The investment..speculation, out right gambling thread

Parent Cafe
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<p>I use market orders all the time if the stock is heavily traded and the spread is narrow. I usually get filled within the spread as I expected so limit orders would not have benefited me.</p>

<p>I can’t stand Greenspan. He was so proud of himself because he could say something that no one would understand. I fail to see how this is a virtue. His policies helped cause the current housing crisis. He lowered interest rates too low in 2003 which fueled adjustable rate mortgages and then began raising interest rates too high. Bernake took over in 2006 and continued Greenspan’s stupid policy of increasing interest rates on an economy that could not handle it. The result was a domino effect from all of those adjustable mortgage rates.</p>

<p>I can’t say I like Bernake either. His QE2 destroyed wealth in America and prolonged the recession.</p>

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<p>I used market orders all the time when I traded.
I like Ron Paul’s view, let’s eliminate the Fed.</p>

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<p>This thread has 2,000 posts and I guess posters are not that interested in bonds. I don’t remember too many posts about bonds. We all know the public has been buying bonds and selling stocks for years, and the returns are pretty low in fixed income. Then again, some of us are pretty old, and the fluctuations in the stock market are not good for our hearts.</p>

<p>Banks have been in the news lately. Banks are always in the news. One of the most disturbing aspects of the JPM loss, is that it looks like traders were hiding the loss by marking their positions at phony prices. This led to valuations of the trades that were overstated, making things look better than they really were.</p>

<p>So this leads me to this. JPM has positions in the derivative markets with notational values of trilions and trillions of dollars. Was this incorrecting marking of positions by the CIO dept of JPM really the only positions that are marked incorrectly? And is this issue really just an issue with
JPM? I don’t believe that for a second.</p>

<p>Another issue with derivatives is that even if they are valued right at this
exact moment in time, the valuations can change.</p>

<p>Posters trade options. Options are derivatives. If the volatilty of options
change, the value of the option changes. This is more noticeable, the longer the duration of the option. Maybe some posters have noticed this. Berkshire is always adjusting its financials because valuations of
derivatives change. If anybody was short, for example a Dec 2012 put and it was trading for $1 and the volatility changed and the put was trading for $2…the account would show an unrealized loss of $100. So I
guess I am asking, how accurate are a bank’s financials when there are
derivatives outstanding with notational values of trillions of dollars?</p>

<p>When I see analysts like Dick Bove state their opinions, I never see the issue of valuations of derivatives addressed. I never hear Warren Buffet
address this when he talks about the banks. I am starting to read a little about the valuations of derivatives, but not in the major press, not with real scrutiny.</p>

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<p>And this leads me to notes and bonds.</p>

<p>The one area where I see decent yields is in certain financials. JPM, GS, Morgan Stanley, Jeffries, Prudential…</p>

<p>You can get yields in the high 5’s, low 6’s depending on when the notes and bonds mature. Maybe 7 to 20 years out. I find it hard to believe that these institutions will fail and not be supported. Maybe they will. If they do fail I will lose. </p>

<p>I invested in the notes and bonds, but I still can’t stand most of these institutions.</p>

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<p>And you were worried that this thread might not have legs, dstark? It’s been more successful than the market!</p>

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<p>^^LOL, jym. Good call on the topic!</p>

<p>I forgot to say why I almost never use market orders - most of my transactions involve biotechs. For a thingly traded biotech stock with, let’s say, 700,000 sh/day average volume, a market order of 10,000 shares is not going to play out well. :)</p>

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<p>A personal trading rule of mine would be to not trade a size in a stock that is a significant percent of daily volume. In other words, if my market order moves the stock, I shouldn’t be trading that size as an individual investor. One of the (many) problems with the JP Morgan fiasco was their trades and positions were too large for the market they were dealing in. Their trades would move the market. </p>

<p>And as for this question,

</p>

<p>The scary thing is, with these illiquid derivatives where there is not an active market with published bids and offers, they use MODELS to determine the value. So a theoretical value may be vastly different from the price that might be paid between a willing buyer and a willing seller, and what is the liquidation value in a forced sale? (much much lower)</p>

<p>Isn’t that what was going on as the financial crisis deepened? Portfolios were using bogus models to value CDOs at unrealistically high prices while the market value for some of these securities approached zero.</p>

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<p>Wall Street makes its profit off of “the greater suckers” who are everyday investors … especially when you factor high-frequency trading into the mix. Stock prices and P/E ratios are artificially high because of all the retirement accounts and so forth which causes the stock market to be awash with money. Private equity is less liquid but makes more sense as there’s a greater chance of discovering an undervalued company.</p>

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</p>

<p>[UPDATE</a> 2-Merkel sees German parlt backing Spanish bank aid | Reuters](<a href=“http://in.reuters.com/article/2012/07/15/germany-merkel-idINL6E8IF2LL20120715]UPDATE”>http://in.reuters.com/article/2012/07/15/germany-merkel-idINL6E8IF2LL20120715)</p>

<p>Has the market factored in this news or will it rise?</p>

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<p>Jym626, :)</p>

<p>BunsenBurner, no, 10,000 share market orders are not going to work in those biotechs. </p>

<p>I am long a few hundred shares in AMGN and rarely look at it. I wonder if a 10,000 share market order would fly in Amgn.</p>

<p>This site doesn’t give bids and offers but it does have time and sales. I like time and sales. (tns) I wish there were tns for more than 1 day on this site. Or time and quotes would be nice. (tnq) That would be a lot of data.</p>

<p>[Time</a> and Sales - Intraday Stock Last Price History for Amgen Inc. (AMGN)](<a href=“http://www.nasdaq.com/symbol/amgn/time-sales]Time”>http://www.nasdaq.com/symbol/amgn/time-sales)</p>

