The good news? My chest infection is much better and I am feeling pretty good, except for....the bad news is while all the crud in my chest was loosening up, I coughed it out to keep my lungs clear and I may have been overzealous. I know I at least pulled a muscle on my right side, and it had better not have torn. Of course now coughing is sort of impossible. It never ends.
Discount Window Borrowing The FED released details of the discount window borrowing operations today. Of course they used old school technology to do it, so any real write up will have to wait. Not that it matters, we know everyone and their brother in the banking world was borrowing, even Libyan banks. Not much news here.
The collateral accepted is not disclosed and that is where the meat would have been. The FED is only supposed to accept the highest quality paper and assets at the window, but we all know that went out another window to save the system and all that. I guess in a way this would not be news either; the FED accepted bad mortgage paper, less than AAA rated paper, and I will say it, equities as collateral. Where is my proof? I have none, the FED won't give me any information. The burden of proof is on them to prove me wrong, they have all the information right? Now why would the FED want a higher stock market via POMO again.....sorry going down the bear cave again!
Market Operations It has been a pretty good 10 day span for Economic Disconnect.
I sold my position in YGE around noon today, banking a 7.6% win.
As we are heading into earnings season (already!?) I am looking to go to cash here. This stinks because I have a few winners riding here that I like, but that's the way it goes. I have to go over things tonight, but here is where I am: TAN +7.0% KCG +3.4% My wife gave me the idea for the following two stocks: SHW +2.3% RPM +4.2% I will update as things unfold.
Planetary Pictures While I await plenty of pictures of the planet Mercury by the Messenger space craft, I wanted to post my 4 favorite space pictures. Long time readers will probably remember them. Click for better views.
The Soviets are the only nation to have landed on the planet Venus and broadcast back pictures of the tortured world: Venera 13: Venera 14:
The Americans own Mars with all the hardware we have there! Mars at sunset from a rover on the surface: Looking back at Earth from the surface of Mars:
I can look at those pictures for hours (A couple are framed high resolution pictures in my den) and just be amazed. It looks like places on Earth, but you know it is not. Maybe it's just me.
This is important because a little while ago AIG offered to buy a big package of assets held by the FED that used to belong to AIG at a cheaper price than could be had by going piecemeal. Again, see this Kid Dynamite item. This not only makes financial sense, but it is the right thing to do. I am hard on the FED crew all the time, but color me impressed here. And no, I am still very sick and losing my mind.
It is going to be 50 degrees here tomorrow and then snow on Friday. About a foot of snow. Unreal.
Handling Your Own Financial Future It occurred to me this past weekend that I have never really discussed how to get into trading or investing on this blog. I think there are twp major reasons for that. One, I figured most that stop in here already had their stuff together. Two, it's not my place to offer that kind of advice.
That said, I figured a quick little big picture post may have some use for anyone wanting to take part in their financial future instead of handing money off to funds and managers to handle. There is nothing wrong with that of course, and this post is in no way is advice to pull all your capital and go crazy in the markets. As of late quite a few people have asked me how to best start handling their own finances, so here is my run down.
I am sure this topic has been covered a million times elsewhere, so forgive me if this is all boring.
1. How Much Capital Are You Willing to Risk It all starts here. You have to be 100% honest with yourself right from the start on a dollar amount you are comfortable putting at risk. This is the big step and the most important. If you are using rent money or this week's grocery cash to start investing, it will not work out and you will have zero fun. On the flip side, opening a trading account with $100 is going to limit your ability to do very much. All investment is risk, a form of gambling that is legal. Every time you put on a position you are risking it all (in a sense).
2. What Kind of Investor Are You The type of trader you want to be is the next step. If you work 50 hours a week or more at a real job, daytrading will probably not work out and maybe will get you fired. Are you the type that likes to play long term macro plays which form and move over months or would you like to focus more on a weekly look? Maybe you work in a field that interests you and you can focus there as you already have some knowledge in the arena. You need to decide how the bulk of your positioning is going to be.
