Market Watch

[PHANTASM]

Bush, made economy bad and Obama is making worse. To fix short term losses, Obama is going to make big time long term loss.

 

They need to lower down the expense, rather then printing more $$. There are few things Obama told to people and I don't see it happening:

 

1. Our Army will be out of Afghanistan. I don't see it happening.

2. We will have to pay less for Health insurance. In fact, I am paying more since 2010.

3. He is still give more bailouts and support to loosing companies AFAIK.

 

Also, somewhere I saw AIG made profit last quarter. Did they paid the money back? Not full, but at least a little?

 

PS Intel is making good amount of profit. Check there job openings and they also have new project going on. If you see any company has more job opening then usual, consider company is either making profit or they investing money on there next project.

 

He said we would withdraw from Iraq too, and we are supposed to pull out 100,000 troops soon (this summer I think). So that's good. I don't know why we are still in Afghanistan. Osama Bin Laden is probably dead by now anyway, and the Taliban will never give up. They endured the USSR, I'm sure they can tolerate a NATO occupation indefintiely. It would be nice if we "won", but the only way to do that would be to kill the entire country, which the Russians tried and failed.

 

I have very mixed feelings towards Obama. When he talks, I like the guy. But I think his policies are a continuation of the Bush era in general, only worse. I think he has no common sense when it comes to money, if you are going to borrow money you should invest it in something that is going up, not going down. Never invest in a failing company. "Never try to catch a falling knife". Every trader knows that. And he broke this rule, which makes him a world-class idiot in my mind. And he did it with my money, and your money, and our kid's money. Bush wasted a trillion over eight years. Obama has wasted more than that in his first year alone.

 

AIG got over $180 billion in the taxpayer-funded bailout and have no plans to pay it back. How could they pay it back? Their stock did a 1:20 reverse split last year so it would look like they were profitable and they could avoid being delisted on the NYSE for falling under $1 a share. I was holding 500 shares that day and got burned bad because it dropped as soon as it split. My sell order was 10% under the original price. So I lost ~50% in an hour for no reason, because it was repriced twenty times higher and I had 1/20th the number of shares. They think their shareholders are too stupid to understand a basic inverse ratio. I will never touch AIG again. They are the worst of the big financial stocks. Pure evil too.

[PHANTASM]

Last week was exciting, a lot of stocks shut up like Layne Staley mid-week during the earnings report (my AMD went up to $7.80 a share). Then Friday we had The Big Dump, as expected, when everybody who did not sell at the higher prices decided to click the sell key at the same time, driving the market down a few percent. Next week these stocks will go back up and the losers who sold low will buy back at the higher prices. This is the perpetual transfer of wealth from n00b investors to those who know what the hell is going on.

 

We also had a new version of the US government's financial reform package get approved. It is 2300 pages long and no one has read it or seen it. The big financials have been spooked by it, fearing it will cut into their worst practices (that make them lots of money at the expense of everyone else). Lots of lobbyists are working overtime in Washington making sure the bill gets turned into swiss cheese so they have enough loopholes to continue business-as-usual. Obama and the Democrats need a victory on this front to help them out in the mid-term elections, and they need the massive campaign contributions (bribes) that will come in from the corporate lobbyists paying them to put in loopholes. It's really just a big game that will do nothing but transfer money and power to the Democrats at the expense of the big banks.

 

You need to remember that the US government is now a major shareholder in the bailed-out banks they now want to "regulate", so they have no real incentive to drive down their profits or share prices. But the Democrats and Republicans need to have a battle on a safe front where they can both squeeze out some major money. The big banks will pay both sides protection money (just like the mafia) to protect them from any significant rules that would actually fix anything. The politicians get to claim victory, the Democrats as the defenders of the common man (whoever that is lol) and the Republicans as the defenders of capitalism from the evil socialists.

 

Last week was the third week of the month, so as usual all the put options (short sales) were cashed in at the end of the week, helping to push down stocks on Thursday and Friday. The shorters are so predictable, they always wait until the last day to cash out their shorts, which means the third Thursday of every month the stock market goes down a bit. Like clockwork. A good time to buy stocks.

