Finance Trends Matter

Netflix melt-up and Google breakdown

2012-01-09T15:59:00.000-08:00

Chart update on Google ($GOOG). After breaking out nicely above longer-term resistance near $645, $GOOG has spent the last few days giving back those gains and more.

Today we saw $GOOG open with a gap down at $646.50 and it quickly slid downhill from there, ending the day at $622.46 (-4.2%).

As Reuters reports, Google took a slide after Motorola Mobility ($MMI) warned of lower-than-expected earnings, which prompted worries over Google's entrance into the hardware side of the smartphone market via their Motorola acquisition. So we've gone from breakout to correction mode in just a few short days.

Meanwhile, Netflix ($NFLX) continued its recent melt-up, surging 13.8% higher today.

The market seemed excited about Netflix streaming services crossing the Atlantic to Britain and Ireland. Not to mention the short-covering rally that ensued. As the article above points out, $NFLX is up 40% in the first five trading days of the year - so much for dour 2012 predictions.

Look for a potential gap fill play back to $115 in the near-term. If Netflix can keep building momentum in their business through the first part of the year, maybe they'll be able to regain some share momentum and slowly heal the memory of last summer's DVD vs. streaming split debacle.

I've not been following Netflix closely in recent months, but I have been eyeing the chart in recent days and will continue to watch it here. You can hear more about their vision for the future in this Charlie Rose interview with Netflix CEO, Reed Hastings. We'll see if they execute.

Disclosure: I have no current positions in either $NFLX or $GOOG, nor have I had any position in either stock in recent weeks. Readers will be alerted to any future long or short positions I hold in individual equity names mentioned, if those positions are held at the time of writing.

Nothing here should be taken as a recommendation to buy or sell securities. These posts are strictly for educational purposes and a market journaling exercise. Thank you for reading.

Google breakout: chart update

2012-01-03T16:46:00.000-08:00

Google broke out above some long-term resistance today. See the daily chart below.

Here's an updated weekly chart to show the longer-term view.

The stock had been trading in a rather wide sideways range between $450 (support) and its prior highs (resistance) near $645 since January 2010.

Today, $GOOG cleared that resistance level with ease, soaring to $665.41 by the day's close. Not a bad trick for the first trading day of the year.

William Blake art from The Book of Urizen

2011-12-31T11:46:00.000-08:00

William Blake etching with watercolor & ink (Tate collection).

Lao Tzu on prediction

2011-12-29T13:29:00.000-08:00

Those who have knowledge, don't predict. Those who predict, don't have knowledge. - Lao Tzu. $$Thu Dec 29 21:08:13 via webDavid Shvartsman
FinanceTrends

Friedrich Hayek on Keynes (1978 interview)

2011-12-27T05:44:00.000-08:00

F.A. Hayek discusses John Maynard Keynes in this 1978 interview clip.

Mark Cuban: How to Get Rich + Success and Motivation

2011-12-20T10:33:00.000-08:00

You may have seen me quote Mark Cuban on Twitter the other day. This is Cuban's take on entrepreneurship in America from his, "How to Get Rich" post:

"...The nature of our country’s business infrastructure is that it is destined to be boom and bust. Booms are when the smart people sell. Busts are when rich people started on their path to wealth."

Kind of applies to trading and "investing" as well, doesn't it? The smart money and experienced traders are buying or preserving their capital and looking for signs of coming strength at the trough, following a panic or bust (bear market).

The bit players in the crowd are mostly on the sidelines, waiting for things to get exciting before they plunge in. They are driven largely by emotions and their knowledge of the market landscape is, shall we say, less than that of the experienced speculators.

When the boom is in full gear and evident to all, savvy veterans are lightening their positions and selling into a liquid marketplace that will take the inventory (stocks, etc.) off their hands.

Novices generally buy high and sell low, losing a great deal of their money in the process, while the expert traders buy at a reasonable, or high, price and sell higher.

This applies to business deals as well, as Mark points out in his post. But you need to put in a lot of hard work and learn your business well before you can identify the right time to invest or start building your company.

Whatever you have set out to do, there's no quick and easy path to excellence and success. If you want to learn more about what Mark Cuban went through to get to where he is today, read his post, "Success and Motivation". I suspect there are lessons here for all of us, whether you're an artist, a writer, a trader, or an entrepreneur.

Related articles and posts:

1. Mark Cuban interview: "Buy and hold is a crock" - Finance Trends.

2. Howard Lindzon interviews Mark Cuban (StockTwits TV) - Finance Trends.

Frederic Bastiat - The Law

2011-12-15T14:53:00.000-08:00

"The law perverted! And the police powers of the state perverted along with it!

The law, I say, not only turned from its proper purpose but made to follow an entirely contrary purpose! The law become the weapon of every kind of greed! Instead of checking crime, the law itself guilty of the evils it is supposed to punish!

If this is true, it is a serious fact, and moral duty requires me to call the attention of my fellow-citizens to it." - Frederic Bastiat, The Law (e-book, English translation).

Related articles and posts:

1. Biography of Frederic Bastiat (1801-1850) - Mises.org.

2. The Law by Frederic Bastiat (audio book) - Free Audio.

3. Works of Bastiat and web links - Bastiat.org.

Kyle Bass on sovereign debt crisis and gold

2011-12-08T05:45:00.000-08:00

Hayman Capital's Kyle Bass discusses the world economy, gold, global credit growth, and debt problems in US, Japan, and Europe at the AmeriCatalyst 2011 conference.

Here's the, "Black Swan of Cairo" piece (Nassim Taleb and M. Blyth) cited by Bass.

Hat tip: Olivier at Tischendorf Letter for highlighting this clip and the article.

And if you missed it, here's Kyle's interview on BBC Hardtalk, skillfully dodging TV sensationalism and speculator-scapegoating attacks to address the euro crisis, the developed world's sovereign debt troubles, and how he is managing risk in his portfolio and hedging against problems in Japan.

Quoth Bass: "Capitalism without bankruptcy is like Christianity without hell".

In other words, the Western world must atone for its past financial profligacy. Check it out.

Rewards for Failure

2011-12-05T22:33:00.000-08:00

"The United States has lost its way".

Greg Simmons at ScopeLabs riffs on the rise and fall of nations and our bailout society in this excellent six minute YouTube video.

Greg hipped me to this clip after I mentioned how I had enjoyed some of his Skype interviews with Matt Davio. From the moment I saw their first taped discussion, with Greg standing there in his Black Flag t-shirt, ready to talk trading and current events off the cuff, I knew I had found someone on my wavelength.

This clip is a must-see, plain truth indictment of our societal decline. Will America wake up from its national brain-coma in time to right itself? Watch and learn, friends...watch and learn.

Steve Jobs interview from 1990, recently surfaced

2011-11-26T11:20:00.000-08:00

Watch An Interview With Steve Jobs on PBS. See more from NOVA.

Steve Jobs talks about the future of computing in a rare 50 minute TV interview aired on PBS.

When asked how computers have changed civilization, Steve begins by noting how humans were able to leapfrog the more efficient locomotion of other animal species by using tools, or technology.

Offering the example of how a human on a bicycle could easily surpass the locomotive advantage of the most efficient animal, a condor, Jobs concludes:

"We humans are tool-builders. And we can fashion tools that amplify these inherent abilities that we have to spectacular magnitudes. So for me, a computer has always been a bicycle of the mind: something that takes us far beyond our inherent abilities. I think we're just at the early stages of this tool."

You can see by the re-do of his 1st interview response that Steve was always "on message" and rehearsing and delivering the exact points he wanted to make when selling his vision of how we use technology and Apple products.

It also highlights the fact that modern TV interviews are often actually rehearsed, taped, and edited performances, rather than the more spontaneous give-and-take than the finished product tries to convey.. Steve could see this, and he crafted his message to the medium, whether he was out on his own at NeXT or selling to a larger consumer market for Apple.

Enjoy the discussion and insights, and see our related posts for more on Steve Jobs.

Related articles and posts.

1. Interview: Steve Jobs and Bill Gates at D5 conference - Finance Trends.

2. In Charts: Apple (AAPL) vs. Microsoft (MSFT) - Finance Trends.

Inner Voice of Trading: A Lesson on Ego and Risk

2011-11-17T17:18:00.000-08:00

Michael Martin was kind enough to recently send over a review copy (via the FT Press) of his new book, The Inner Voice of Trading.

I've started reading through the book and have highlighted an important lesson on risk mgmt., ego, and the emotions we feel as humans who trade.

Here are a few thoughts from chapter 2 of Michael's book, paraphrased or direct quotes, that address some of these issues:

• Most traders drawn to risk management focus on the external "how to" aspect of trading, vs. the inner aspect of emotions and psychology. This is where trouble begins.

• Our American education system has ingrained in us the need for accuracy and regurgitation of info. We become conditioned to this accuracy model and the rewards of rote learning. The longer we remain in this reward model, the more it colors everything we do in life.

• In the school model, one's self-esteem is tied to being right. Avoiding mistakes, especially public mistakes becomes paramount. But in trading, one can be wrong in most choices and experience regular "outlier" events in the course of trading the markets. Traders must somehow learn that they will miss out or be incorrect regularly and still have a shot at great success.

• Traders need to have a survival plan. Know when you will get out of a trade before you get in.

• If you don't take the small loss today, your capital and trading career may not survive tomorrow.

• The most successful traders surrender their egos to not knowing the frequency or magnitude of any trend. They quiet their mind and follow their inner voice.

• Most of the world can't keep their losses small. Professional traders and investors who've been around for decades are usually those who play the best defense.

I'll try to review the book in full after I've finished reading it. Till then, check out Michael's book along with this interview on The Inner Voice of Trading, and visit Martin Kronicle for more on trading from Michael and his interview guests.

When you have no move, do nothing...

2011-11-14T06:47:00.000-08:00

"...You have no move, Mr. Thompson. You do nothing.".

Reflecting on Nucky Thompson's compromised position in the most recent episode of Boardwalk Empire, Arnold Rothstein (played by Michael Stuhlbarg) tells the embattled Atlantic City treasurer/gangster to simply wait and plan for a time when there is a move to be made.

Rothstein elaborates:

"I've made my living, Mr. Thompson, in large part as a gambler. Some days I make 20 bets. Some days I make none.

...There are weeks, sometimes months in fact, when I make no bets at all because there simply is no play. So I wait, plan, marshal my resources and when I finally see an opportunity and there is a bet to make, I bet it all.".

Leaving aside the near-certainty of fixed bets and the part about "betting it all", doesn't this sound like the strategy of a good speculator? When there is no clear move to be made, you must simply wait and do nothing until the real move (the true opportunity) presents itself.

Then, having protected your capital and your wits, you may step in and seize the opportunity.

Facebook's Mark Zuckerberg interview w/ Charlie Rose

2011-11-10T20:40:00.000-08:00

Charlie Rose interviews Facebook's Mark Zuckerberg and COO Sheryl Sandberg in an hour-long discussion on the future of the social web and the impact of social media.

Interesting chat and here's one noteworthy comment from Mark on the need for engineers in our new economy: "My #1 piece of advice [for young students & job seekers] is you should learn how to program".

Also, some discussion of American entrepreneurship, risk-taking, and innovation.

Check it out.

Rakesh Jhunjhunwala interview: Wizards of Dalal Street

2011-11-06T22:01:00.000-08:00

On CNBC India, Rakesh Jhunjhunwala is feted in the same way Warren Buffett is here in the USA.

He is known as one of the great bulls of the Indian markets, and while his success has coincided with the recent decades' secular uptrend in Indian shares, Rakesh is also an adept trader who has made money selling short. He cites Buffett and Marc Faber as two of the greatest influences on his trading and his understanding of markets.

CNBC-TV 18 profiles the Indian share trader and investor in this biography special, Wizards of Dalal Street. Rakesh tells Ramesh Damani the story of how he got his start in the share markets and how he searches for attractive investments today.

Here are a few excerpts from the discussion, in which Jhunjhunwala talks about his childhood interest in the workings of share market and shares a few lessons on speculation:

CNBC: "But you're a bureaucrat's son. I mean, weren't you compelled into [that area]?"

Rakesh: "I was a bureaucrat's son, but fortunately I had a very democratic father. And also we had a business background...my father was an intelligent man and he encouraged me to do whatever I had an interest in."

On speculation and reality:

CNBC: "Does speculation teach you to be realistic, because you are betting on leveraged money?"

Rakesh: "I think so, because speculation requires and teaches you to accept reality as it is, rather than reality as you would like to have it."

An important point on risk taking and concentration:

CNBC: "But is one of Rakesh Jhunjhunwala's tenets is when he finds an idea to bet big?"

Rakesh: "Big is relative, Ramesh. But when I find an idea whose prospects are very good...you have to be conscience of one thing - the great investment opportunities are very rare. So when you get them, seize them. And seize them in a manner that if you're right, it makes some difference to your balance sheet."

Check out the full interview here. Much great wisdom and insights within.

If you enjoyed the interview and would like to read and hear more, please follow the links in our related posts section for a wealth of articles and interview transcripts.

Related articles and posts:

1. Rakesh Jhunjhunwala interview on FT.com - Finance Trends.

2. FY 2012 has been the worst trading year of my life: Jhunjhunwala - Moneycontrol.

3. Rakesh interview CNBC-TV 18 transcript: Momentum and risk - Moneycontrol.

Black markets: a global $10 trillion economy

2011-11-01T16:26:00.000-07:00

Excellent article from Foreign Policy entitled, "The Shadow Superpower", which examines the world's $10 trillion underground economy.

"You probably have never heard of System D.

