Monthly Archives: May 2014

Admit when you’re wrong… and profit (Jesse Livermore)

In trading, it’s best to quickly admit when you’re wrong. 

If you can keep your losses to a minimum, you will be able to preserve your trading capital (along with your mental capital) and improve your odds of profiting from future opportunities.

As Jesse Livermore once said, “I have long since learned, as all should learn, not to make excuses when wrong. Just admit it and try to profit from it.

Can you think of a time when admitting you were wrong saved you from prolonged agony or bigger trading losses? Did you ever turn the situation around or even go on to profit from it? Share your story with us in the comments and on Twitter.
 

Facebook buys Instagram for $1 billion.

“Just one word. Are you listening? Apps.”

Update on the S&P 500 $SPX


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.

Tesla hits new all-time high: Do Androids Dream of Electric Cars?

After a recent consolidation along its 20 day moving average, Tesla (TSLA) closed at a new all-time high today. 

As you can see from the daily and weekly charts, the runaway move started in April when TSLA broke out above the $40 level on large volume (over 7 times its daily avg. volume). TSLA soon consolidated that move and continued higher, amidst a stream of exciting announcements and a growing wave of “Elon mania” (see recent interviews, videos below), to its most recent prior peak in late May. 

As of today, TSLA is up over 165% from its April 1 closing price.

TSLA Tesla chart

After noting some weakness in several leading stocks (including TSLA) on StockTwits + Twitter late last month, I soon realized that I was wrong on TSLA. What I mistook for topping action was actually just a pause before this latest, new high. The uptrend continues…

Elon Musk discusses creativity, entrepreneurship and a new mode of travel (hyperloop) at Pando Monthly.

 

TED chats with Elon Musk: The mind behind Tesla, SpaceX, and SolarCity. 

 

Disclosure: as of this posting, I have no position in TSLA (and I have had no prior positions in TSLA) and am watching from the sidelines. This may change at any time. If any follow-up posts coincide with my holding a position (long or short) in the stock or in TSLA options, this will be noted within said posts. 

John Allison on “Leadership and Values”

John A. Allison, then acting CEO and Chairman of BB&T bank (now retired), gives a talk on “Leadership and Values” at the University of Virginia’s Darden School of Business.

Why am I linking to this lecture by John Allison? Very simply, Allison’s excellent talk addresses a greatly overlooked theme in American business and life today: establishing one’s code of personal ethics.

Now what makes John Allison qualified to deliver such a lecture?

Allison, who we highlighted (and who the NY Times profiled) in our post, “BB&T prefer liberty and reason to bailouts”, grew the North Carolina-based BB&T bank by leaps and bounds while it gained plaudits from customers and the business community for its integrity and high rates of customer satisfaction.

While large banks and mortgage lenders across the country sank their customers, themselves, and our overall economy through their overexposure to residential housing and subprime mortgage loans, Allison and BB&T remained focused on ethical capitalism and engaging in “win-win” transactions that benefited the bank as well as its customers.

In his talks on “Leadership and Values”, Allison, an admirer of Ayn Rand’s philosophy of Objectivism, discusses the importance of integrity, examining your ethical framework, egalitarianism and moral relativism vs. objective truth, and the road to self- improvement.

We’ll let John Allison do the talking now. Check out the video above, or see this more recent clip of a very similar talk at Marshall University with a Q&A session from students and community members. Enjoy the discussion!

James Grant on the “V-shaped” recovery

One of the most talked about economic stories of the weekend was Jim Grant’s piece in the Wall Street Journal, “From Bear to Bull”.

In it, Grant discusses the rationale for a rather zippy (or “V-shaped”) recovery following this steep recession that began (officially) in late 2007. Here are some excerpts from that piece:

The Great Recession destroyed confidence as much as it did jobs and wealth. Here was a slump out of central casting. From the peak, inflation-adjusted gross domestic product has fallen by 3.9%. The meek and mild downturns of 1990-91 and 2001 (each, coincidentally, just eight months long, hardly worth the bother), brought losses to the real GDP of just 1.4% and 0.3%, respectively…

…Americans are blessedly out of practice at bearing up under economic adversity. Individuals take their knocks, always, as do companies and communities. But it has been a generation since a business cycle downturn exacted the collective pain that this one has done.

Knocked for a loop, we forget a truism. With regard to the recession that precedes the recovery, worse is subsequently better. The deeper the slump, the zippier the recovery. To quote a dissenter from the forecasting consensus, Michael T. Darda, chief economist of MKM Partners, Greenwich, Conn.: “[T]he most important determinant of the strength of an economy recovery is the depth of the downturn that preceded it. There are no exceptions to this rule, including the 1929-1939 period.”

If you’d like to read more, see the full piece at the link above.

Related articles and posts:

1. Jim Grant on CNBC: get set for inflation – Finance Trends

2. James Grant on Bloomberg TV – Finance Trends

3. “Jim Grant: Ringing the Bell at the Top?” – Financial Armageddon.

4. The Aftermath of Financial Crises – NBER.

Traders and brokers at the Curb market, 1916

Traders brokers hand signal Curb market

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.

Another Fed day, another dollar

Market chatter and action today has been (predictably) dominated by the spectacle of yet another Fed announcement day.

Today’s shocker: rates are left unchanged near zero, with talk (from the high priests in media and central banking) of some kind of unfolding economic recovery (one supported by “stimulus” and accompanied by high unemployment rates for the next couple of years).

Actually, I spent very little time focusing on this subject today, aside from catching up with some amusing and informative tweets on the market impact from the likes of Howard Lindzon, Tradefast, and others in my Twitter stream.

Good to know there are people keeping up with some of this stuff (Fed’s impact on yield curves, equities) when you need a quick refresher and a bit of insight from those in the know. This is one of the areas in which my Twitter community and favorite blog lists really stand out.

I’m also checking in with BMB’s market wrap (hot off the WordPress) for an overview of the day’s action and a look at what may lie ahead for the stock market in the coming days.

What I’d really like to do is revisit this January 2009 piece from Bronte Capital, “Zero in Japan versus zero in America”, and find some more recent material on the differences between ZIRP Japan and ZIRP US in the late 2000’s. This is an area I could stand to learn more about, so look for updated notes in the comments section (or please add thoughts/links of your own).

To hell with the TV news, I will be searching the blogosphere and online print and journals for more on this.

Online Trading Account – Easy access for investors to trade

Trading on the stock market has improved in the past. Now, investors have a demat account for trading. This increase has resulted in many benefits for investors. With the help of online trading account, investors can instantly share your book.

 Investors can make more profit with the account; they can now take immediate ownership of its shares, the transaction is guaranteed via the Internet, no delivery wrong signature does not match, easier and more dependent subscribe shares, access to your account anytime, from anywhere place, and more. This online trading account so helps investors overcome many obstacles during the traditional money-way trade and investment. Runners also reduced since the days of online trading has been introduced. Another benefit is to avoid confusion in the title of ownership of securities and easily accept IPO (ration common problem).

Art Institute Matisse exhibit


An image of one of many beautiful paintings & sketches seen at the Art Institute of Chicago’s Matisse exhibit. This painting is called Blue Nude (Souvenir of Biskra) and was painted by Henri Mattisse in 1907.

If you’re in or near Chicago and love art, go see the exhibit if you haven’t already.

Not only are there some fabulous paintings & sculptures on display, but also some great drawings that seemed to be overlooked, judging by the attention paid to them by the visitors I shared the viewing galleries with.

For those who can’t make it to Chicago for the exhibit, you may be interested to catch a glimpse of the work on display in this video overview of Matisse: Radical Invention, 1913-1917.