[PHANTASM]

And here is some of the carefully orchestrated spin coming from the liberal media (as opposed to the right-wing media) on how Obama has scored a victory with the financial reform bill they passed last week:

 

http://www.csmonitor.com/USA/Politics/2010/0716/Financial-reform-bill-another-win-for-Obama-but-will-the-public-care

 

Now, what's interesting about this story, and really the way the Mainstream Media in general have reported this issue, is that no one is discussing what is even in the bill. They just say that Obama did a great job and the bill will help "consumers" by setting up a consumer protection agency (more government jobs will be created at taxpayer expense). We already have the Security and Exchange Commission, Fannie Mae, Freddie Mac, the FDIC, the PBGC (pension bureau), and every state except South Dakota has their own set of financial rules governing consumer protection. I probably missed quite a few agencies but you get the point.

 

What Obama is doing is creating jobs at the federal level, within the federal government. That's what is really important to the Democrat Party at the highest level. What this new agency is actually supposed to do is not yet known. Probably fill out TPS reports until some future Republican administration gets rid of them.

 

Now, I want to explain that the derivatives market is the real global economy. And this story has only one actual sentence on which it mentions that this bill will regulate the derivatives market. This is the real story, that the government wants to make major changes to the $600 trillion derivatives market (that's 600 million million dollars).

 

The derivatives market is like a casino on which you can bet on anything. Stocks, mortgages, bonds, commodities, anything at all can be turned into a derivative on which "investors" can place a bet (called an "option"). Options expire after a set time and are then worthless if they did not "win".

 

Options are completely different than stocks. A stock is a tiny sliver of actual ownership in a corporation. Stocks do not expire, and you can hold it forever unless the company goes bankrupt. An option is like a lottery ticket - after the numbers came out you either won or you lost.

 

The sad reality is that most of the world's money is stuffed into the options market, leaving the rest of the world in absolute poverty. The entire GDP of the US is around $12 trillion, about 2% of the total value of the derivatives market.

 

There was a rule called the "uptick rule" that required that the last two readings of a stock price had to be positive before a short sell (a "put option") could be exercised. This rule was put in place in 1938 to prevent another Great Depression. It held up the stock market for seventy years. The SEC eliminated the uptick rule in 2007. This is one of the real reasons for the market crash we are currently in. It had a much bigger impact than the housing crash or sending all the jobs to China.

 

Short selling involves borrowing a stock and giving it back when its price declines, and keeping the difference in price as a profit. It is quite easy to spook ordinary investors into selling their shares, triggering a profitable decline in a stock price. If you own a major media outlet, you can easily make trillions on short selling every time you create a media panic that lowers prices. This happens weekly now.

 

So, by threatening to regulate the options market, the politicians can easily get billions of dollars to appear as campaign contributions from the big firms that profit from the market. This is how the US government actually works. Don't tell anyone lol.

[PHANTASM]

This is from the Wall Street Journal (yeah I'm a dork):

 

Now, the legislation hands off to 10 regulatory agencies the discretion to write hundreds of new rules governing finance. Rather than the bill itself, it will be this process—accompanied by a lobbying blitz from banks—that will determine the precise contours of this new landscape, how strict the new regulations will be and whether they succeed in their purpose. The decisions will be made by officials from new agencies, obscure agencies and, in some cases, agencies like the Federal Reserve that faced criticism in the run-up to the crisis.

 

The Commodity Futures Trading Commission has designated 30 "team leaders" to begin implementing its expansive new authority over derivatives, and has asked for $45 million for new staff. The Federal Reserve, Federal Deposit Insurance Corp. and Securities and Exchange Commission are also in the thick of the implementation.

 

J.P. Morgan Chase, one of the biggest U.S. banks by assets, has assigned more than 100 teams to examine the legislation.

 

Democrats say the bill will cut the odds of another crisis and better handle one when it arrives. They also contend it will restore confidence in U.S. financial markets, protect consumers and spur growth. White House officials said it will put an end to taxpayer-funded bailouts of banks, addressing the scars of the financial crisis of 2008.

 

The legislation creates a council of regulators to monitor economic risks; establishes a new agency to police consumer financial products; and sets new standards for the way derivatives are traded. "These reforms will benefit the prudent and constrain the imprudent," Treasury Secretary Timothy Geithner said in a press conference. "Strong banks, the well-managed financial innovators, will adapt and thrive under the new rules of the road."

 

Republicans said the bill could jeopardize the recovery by constraining credit and crimping the banking industry, and chided the expansion of government power it envisions.

 

The bill "is a 2,300-page legislative monster…that expands the scope and the powers of ineffective bureaucracies," said Sen. Richard Shelby (R., Ala.).