3. Read After steps 1 and 2, now you have to read. Books are ok, but the real pulse of the markets and economy can be found on the blogosphere. The MUST READ column at the left on this site is a good place to start, then fill it out with sites you find that add value. While in no way to you have to read everything at all times, you need to understand current dynamics and how things flow.
4. What Kind of Trigger Will You Use There are just too many ways to pick an idea to try to cover here. I have always used simple candle stick charts with a few indicators added for most of my ideas. A cool screening tool like The PPT can add real time saving value after you get to know it. There are a million services out there to choose from but many are not worth the time. You will have to decide under what triggers you are going to open a position. (Note: No affiliation with The PPT; I am a subscriber)
5. Test Run No one should ever jump right in and put capital at risk. Luckily you can test your ideas out first. FreeStockCharts is a service that allows you to book a portfolio and then track performance. The basic package will only cost you an email sign up. Using your system trigger start "trading" by selecting stocks for a portfolio. Monitor them as a test environment. At this point you may see your trigger system is either not working at all or you are not using it right. You may find that you are just really unlucky and need never trade in real life. You may find you cannot lose. In any case, play with play money first so you know what to expect. To go to the next level, set up the virtual account the same way you will set up your real account. Then test some more.
6. Start Small After the 5 steps above, it's time to get to work. I would assume you have a trading service at this point (there are quite a few, shop around). In step 1 you decided on an amount to fund your account with. Divide that number by 3 and transfer the cash to your account. The 30% is arbitrary, but you should start in at that area. I think this is the best way to open activity and keep fear levels down at the start.
7. Notes and Honesty The first month you will need to make notes about what you are doing. I am old school and use a leather planner to write down my ideas and trades. You new age folks can use some kind if electronic notebook or just post all your trades on Facebook (kidding!). Keep detailed notes about everything; what you were looking at, how you felt about a position, where you are going to sell if you are up, and where if you are down. The biggest thing to stick to here is to be honest. You may be tempted to delete or forget bad ideas or trades that went south to pretend it did not happen. This will not help you out at all and is the single biggest money loser I see among the small type traders I know in real life.
8. Assessment After 3 months, how are you doing? All things being equal (a normal market, no major sell off or monster moves up), how do you stack up? Again, be honest. While nothing is certain, if you have studied and tested your system you should be performing within the limits of your test results. At this point it is decision time.
9. Commit or Quit If you had huge losses after three months you need to go back to step one and try again using another angle. This will restart the entire process. It is a huge commitment. While there are a million ways things can go wrong, if your system is not working out you need to stop and not put the other 70-80% of your money into this. What would be a loss figure to decide this on? I think if you are down 30% in 3 months you need to rethink the whole thing.
If you came out even, slightly up, or really up (one can hope!) you need to decide right now how much time to commit to this. You will know how much effort it took by now to get to this point, can you keep it up? Will you do homework and try to get better? Again, be honest. If you are happy with how things went, go ahead and deploy your target amount in step 1 to your account.
Not quite 10 steps.
I hope this helps anyone that is in this position.
Lightsaber Factory? Any real Star Wars fan knows that a lightsaber is constructed by a force user in a dedicated way that uses the Force to align the crystals in the handle to form the blade. Still, this video is really cool. A steel factory has a backup of molten steel and it looks really wild (hat tip Geekologie):
It was a tough day at work and I ran out of gas big time after lunch. Still not feeling all that well, but getting better. Only 4 weeks to go until I will be in Antigua for a week getting warm and tan. So soon.
Good Position Day Had a pretty good day in the markets with some of the positions I took last week: YGE TAN RPM Even a stopped clock is right twice a day!
The Robots are Still Marching I have not had a robot story up for a bit, but here is your regular warning about humans being taken over very soon.
A robotic bird?
THE HORROR! This thing is creepy!
We have talked about the Uncanny Valley here before. Here it is in chart form: All I know is that as I watched the video I wanted to shoot that abomination out of the sky with a huge shotgun.