Neither had I until I started visiting street markets and unlicensed bazaars around the globe.System D is a slang phrase pirated from French-speaking Africa and the Caribbean. The French have a word that they often use to describe particularly effective and motivated people. They call them débrouillards.

To say a man is a débrouillard is to tell people how resourceful and ingenious he is. The former French colonies have sculpted this word to their own social and economic reality. They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes, are part of "l'economie de la débrouillardise."

Or, sweetened for street use, "Systeme D." This essentially translates as the ingenuity economy, the economy of improvisation and self-reliance, the do-it-yourself, or DIY, economy..."

Why the attraction to this unlicensed, improvised economy? Because that's where the jobs are, and where flexibility exists for entrepreneurs and traders/merchants to come in and do their thing without burdensome costs of regulation, licensing, and taxation (i.e., red tape).

"...It used to be that System D was small -- a handful of market women selling a handful of shriveled carrots to earn a handful of pennies. It was the economy of desperation. But as trade has expanded and globalized, System D has scaled up too.

Today, System D is the economy of aspiration. It is where the jobs are. In 2009, the Organisation for Economic Co-operation and Development (OECD), a think tank sponsored by the governments of 30 of the most powerful capitalist countries and dedicated to promoting free-market institutions, concluded that half the workers of the world -- close to 1.8 billion people -- were working in System D: off the books, in jobs that were neither registered nor regulated, getting paid in cash, and, most often, avoiding income taxes. "

This is a trend I've talked about a bit on Twitter, but haven't covered here on the blog. Be sure to check out the full piece. It's well worth your time, and these trends will likely take hold here in the USA for similar reasons.

Around the world in 8 charts

2011-10-27T20:29:00.000-07:00

The charts tell the tale of the October rally.

Since our last update on the global correction in stocks, shares have bottomed (at least in the short-term) and embarked on a powerful new rally.

As noted in real-time on Twitter and StockTwits, the 1,250-1,260 levels were an important technical (and psychological?) level for the S&P 500 and US shares. The market busted through those levels this week amid a backdrop of hectic news concerning Europe's debt crisis.

Here you'll find newly updated charts, from the SPX to the AWCI (MSCI World ETF), the Dow Industrials and Transports, the Nasdaq, the EEM (Emerging Markets ETF), the VIX, and TLT (long-bond ETF).

This is still a very news-driven (some would say intervention-driven) market. Therefore, I want to either watch (or ignore) the action from the sidelines or keep a very tight reign on positions and risk. We'll see if the global share markets can continue higher on a stream of bad news, a sign of a potential bullish uptrend in the making.

Keep up with Finance Trends in real-time on Twitter and StockTwits. You can follow our RSS feed (full posts, always free) to catch all our posts.

Sotheby's vs. emerging markets

2011-10-21T12:11:00.000-07:00

Performance comparison of "$BID indicator", Sotheby's vs. the $EEM (MSCI Emerging Markets) going back to 2003. You can see the close correlation throughout in this weekly chart.

Check out a larger image of the same chart here.

You can also see a 3 year performance view of Sotheby's vs. $ACWI (MSCI World stocks ETF) here on Chart.ly.

As you'll see, the correlation between $BID and $ACWI is not as close, and Sotheby's easily outperformed the global shares ETF over this recent 3 year period.

5 predictions from 'Trader Vic' Sperandeo

2011-10-11T18:57:00.000-07:00

Victor Sperandeo makes 5 "Frightening Market Predictions", as well as a few policy prescriptions for the USA in this Real Clear Markets piece. Here's a taste:

"...1. The U.S. is going into recession.

This is being entirely caused by the woefully misguided fiscal policies of the Obama administration.

Their anti-business, socialist agenda is killing the "Golden Goose" (i.e. Capitalism). Raising the costs for small and big business via tax hikes, Obamacare, and massive regulation is in effect causing a capital "strike" by entrepreneurs. As a result, GDP is going to decline..."

Recession is not the only thing on Trader Vic's mind. Head on over for a few thoughts on gold, the future of the EU, hyperinflation, and the global bubble in debt.

Plus, a few key changes that may help the US fix its problems and change our course for the future (only wish Victor had some more time and space to really flesh these out). Check it out.

Jeffrey Gundlach interview: deflation risk

2011-10-05T13:44:00.000-07:00

Noted bond fund manager and DoubleLine founder, Jeffrey Gundlach speaks with FT.com about the economy, deflation risks, and his views on Treasury bonds.

Some highlights from this interview:

DoubleLine notes that the market has been affected by shifts in sentiment relating to potential inflationary outcomes vs. deflationary outcomes. Gundlach seeks to take advantage of pendulum shifts in sentiment by positioning his portfolio more into government bonds when everyone is focused on inflation, bucking the prevailing sentiment trends.

As unattractive as Treasury yields appear to be from a historical standpoint, investment managers should own bonds "even today" as a hedge.

"I used to be an inflationist several years ago". Gundlach understands the printing-money-to-cover-entitlements view, but feels that this pro-inflation scenario is unlikely to happen without a crisis. Gundlach feels you will first see economic weakness and a societal trend towards reigning in deficit spending. Hence, deflationary arguments are at the forefront.

Tremendous income polarization in the United States. This has often led to societal unrest. Hard times for working class vs. plush times for multinational corporations will lead to calls for increased corporate taxes. Expect lower PEs for stocks in that environment.

Catch the full take at the link above.

Picture of a global market correction

2011-10-03T03:17:00.000-07:00

Call it a downtrend, call it a cyclical downturn, or a bear market. No matter how you slice it, stocks are in a definite slump worldwide.

Here's a daily chart of the iShares MSCI All-Country World Index ETF, AWCI.

The pattern of lower highs and lower lows since May 2011 is clearly evident in this ETF tracking some of the world's leading shares. This shows a bear trend, or at the very least, a months long correction in global shares.

Proceed with caution, folks.

Hugh Hendry on the importance of social mood & failure

2011-09-26T17:55:00.000-07:00

"I'd say 80% of my activity is engaged in the interpretation of social mood." - Hugh Hendry.

That quote taken from this September 2010 BBC Hardtalk interview with Hugh Hendry.

When asked about the need for regulatory control of financial markets and curtailing of risk, Hugh replies, "The best form of regulation is, 'If you mess things up, you fail.'".

Hat tip: Kevin Kaiser at Hedgeye.

Precious metals take a hit as dollar moves higher

2011-09-23T15:09:00.000-07:00

Gold and silver have really taken it on the chin this week, with gold down 5% Friday and silver down a whopping 15% in today's trading (as of 4pm Chicago time).

For the week, Finviz shows gold and silver down 8.7% and 23.6%, respectively (see performance chart below).

The sell-offs in the futures markets have, of course, impacted the share prices of metals ETFs, GLD and SLV similarly.

The leading gold and silver mining indices, XAU and HUI, also took a dive over the last few days.

Meanwhile, the US dollar index continued its climb this week. Having bottomed near 72.70 in early May, and following its consolidation around the 73.50 mark in August, the index (which measures the US dollar against a basket of other paper currencies) is up strongly in September.

So were there any technical price signals or sentiment changes that hinted at these latest shifts in the dollar and in the precious metals market?

Sounding prescient on the gold trade is Phil Pearlman, discussing his decision to sell gold in this August 24th interview on CNBC (looking sharp, buddy).

We'll continue watching gold, silver, and the dollar in the weeks ahead. Keep up with our real-time updates on Twitter and stay tuned to the blog feed for more.

Long bonds flying on Operation Twist - $ZB_F $TLT

2011-09-21T12:11:00.000-07:00

Earlier this afternoon on Twitter, I noted that the long bond ETF, TLT was up over 10% (then quoted near $114.60) since S&P downgraded the USA's debt rating to AA+ on August 5, 2011.

Well, it looks like we'll have to update those stats already, thanks to the pop in 30 year bonds (ZB_F) and in TLT on news of Operation Twist, the Fed's telegraphed scheme to sell $400bn of short maturity bonds and reinvest in longer (6 to 30 year) bonds by June 2012.

Here's how the market reacted to that news. Note the flagpole move up in TLT and the 30 year Treasury futures, ZB_F on the intraday charts.

Above: 5 minute chart of the 30 year Treasury futures, via Finviz.com.

Here's an intraday chart of TLT, courtesy of freestockcharts.com.

The updated daily chart of the TLT, marking the August 5th closing price to today's action on the Twist announcement. Chart via freestockchats.com.

So in the space of 20 minutes, we had to recalculate that 6 week return figure (post S&P debt downgrade): the long bond ETF TLT is now up 13% since its close on August 5th, based on an intraday price of $117.70

What a difference a day makes...

Hello

2011-09-21T09:31:00.001-07:00

hello

New: Finance Trends mobile reader view

2011-09-20T20:10:00.000-07:00

Finance Trends mobile readers: you can now easily access our new mobile view on your iPad, iPhone, Berry, or Android device (courtesy of Blogger).

Here's what individual posts look like in our mobile site view:

Right now we're leaving the mobile view as an option, rather than a default, for our mobile visitors.

If you're a mobile reader and you'd like to see this mobile view as the default view during your visits, please leave us some feedback. For now, I'll work on providing a mobile link icon near the top right portion of our sidebar column. Thanks!

Bruce Kovner retires: a Market Wizard's career

2011-09-13T17:27:00.000-07:00

Bruce Kovner is stepping down as chairman and CEO of Caxton Associates, the hedge fund he founded in 1983.

Bloomberg has the details on the transition that will see CIO Andrew Law take over at Caxton:

"...“After 34 years in the trading business and more than 28 years leading Caxton, the time has come to hand the leadership of the company to a new generation,” Kovner, 66, wrote in the letter. “I do so knowing that I will miss the adrenalin rush of confronting markets every day but also confident that new leadership will carry on the traditions, style and substance of Caxton’s successful history.”...

...Kovner is attempting a rare handover of power in the $2 trillion hedge-fund industry, where some of the most successful managers, including Stanley Druckenmiller and George Soros, chose to transform their firms into family offices rather than put another trader in charge. A family office usually oversees money for a wealthy individual and their relatives."

And a note on Kovner's successor Law, who offers up some interesting comments on lessons learned from Bruce Kovner and similarities in their trading styles:

"...Law’s trading style has always been similar to Kovner’s, he said in an interview in his office on Park Avenue in Manhattan. Yet the older man drove home some important lessons.

“I’ve learned to listen to the markets more,” said Law, meaning that he pays close attention to how markets move relative to one another, and how they react to events. He depends on these observations, rather than what he calls “abstract fundamental preconceptions,” to forecast future price movements.

Law also embraces Kovner’s practice of cutting risk when he doesn’t understand what’s going on in markets, something that Law did in May and June of this year. “Bruce has done this many times in his career,” he said."

Kovner is a true trading legend whose trading career really took off once he joined Commodities Corporation in late 1976. On his performance as a hedge fund manager, Financial Times sums up his 28 years thusly: "An investment of $1,000 in Caxton made when the firm began trading in 1983 would today be worth $168,000.".

Kovner sat down for a rare interview with Jack Schwager in 1989. The resulting chapter on "Bruce Kovner - The World Trader" can be found on page 31 of this Market Wizards ebook. Check it out.

Schwager, Jack D. - Market Wizards 1989

Related articles and posts:

1. Bruce Kovner interview with AR magazine - Absolute Return.

Banknotes as wallpaper: Weimar Republic, 1923

2011-09-08T12:33:00.000-07:00

When Money Dies: Banknotes (Marks) as wallpaper. Weimar Republic, 1923.

*Photo via Wikipedia (Deutsches Bundesarchiv), Hyperinflation in the Weimar Republic.

Related posts:

1. FT interviews Adam Fergusson: When Money Dies - Finance Trends.

2. Dying of Money: Financial Sense Newshour special on inflation - Finance Trends.

Traders and brokers at the Curb market, 1916

2011-09-01T15:55:00.000-07:00

Traders and brokers signaling to offices at the Curb market, New York City, 1916. The Curb market moved indoors in 1921 and, in 1953, became the AMEX.

Photo via Library of Congress.

In charts: Apple (AAPL) vs. Microsoft (MSFT)

2011-08-30T18:40:00.000-07:00

Here's a look at some charts shared recently on Chart.ly and StockTwits. Think of it as a quick follow up to our Steve Jobs and Bill Gates post from last Friday, looking back on 30 years of technology innovation.

The long view of Apple: monthly chart of AAPL stock price dating back to 1984. That's shortly after the Mac was introduced (click to enlarge chart).

The following chart shows a comparison of Apple and Microsoft's share performance from 1986 (the year MSFT went public) to 2011.

On this timeframe, MSFT trounces AAPL from the early 1990s on to the dot.com bubble peak.

Still, Apple shares gain momentum in the 2000s, finishing the 25 year period with a more than 15,000% gain. Microsoft achieved a 25,000% gain in its stock price for the same period (down from its 1999 peak near the 50,000% mark).

Finally, we see the same two stocks measured from 1997, the year of Steve Jobs' return to the company he co-founded. The second act of Jobs at Apple was a wildly successful period for the company and its shares, as you can see from the chart below.

While MSFT's share price barely managed to keep its head above water in the post-dot.com bubble period, AAPL went on to slay the competition and innovated its way to a 7,000% return over 14 years.

For more on what both companies and their famous founders have accomplished over the last 30-odd years, check out our related posts below.

Related posts:

1. Interview: Steve Jobs and Bill Gates discuss careers, tech - Finance Trends.

2. MSFT and AAPL: a tale of two tickers - Finance Trends.

Interview: Steve Jobs and Bill Gates at D5

2011-08-26T11:29:00.000-07:00

So this week's resignation announcement from Steve Jobs has many of us looking back through the archives, compiling old interviews and articles, and summarizing the accomplishments of Apple and its iconic co-founder.