 

The measure is the latest sweeping law to emerge from the 111th Congress. But the financial revamp, the 2009 stimulus act and this year's health-care overhaul—by any measure significant legislative achievements—haven't translated into support for the White House. Mr. Obama's approval ratings have sunk to some of their lowest levels in some polls amid a gloomy economic picture and rising doubts that his economic policies are working.

 

/end quote

[PHANTASM]

One of my favorite stocks is about to take a dive. The stock is Citigroup, aka C. No, I'm not worried about it lol. I don't have any sharez in it today. I will probably buy a few thousand shares on the drop and wait for the rebound. I make it my personal business to study everything about this one stock so I can buy it and sell it over and over again for a profit. Just to give you an idea of the kind of info I watch, here is a page showing what the Board of Directors have bought and sold:

 

http://research.scottrade.com/public/stocks/insiders/insiders.asp?symbol=C

 

 

The government owns lots of their stock so they are "too big to fail", which means they cannot go bankrupt without government approval. So it is as safe as a bond or a Treasury Bill. The price fluctuates right around $4 a share. The US government is about to sell billions of its C shares and dilute the price down.

 

Here is the full story:

 

http://www.ustreas.gov/press/releases/tg785.htm

 

 

Treasury Announces Plan to Continue to Sell Citigroup Common Stock

 

WASHINGTON – The U.S. Department of the Treasury today announced its continued sale of its holdings of Citigroup common stock. Treasury has entered into a third pre-arranged written trading plan under which Morgan Stanley, as Treasury's sales agent, will have discretionary authority to sell 1.5 billion shares of Citigroup common stock under certain parameters.

 

Treasury received 7.7 billion shares of Citigroup common stock last summer as part of the exchange offers conducted by Citigroup to strengthen its capital base. Treasury exchanged the $25 billion in preferred stock it received in connection with Citigroup's participation in the Capital Purchase Program for common shares at a price of $3.25 per common share.

 

Treasury currently owns approximately 5.1 billion shares of Citigroup common stock and expects to continue selling its shares in the market in an orderly fashion. On July 1, Treasury announced the completion of its sale of a total of approximately 2.6 billion shares of Citigroup common stock across two trading plans and its receipt of approximately $10.5 billion in gross proceeds from the sale.

 

As part of the disposition program, Morgan Stanley agreed to provide opportunities for involvement by small broker-dealers, including minority-, women-, and veteran-owned broker-dealers. Morgan Stanley has entered into agreements with the following 12 broker-dealers: Cabrera Capital Markets, LLC; Great Pacific Securities, Inc.; Guzman & Company; Kaufman Bros., L.P.; Loop Capital Markets; M. Ramsey King Securities, Inc.; Mischler Financial Group; M.R. Beal & Company; Sturdivant & Co. Inc.; Valdés and Moreno, Inc.; The Williams Capital Group, L.P.; and Wm Smith & Co.

 

Because Treasury will not sell shares during the blackout period set by Citigroup in advance of its third quarter earnings release, which period is expected to begin on October 1, this third trading plan will terminate on September 30 even if all shares have not been sold by that time.

 

/end copy

[daredevil]

Stock market is like Casino Play 2 win or loose.

 

On the side note, how much tax you are paying on short term sells? Someone told me government charges around 60%+ tax on one day share trading. You have any idea for that? I might soon enter one day trading depending on how I feel comfortable to play in casino.

[PHANTASM]

Stock market is like Casino Play 2 win or loose.

 

On the site note, how much tax you are paying on short term sells? Someone told me government charges around 60%+ tax on one day share trading. You have any idea for that? I might soon enter one day trading depending on how I feel comfortable to play in casino.

 

Short-term capital gains is around 20% depending on your tax bracket. It's the same rate as your income tax.

 

You can carry forward any losses indefinitely, and subtract them from reportable profits made in the future. So those losses you make this year while you are learning (and you will make losses lol) can be deducted from your profits next year when you get some practice setting your Limit Orders and Stop Orders.