Small Crowd From Geekologie, the countries that do not use the metric system: Wow, I actually had no idea it was that bad.
Taxes Suck The accountant called today and told me where we stand tax wise. Seems between raises at work for the wife and I, and the killing I made on the SLV trade last year, we have moved up to the next tax bracket! Well that's just aces really. Wunderful. Anyways, it put me in a mind of a film from way back, Kidco.
I wrote this last year about this time, but it still fits: Paying taxes on money I made when it is done using after tax money I already paid on reminds me of a scene from an obscure film "Kidco". The set up is the owner of the all kid fertilizer business is taken to court on a charge of not paying sales tax on his product, which is horse manure. The lead kid represents himself and calls as a witness the man that sells hay and oats to his father to feed the horses that make the manure he uses as fertilizer. The exchange goes like this, but it is from memory so I may be off:
Kid: Mr. Jones, does my dad buy all his feed from your store? Mr. Jones: Yup. Kid: Does my Dad pay you sales tax on said items? Mr. Jones: Yup. Prosecutor: Your honor, the question is not whether the defendants father paid sales tax....(interrupted) Kid: Good. Good. Your honor, you see all Kidco sells is manure, which used to be hay and oats! Don't you see!? We are getting taxed at both ends!!! Court erupts with laughter.
A funny film if you can find a copy.
All There Is? I still cannot believe the only copy of Craig T. Nelson's speech in the film "All the Right Moves" is this cruddy quality one. Must be copyright issues. Ugh.
This feeling ill is still dragging on, but improving every day. Luckily I had a huge lift today from the sports world.
Kevin Harvick Wins at Fontana Speedway! The #29 car must have known I was feeling bad, because he pulled off one of the sickest last lap passes for the win I have ever seen!:
Go KEVIN!: That was so awesome to see live! I feel a bit better already!
I am doing market homework tonight and will update if I see anything I like.
Image Change I changed my profile picture to Darth Nihilus, The Lord of Hunger. Check him out if you like!
I am feeling a bit better today, but that is not saying much. I probably should have taken today off from work, but I thought it would be better to be up and about. Great idea.
In the Money? Tonight in the Massachusetts Lotto game Mega Millions, the jackpot is around $315 Million dollars! When lotto jackpots get over $100 Million I always buy 20 quick picks just in case. When I win I will handle it very calmly.
I plan on blowing about a million in Vegas, handing out millions to my close friends (there are not many) and with the rest I would try and get either Josh Brown or chessNwine to manage for me. It's all planned out. Wish me luck.
JP Morgan and Silver - The Story Never Ends I do not want to get all into this issue, either you believe JPM has silver games going or you don't. I do. For some interesting commentary I would point you to today's post over at The Golden Truth: The COMEX goes "Extend and Pretend" on JP Morgan's Paper Silver Short Whatever you think about the JPM/silver connection the move to allow JPM fast track access to silver storage (by the CME) cannot be dismissed as nothing.
Market Operations I was ill most of the week, but I did open some positions: -On Tuesday ,after something my wife said put an idea in my head, I went long SHW (Sherman Williams) and RPM (RPM International). I also bought TAN (solar ETF) but that was a rip off of chessNwine. -On Thursday as I waited for my doctor's appointment I went long YGE (a solar company) again ripping off sir Chess, and KCG (Knight Capital) which was a chart I liked before and I wonder if all the volatility and trading volume might just make it's way to their next earnings report.
As always, not investment advice. Just telling you what I am up to.
Friday Night Entertainment Some non-financial related items for a change of pace.
Now I want to bowling after seeing this vintage ad: see more Very Demotivational Sometimes I get this feeling that the 1950's were more fun than people think.
Fishing Flu I may be sick, but it is that time of year to get ready for fishing season! Time to buy a license and do that most sacred of all outdoors man ceremonies; cleaning your gear and buying new stuff!