<p>NJres, I agree, so I like your post.</p>

<p>Evitaperon, I agree with most of your post. I don’t like PE. At one time
it was probably ok as an equity class, but too much money went into PE and the deals weren’t as good. Also,
management takes too much of the profits.</p>

<p>Razorsharp…we will see. </p>

<p>Bunsenburner, you are long 10,000 shares of some biotech stocks? You really do have guts. </p>

<p>I am long biotechs, as I have stated before, but not 10,000 shares of any. I am long HGSI, But not much. I guess takeover talks have heated up. Of course the stock is way down from its highs. Not one of my
winners.</p>

<p>I really liked the biotechs 10 years ago and bought…I don’t know…15 to 20 of them. They have done better than the market, but with takeovers or the crash and burning, I think I am long fewer than 10 now. I guess I could check.</p>

<p>Right now biotechs are hot. Maybr the next time the stocks significantly drop, I will reload.</p>

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<p><a href=“Hedge Funds Tap Into Early Views of Stock Analysts - The New York Times”>Hedge Funds Tap Into Early Views of Stock Analysts - The New York Times;

<p>What a cesspool…</p>

<p>They are supposed to be among Wall Street’s most closely guarded secrets: changes in research analysts’ views, up or down, of a company’s prospects. But some of the nation’s biggest brokerage firms appear to be giving a handful of top hedge funds an early peek at these sentiments — allowing them to trade on the information before other investors get the word."</p>

<p>"But documents obtained by The New York Times indicate that the hedge fund practice of trawling for analysts’ shifting views is systematic and growing on Wall Street. Questionnaires completed by analysts that can telegraph their thinking are being used by hedge funds run by BlackRock; Marshall Wace, a large British hedge fund company; and Two Sigma Investments, a United States hedge fund concern.</p>

<p>The funds say they ask only for public information, but in at least four cases, documents from Barclays Global Investors, now a unit of BlackRock, state the goal is to receive nonpublic information. Two documents state that the surveys allow for front-running analyst recommendations."</p>

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<p>My apologies for butting in to the normal financial discussion but I am wondering how everyone feels about the “Financial cliff” approaching in January. I can’t say I understand everything you discuss in this chain but I am interested in what everyone thinks about this topic. </p>

<p>My husband is making noises about just selling everything and waiting to see what happens. Does this scare anyone else?</p>

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<p>Did my daytrading thing this morning and I am done. It is nice to make your money and then get out for the rest of the day. You don’t necessarily make a lot of money but that’s not what I’m looking for at this point.</p>

<p>On the Fiscal Cliff - it’s another potential event that will come and something will happen. Nobody has a crystal ball so we don’t know whether it will get resolved in time or not. There are lots of people that have already sold their stocks and are sitting on some form of cash equivalent or near-equivalent.</p>

<p>Most of my trading buddies went long this morning based on the technical indicators which were slightly bullish - though our overall guru is keeping positions small. I know one guy who is very good with short-term trades; he typically does something in the pre-market and he’s done by about 10:30 AM. It’s fun to watch him work as he posts his trades in real-time and you can see how he does. There are a few others that do that too.</p>

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<p>Artrell, anyone can post about whatever he/she wants to discuss. There is no such thing as butting in.</p>

<p>I hope other lurkers understand this too.</p>

<p>This thread is informal, free flowing, open to whoever.</p>

<p>I am not that concerned about the financial cliff. I think it is politically posturing, and for a way to get people to watch news programs or go to news sites. I think next year, we will be on to something else. Similar to the debt ceiling issue. </p>

<p>Just my opinion.</p>

<p>But the stock market did sell off during the debt ceiling debate, so who knows? </p>

<p>I don’t have much of my wealth tied up in stocks, so psychologically, drops in the market don’t affect me much.</p>

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<p>[Short</a> Sales on NYSE Top 2011 Peak as September Bets Lost 21% - Yahoo! Finance](<a href=“http://finance.yahoo.com/news/short-sales-nyse-top-2011-135810129.html]Short”>http://finance.yahoo.com/news/short-sales-nyse-top-2011-135810129.html)</p>

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<p>Except for holidays, this is the lowest volume I have traded since I started this gig.</p>

<p>Incredibly low volume.</p>

<p>Maybe a few people are waiting for Bernanke.</p>

<p>The rest are lying on beaches.</p>

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<p>As far as market and limit orders: For stocks, I typically use market orders especially since I hardly ever trade low volume stocks. I never use market orders for options - the spread is too great.</p>

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<p>[Home</a> Prices Down Fifty Percent Since 2007, Fed Helps Stocks Gain Ground - Forbes](<a href=“Home Prices Down Fifty Percent Since 2007, Fed Helps Stocks Gain Ground”>Home Prices Down Fifty Percent Since 2007, Fed Helps Stocks Gain Ground)</p>

<p>I don’t care about Biderman’s opinions, but I do like his numbers, and I find what he is writing about interesting.</p>

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<p>^ He repeated says “home prices are down 50%” when what he means is “home equity is down 50%”.</p>

<p>There is a huge difference, and interchanging the two invalidates the whole point of his article. If people were borrowing 80-90%+ to fund their stock purchases, you’d be able to say “stock equity” is down 50%.</p>

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<p>You make a good point that he should not have said prices…</p>

<p>But…most equities (stocks) are not bought on margin.</p>

<p>Equities (stocks) have rallied more than both homes equity and home prices.</p>

<p>The value of homes have not rallied like the value of stocks.
Biderman is right about that.</p>

<p>Edit: I like the info on the relative value of homes and stocks over the time periods.</p>