It's prompted me to look back not only at what Steve and Apple have done in the past 30-plus years, but what the tech industry as a whole has created in that time. We're all familiar with the stories of famous rivalries and stolen (or "borrowed"/cheaply purchased) technologies in the PC and software industries. It hasn't always been pretty.

It's quite interesting then, to find two of the tech industry's most famous sparring partners (and sometimes, business venture partners), Steve Jobs and Bill Gates, sharing a stage and chatting about their careers in this D5 (All Things Digital, 2007) conference panel interview.

The panel discussion begins when the two great entrepreneurs are asked to describe the other's impact on technology and our daily lives. Quite an interesting opportunity to hear these two gentlemen speak. This is something our grandkids will probably watch someday.

Enjoy the video, and check our related links section for more.

Related articles and posts:

1. Steve Jobs resignation: reactions from Wozniak, et al. - Bloomberg via YouTube.

2. How Steve Jobs Made Business Cool Again - Bloomberg.

3. Discussion with Steve Jobs & John Lasseter - Charlie Rose.

4. The ultimate Steve Jobs resignation linkfest - Abnormal Returns.

J.J. Butler - Successful Stock Speculation (Scribd)

2011-08-23T09:50:00.000-07:00

New to the Scribd trading books collection, John James Butler's, Successful Stock Speculation (1922).

I was introduced to this short handbook on investing and speculation through Michael Bigger, who created an appended version of Butler's book with his own summary notes called, In Praise of Speculation.

I'm just starting Butler's book, but I find his introductory notes quite useful in clearly defining the meaning and purpose of that now mistreated term (and misunderstood activity), "speculation".

Butler defines the act of speculating as follows:

"To speculate is to theorize about something that is uncertain. We can speculate about anything that is uncertain, but we use the word "speculation" in this book with particular reference to the buying and selling of stocks and bonds for the purpose of making a profit.

When people buy stocks and bonds for the income they get from them and the amount of that income is fixed, they are said to invest and not to speculate. In nearly all investments there is also an element of speculation, because the market price of investments is subject to change. "Investment" also conveys the idea of holding for some time whatever you have purchased, while speculation conveys the idea of selling for a quick profit rather than holding for income.

To the minds of most people, the word "speculation" conveys the thought of risk, and many people think it means great risk. The dictionary gives for one of the meanings of speculation, "a risky investment for large profit," but speculation need not necessarily be risky at all. The author of this book once used the expression, "stock speculating with safety," and he was severely criticized by a certain financial magazine. Evidently the editor of that magazine thought that "speculating" and "safety" were contradictory terms, but the expression is perfectly correct. Stock speculating with safety is possible. "

Enjoy the book and its classic insights.Successful Stock Speculation, By J. J. Butler The Project Gutenberg eBook

Mark Cuban interview: "Buy and hold is a crock"

2011-08-16T14:20:00.000-07:00

Entrepreneur and Dallas Mavericks owner, Mark Cuban recently chatted with Alan Murray at the Wall St. Journal about investing, entrepreneurship, job creation and innovation, patent trolls, and the NBA.

Mark kicks things off on a frank and "controversial" note by stating up front his belief that, "buy and hold is a crock of shit", and the idea that one should be almost fully invested in the markets at all times is similarly bunk.

As Cuban puts it: "Unless you really have a commitment to something, just keep your money in cash - knowing that at some point in time there's going to be a week or two like we've had [recent volatility and stock market plunge]."

Mark explicitly states that these are his times to look for opportunity in the market, and implicit in his statements are a belief in the value of market timing and his own ability to find relative bargains in the capital markets. He likes to find things that are cheap, but is not seeing the bargains he needs in leading shares yet. You'll hear more about what he's doing and his philosophy on the current realities of trading and investing in the interview.

What's really interesting to me, beyond the investing discussion, are Mark's comments on patents and the current business environment. Cuban says patent laws and patent litigation are having a "huge", negative effect on the economy and job creation, particularly with technology companies. In fact, he flat out says, "You don't need patents...ideas are easy", citing his own experience with Broadcast.com and its technology patents in the dot com boom environment.

Note that Cuban's remarks on defensive purchases of patent troves came just ahead of the Google - Motorola Mobility deal (driven largely by patent protection needs for the Android OS in the litigious mobile phone industry) announced this week.

There are a few things that I may not agree with in this interview (mostly Mark's ideas about government grants for job creation), but I really like the fact that Mark speaks his mind and is just so off the cuff and straight up with his remarks. Really refreshing at a time when you see so many mealy-mouthed individuals hemming and hawing with their measured, pre-planned responses in interviews. Great stuff, watch and enjoy.

Related posts:

1. Howard Lindzon interviews Mark Cuban on StockTwits TV - Finance Trends.

2. Billionaires are different than the rest of us - Abnormal Returns.

Market plunge and relative strength: Caribou Coffee (CBOU)

2011-08-12T11:26:00.000-07:00

In the week that's passed since our last post, the stock market decline deepened, Standard & Poor's downgraded the US' debt from AAA to AA+, several European countries enacted a short-selling ban, and many stocks were taken to the cleaners.

Of course, after declining 16 percent in 3 weeks (from 1,340 to 1,120 on the S&P 500), the US market has seen a bit of a relief rally the past few days.

Still, it's been very tough to find names that didn't get hit hard in this market. Which is why the relative strength in a stock like Caribou Coffee (CBOU), which not only held up but is making new highs, is impressive.

Here's a view of CBOU vs. the Nasdaq Composite index. You can see how the stock has held up during the index's recent decline.

While the action in CBOU looks good and it's earned a place on the watch list, I'm still proceeding with caution here. Anything can happen in a volatile news-driven market like this, and we've seen industry-leader, Starbucks (SBUX) and recent favorite, SodaStream (SODA) slump or get knocked down hard after recent earnings reports.

Build your watchlists, view developments from the sidelines, and keep a close eye on your risk management process if you choose to speculate here on the long or short side.

Sitting on the sidelines, reading

2011-08-04T15:55:00.000-07:00

"The worst thing you can do when you're having a hard time is flail. In trading, when there is nothing to do, the best thing to do is nothing." - Scott Bessent (Bessent Capital).

Well, the damage is already done for those who were heavily long heading into this week's market decline.

I look at the S&P 500 component data on freestockcharts.com and see that only 3 stocks in that index were up today. We saw a -4.78% decline in the S&P to go along with that. Here's an updated chart that shows the recent breakdown below the 1312 line we've fluctuated around in recent months.

There's been a lot of whipsaw in this news driven market of late, and it doesn't seem like the recent deficit/debt ceiling deal reached by Congress has quieted things much. Even gold and silver got whacked today. But just look at all that money piling into Treasury bonds.

At a time like this, perhaps it's best to step aside and watch the action from the sidelines. That may not be the proper stance for a short-term trader making hay from all this volatility, or a professional money manager tasked with managing positions on the long and short side, but for now it suits me fine.

In July, I closed out a couple of losing stock trades and haven't put on any new trades since. I've mostly been pruning watchlists, reviewing my trading journals and trading mistakes, running through charts, and reading. A break from trading was needed, and this was the time to do it.

Today, while reading Steven Drobny's Inside the House of Money, I came across our intro quote in an interview with "stock operator" and hedge fund manager, Scott Bessent. On a day like today, you can really appreciate the time honored truths that: 1) being in cash is a position, and, 2) activity (trading) for the sake of activity can be a real hazard to your trading account and your emotional capital.

By the way, the interview with Bessent is a great chapter from Drobny's book. Here is a guy who, amazingly, has worked for or trained under George Soros, Stan Druckenmiller, Nick Roditi, Jim Rogers, and Jim Chanos. It's quite something to not only read Bessent's thoughts on trading, but to hear what he's learned from some true all-stars of the hedge fund world. Check out this book if you're taking a late-summer break and keeping your powder dry as well.

Charlie Rose interviews Barton Biggs (March 9, 2009)

2011-08-01T07:05:00.000-07:00

Charlie Rose interviews hedge fund manager, Barton Biggs (Traxis Partners) for an episode which aired on March 9, 2009.

Yes, that was also the exact day the S&P 500 put in its bottom at the 666 mark, amidst more economic gloom than some of us had ever seen.

Thought it would be interesting to revisit this interview, and while I still don't agree with much of what Barton and Charlie said about the "need" for certain bailout measures and monetary stimulus, it is quite instructive to hear the discussion that took place at this particular moment in time (some might say this is real market and economic history you're watching).

Note that Biggs is rather bullish on stocks in the interview, which, in hindsight, was the right thing to be up to this point. Of course, the two year bull move in shares we've witnessed has been helped along by holding interest rates at historically low levels and employing "quantitative easing" programs designed to keep asset prices aloft.

Still, Biggs makes the sound point that the sharp declines of '08 had occurred in a short timeframe, thereby providing the necessary fuel for a sharp rally (even if only within the context of a bear market). He also compares the "scary" mood of the time with the terrible period surrounding the 1974 market bottom. In fact, he goes on to say that "[negative] sentiment is more extreme than in 1974".

These points are quite similar to those made around the same time by Jim Rogers and Marc Faber, who argued that a forced asset liquidation period and extreme negative sentiment were signs of a potential share rally to come, as well as an entry point for long-term share investors in commodities and certain segments of global share markets.

If you enjoyed this interview, you may also want to check out Biggs' follow up appearances at Rose's table.

Clarification: Email and RSS subscriptions

2011-07-31T21:22:00.000-07:00

Hi gang, just wanted to offer a clarifying note on the Finance Trends blog subscriptions.

I've received a few email requests recently for our "email subscription" list. At this time, we do not offer a site subscription (or any other material) via email.

We do show an email icon under the "subscribe to Finance Trends" header in our top right sidebar, but this is simply a contact email link for our readers' convenience. You may, however, subscribe to our blog feed via RSS and follow our real-time updates on Twitter and StockTwits (which I'd encourage all interested readers to do). This should definitely keep you up to date.

A view of the Finance Trends RSS feed in Google Reader.

I apologize for the misunderstanding on the email link and for any inconvenience this may have caused. Thanks for reading, and we'll see you bright and early next week!

Life imitating The Simpsons: Trillion dollar coin edition

2011-07-29T12:26:00.000-07:00

Thought surely this #trilliondollarcoin thing was a joke, but no. Life imitating The Simpsons, again: http://t.co/hKgQlaQ $$Fri Jul 29 19:09:51 via webDavid Shvartsman
FinanceTrends

Update: For more on this see Credit Writedown's post on the #trilliondollarcoin meme.

Bloomberg profiles Michael Burry on Risk Takers

2011-07-20T13:56:00.000-07:00

Bloomberg TV just aired a special on Scion Capital founder, Michael Burry that is worthwhile viewing for any trader or investor.

If you missed the program, tune in now for a quick primer on Burry's entry into the investing world and the structuring of his now-famous subprime short CDS trade. This is a great story of how one blogger-turned-investor got his start operating a hedge fund and eventually shifted his focus from common stock value investing to diligently uncovering opportunities in the subprime mortgage and credit markets.

If you'd like to get a much more in-depth view of Burry's struggle to stick with his hugely rewarding trade during the height of the real estate bubble, check out Michael Lewis' book, The Big Short.

You'll also want to check out the video of Burry's recent lecture on his "big short" trade and America's financial future at Vanderbilt University.

There you'll find added links to our post on Michael Burry's emergence as a global macro star, plus a great deal of interview material with Burry and author, Michael Lewis (including some Bloomberg interview transcript material you may not have seen). Dig in and enjoy.

US debt crisis is contrived, says Jim Grant

2011-07-18T17:22:00.000-07:00

The US debt crisis is a contrived political showdown, James Grant tells Bloomberg TV. If you want a real crisis, look to Europe, says Grant.

Also up for discussion: the 30 year bull market in US Treasuries and the risks associated with government paper. Plus, the future of monetary arrangements and the gold standard vs. the "Phd standard". Enjoy the clip.

Money

2011-07-13T12:14:00.000-07:00

"But if you ask for a rise / it's no surprise, that they're giving none away." - Pink Floyd, "Money".

Independence Day links: the struggle for liberty

2011-07-04T11:57:00.000-07:00

Happy Independence Day to all!

You may want to check out these excellent links from our past July 4th post on the Declaration of Independence and the struggle for liberty. You'll note the special emphasis on two leading figures in the cause for American independence, Thomas Jefferson and Thomas Paine.

Enjoy these informative and historical links, and have a great July 4th holiday.

Originally posted on July 4, 2010.

These are a few of my favorite blogs...

2011-06-22T12:42:00.000-07:00

OK, I won't hum a few bars from Rodgers and Hammerstein, but I will get right into today's post.

In Monday's wrap up of the AR blogger quiz, I mentioned that one of the desert island quiz questions asked us to name our favorite blog. The exact question was, "if you could only read one blog (not Abnormal Returns) which would it be?".

If you read that post, you know that I picked Kent Thune's blog, The Financial Philosopher, as my desert island pick. What you may not have known is that I had a very hard time picking just one blog to read, and in fact named several blogs as favorites in my original response!

So getting right to it, here are a few of my favorite, "must-read" blogs:

1. First off, if you haven't read The Financial Philosopher, I highly recommend it.

Not only will you find the more recent posts a joy to read, but I think you'll also find that the archived material holds up very well and includes a great deal of original insight and wisdom not only on financial matters, but on life as well. I've learned a lot from Kent's blog and it's a great place to occasionally reflect and exchange ideas (in the comments section) with Kent and his readers.