It may be a bit before I can get out there, all the snow has raised the Merrimack River to dangerous levels for a Kayak and the cold meltwater may delay the fish waking up. Here are a few posts that show EonomicDisconnect out on the water. There is even a post with a real picture of me! I still am able to remain anonymous/mysterious/afraid to show my face: Quabbin Reservoir 1 The Mighty Merrimack The Kayak Rigged for War Quabbin Reservoir 2 Can't wait to get back out there.
Film Clips Well sort of.
I just got the new Star Wars book "Deceived" by Paul Kemp via Amazon. This novel covers the origins of the upcoming game "Star Wars: The Old Republic". If you have not seen the game trailer, well you should remedy that:
SICK! Better, clearer version here. Second trailer here.
One of my favorite scenes of all time: Uther Pendragon (Gabriel Byrne) embeds the mythical sword Excalibur into the stone (skip to 1:50 mark on):
That rocks I don't care who you are.
Rock Blogging Low on energy, low on concentration, but EconomicDisconnect always delivers on Friday night.
The last time I had "Green River" by Creedence on, I also featured a DNA based puzzle in this post. Check out the puzzle and see if you would like more, and of course check out this tune:
Love that tune.
The yearly appearence of "Libera Me":
So nice.
Ok, for all you "Princess Bride" maniacs out there (I am one of many, 'My name is legion for we are many') here is "My Love is Like a Storybook Story" by Willy Deville:
Mega points for who can source the quote above.
Still going strong, Bon Jovi with "Who Says You Can't Go Home":
Two left and that's it.
Please enjoy Anthrax with "Black Lodge":
HA, you had no idea they could play that kind of tune!
Last call!
Closing up shop with Depeche Mode and "Wrong" with a great live show:
I had to take today off from work and get to my doctor. My sinus infection got worse and now I am in a full on bronchitis infection. I used to get them a lot when I was a kid, but not too many after College. They freaking hurt! Anyways, I put on my most pained face and asked my doctor for help!:
And he was kind.
I am now armed with my antibiotic of choice, Clarithromycin (Biaxin) which kills everything that is not you. Thanks doc! I should feel better as soon as tomorrow afternoon. This would be good as I have slept about 6 hours this week.
Maybe it is because I am cranky and in pain, but I found some articles today that recaptured my nasty side when it comes to things economic. I hung up the "try to help things" towel a while ago but items like the following deserve a look even if they don't matter at all.
Saw this link over at The Big Picture site:
Four States Consider Legislation Barring Distressed Sales as Comparables Homebuilders and real estate sales agents are concerned that the prevalence of distressed sales, and their subsequent use as comparables, is resulting in the appraised value of residential properties not matching the contract sales price, or in the case of new construction, the cost to build. The Missouri legislation, known as House Bill 292, would prohibit appraisers from using a property that has been sold at a foreclosure sale as a comparable. Similar to the Missouri proposal, the Illinois legislation would prohibit appraisers for the next five years from using as a comparable sale “a residential property that was sold at a judicial sale at any time within 12 months.” The Nevada legislation would prohibit the use of foreclosures and short sales. The prohibitions contained in the Maryland legislation are somewhat broader and include any property that was sold under “duress or unusual circumstances, such as a foreclosure or short sale.”
There is a discussion at the link about how this will put appraisers in a bad spot legally.
This is just so unreal I have to leave it alone. Cannot wait until they bar sales of any stock more than 5% under it's closing price at it's all time high! Any idiot paying a stupid appraised price for a new/used home without considering the distressed sale prices is a fool that deserves to get fleeced 100% and then bailed out. This is your world folks.
The Automatic Earth has a guest post from reader El Gallinazo that demands your 5 minutes to read it. Yes, you could read about how Groupon will be worth a trillion dollars or that Twitter will make your life more happy as you gain social influence but you would be better served on a mcro level to check this one out: Cookie Inflation and the End of Quantitative Easing No excerpts, you have to read the whole thing.
