Stock Market

[ExPatriatePen]

Are they referring to level II quotes in relation to fair value for GAAP?

Level II quotes allow you to "Peek into the order book"

You'll be able to see the current bid/ask spread at various prices and the good ones also show what house is placing the trade.

BE CAREFUL with high frequency trading (HFT) you can get seriously burned with this. You think you're seeing everything in "Real Time" but, especially with the bigger stocks, trades can come and go dozens of times before your screen even refreshes.

Also trading houses have been known to place ghost trades to make it look like there's huge support levels at a certain price, only to pull those trades right before they would have been executed creating vacuums.

[columbia]

Traders in the New York Stock Exchange felt the shaking and shouted to each other, "Keep trading!" CNN's business correspondent Alison Kosik reported from the floor at 2:20 p.m. E.T.

http://news.blogs.cnn.com/2011/08/23/qu ... ngton-d-c/" onclick="window.open(this.href);return false;

The DJI is up ~ 225 today.

[ExPatriatePen]

Yeah! looks like a strong close.

Still no volume to speak of though.

Advance/Decline looked decent.

[ExPatriatePen]

XLF, the Spider bank ETF, closed at 12.42. It hasnt traded at that level since March of 2009, when the bank stocks were rising from purgatory. call kenny the kangaroo crazy, but that seems pretty cheap. the wall street journal reported last week that the 6 largest banks in the US were all trading for less than book value. kenny the kangaroo isnt saying that all 6 are great buys, but the market seems to be punishing banks a little bit too much.

BoA down 3 3/4 % today, on an up day overall.

Hope you didn't jump in last week Kenny.

[KennyTheKangaroo]

did not end up buying XLF, or anything else for that matter.

today was an all and all good day for the market though. perhaps the fed will consider tectonic easing to stimulate the economy

[ExPatriatePen]

Well, I just spent most of the night and much of this morning going over the data.

OUCH.

The "Hard" economic data looks better than most are giving credit for. There is a bit of strength in the Industrial Production numbers etc...
(Let's see how the new unemployment claims come out tomorrow - but even a move a bit higher to 410-415 wouldn't be alarming)

The "Soft" economic data is horrible, but most of that data was gathered during the same week as S&P's downgrade, so sentiment being low shouldn't be a surprise in that context.

The next couple of days news out of Jackson Hole will tell the story.

As for Europe, I'm convinced there's a major drop coming. Europe, even more than the US, basically closes up shop during the end of August. I don't think there's a whole lot of sunshine being directed at European Financial institutions right now (Not relative to what it will be in a couple of weeks)

When early September gets here I think they'll be an assault on European Financials. I'm trying to figure out what the contagion effect will be for the US. I think BoA has a huge exposure to Europe. I'm not sure though how much that's already priced into the stock now that BoA is nearly in danger of being reverse spilt territory.

There's a lot of uncertainty out there. No place to be if you're trying to preserve capital. But huge opportunities if you place the right bets.

GLTA

[JeffDFD]

Strong day today so far...hopefully things can get back to normal!

[KennyTheKangaroo]

upon seeing the news that warren buffet bought $5 billion of BoA stock, kenny the kangaroo is fairly certain that buffett read kenny the kangaroos post on lgp.com from last week, did a little research of his own, then bought some boa. conclusion: bufffett is a copy cat.

[pfim]

upon seeing the news that warren buffet bought $5 billion of BoA stock, kenny the kangaroo is fairly certain that buffett read kenny the kangaroos post on lgp.com from last week, did a little research of his own, then bought some boa. conclusion: bufffett is a BILLIONAIRE copy cat.

[bh]

Interesting...

http://www.indexfundeducator.com/randomness.htm

So, just by luck, a certain small percentage of mutual fund managers will have great track records. So could you, armed with a coin and the strength to keep flipping. Is it likely, that you, or any one mutual fund manager, will have a great track record over time? No. But, just based on sheer luck, some will and we will call them “genius” and put them on the financial television programs. Is it likely that a manager who “happened” to produce a superior track record one period (say the 1980s) would produce a superior track record in the next period (the 1990s)? Absolutely not! This is borne out by the research. (See the Fallacy of Persistency elsewhere on this web site.) We can not state this strongly enough: the precious touchstone upon which mutual funds stake their claim to fame, superior track record, is, upon proper examination simply “statistical fluke”, with the future track record of the so-called financial expert destined for ordinariness or worse. We are talking here about major ‘distortion’, an entire industry based on statistical confusion and the propensity of investors to be Fooled by Randomness.