2. You might have noticed some links to Joe Fahmy's trading blog in recent months, here and on Twitter.

While Joe doesn't have as much time to update the blog as he used to, I still check in for his thoughts on the stock market and on trading. There are some great posts (and videos) on his stock selection methods and trading philosophy here. You'll also find some key interviews with pro traders like Joe's mentor, Mark Minervini.

3. The Tischendorf Letter is another great resource in the world of stock trading blogs.

Not only does editor, Olivier Tischendorf combine technical analysis with macro and fundamental themes, he also serves up some great quotes and excerpts from his favorite trading books. Don't overlook his public chart lists and key interview posts as well.

4. Last, but not least, is the excellent Mises Institute blog.

A font of information and insight on economics and liberty, the Mises blog is also a gateway to the vast library of resources (ebooks, audio, and video presentations) found on the main Mises.org site. Keep this one bookmarked; you will need it (trust me).

And of course, as a student of the markets and of writing, I'm always checking quality blogs whenever I can to get the best available info from my chosen filters. Please visit our blogroll ("Blogs") in the sidebar to find more of the excellent bloggers in our network.

I learn something from all of these sources and I'm pleased to count some of them as my friends. Pay them a visit, read their posts, and if you like what they have to offer, subscribe and let them know!

Abnormal Returns: financial bloggers Q&A

2011-06-20T10:35:00.000-07:00

Last week, while Tadas Viskanta at Abnormal Returns was on a week-long "blog break", AR ran a series of Q&A posts with some key independent finance bloggers.

Since I enjoyed participating in, and reading, the quiz responses, I thought it'd be fun to share these with you here.

1. Desert island blogger quiz - Book recommendations.

Finance bloggers pick their favorite trading and investing books. One of my all-time favorites, Reminiscences of a Stock Operator, garnered the most top choice picks, but I highlighted another trading book.

2. Blogger quiz - Recent book recommendations.

This time, Tadas asks the group for their favorite recently published (post-crisis) book.

There are some interesting selections here. Still, I was a little surprised that no one picked Greg Zuckerman's The Greatest Trade Ever, an excellent account of the subprime mortgage crisis that centered on Paulson & Co.'s subprime CDS short trade.

3. Desert island blogger quiz - Blind trust edition.

Bloggers decide who they'd turn their money over to if they had to put their portfolio into a blind trust. There are some great answers to this question.

4. Blogger quiz - Favorite blogs.

If you could only read one blog (besides AR), which would it be? Tough question. I had a hard time naming just one and offered up several favorites, in spite of the one blog limit. Tune in tomorrow to find out which others I consider essential reading.

5. Desert island blogger quiz - Career change edition.

There was a real common thread among finance bloggers running through this discussion topic. Check out the answers and Tadas' intro explanation to understand why.

6. Blogger quiz - Tadas Viskanta responses.

Turnabout is fair play, right? Tadas answers his own blogger quiz questions in this Q&A wrapup.

All in all, this Q&A was a fun read and a great idea for a post series during AR's brief linkfest hiatus. Thanks to Tadas for including us, and to all the bloggers for their thoughtful answers. Go check out their blogs while you're at it.

MSFT and AAPL: a tale of two tickers

2011-06-14T13:54:00.000-07:00

Who would have thought 10 years ago that Apple ($AAPL), then valued at an $8 billion market cap, would meet, then exceed Microsoft's ($MSFT) $200 billlion market cap by 2011?

We could say so many things about Apple's historic transformation from tech also-ran to re-emergent industry leader in that time. You could also write a book describing Microsoft's eroding dominance and its stagnating shareholder returns in the post-PC world.

Or we could just look at the chart above and know that a picture is worth a thousand words.

Howard Lindzon interviews Mark Cuban

2011-06-13T17:46:00.000-07:00

Could have sworn I posted this StockTwits TV interview with Mark Cuban months ago, but maybe I just retweeted it. In any case, enjoy this laid-back and excellent discussion with the highly visible (and vocal) Mavs owner and entrepreneur.

Entourage guest spots, investing, free agent talks with Lebron, the birth of Broadcast.com and the rise of user-generated web video... it's all here in this interview.

Plus, more from Mark and Howard in this long/short interview segment.

Oh, and congrats to Mark and the Dallas Mavericks on their first NBA championship. The victory is well-earned.

Related articles and posts:

1. 10 Questions for Mark Cuban - Forbes interview.

Features of the Week

2011-06-10T12:07:00.000-07:00

Get set for Friday links in our, "Features of the Week".

1. Jim Rogers: only a crisis can solve US debt problem - WSJ.

2. What Keith Richards' 'Life' as a Rolling Stone tells us about economics - Forbes.

3. An example of why Illinois is screwed up - Points and Figures.

4. The ultimate China fraud linkfest - Abnormal Returns.

5. Was it a "There it was" stock? - Crosshairs Trader.

6. Jeff Bezos on innovation: Amazon is "willing to be misunderstood for long periods of time." - Geekwire.

7. Another story on hedge funds "grabbing land" in Africa - BBC.

8. Ron Paul: more people have died in the drug war than from drugs - Liberty Underground.

9. 2010 Oil story: drawing down the inventories - Gregor Macdonald.

10. Why comedians make great investors - Financial Philosopher.

11. Learn to overcome your obstacles - Kirk Report.

That's all for this week. Enjoy your weekend and keep us on your RSS and real-time radars for more to come.

Thinking out loud

2011-06-09T13:04:00.000-07:00

Funny how Paul Giamatti's career arc has spanned Pig Vomit, Miles, Harvey Pekar & Ben Bernanke. All slightly mad.Thu Jun 09 19:45:08 via webDavid Shvartsman
FinanceTrends

Stealth bull market leader: DTG

2011-06-07T13:54:00.000-07:00

Here's one some of us may have missed in the great Bull Market of Disbelief (2009-present): Dollar Thrifty Auto Group (DTG).

Check out the 3 year pattern on this stock, from the collapse of '08 to the bull market recovery of 2009 and beyond. Yes, you see that chart right. DTG has risen from its early '09 lows below 80 cents to over $81 today. That's not a "10-bagger", it's a 100-bagger, or a 10,000% gain.

I happened to notice this chart while scanning through some names in the diversified services sector today on freestockcharts.com. When I backed up from the daily chart to view DTG on a weekly timeframe, the phenomenal rise and long-term recovery pattern were staring me right in the face.

Here was a name I had totally lost track of for at least the past year or more. I wondered if anyone else was long DTG or even tracking it, as I couldn't recall many mentions of it in my Twitter stream or in the trading blogs I read.

While glancing through the archived $DTG tweets on StockTwits, I noticed some interesting things.

First off, the stock is not one of the hotly followed securities on StockTwits, with only 8 people following the ticker (some hot stocks or futures contracts will boast over 1,000 followers on ST). It is under-followed and probably under-owned among retail investors, although it is very widely held among institutions.

Secondly, the stock has been lifted higher in recent months thanks to a protracted bidding war among major car-rental chains Avis and Hertz. In fact, the two firms have been fighting for DTG since April, 2010. Here's a funny little tweet from Leigh Drogen, way back in September of 2010, which illustrates that fact.

Finally, many of the archived tweets seem to highlight the fact that many of us just plain missed it, or were reluctant to go long after witnessing the first 1,000% advance. A great many also seemed to want to play DTG short-term for swing trades on the long or short side, but few traders offered a verified account of their ownership of DTG over the long haul.

So here's a stealth bull market leader that many of us seem to have missed. Something I found interesting on a day when many of the stocks in my watchlist are chopping around or breaking down. I guess it really does pay to take note of the market leaders, go long, and acquire the wherewithal to sit tight (with proper risk management in place).

Felix Zulauf interview: storm clouds ahead

2011-06-05T11:02:00.000-07:00

FT.com interviews Swiss investor, Felix Zulauf, who sees storm clouds ahead for world markets.

Always worthwhile to hear Zulauf's views on the economy and investment markets. He feels we are entering a rough period ahead for emerging markets as they work to tighten inflation. He also anticipates a double dip in Europe, as well as a "tremendous slowing" in China.

Felix also makes some interesting forecasts on the US dollar, bonds, commodities, and the shape of quantitative easing (QE) to come, which he believes will be global in nature.

Great response from Zulauf when asked about recent boom conditions in Germany: "I like to look forward not backwards". An excellent reminder that markets are forward looking in nature and "always run ahead of the fundamentals".

Did the Recession Ever Really Go Away?

2011-06-03T09:45:00.000-07:00

"Their stupid and profligate stimulus did not work."

That's the verdict of Jeffrey Tucker's new Mises.org article, "Did the Recession Ever Really Go Away?".

As Tucker points out, the massive stimulus programs and bailouts of the past three years (under Bush and Obama) haven't amounted to a hill of beans in terms of actual economic improvement.

Has the average American's lot in life been improved due to these measures? No, but they have helped save some politically-connected institutions (banks, unions, insurers) and given the appearance of government doing something to "help" matters.

Here's an excerpt from that piece:

"The screaming pleas from the political class in 2008 weren't really about finding a cure. They were about saving the top players (banks, unions, insurers) in a system that was built on illusion.

According to official dating, the recession lasted only 18 months, and then recovery began. The belief that we are recovered then became the new illusion, mostly fostered by the injection of phony money and massive spending built on debt. As college grads faced a hostile labor market, as retailers dramatically shrunk inventories, as businesses have closed and closed, as income has shrunk, and as prices have pushed higher and higher, the feeling on the part of most people has been: something is not right...".

Do have a look at the full piece. You'll find some skillfully woven intro paragraphs, thoughts on why the stimulus simply won't work, and a list of suggested reading material on Austrian economic principles and freedom. Pass it on.

Commodities update: May futures performance

2011-06-01T16:10:00.000-07:00

An infographic look into the dark heart of the commodities complex, via Finviz' 1 month futures performance chart (period ending June 1, 2011).

As you can see, May has been no picnic for much of the commodities world. We saw a notable sell-off in crude oil in early May, coinciding with the reported killing of Osama bin Laden.

Speaking of energy, natural gas has shown some strength in recent days. While it was slightly down on the month, the relatively clean energy option for electricity, heating, and transport has moved higher since the recent nuclear catastrophe in Japan.

Some soft commodities, such as cocoa and coffee, sold off or remained depressed.

However, orange juice futures were able to post some nice gains for the month. In fact, along with oats, OJ was one of the top performers among the Finviz-tracked futures performers (up 8.7% for the month).

Of course, anyone keeping up with the markets knows of silver's recent plunge off its April highs. While silver may have to consolidate a bit more before resuming its long-term upward trend, gold weathered the early May rout quite well, and is now within striking distance of its early May high of $1,577.40 an ounce.

That's a wrap. Thanks for checking in. You can follow Finance Trends on Twitter and StockTwits for more real-time info on the precious metals and investment markets.

Fun on Twitter with Joan Jett + upcoming posts

2011-05-30T19:58:00.000-07:00

Just a fun, candid shot of Joan Jett (then of The Runaways) backstage in 1977.

In case you haven't noticed, I'm spending a lot more time on Twitter lately than on the blog. Twitter is fun, it's easy to post quick thoughts & links (on any subject), and with the efficient grouping (via lists and follows) of market participants and favorite bloggers on the stream, it's become my "RSS feed you can talk to".

I'll be posting on the blog a bit more (after hours, or during the day when time allows) in coming weeks. You'll probably start to see more market and trading-related commentary which mirror our real-time discussions on Twitter and StockTwits, as well as our more recent posts on stocks and futures markets.

PS, be sure to visit some of our favorite bloggers in the meantime (see our sidebar "Blogs" list), and check out Brad Elterman's fantastic photo blog while you're at it.

Austrian economics and financial markets: Kevin Duffy interview

2011-05-27T18:41:00.000-07:00

Mises Institute's Jeffrey Tucker interviews hedge fund manager, Kevin Duffy (Bearing Asset Mgmt.) to discuss Austrian economics and navigating the financial markets with an Austrian perspective.

This is a must watch, must hear discussion on basic economic principles and the problems of crony capitalism and the "political economy" that have grown out of the bailouts and stimulus-fueled responses to the 2007-2008 financial crisis.

QE and QE2 have helped spur a two year rally in the stock market, but Duffy argues that these easy money policies have created many harmful unintended consequences. Check out the full interview for insights into how Duffy and his firm use their Austrian viewpoint to analyze economic trends and invest in the capital markets.

Related articles and posts:

1. Mises Circle in Manhattan: audio presentations (Chris Whalen, Marc Faber).

2. Navigating the Financial Markets with an Austrian Compass (w/ Kevin Duffy).

Stock watch: Social media, oil, and uranium

2011-05-19T16:50:00.000-07:00

All anyone wanted to talk about today, it seems, was the LinkedIn (LNKD) IPO and whether or not there is a bubble in social media and tech startup valuations.

It was interesting to see the strength in LinkedIn spread to some of the other names in the social networking arena, such as SINA and QPSA, today.

We'll let you decide whether the LinkedIn IPO marks a Netscape-type event (1995) for social web or a fin de siecle reminiscent of the 1999-2000 dot com bubble peak. One thing is certain, easy money policies did a great deal to fuel deals and share prices in both cycles.

Meanwhile, I decided to look at some of the charts in the beaten down energy and resource sectors. Here are a couple names that caught my eye (no current positions in highlighted names and no personal investing/trading recommendations are intended. Do your own research & manage your own trades wisely).

Hathor Exploration (HAT.TO) is one of the only uranium names in my watchlist showing any strength. The sector has been extremely weak overall in the wake of the Fukushima disaster, so score one for HAT.TO on the relative strength meter at least.

