Financial topics

[Higgenbotham]

There was also a major stock market crisis in 1914 that would have to
be factored in. You know, I would say that you're crazy, except for
the fact that you're making money and I'm not, which means that you're
the one that's sane and I'm the one that's crazy. Well, that would be
no surprise to anyone.

What made me think of that again was listening to Tim (in the video I posted last night) explain the various phases of the bubble starting in the 1990s. And I thought let's not try to explain anything and look solely at what the bubble actually did (as he advocates in other parts of the video).

I actually think I'm wrong to be short. But what I realize is if this is the secondary peak before the crash, it's going to fool everybody, or nearly so, including almost everybody who is sane and almost everybody who is crazy.

[Higgenbotham]

[Higgenbotham]

Except for the disparity in time (number of days for the pre-crash pattern to play out), I see a lot of similarity in the above 2 patterns

When I day trade, this is what I'm doing on a micro scale. I'm looking at market behavior and comparing it intuitively to situations I've seen before. That's hard to do because the time sequences don't normally correspond one to one, but there are vague similarities.

A lot of people try to categorize these similarities into definable, identifiable categories of patterns. I don't find that to be helpful.

What I see above broadly is 2 patterns that are similar enough (particularly the ending rebounds) to be actionable if one were to consider pattern as the only criteria.

[John]

> Except for the disparity in time (number of days for the pre-crash
> pattern to play out), I see a lot of similarity in the above 2
> patterns

> When I day trade, this is what I'm doing on a micro scale. I'm
> looking at market behavior and comparing it intuitively to
> situations I've seen before. That's hard to do because the time
> sequences don't normally correspond one to one, but there are
> vague similarities.

> A lot of people try to categorize these similarities into
> definable, identifiable categories of patterns. I don't find that
> to be helpful.

> What I see above broadly is 2 patterns that are similar enough
> (particularly the ending rebounds) to be actionable if one were to
> consider pattern as the only criteria.

When I was counting days, what I did was look at the interval from the
beginning of the earnings period to the October 1929 crash, and then
compare that to a similar period for this year's Q1 earnings. This is
based on the idea that the 1929 crash was triggered by Q3 earnings
reports that were below expectations.

I think that a meaningful comparison might be possible if it compares
two intervals of a few weeks. But I just don't see how comparing
15-year intervals can make sense. There might be a war in one
interval but not the other, or there might be sequestration or some
other fiscal policy in one interval but not the other, or something
else that would make the two intervals incomparable.

Things like Kondratiev cycles might be comparable, but even then the
timespans are approximate, rather than an exact number of days.

As you say, when you day-trade, you're working on a micro scale. That
makes sense to me.

[Higgenbotham]

As you say, when you day-trade, you're working on a micro scale. That
makes sense to me.

Contrary to what most people think (that short term market movement is all noise, or random walk), the micro scale is more reliable to trade. That can be seen in my results - they are highly consistent. The fundamental reason for that in my opinion is the world doesn't change much in the approximately 5-15 minutes it takes me to produce a typical winning trade.

The argument could be made, however, that you can't have an expectation that one stock on a given day will behave nearly identically to a completely different stock on a completely different day. That is true. While there are vague similarities, there are wide differences depending on overall market environment (I've talked about how I minimize that - it's very important to), ownership profile, industry, short interest, profitability, previous days market movement, recent news, etc., and then just random factors such as the wide variation in how investors may react to nearly identical news (for example, in one situation a large institutional investor may decide to dump all shares at the market whereas in another nearly identical situation there are few sellers).

I consider both situations (day trading and longer term trading) to be extremely challenging but the main thing that makes longer term trading more dangerous is that you only get a few shots, so a good trader can still be taken out just due to random factors, whereas with day trading, if you can overcome the higher transaction costs and losses to HFT, hundreds of iterations will average things out. But either will be a lost cause for the vast majority of people. I once had a firm lock my account for day trading, not because I was in violation of any SEC rule, but because they didn't want anything to do with the appearance they were encouraging the churning of an account, which is notorious for producing losses. That was despite the fact that the account was extremely profitable to that point.