 

From wikipedia:

 

In the United States, individuals and corporations pay income tax on the net total of all their capital gains just as they do on other sorts of income, but the tax rate for individuals is lower on "long-term capital gains," which are gains on assets that had been held for over one year before being sold. The tax rate on long-term gains was reduced in 2003 to 15%, or to 5% for individuals in the lowest two income tax brackets (See progressive tax). Short-term capital gains are taxed at a higher rate: the ordinary income tax rate. The reduced 15% tax rate on eligible dividends and capital gains, previously scheduled to expire in 2008, has been extended through 2010 as a result of the Tax Increase Prevention and Reconciliation Act signed into law by President Bush on May 17, 2006 (P.L. 109-222). In 2011 these reduced tax rates will "sunset," or revert to the rates in effect before 2003, which were generally 28%.

 

(US Only) - Tax Loss Harvesting - Realized tax losses can carry forward forever and can be applied to offset capital gains months or years in the future. Overlay managers have developed new trading methodologies that have evolved tax loss harvesting into a year-round strategy, as opposed to year-end, which is standard to most financial advisors, and is paramount in reducing the capital gains tax burden on affluent investors.[12]

 

/endcopy

[PHANTASM]

I've been reading about some of the trading patterns made by the HFT programs. Some of them are pretty cool. This one looks like a knife - anyone think it was deliberate?

 

 

copied from http://www.theatlantic.com/science/archive/2010/08/market-data-firm-spots-the-tracks-of-bizarre-robot-traders/60829/

[PHANTASM]

I was having a normal day, buying some stocks on a dip, even writing in my tutorial in case anyone cared. Just another day for a bored middle-aged daytrader.

 

As the day went on I realized every stock I watch, every commodity (gold, oil, etc), and every currency, all plummeted a few percent. Even bonds went down, and they usually go up when stocks go down. Only Treasury Bills went up, and they should have gone down since the US government has basically declared bankruptcy.

 

99% of the stocks in the stock market fell today.

 

Which has half the planet going "wtf???" Is this like Die Hard 4 when the bad guys crash the entire market?

 

Anyone have any opinions?

[PHANTASM]

I was having a normal day, buying some stocks on a dip, even writing in my tutorial in case anyone cared. Just another day for a bored middle-aged daytrader.

 

As the day went on I realized every stock I watch, every commodity (gold, oil, etc), and every currency, all plummeted a few percent. Even bonds went down, and they usually go up when stocks go down. Only Treasury Bills went up, and they should have gone down since the US government has basically declared bankruptcy.

 

99% of the stocks in the stock market fell today.

 

Which has half the planet going "wtf???" Is this like Die Hard 4 when the bad guys crash the entire market?

 

Anyone have any opinions?

 

I have been reading trader blogs and finally someone had the answer:

 

http://www.marketwatch.com/story/us-stocks-hit-by-us-global-growth-worries-2010-08-11

 

AmeriWho 7 hours ago+3 Votes (3 Up / 0 Dn) Request sentRE: Stocks plunge after disappointing economic data and comments from central bankers combine to stoke ongoing worries about the global economy, erasing the year's gains a single swipe

 

My take on it is slightly different.

 

After several weeks of ultra-low volume trading, which ran up prices, the market is allowed to slide a couple hundred bucks in order to cause panic and sell lots of Treasuries. This is done to keep the Federal Government funded in cheap money.

 

Enjoy the Casino. Once treasuries get sold, the market will "woosh" back up to where the Federal Reserve and US Treasury wants it to be.

 

Two-word translation: market manipulation

/endcopy

 

So, what was to my point of view, extremely unusual market behavior was probably manipulated by the Federal Reserve to drive millions of investors into buying Treasury Bills, which sold at an all-time record yesterday. It's the Federal Reserve driving down every stock, commodity and currency simultaneously to push the fat cats into buying government debt. Makes sense now.

 

So the crash is being deliberately created by the Feds to prop up the govt.

[PHANTASM]

I have been reading about a new type of investment that lets you short (bet against) the market without buying options. It is called an "inverse ETF". An ETF is an "exchange traded fund", basically a collection of stocks/bonds/options/commodities/whatever that can be bought and traded like a stock. But an inverse ETF is based on short options that are placed against these stocks, letting you short sell the market without buying options.

 

The interesting ones are SDS, an inverse ETF that shorts the S&P 500, and SKF, an inverse ETF that shorts the Dow Jones Index. They are both doing very well the last couple weeks.

[Duckie]

No harm in long term investment... like gold... The dollar is worse less and less every day =]

[<Jose>]

I feel smarter after reading all that and i have to admit im interested... mayb i will invest in market once i have gathered sufficient knowledge.