Also been revisiting the smaller oil & gas names in my watchlist. Most of these momentum-driven shares took a big hit once crude oil turned down from its highs in April. Hercules Offshore (HERO) is one name from my oil & gas list that's held up quite well in that time.

One last chart: Pyramid Oil (PDO) is a more thinly-traded O&G stock that was beaten down from its March highs. There might be more downside for this stock in the near-term, but a shelf of support in the 4.50 to 4.70 area is evident on the weekly chart. If we see a bit more volume and follow through on this trendline break, it could signal a much-improved picture ahead for PDO.

So hopefully that gives you an added look beyond the web stocks and fuels some ideas for your own stock screens. As always, make the ideas your own and manage your risk. See you soon & in real-time on the stream.

Michael Bigger on Starting Over

2011-05-13T10:15:00.000-07:00

I'm revisiting Michael Bigger's post on the things he'd do differently if he were to start all over again, professionally. This is a great essay and thought experiment and I wanted to share it with you.

Here are some excerpted ideas from, "Starting Over":

"Education: I would learn from the money makers not the teachers. I would not get an MBA. I would not get a CFA. Actually, through my experience I would plant the seed to develop an education platform at a very early stage in my financial career. Here is what John Templeton had to say about the education system before he passed away. The traditional is toast.

I would learn to write better.

I would start trading my money right away.

I would start a business as early as possible.

I would not build a career; I would build a platform."

If you've read Michael's blog and trading ideas on Twitter, or watched this interview on Michael's "trading recipes", writing, and technology, you'll know that he is constantly incorporating many of these ideas into his trading and business approach.

Go check out the full post at the link above, especially if you are a young person starting out in life or someone who is looking to rethink and start over.

Netflix CEO Reed Hastings on Charlie Rose

2011-05-10T12:00:00.000-07:00

Caught Netflix CEO and founder, Reed Hastings on Charlie Rose the other night.

Great interview, with some very interesting insights on new media business models and the future of "the cloud". In fact, Hastings' comments on the cloud and Amazon's online services seemed to echo this short and sweet post on the cloud's bullish future from Phil Pearlman.

It turns out Hastings was a guest at Charlie Rose's table before, back in late 2005. It will be interesting to check out that interview as well to compare how Netflix and streaming media have evolved since that time.

Commodities rout: evening update

2011-05-05T20:46:00.000-07:00

So by now, I'm sure most of you have digested much of the news surrounding this week's commodities rout.

What started out as a noteworthy plunge in silver, helped along by an 84% increase in margin requirements over the past two weeks, quickly spread across the commodities complex. From gold and crude oil to natural gas and heating oil, few were left unscathed.

Here's a quick summary of the day's events from Bloomberg:

"Commodities plunged the most since 2009, led by oil and silver, and stocks posted the biggest three-day drop since March as selling of energy futures drove down equities. The dollar strengthened and Treasuries jumped.

The Standard & Poor’s GSCI index of 24 commodities sank 6.5 percent at 4:32 p.m. in New York and has lost 9.9 percent this week. Oil tumbled 8.6 percent, the most in two years, to $99.80 a barrel. Silver dropped 8 percent, extending the biggest four- day slump since 1983 to 25 percent."

The article's quoted source went on to describe the selling as a "classic liquidation move in a crowded trade". Indeed, I've seen a fair bit of talk suggesting that margin increases in silver and the accompanying plunge led to forced selling of other assets, including stocks.

I posted this Finviz 1 week relative performance chart of commodities on Chart.ly earlier tonight.

As you'll see, orange juice and 30 year Treasury bonds held their own during this recent decline. Most of the other commodities were not as fortunate, with silver and crude oil leading the declines so far this week.

So far, we're hearing a lot to suggest that this is the start of a needed correction in an overheated commodities sector, rather than a harbinger of a longer-term bear market. We'll keep our eyes peeled and focused on the futures complex in the weeks ahead.

Related articles and posts.

1. Flash crash commodities edition with Greg Simmons & Co. - MissTrade.

2. What does Jim Rogers think of the silver crash? - Credit Writedowns.

Stockbee interview with Mark Minervini

2011-05-03T14:16:00.000-07:00

Pradeep Bonde at Stockbee has posted an interview with "Market Wizard", Mark Minervini.

For those who don't already know, Mark is something of a present-day all-star stock trader and, more recently, a stock trading educator. In 2000, Jack Schwager profiled Mark in his book, Stock Market Wizards, thanks to his largely self-taught skill and the trading record he had amassed up to that point.

Here's an excerpt from Stockbee's interview with Mark:

[SB]: "You often say the individual investor/trader has a great advantage over the Professional manager. What gives the individual investor the edge?

[Mark Minervini]: The biggest advantage that the individual investor has is control. With today’s technology, most traders can have the same tools as a pro. However, the individual trader has a tremendous advantage over professionals like mutual fund managers, mainly because they have greater liquidity and speed.

This enables the individual to be more concentrated in a smaller list of well-selected names at lower risk because the individual can utilize stop-loss protection with little or no slippage. The individual, with a faster response time, can be more patient and strike at only the most opportune moments, which is the best advantage of all.. "

After reading Stockbee's interview, be sure to check out Joe Fahmy's interview with Minervini for additional insights into Minervini's trading philosophy and what Fahmy learned from working with him. Excellent stuff.

Keep talking, Ben: US Dollar update

2011-04-28T08:55:00.000-07:00

Listening to the Flamin' Groovies as the dollar burns. $USDXThu Apr 28 14:06:14 via webDavid Shvartsman
FinanceTrends

This is what's going down. Here's the weekly chart on the dollar index:

Wouldn't be surprised to see a new low on the index shortly, followed by a consolidation period and a months-long rally in the USDX. That seems to be the pattern, anyway, over the last several years. We'll be watching.

The Zurich Axioms - Scribd Trading Books

2011-04-25T13:56:00.000-07:00

Recently added Max Gunther's book, The Zurich Axioms to our Scribd Trading Books collection.

My interest in this book was piqued when I noticed some of its excerpted quotes and principles of trading shared on Olivier Tischendorf's and Michael Covel's blogs.

Here's one of my favorite trading axioms from Covel's list, "On Hope":

"When the ship is sinking, don't pray. Jump."

Although I'm trying to make my way through a few other books at the moment, I had to stop and add Axioms to the collection for future reading.

You may read it here (embedded below on the blog for our RSS readers) or check it out in the e-book collection shelf. You can also find The Zurich Axioms on Amazon.com. Enjoy, and see our related posts section for more classic trading books.

Zurich axioms

Related articles and posts:

1. Trader Vic and Market Wizards on Scribd.

2. Scribd collection of classic trading books.

New music on Trader Rock

2011-04-24T15:20:00.000-07:00

New stuff on Trader Rock, the full-time rock n' roll jukebox:

I've posted some new music and documentaries for your listening and viewing pleasure. New jukebox selections from David Bowie, Kate Bush, OMD, Joy Division, The Move, The Smiths, Suede and more are featured in our latest posts.

You can also take advantage of continuous play rock with the Trader Rock YouTube playlists; all our hits are compiled in sequential order for non-stop rock n' roll fun. Perfect for those who want to rock out at night, or while you work (researching, trading, etc.) at your desk!

Enjoy, and check out our links section for more great music blogs & online radio resources.

Wealthtrack interview with James Grant

2011-04-20T13:15:00.000-07:00

Grant's Interest Rate Observer founder, Jim Grant sits down with Consuelo Mack for an interview on WealthTrack.

Topics include: the rising cost of living and commodities, the US dollar's decline, and the Federal Reserve's targets for "desired inflation". See what Grant has to say about all this, and more, in this discussion.

By the way, I don't think anyone who caught Grant's interview or Michael Burry's recent talk on America's financial condition was surprised by S&P's recent warning on America's AAA debt rating. Only the timing of the outlook revision might have come as a surprise, and even that may have been telegraphed to market participants earlier.

Related articles and posts:

1. Jim Grant and John Hathaway chat with Charlie Rose.

2. Jim Grant's latest interview with King World News.

3. Lew Rockwell and Jim Grant discuss Austrian economics, gold standard.

Michael Burry talks "Big Short", America's future at Vanderbilt

2011-04-16T09:08:00.000-07:00

Michael Burry, the Scion Capital founder and subprime speculator profiled in Michael Lewis', The Big Short, talks to Vanderbilt students about his now-famous subprime CDS short trade and the perils of America's financial future in this video lecture.

Last week on Twitter, I retweeted DDI's notes on Michael Burry's talk, which gave rise to hopes that video of this talk might soon be available. Indeed, that video is now here and it has been making the rounds over the last few days.

Be sure to check DDI's post for comments from the Q&A (Burry's thoughts on farmland and capitalist innovation in Silicon Valley) that might have been edited out (?) of this video.

Burry's talk adheres to a script early on, but as he warms up near the second half of this presentation on the causes of the housing collapse and the financial crisis, the vibe is a bit more loose and the information presented is excellent throughout.

Watching this clip, I get the feeling that we are witnessing a first-rate historical commentary on the pre and post-crisis environment. If economic historians don't look back to Burry's talks, or Tom Woods' analysis of the crisis, they'll be doing everyone a huge disservice.

If you want to know a great deal more about Michael Burry's investments and his views on America's current cultural and financial condition, check out our posts in the section below. Lots of valuable info, including an unedited Bloomberg interview transcript, will be found here.

Related articles and posts:

1. Michael Burry: macro star? (Bloomberg interview transcript) - Finance Trends.

2. Michael Burry bullish on farmland & gold (Bloomberg) - Finance Trends.

3. Michael Lewis on Charlie Rose: The Big Short - Finance Trends.

Interview with futures trader, Peter Brandt

2011-04-15T12:40:00.000-07:00

Mercenary Trader has been posting segments of an in-depth interview with Peter Brandt, trader and author of the recently published, Diary of a Professional Commodity Trader.

As I recently started reading Brandt's new book (which I'll try to review in the near future), and have been following him on StockTwits, I'm interested to hear more of his thoughts on trading and risk management.

You can check out the first few sections of MT's interview with Peter Brandt here at Peter's site, and check in with either blog for the forthcoming final part.

Update on the S&P 500 $SPX

2011-04-12T13:00:00.000-07:00

This SPX daily chart should serve as an update to our February post, which highlighted a new weekly high in the S&P 500.

Since that time, we've seen some chop in the stock market as the SPX worked below, and back above, the magic line around 1,311. We saw an 85+ point rally off the March low near 1,250 on the S&P and have since sold off from the rally highs in early April.

Here's an updated view of the weekly S&P 500 chart:

As we enter the 1st quarter earnings season, I'd like to highlight two posts from Joe Fahmy and Olivier Tischendorf on the current state of the market.

As you'll note from their updates, neither trader is in a mood to put on new positions here. Rather, they remain in a patient "wait and see" mode as they gauge the strength of this market. Check out their thoughts in the links above.

What will historians say about us?

2011-04-11T13:21:00.000-07:00

Great quote from Umair Haque:

I have a hunch. The puzzled historians of the 23rd century will say: "Why did they let sociopaths, crooks, and narcissists run their world?"Thu Apr 07 16:48:22 via TweetDeckumair haque
umairh

Hedgeye on government shutdown

2011-04-07T13:07:00.000-07:00

Must read note from Keith McCullough at Hedgeye on the government shutdown:

"Finally, we’re here. This week we’re finally going to see US Professional Politicians face the door that’s closing on their conflicted and compromised careers of debt-financed-deficit-spending. This isn’t the time to give into their fear-mongering. This is going to open he door for a generational opportunity in America. This is great news.

On Friday, the stop-gap bill to keep the US Government open for business expires. With $14,272,778,776,442 in US Debt + another $55,800,000,000,000 in unfunded Medicare and Medicaid liabilities, I say shut these politicians down. The biggest risk to America today isn’t what’s happening in the Middle East or Japan – it’s the 112th Congress..."

Keith just linked to this Monday research note on Twitter and I had to post it here. Hope you'll take a moment to read it and pass it along.

Michael Steinhardt talks Buffett, America with CNBC

2011-04-05T18:54:00.000-07:00

Legendary hedge fund manager, Michael Steinhardt has a few things on his mind and he shares them readily in this interview with CNBC.

A few highlights from Steinhardt's chat with the CNBC crew:

Hedge fund management is not the elite business it once was. Managers today content with low double digit returns, versus emphasis on true performance and 25%-40% annual returns in Steinhardt's days.

Asked if he could repeat his performance today, Michael demurs, "I don't know". He notes that magnitude of funds involved in hedge funds is much larger today. Emphasis has shifted to making money off a large asset base, as opposed to performing for your investors.

You don't have to do what everyone else is doing. You do need to understand the way in which your perspective is different than the world's (your edge).

Steinhardt is concerned about savers (old folks and retirees) getting shafted by near zero interest rates and inflation. This is a terrible situation for Americans.

Buffett's carefully crafted PR persona and his philanthropy-in-one-fell-swoop approach are "worth reflecting on".

Superficially, the United States is doing okay. Steinhardt looks at the inflation picture, the valuations in the stock market, and America's economic strength and its cultural standing in more depth.

Seems a lot of the comment surrounding Steinhardt's interview today focused on the Buffett side of the equation (especially given the forum; CNBC is Buffett ass-kissing central).

While it is interesting to hear someone publicly question Buffett's "PR" persona and his philanthropic gestures, I'm actually more interested to hear Steinhardt's take on the economy and the reality of inflation, as well as how that affects the average person in America today.

This rich guy gets it - why do all the pointy-headed academics have such a hard time voicing these simple truths (maybe because they're paid to do the opposite)?