[Higgenbotham]

Most of my results shown on the previous page were done day trading in my IRA in exactly the manner this article says not to do. I also have a smaller margin account.

6 Reasons Why Day-Trading Your 401k is a Recipe for Disaster

1) It's you versus Wall Street. You're not going to win.

Over the past 30 years, Wall Street firms have hired some of the brightest minds in the investing – economists, mathematical geniuses, strategists - to help them beat their competitors by the slightest of margins. The difference between a 9% return and a 10% return on investment is massively lucrative when we're talking bank portfolios in the hundreds of millions to billions of dollars.

These 20- and 30-somethings are armed with Bloomberg Terminals, in-house proprietary research, direct access to business leaders and politicians and billions of dollars in leverage to help them outperform the market. They also have near-instant access to capital markets and dark pools of liquidity.

"These investment firms have armies of people who focus their entire lives on one segment of the market, and you're a guy who's watching the market using a Charles Schwab trading screen," said Dan Morgan, a portfolio manager with Synovus Trust Securities.

It's not a zero-sum game. You could benefit from stocks going up just like Morgan Stanley would. But in times when there is increased volatility, actively-managed mutual funds and banks can employ strategies that can help lower their exposure and risk to the market. You cannot, outside of purchasing certain extremely specialized ETFs, which leaves you more exposed to violent swings in the market, Morgan said.

2) Guessing short-term price direction isn't a strategy

More importantly, most day traders these days aren't guessing price movement, which is the typical strategy for the average retail investor.

Typical day-traders these days are using arbitrage strategies -- comparing prices on similar investments and trying to make money on the difference, or spread, between those investments. Arbitrage is a valid strategy, but it often requires computers and high-frequency trading algorithms to succeed at it. You sitting at home at your Charles Schwab trading screen (no offense to Schwab, they're good people) isn't going to beat the Goldman Sachs kid who is using arbitrage on General Electric shares 5,000 times a day.

3) You're giving up a huge chunk of your potential return by day-trading your retirement

The stock market isn't all up-and-down price movement. A good portion of your potential return that's hard to overlook is compounded dividends -- blue chip companies like Coca-Cola, Walt Disney, General Electric that pay quarterly dividends on a stockholder's investment.

By day-trading your account, you're cutting yourself off from 40% your potential return because you're not in the stock long enough to collect those important quarterly dividends, said Marty LeClerc, portfolio manager with Barrack Yard Advisors.

This means you need to make up for those losses somewhere else, most likely by attempting to outperform the market using price direction.

"And predicting daily stock price movements is known by another name: gambling," LeClerc said. "You might as well head to the poker table with your retirement."

https://www.forbes.com/sites/kensweet/2 ... 6ab2de22bf

[Higgenbotham]

How Domino’s Persuaded Wall Street to Lend to It For Less
Whole-business securitization enables companies to issue bonds more cheaply

Restaurant chains are turning to complex debt deals that lower their borrowing costs, but at the price of control over their most valuable assets.

This summer, Domino’s Pizza Inc. DPZ -0.74% sold $1.9 billion of bonds backed by essentially all of its revenue streams, including payments from franchisees, intellectual property and license and distribution agreements. The deal, which allowed it to borrow at well below the going rates on junk bonds, was the latest example of firms putting all their cash-generating assets into separate entities that are used to back the debt.

In the case of Domino’s, the pizza chain drew an investment grade BBB+ rating from S&P Global Inc. It is one of the earliest users of this structure, and had a junk level rating until 2007, when it paid off its old debt to do its first of four whole-business securitizations, which the company says has saved it tens of million of dollars in borrowing costs over the last decade. The most recent deal was so popular that bankers increased its size by $100 million, according to a person familiar with the matter.