Finviz 1 month futures performance chart

2011-04-01T12:58:00.000-07:00

Keeping it short and sweet. Here's a chart snapped earlier today, showing the 1 month relative performance view for futures tracked by Finviz.

Natural gas, silver, and live cattle lead the gainers column. Cocoa, Nikkei, and orange juice futures put in the worst performance over the past month.

Looking over the full chart, it seems that livestock and energy (crude oil, nat. gas) had a pretty good month, while softs (orange juice, sugar, coffee), metals, and grains tended to be laggards in March.

Who knows what April will bring? One thing's certain, we'll be watching.

New viewing options for Finance Trends readers

2011-03-31T19:05:00.000-07:00

Blogger has introduced some new viewing options for blog readers and I wanted to share these with you.

In addition to our regular site layout, you can now view Finance Trends Matter in five new formats called, "dynamic views" for readers.

While I thought this would be a gimmicky style option, it turns out that the new views are pretty sleek and I imagine they'd be great for mobile web readers and iPad users. Here's one format I particularly liked, called "flipcard".

As you can see, this view contains all our recent posts and I like they way the images from certain posts stack up with neighboring post titles. Pretty sharp, actually.

Take it for a spin. You'll find a drop-down bar that lets you easily navigate the five viewing formats to find the one that's right for you.

Weekly futures chart: Trend in oil prices

2011-03-29T12:16:00.000-07:00

Taking a gander at the longer-term trend in crude oil prices via this Finviz weekly futures chart.

You can plainly see the bull move of 2007-2008 and the ensuing correction (plunge) from $140 that followed here. Then we see the bottoming process and rally off the early 2009 lows, when crude oil traded near $30 a barrel. The uptrend of the past two years has taken us back above $100 a barrel.

You'll also notice the COT (commitment of traders report) data below the price chart. It seems the commercial hedgers are the savvy players in the oil market. Their relatively infrequent net long exposure seems to occur near cyclical bottoms in crude oil prices. Of course, their net short positions tend to increase as the price of oil trends higher.

Perhaps some of our commodity-savvy readers can fill us in on any useful ways to read & use the COT data. If you have some helpful insights, please add them in the comments.

Trading lessons from Nicolas Darvas

2011-03-26T08:44:00.000-07:00

Charles Kirk recently re-posted a very worthwhile rundown of trading lessons from Nicolas Darvas.

Here is an excerpt from that piece:

"Nicolas Darvas has inspired traders for many generations. His book, “How I Made 2,000,000 in the Stock Market” is one that you’ll find on many recommended reading lists including my very own. While some have argued that much of Darvas’ success had to do with lucky timing, his books are still widely read and for good reason.

A lot of traders can identify easily with Darvas because he went through the process of learning how to trade much like most people do today as he first began by searching for the “secret” to making money in the market. And, just like all of us have found, after finding no success from trading on the stock tips of others including brokers and expensive newsletters, Darvas figured out that he ultimately had to develop a trading system on his own..."

Check out Kirk's notes on Darvas' trading approach and the lessons gleamed from his famous book. This is a great rundown of the wisdom found in Darvas' personal approach to trading the stock market.

For those who'd like to read How I Made 2,000,000 in the Stock Market, you can find it at Amazon or read it online, here in the Scribd Trading Books collection.

Related posts:

1. What makes a great trader? Managing risk - Finance Trends.

2. Interviews with Nicolas Darvas - Maoxian.

Interview with Michael Bigger, trader & author

2011-03-23T11:30:00.000-07:00

Trader and author/blogger, Michael Bigger of Bigger Capital offers his thoughts on "trading recipes" and collaborative communities in this interview for The Trading Elite website.

Having read some of Michael's posts and thoughts on algorithmic trading and self-publishing, I was interested to hear more about his entrepreneurial trading efforts and building creative collaboration networks.

Here are some key takeaways from the discussion:

Michael talks about getting started in algorithmic trading. Start young, build a simple framework and improve it as you go over time. Start learning & experimenting as early as possible.

Develop some "trading recipes" with your algo experiments. You can learn more over time and try to scale your best trading ideas.

There are creative people who can help you develop programs and teach you more about trading. Michael wants to use the power of the internet to reach out to people and build collaborative trading communities.

Technology available to individuals now in many ways surpasses what Bigger had while trading billions at a large bank 10 years ago.

Wealth in finance will flow increasingly flow to those who are able to interpret info better than others. Filtering info and connecting important ideas & concepts is key for the future.

There is this pool of talented individuals who remain untouched by the teachings, dogma of elite schools. These are the people you want to reach out to and collaborate with.

Blogging, writing ideas down, and communicating with other traders and programmers via Twitter and social media is essential. You never know who you will meet or what will come out of it.

Hard work and long hours are key to Bigger's success, but he views this as worthwhile and just a part of something he loves to do.

Definitely a worthwhile chat. Check out the full interview, I think you'll enjoy it too.

Recap: Sunday $Macro chat on StockTwits

2011-03-21T08:59:00.000-07:00

Last night on StockTwits, the Sunday $Macro gang convened for a global macro chat in 140 characters.

I hosted the chat, and with the help of some Sunday macro regulars and some new faces, the discussion was rolling in no time (see screenshot below).

Here's a partial recap of some important themes and debate points from our macro discussion:

Early on the discussion centered around Japan and the currency interventions designed by the G7 nations and BOJ to make the Yen cheaper. As I was not following the currencies closely, it was good to have the other stream members fill me in and offer their views on the likely impact of the recent Yen strength on Japan's economy.

The Yen discussion carried over into a thread on Japan's rebuilding efforts, and how a "repatriation of assets" held abroad might bring renewed Yen strength. Some debated the effect (if any) Japan's investors would have on global stock and commodity markets.

Jack Barnes offered up the view that Japan would drive "an increase for refined hydrocarbons worldwide" as it sought to restock and repair its economy.

Some debate followed on various beneficiaries in Japan's rebuilding phase. LNG, shippers, copper, and timber were some materials and sectors thought to offer upside in coming weeks and months. Demand for cotton was also discussed briefly on the stream.

We discussed the media's coverage of the nuclear crisis in Japan. I highlighted James Altucher's recent post on the subject and asked the stream participants if the threats from this disaster were being over-amplified by the media. Some discussion on risks of nuclear power and plant siting ensued. Some stream members also highlighted the risks to food and the latest movements in grain prices.

Our chat was moving along so well that some of the stream participants moved to keep chatting beyond the conventional 1 hour time slot, so we continued the discussion ("$macro overtime") for another 30 minutes. I cannot recall the last time this happened. It was great to see the discussion take off and branch off into many smaller side discussions on a variety of topics, including geopolitical events, war, and energy issues.

Lastly, I'd like to thank all the regular and newer $Macro 140 participants for their insights and questions on the stream. It's been great reviving the spirit of the old Sunday global macro chats (hosted by Gregor Macdonald) with you, and I'd especially like to thank Jim Gobetz for his help in bringing these discussions to life during the past few $Macro 140 sessions.

I'm hearing that StockTwits TV will be producing a new $Macro show with (I believe) Jack Barnes and Robert Sinn. I will be sure to tweet the details of this new program when I have them. See you on the stream!

Joe Fahmy interviews Market Wizard, Mark Minervini

2011-03-11T13:39:00.000-08:00

Wanted to share this excellent video chat on trading and the stock market with you. Joe Fahmy interviews his trading mentor, Mark Minervini of Stock Market Wizards fame.

Mark and Joe both maintain a presence on Twitter and StockTwits, so it's been rather interesting to get a closer look at some of their thoughts on markets and trading through their real-time updates.

In this interview, Joe talks with Mark Minervini about his trading philosophy and the importance of blocking out meaningless distractions when focusing on one's trading strategy. This is a great discussion, and it serves as a very good learning opportunity for stock traders.

Check it out, and when you're done, take advantage of some of the other archived posts and trading videos on Joe Fahmy's excellent site.

Dana Galante on the value of auditing firms

2011-03-08T10:24:00.000-08:00

Currently rereading Jack Schwager's Stock Market Wizards and I came across a very illuminating excerpt from an interview with short-seller, Dana Galante.

Had you read Galante's interview back in 2000, especially her comments on the value of auditing firms and the discretion banks and fund managers had in valuing illiquid investments, you might not have been surprised by subsequent events in our capital markets (read: Enron, Arthur Andersen, The Financial Crisis of 2007-2009, and so on).

Here's an excerpt from Schwager's chat with Galante in which she explains how a former boss was hiding trading losses from investors by marking up the value of illiquid private company investments in the fund's portfolio:

"JS: It almost sounds as if he was gambling with the portfolio.

DG: It sure appeared to be gambling. Looking back, it seemed that he tried to hide these losses by marking up the prices on privately held stock in his portfolio. He had complete discretion on pricing these positions.

How was he able to value these positions wherever he wanted to?

Because they were privately held companies; there was no publicly traded stock.

Is it legal to price privately held stocks with such broad discretion?

Yes. In respect to private companies, the general partner is given that discretion in the hedge fund disclosure document. The auditors also bought off on these numbers every year. He would tell them what he thought these companies were worth and why, and they would accept his valuations. They were these twenty-two-year-old auditors just out of college, and he was the hedge fund manager making $20 million a year; they weren't about to question him.

Another hedge fund manager I interviewed who also does a lot of short selling said that the value of audits on a scale of 0 to 100 was zero. Do you agree?

Yes.

Even if it's a leading accounting firm?

Oh yeah."

Now this type of exchange may not come as a surprise to readers in 2011, but I can assure you that plenty of people were shocked and caught unaware by these realities back in 2001-2003 and once again during the recent financial crisis.

So I guess the moral of the story is, do your own thinking and don't rely on the word of prestigious auditing firms and conflicted ratings agencies. Always do your own homework and try to understand how "business as usual" at the supposed safeguard firms can lead to disastrous results for those caught unaware.

What makes a great trader? Managing risk

2011-02-25T10:32:00.000-08:00

Found these excellent comments (one, two) on trading from Fullcarry and had to favorite and share these tweets.

One of the best traders I ever met was never right.Fri Feb 18 20:17:18 via TweetDeckEd Bradford
Fullcarry

It was one of the few woman traders I ever worked with. She just new how to trade and manage positions, but was terrible at calling things.Fri Feb 18 20:20:06 via TweetDeckEd Bradford
Fullcarry

Amazing how quickly these pearls of wisdom can dissipate in the real-time information ocean of Twitter if you don't happen to spot them at the right time.

Incidentally, this is why I try to favorite (Twitter's bookmark function) tweets and check up on my favorite Twitter lists. You never know what you'll find, or what you might have missed if you didn't happen to catch it in your stream. Wish Twitter would improve its archived search features so users could easily uncover more great information like this, but that's a topic for another day.

Back to Fullcarry's notes: what's amazing about this particular insight on trading is that it goes against the grain of conventional thinking on successful trading and investing.

So many outsiders, and many trading books and programs aimed at a mass audience, operate on the assumption that you need to aim for a high percentage of winning trades ("high probability outcomes") or that you must be right most of the time to make it as a trader.

As Fullcarry tells it, just the opposite may be true. You don't have to be right on all your calls (or even half of them) to be a profitable trader. You do have to know how to manage your trades and your risk.

After I had saved these tweets last week, I happened to notice a great post by Darvas Trader that ties right in with Fullcarry's message on managing trades & risk. It's called, "The Dirty Little Secret of Successful Trading" and it makes a similar point about relying on winning percentage vs. managing risk.

Quoting Darvas Trader:

"Risk management is the single biggest determining factor in the long-term success of a trader."

Great study material for traders and investors who are learning to apply some form of risk management to their trading or investing method of choice.

Of course, you could always go the big-shot fund manager route and tank your investors' returns (by refusing to take losses and managing risk) after a big winning streak, but maybe the disciplined approach is more useful for those of us who aren't in the media spotlight.

Simplify: a Lesson from the Bad News Bears

2011-02-24T16:18:00.000-08:00

Watch coach Leak's instructions to pitcher, Carmen Ronzonni. Sometimes we make things harder than they need to be. Simplify.

Russia Forum 2011 w/ Nassim Taleb, Marc Faber

2011-02-22T12:04:00.000-08:00

Russia Forum 2011, which recently took place in Moscow, featured a global investing outlook panel discussion which included famed investors and commentators, Nassim Taleb, Marc Faber, and Hugh Hendry.

Also on hand at the forum were economist, Nouriel Roubini, strategist, Russell Napier, and a panoply of international investors and business leaders. You'll find Roubini and Napier adding their thoughts in the outlook panel video above.

There was also a rather interesting panel, featuring Faber and Taleb, entitled, "Is Russia the Best or Worst in BRIC?".

As you'll surmise from the title, it's a panel debate on the strengths and weaknesses of each of the large BRIC (Brazil, Russia, India, and China) nations, with added focus on host country, Russia. So is there a strong case for investment in Russia at this time?

This conversation is worthwhile not only for the contributions from the aforementioned panel stars, but also due to the comments from other panelists and some key questions from the audience.

Pay special attention to Mario Garnero's comments on the effects of Brazil's past inflation on its middle class (this is important for those of us in QE, deficit-land US), as well as the questions on Russia's future from the native conference attendees.

If you'd like to take a look at last year's lively panel discussion and judge the panelists' comments against what took place in 2010, check out our related post links below.

Related articles and posts:

1. The Russia Forum 2011 - Russia Forum.

2. Panel discussion from Russia Forum 2010 - Finance Trends.

Steve Cohen on trading, global macro

2011-02-17T13:28:00.000-08:00

If you caught our last post on Steve Cohen's ISI chat with Paul Tudor Jones (coverage courtesy of Dealbook), it's highly likely that you clicked through to read the details of Steven's interview.

Here's one item from that discussion that really grabbed my attention, Steve Cohen talking global macro:

"...Mr. Cohen, who said probably 25 percent of his investments were made outside the United States, has been emphasizing to his traders that global macro themes are more important than ever in investing.

For this reason he went to Davos, Switzerland, last month for the World Economic Forum and said that he found “the development of the next phase of the consumer economy in China is very intriguing.” He recognized that there “could be more situations like Egypt” and “you have something going on here that could be a tinderbox.”".

This piece of info really jumped out at me for a few reasons.

Firstly, as far as I know, Cohen has not been identified as a global macro trader in the past. SAC Capital seemed to grow from Cohen's roots in proprietary stock trading, with SAC's traders eventually taking on a larger role in fundamental analysis as time went on.

The fact that such a prominent, fundamental and technical-driven US stock trader is now stressing the importance of global macro themes and their influence on markets is quite noteworthy.

His recent comments to PTJ on the firm's growing exposure to international investments were also touched on in an earlier, 2008 interview with AR:

"...How much does SAC invest outside the U.S.?

[SC] Probably 15 to 20 percent of our activity is outside the U.S. There’s a lot of opportunity for growth in both Europe and Asia. The game is changing. Stock markets are starting to develop all over the world, and that creates opportunity...."

This brings to mind two separate interviews, with Passport Capital's John Burbank and California investor Michael Burry, that we shared last fall in our global macro post series. Both stressed the importance of international investing and the profound influence that global macro themes now have over US markets.

The observations made by Burry and Burbank were soon echoed by well-known hedge fund manager, David Einhorn, who noted the shift that had occurred in his investing style due to the impact of big picture, macro trends.

These interviews are a rare glimpse into the thinking of some of our most astute investors, and are all must hear/must read material. Hoping you will be informed by, and profit from, them.

Related articles and posts:

1. Must hear interview with John Burbank - Finance Trends.

2. Michael Burry: an up & coming macro star? - Finance Trends.

3. Macro themes dominate investing world - Finance Trends.

SAC's Steve Cohen opens up to Paul Tudor Jones

2011-02-15T18:03:00.000-08:00

SAC Capital chief, Steve Cohen opens up to fellow hedge fund legend Paul Tudor Jones in an ISI conference chat that was closed to the media, but reported on by Dealbook.

Here's the 411 from Dealbook:

"The founder of SAC Capital Advisers, the $12 billion hedge fund in Stamford, Conn., sat for a rare wide-ranging interview with Paul Tudor Jones, another hedge fund manager, where he discussed his favorite stocks and a whole lot more. The interview was part of a two-day conference at the Waldorf Astoria hotel in Midtown Manhattan sponsored by ISI, the Wall Street research firm...

Other than complaining about his bad back, Mr. Cohen is said to have appeared at ease during the hourlong conversation before a packed crowd. Mr. Jones, who joked that he was playing the role of Charlie Rose, pressed Mr. Cohen on a variety of topics but did not — no surprise — ask questions about the government’s insider trading charges against two of his former traders.

Mr. Cohen talked about how he got started as a trader, reading the stock tables in the daily newspaper as a child and hanging around the local brokerage firm near his house in Great Neck, N.Y. There “was something in my blood, something that I loved” about trading that has stayed with him... ".

This discussion must have been something to witness in the room. I'm just glad Dealbook has provided notes on this little chat between two modern-day trading legends. Check this one out, gang.

Related articles and posts:

1. Bloomberg profiles SAC's Steve Cohen - Finance Trends.

2. Paul Tudor Jones on trading macro - Finance Trends.

Alphatrends on headline noise and managing risk

2011-02-14T12:16:00.000-08:00

In case you missed it, Brian Shannon's weekly market wrap from February 11 was a very worthwhile lesson in markets indeed.

Check out Brian's video and pay special attention to the comments on the market's reaction to geopolitical events, headline noise, and managing your risk in trading. A must see segment for all traders and investors.

Related articles and posts:

1. Howard Lindzon interviews James Altucher - StockTwits TV.

Features of the Week

2011-02-11T10:23:00.000-08:00

It's been a while since we compiled a Friday Features linkfest, but we've got some great posts and news items to share with you today. Set a spell and enjoy our "Features of the Week".

1. Wikileaks confirms what we already know: Saudi oil reserves are overstated. (Al Jazeera).

2. Egypt unrest: how Mubarak's end came. (BBC News).

3. Mubarak resigns, but will he hold on to his estimated $70 billion stash? (FP blog).

4. The Perils of Intervention and a humbler American foreign policy. (C4Liberty).

5. An interview with Pimco CEO Mohamed El-Erian. (Der Spiegel).

6. Inflation is so much worse than we're told: Chris Martenson. (Financial Sense).

7. Q&A: Michael Lewis on the politicians that sank Ireland. (Vanity Fair).

8. Shades of 2006? Exchange fever takes hold as LSE-TMX merger followed quickly by NYSE- Deutsche Borse deal. (FT.com)

9. G.C. Selden trading psychology: hunches and gut feelings. (Tischendorf Letter).

10. Howard Lindzon interviews red-hot blogger, James Altucher. (StockTwits TV).

You can follow all our updates and tomfoolery in real-time via Twitter and StockTwits, or subscribe to the Finance Trends RSS blog feed and stay up to date with all our posts.

Have a great weekend.

New weekly high on S&P 500 $SPX

2011-02-09T10:25:00.000-08:00

P/E multiple expansion, cheap money via QE, bullish psychology & social mood...whatever it is that's driving the market, US stocks continue to climb higher.

Today the SPX is down a bit midday, but as you can see from the weekly chart posted above, we're seeing a fresh weekly high in the S&P 500 as the index moves above its August 2008 resistance at the 1313 level.

Your take on the continued bullish action?

Is QE fueling commodity, food price inflation?

2011-02-04T10:19:00.000-08:00

Is the Federal Reserve's quantitative easing policy fueling inflation in asset prices, including the price of commodities and foodstuffs?

That seems to be the big question in recent days, as civil unrest in Egypt and in other parts of the Middle East and Asia demonstrate how long-simmering tensions can quickly boil over when grain prices rise and the spectre of food shortages looms over a population.

The recent situation recalls the commodity and grain price surges of 2007-2008, when food stocks were diminishing and shortages and worries over food riots were a global phenomenon (and news item). Then, as now, grain ethanol and "excess speculation" were offered up as contributing causes to rising food prices.

Image via: FAO Food Price Index.

So what about the role of quantitative easing and increased money creation by the Fed and other central banks? Might that sort of liquidity operation be fueling a rise in asset prices across the globe?

Or are prices rising due to demand from increased populations and rising wealth in emerging nations as Fed Chairman Ben Bernanke would have it?

Last night, while reading through some interesting reactions to this topic on Twitter, I decided to do a little quick research and see what sort of answers I could find. As rising food prices and global inflation have been a big theme with economists and macro analysts in recent months, it didn't take long to find some worthwhile articles and posts addressing this topic.

One particularly interesting article from October 2010 anticipated a great deal of what we currently see unfolding in the world. Here's an excerpt from, "Bernanke sets the world on fire":

"...In 2007-2008, Bernanke's loose monetary policy fueled unprecedented commodity price inflation. But Bernanke put the blame on China and on oil producers.

So far in 2010, the price of crude oil has jumped by 27%, of corn by 63%, of wheat by 84% , of sugar by 55% , and of soybeans by 24%. Without the Fed's unprecedented loose monetary and near-zero interest rates, it would have been highly unlikely for commodity prices to increase at these alarming rates...

...The frightening food price inflation has raised the specter of another food crisis and food riots... Since liquidity for commodity price inflation is abundant and cheap, food price inflation could run up, stall world economic growth and spread social unrest. "

Certainly many other factors, including the use of food for ethanol, growing populations, increasing standards of living (changing diets), weather events, and gradual loss of prime arable land to urbanization are playing a large role in ongoing food price rises.

Still, is it possible that the role of cheap money flowing into asset markets (including commodities) is an under-acknowledged spark fueling higher prices?

Related articles and posts:

1. Bernanke says policies boost stocks, not food prices - Barron's.

2. Countering the myth that "World is running out of food" - Big Picture Ag.

3. FAO food price index and reports - United Nations, FAO.

Jim Simons of RenTec speaks at MIT

2011-02-02T19:45:00.000-08:00

Jim Simons of Renaissance Technologies gives a talk at MIT about his background in mathematics, how he got his start in business, and the "secret sauce" of running a hedge fund with a quantitative bent.

As Paul Kedrosky notes on his blog, it's not often that you get to hear from Simons, so have a look at this video and hear what he has to say about his work, the importance of getting young people involved in math and science, and following your entrepreneurial drive.

Marc Faber on Davos, "dishonest" Obama (Bloomberg TV)

2011-01-26T16:28:00.000-08:00

Newsy: Marc Faber talks to Bloomberg TV about Davos, the disastrous 1st term of our dishonest President Obama, the illusion of deficit spending prosperity, and more.

If you're a regular here, you already know how much we love the straight-shooting Dr. Faber. This latest chat is one more example of Faber's natural ability to cut through the propaganda and nonsense and get straight to the heart of matters.

Have a listen and catch Marc's latest thoughts on the US and emerging markets, the "global agenda setters" of Davos, bonds, inflation, and gold. Enjoy.

Related articles and posts:

1. Marc Faber: final crisis yet to come - Finance Trends.

2. Jim Rogers at Reuters 2011 Outlook Summit - Finance Trends.

Speculation drives human progress

2011-01-25T12:57:00.000-08:00

Speculation, in all its forms, is what drives human progress. This is the core message behind Michael Bigger's recent post, "The Desire to Speculate".

An excerpt from Michael's essay:

"It is said that the desire to speculate is very strong in the American people. That is why our country has made greater progress than any other country in the world, because progress is the result of speculation. We are not referring merely to stock speculations, but to the word in its broadest sense. Every new undertaking is a speculation.

An inventor speculates on what he is going to invent. Often such speculations result in losses, because many inventors, or would-be-inventors, never accomplish very much. They spend their money, time, and efforts, and probably live years in poverty, and then if the invention is not profitable, they are heavy losers.

It is the same thing with every new business. It is purely a speculation..."

This is a great point, and one that is greatly misunderstood by some ignorant politicians, journalists, and everyday people who refer to "speculators" as wicked people who somehow conspire to drive prices of shares or commodities higher or plunge them lower.

Any human activity that requires foresight and planning and the assumption of risk (of money or labor lost) is a form of speculation. Thomas Edison speculated with his toil and sweat as he sought to perfect and market yet another invention, never knowing for sure whether it would succeed or fail in the end.

Venture capitalists speculate with their partners' capital when they back a new technology firm or a startup that makes electric cars.

Traders may speculate with their own money (and emotional capital) that some catalysts will serve to send prices of share "x" or commodity "y" higher or lower in the days and months ahead.

In other words, we speculate when we imagine something new or create some new business or invention or vote with our dollars on future outcomes in the marketplace.

As Bernard Baruch famously pointed out, the word speculate comes from the Latin speculari, which means "to observe" or "to look (spy) out". This is the essence of speculation, to look out towards a great distance and try to observe future developments.

However, there are differences that separate the successful speculator from the wreckless gambler. As Michael mentions in his post, most people think of all the profit to be made in a speculative venture, instead of focusing on the risk of loss:

"...It does not pay to take big risks. That is true in stock speculating the same as in any other undertaking. Most speculators are keeping their minds all the time on the possibilities of profit and not thinking about the possibilities of losing.

There is an old saying, and we believe a very true one, that a man who speculates with the idea of getting rich quickly loses all his money quickly, but that the man who speculates with the idea of making a fair return on his money usually gets rich..."

Do you speculate with an eye towards big profits? How many of us dream of returns while neglecting the discipline of adhering to sound principles of risk management? What can we do to sharpen our judgement and improve our odds of success in any form of speculation, be it a new business venture or a stock trade?

Sebastian Mallaby interview: future of hedge funds

2011-01-21T05:35:00.000-08:00

A few weeks ago on Twitter, we shared this interview with Sebastian Mallaby, who speaks to UC Berkeley about the future of the hedge fund industry for their "Conversations with History" series.

For those who may not know, Mallaby is the author of a recent book on hedge funds and the financial crisis called, More Money Than G-d: Hedge Funds and the Making of a New Elite. In this discussion, Sebastian

One point that really caught my interest early on in the interview is an anecdote Mallaby shares regarding Paul Tudor Jones and the factors he attributed to his own success as a trader and hedge fund manager.

As Mallaby tells it, PTJ's explanation for his success is not at all the real reason why he is successful, but it is part of a common theme of professionals misattributing causes to explain their colleagues' and their own successes.

Enjoy the discussion; it should prove especially interesting to those who are in the business or watching the hedge fund space closely.

Related articles and posts:

1. A.W. Jones and hedge fund history - Finance Trends.

2. Interview with Sebastian Mallaby: the history of hedge funds - Martin Kronicle.

Steve Jobs on effort and success

2011-01-18T13:20:00.000-08:00

"The things I've done in my life have required a lot of years of effort before they took off." - Steve Jobs $AAPLTue Jan 18 20:16:32 via webDavid Shvartsman
FinanceTrends

Just a cool quote from Apple CEO, Steve Jobs. Found it while reading O'Neil's How to Make Money In Stocks, of all things.

Sometimes people forget that there is an unseen foundation of hard work (and earlier failures) that lies beneath any great success.