“Within this whole business space, it’s as hot as it’s ever been,” said Jeffrey Lawrence, the chief financial officer of Domino’s. “There are more market participants, more people who have done their homework and are comfortable with it.”

Through September of this year, a group of mostly restaurant chains have borrowed $6.7 billion through these transactions, more than during any other three-quarter stretch since at least 2008, when financial technology firm Finsight began tracking the data. Finsight says there have been at least 25 deals since the financial crisis, with eight so far this year. If the activity remains at its current pace, 2017 will be the biggest year in memory, market participants say.

While the company generally benefits from lower borrowing costs, the rigidity of the debt structure can leave it with less ability to issue debt outside the securitization or sell assets if its cash flows start to decline.

“If the business goes sour, it’s not like you have anything left in reserve,” said John Kerschner, head of U.S. securitized products at Janus Henderson Investors, who has participated in some recent deals and passed on a few. “What you could see in a business really deteriorating rapidly, it would go down that much quicker.”

A healthy outlook in corporate America and years of near-zero interest rates are heralding a renewed appetite for bond structures that link risky companies trying to lower their debt costs and yield-starved investors in search of income. In exchange for borrowing at cheaper rates, they’re taking on a debt structure that can limit flexibility, potentially shortening their lifeline if the business takes a turn for the worse.

https://www.wsj.com/articles/how-domino ... 1507739797

[aeden]

Recent numbers.
China - $636 billion traded with a $375 billion deficit.
Canada - $582 billion traded with an $18 billion deficit.
Mexico - $557 billion traded with a $71 billion deficit.
Japan - $204 billion traded with a $69 billion deficit.
Germany - $171 billion traded with a $65 billion deficit.

The EU announced a list of products subject to a 25% consumer tax – products all partially made in the US. Ahead of tomorrow's G6 plus 1 summit, French President Macron indicated France may not sign the statement if the US does not change its approach.
Clearly, this is a terrifying threat (though it does rather emphasise US isolationism, which markets may worry about.

They have one view and it is not the taxpayers.

https://www.zerohedge.com/news/2018-06- ... -statement

We've been in a trade war ever since the Fed unleashed QE1. We're just moving onto the next phase.

That is why we opposed the bailout but to be clear and blunt we are up against SWF.

The Office has our full support.

[aeden]

The level of complexity will annihilate them since they produce nothing and take digits.
Just because you polish a cargo cult model it does not produce value streams.
The hold the line as the curve flattens tells the minority who see it that you can produce
here as the 17 layers of bloated abc agency's sucking the life out of free people.
Many people I know will not invest because of the corruption factors.
Not dealing with it is as bad as the action that caused it.

They miss that, not us.

As you discussed H we addressed that issue with our current approach.

Meanwhile back at the Ranch.

Mon Jun 08, 2009 8:59 pm
Transatlantic exchange group, and Liquidnet, one of the largest US-based “dark pool” equity trading platforms, have agreed to set up a service that will allow companies to get a better indication of how investors intend to trade their stocks. Under the terms of the agreement, NYSE Euronext-listed companies will be able to see the ratio of intended buy orders against intended sell orders in their company’s stock in the Liquidnet dark pool. FT

Investors never had chance or ever will. Adapt people and HFT already knew that.

As soon a Rex got fired and Mike was onboard with go fix this as we may see the results.

Far as I am concerned today Italy can be the fifty first State if they wish since the suicide mission was noted here for
the Kalergi feudalistic Marxists. Fair trade will exist over the rhetoric of free trade.
Easter Island B is falling and the one percent of the one percent killed it.

[aeden]

http://ibankcoin.com/flyblog/2018/06/10 ... rade-tape/

http://ponziworld.blogspot.com/2018/06/ ... truth.html

Part of the information process cycle of the seven.

http://gdxforum.com/forum/search.php?ke ... sf=msgonly