They'll just change the rules

2011-01-14T12:57:00.000-08:00

Inflation or deflation ahead?

Why, after the bursting of a massive credit bubble, do losses from defaulted debt go unrecognized? How is that we simply continue to hum right along?

Chris Martenson explains in, "Don't worry, they'll just change the rules":

"Suppose, for the sake of argument, that there is a world in which banks are allowed by their regulators to pretend their default losses simply do not exist. And, even more outlandishly, some of these banks are allowed to sell heavily damaged loans to their central bank at nearly their full original price.

What does "deflation" mean in such a world? Not much, as it turns out. At least from a monetary perspective, because money is not being destroyed at nearly the rate that would be expected or predicted by the size and rate of the defaults.

This is the world in which we currently live. Trillions in probable and provable losses quietly exist, out of sight, on the balance sheets of the Federal Reserve and other financial institutions. If they ever come out of hiding and onto the books, I think the deflationists will be proven correct beyond all doubt..."

Which brings Martenson to his next point: the "extend and pretend" game which favors the "too big to fail" (TBTF) banks is part and parcel of the trend towards changing the rules of the game at will. In this framework, what should happen may not transpire at all, or at least not for some time.

"...The theme here is simple enough: If and whenever the circumstances justify a major response, existing rules will be changed, altered, bent, or broken.

Because of this, I routinely argue that what should happen won't happen, at least not right away, and that there's really no such thing as investing anymore, only speculating -- unless you are a big bank, favored by the Fed, with advance information..."

Check out the full piece to hear why the rules of the game are constantly changing, and why we're all speculators (as opposed to investors) now.

Reducing noise & finding value on StockTwits

2011-01-11T13:21:00.000-08:00

Wanted to track down some of the better posts on filtering one's information feeds and following users on Twitter and StockTwits.

One of the common objections I hear from potential users on trying Twitter or StockTwits is that they anticipate a flood of extraneous "noise" from these new info channels. Therefore, they wish to remove the possibility of being inundated with chatter and opinions by not taking up these microblogging platforms.

This is a very fair objection. After all, if you have a well thought out investing and/or trading strategy, and you're carefully screening the info you consume on a daily basis, why expose yourself to additional noise and unwanted opinions?

But is there a chance you might be missing out on an opportunity to connect with, and learn from, like-minded (or differently focused) traders and investors? What if you could filter your Twitter or StockTwits streams to show you an organized set of updates from the sources of your choosing? Might some form of value be extracted here?

With serendipitous timing, StockSage1 offers up this excellent new post on, "Reducing Noise Intake - From Mandelbrot to StockTwits".

An excerpt from that piece:

"Athletes often talk about the concept of the ‘game slowing down’ when they are really in the zone...

...Traders can achieve the same ability to ‘slow the markets down’ by preparing, studying and focusing on the most relevant new information while blocking out all the useless noise. This last point, blocking out noise, is paramount to achieving success as a trader. In the 2011 world of high speed information flow and social media, the challenge of blocking out noise becomes increasingly difficult by the day."

Read on to find out where StockTwits enters into the equation, and how you might best filter your message inputs to receive value from the stream (or reduce information overload in general). You may find that you've opened up a whole new channel of communication and idea generation.

Of course, this applies not only to traders and investors, but to anyone using Twitter (and Twitter clients like Tweetdeck, or features like Twitter lists) to communicate and share ideas with others who share similar interests or business goals.

Have you found value on Twitter or StockTwits? Tell us about your experience.

On the value of financial blogging

2011-01-07T12:11:00.000-08:00

Does blogging provide any real value for market participants, students of the markets, or blog readers?

I recently came across a few posts and discussions that speak directly to this question, and seem to answer back with an emphatic "yes" on all counts.

First, let's take a quick look at Michael Bigger's recent post in which he states that 99 percent of traders are missing out on the benefits of blogging.

Michael highlights a short clip of Seth Godin speaking about the advantages of writing a blog and how the act of writing helps to sharpen one's thinking and understanding of the subject at hand.

He adds that a trader's blog is his home base, and that everyone should think of blogging as their "thinking out loud" platform. I could not agree more with his visualization of the blog as an idea scrapbook or journal, as this was the initial purpose for Finance Trends Matter, but check out Michael's post and hear his (and Seth's) view on the subject.

I also want to highlight two worthwhile clips from StockTwits TV. First we have Tadas Viskanta at Abnormal Returns discussing the value of financial blogging.

As he makes clear in this discussion, the costs of and ease of entry to blogging have come down to the point where just about anyone get started writing their own blog. There are still risks (sometimes reputational), but the value of archiving one's thoughts and receiving feedback from engaged readers is a great benefit to investors, traders, researchers, and entrepreneurs.

You'll also find a link in Tadas' post to a new interview with Charles Kirk (The Kirk Report), one of the "godfathers" of the market blogosphere, who discusses his writing and trading methods with Howard Lindzon.

Be sure to check out some of the related items mentioned in Tadas' talk, and think about starting your own blog (or engaging with those you follow) to help you journal your ideas and learn from others in the financial blogging and trading world.

Don't become complacent (Trainspotting)

2011-01-06T13:06:00.000-08:00

There's a lot of truth to this scene from Trainspotting, in which Sick Boy explains his unifying theory of life to his friend, Mark.

It's a very universal phenomenon: you get a bit of success (or maybe a lot of it) and then, as you get older and more comfortable, you tend to become complacent and less aware.

Maybe you don't push the envelope as much as you did before, or maybe you just get to a point where you're more easily satisfied and content to rest on your laurels. It doesn't have to be an age-specific thing either, it may just be a lack of enthusiasm or vitality. That old hunger you once felt is nearly gone.

Be cognizant of this reality and its tendency to creep up on your life. Don't become complacent.

Or as Paul Tudor Jones once said:

"Don’t have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead."

Capisce?

Related articles and posts:

1. Lessons from Paul Tudor Jones - First Adopter.

2. Paul Tudor Jones: "Trader" - Finance Trends.

Purchasing power of US dollar 1920-2009

2011-01-04T15:26:00.000-08:00

The price of gold took a big hit today, something we noticed while having an interesting conversation about the dollar index and US dollar's recent strength (as measured by said index) earlier today on Twitter.

Still, we have to keep our eye on the big picture here. The long-term trajectory of the US dollar and its purchasing power, as measured against a constant store of value (such as gold), is down. Conversely, the longer-term trajectory of the dollar price of gold is up.

Food for thought.

Related articles and posts:

1. Bloomberg: weak dollar, inflation "illusory" - Finance Trends.

2. Dollar's purchasing power annihilated - Zero Hedge at Seeking Alpha.

Finance Trends: The Best of 2010

2010-12-28T13:45:00.000-08:00

We're wrapping up some of your favorite posts (and mine) for this Finance Trends "Best of 2010" features edition.

You'll find key interviews with leading businessmen and investors, along with the best of this year's posts emphasizing the strong trends and events that are shaping our country, our investment markets, and our world.

Without further ado, here are some key posts highlighting the big picture trends we've witnessed in 2010, some of which may continue to unfold in 2011 and beyond.

1. On a Return to Classical Education. Your educationally-deprived editor muses over the benefits of a Classical education, and how such a foundation in thinking might help us as investors and as citizens of the world.

2. Marc Faber: Final Crisis Yet to Come. Wonderful presentation by Marc at this year's Mises Circle in NYC, offering a crucial take on US monetary policy and the likely outcomes of the Fed's "quantitative easing" experiments. Video and presentation slides included.

3. Niall Ferguson on Fiscal Crises and Imperial Collapse. Must hear presentation from Ferguson offers a historical overview of government debt crises. Highly relevant back in May and only more so now that the developed nations' sovereign debt crisis continues to unfold here at year-end 2010.

4. LTCM and the Lessons of Failure. Thoughts on hedge fund collapses (and fund manager resurrections), the money manager merry-go-round, risk management, and the dangers of overconfidence.

5. Must Hear Interview with John Burbank of Passport Capital. Part of our series on global macro investors and hedge fund managers, this excellent discussion with John Burbank comes to us via Benzinga podcast.

6. Michael Burry: An Up & Coming Macro Star? An in-depth look at Michael Burry's gradual transition from a US stock-focused value investor to an international, global macro investor.

Includes an unedited transcript of Bloomberg TV's interview with Burry, in which he offers his views on the economy, investing, and his famous subprime short trade.

7. Jim Grant, John Hathaway and Peter Munk sit down with Charlie Rose to discuss gold as money, the causes of the recent final crisis, and likely outcomes of Fed and government intervention in the markets.

8. John Allison on "Leadership and Values". The former CEO and Chairman of BB&T bank speaks to Virginia's Darden School of Business on the importance of adhering to a sound ethical framework and engaging in "win-win" business transactions. Excellent talk on the spirit of true capitalism and personal responsibility.

That's all for 2010. Please join us for more in 2011, as we explore the coming year's macro investing themes and future economic events.

You can keep up with us in the meantime through our real-time updates on Twitter and StockTwits or via the Finance Trends RSS blog feed. Have a Happy New Year!

*Photo credit: Floor of the New York Stock Exchange via LOC.gov.

Trader Vic and Market Wizards on Scribd

2010-12-26T15:04:00.000-08:00

I've recently updated the Finance Trends "Classic Trading Books" collection on Scribd to include two personal favorites from Victor "Trader Vic" Sperandeo and Jack Schwager.

You'll now find Sperandeo's, Trader Vic: Methods of a Wall Street Master, along with the first volume of Schwager's classic interview series, Market Wizards in the collection.

You can find the scanned e-books and pdf downloadable versions by clicking on the titles in the Trading Books collection widget (RSS readers may need to visit our site to see the Scribd widget) or by visiting the collection shelf at the text link above.

You'll also find a widget embed code included, so feel free to grab it and paste it onto your site or your Facebook page. The widget will be updated automatically to show all newly added titles in the Trading Books collection.

For those of you who'd like a hard copy or Kindle version of these classic texts, visit Amazon (see title links above) to order Sperandeo and Schwager's books. Enjoy!

Amazon's Jeff Bezos chats with Charlie Rose

2010-12-21T16:47:00.000-08:00

Amazon.com chief, Jeff Bezos sits down to an interview with Charlie Rose from earlier this year. This is a very good discussion of the company's philosophy, its future plans, the growth of e-readers & user adoption of that technology.

It's also a great insight into the thinking of one of our generation's great entrepreneurs, Jeff Bezos.

As you'll see from the interview, Bezos understands his customer base and what they want, and he trusts his instincts and Amazon's strengths (as an e-retailer and gadget manufacturer) enough to act on that understanding and not get swayed by suggestions & criticisms from outside voices.

Last week I was thinking about Amazon's decade-plus rise in online retailing. Back in the dot com bubble days, we knew Amazon was an emerging powerhouse in online book selling and later, CDs & music. What some of us didn't realize (myself included) was that Amazon.com would successfully expand into many other areas of retailing. Boy, was I dumb to doubt Bezos' company.

Now, when I want to look up info or reviews on anything from books to backpacks to internet routers, I'm likely to turn to Amazon.com because I know I'll probably find what I need. A lot of other people must feel the same way, because I've heard numerous comments this past month about the ease of shopping for Christmas and holidays on their site. The bubble may have burst back in 2000, but shopping online has become increasingly standard every year since.

There are probably a few main reasons why Amazon has become a go-to option for online shopping, and Bezos outlines them here. He also touches on some of the reasons why Amazon can outshine some physical + online retailers like Wal-Mart. The focus is largely customer-centric and there are some interesting details from Bezos on how they view the retail landscape.

Of course, given the recent Wikileaks hosting fiasco, there's bound to be some serious skepticism over the Amazon web services portion of the discussion, but we'll see how their credibility stands up in this area over time. In the meantime, this is a great interview overall. Check it out.

Cotton, palladium, silver lead futures gainers YTD

2010-12-17T10:28:00.000-08:00

Did some charting on Finviz yesterday and came across this relative performance chart of the year's top futures gainers (year-to-date).

As you can see from the chart, cotton, palladium, and silver lead the performance YTD. We all know gold's been having a headline-grabbing year (+25%), but silver futures have handily outpaced the yellow metal (+71.5%).

Interesting to note that lumber is up 40% YTD, second only to top-performing cotton (+93%) in the soft commodities group. Lumber futures had a very poor showing in '06 - '08 as the housing bubble collapsed and the homebuilders fell on hard times. However, we saw a pickup in '09 and the rebound seems to have gathered steam all through 2010.

Natural gas futures were a bottom-dweller this year, down (-)27% YTD. There were a few other poor performers, but for the most part we see green on this chart, reflecting a year of strong commodity demand and QE (money printing) operations in the US.

As Jim Rogers has pointed out many times in recent interviews and talks, cheap money will only fuel advancing prices of in-demand commodities in the months and years ahead. Stay tuned for 2011.

Charting the BP Gulf oil spill lawsuit

2010-12-15T14:01:00.000-08:00

The US Department of Justice today announced its lawsuit against BP and eight other companies involved in the disastrous Gulf of Mexico spill.

We added some charts of BP and other firms involved to the Chart.ly and StockTwits streams today.

Here's how the big 4 oil names reacted to the official news of the suit in today's trading session. Note that Haliburton (HAL) was not named in the government's suit, but still moved notably to the downside.

There's a lot of talk about BP's being kept alive in order to bleed it nearly dry to fund government spending programs. I'll let the BP and legal/political experts weigh in on that, as I'm not as familiar with the company's assets vs. liabilities picture.

However, we do know that BP has been moving to sell off assets and reposition itself as a leaner company in order to survive. Will they succeed? That is the (current enterprise value) $164 billion dollar question.