This is good too.
http://www.indexfundeducator.com/persistency.htm" onclick="window.open(this.href);return false;

[Tomas]

Interesting...

http://www.indexfundeducator.com/randomness.htm

So, just by luck, a certain small percentage of mutual fund managers will have great track records. So could you, armed with a coin and the strength to keep flipping. Is it likely, that you, or any one mutual fund manager, will have a great track record over time? No. But, just based on sheer luck, some will and we will call them “genius” and put them on the financial television programs. Is it likely that a manager who “happened” to produce a superior track record one period (say the 1980s) would produce a superior track record in the next period (the 1990s)? Absolutely not! This is borne out by the research. (See the Fallacy of Persistency elsewhere on this web site.) We can not state this strongly enough: the precious touchstone upon which mutual funds stake their claim to fame, superior track record, is, upon proper examination simply “statistical fluke”, with the future track record of the so-called financial expert destined for ordinariness or worse. We are talking here about major ‘distortion’, an entire industry based on statistical confusion and the propensity of investors to be Fooled by Randomness.

This is good too.
http://www.indexfundeducator.com/persistency.htm" onclick="window.open(this.href);return false;

When I was teaching Intro to Finance at Pitt all those years ago, I illustrated market efficiency on these 2 examples:
1) Say that at the beginning of every year, there is 50:50 chance that the market will be up/down at the end of that year. So, the chances that a portfolio manager flipping a coin will be right is 0.50 . The chance that the manager will be right 10 years in a row (and will be considered a true investment star) will thus be 0.5^10 = 0.0009765625

So, there is 1-0.0009765625 = 0.9990234375 that the manager will be wrong at least once. However, the chance that AT LEAST one manager among , say, 5,000 portfolio managers (all flipping coins) will be right is:
(100% less EVERYBODY is wrong) i.e.
1 - (0.9990234375)^5000 = 99.25%

2) I took old WSJ ads for mutual funds claiming substantial market overperformance (Fidelity with Peter Lynch used to advertise a lot this way). Then, I showed the subsequent performance of such funds (after the ad) - it was always much lower than the advertised extra gains.

2)

[Ron`]

upon seeing the news that warren buffet bought $5 billion of BoA stock, kenny the kangaroo is fairly certain that buffett read kenny the kangaroos post on lgp.com from last week, did a little research of his own, then bought some boa. conclusion: bufffett is a copy cat.

Warren always goes where the safe money is "today". The fact that BOA is now bobbing above the water, and the fact that BOA has already been propped by the US Government, that was a tough call. The real question is what did Warren get in preferred shares? He typically doesn't wade that deep unless he is ensured to be paid first as in preferred stock.

[KennyTheKangaroo]

his deal is a lot similar to the deal that he got with goldman sachs. in the goldman deal, his preferred shares got some hilariously lopsided dividend that yielded 10% or something like that. trying to copycat buffett is more or less useless because the average investor does not get the deals he gets. if the man played roulette, he would insist on getting 2.5 to 1 odds on red or black instead of 2:1.

[thehockeyguru]

Standard & Poor’s is giving a higher rating to securities backed by subprime home loans, the same type of investments that led to the worst financial crisis since the Great Depression, than it assigns the U.S. government.

[pfim]

Standard & Poor’s is giving a higher rating to securities backed by subprime home loans, the same type of investments that led to the worst financial crisis since the Great Depression, than it assigns the U.S. government.

It's not that simple, but it does highlight how irrelevant the downgrade of the US bonds was. Honestly, does anyone need a rating agency to understand the risk of US debt?

It seems like S&P tried to make a political statement and by doing so, called into question their other decisions. Even if it wasn't a political statement, it was just plain dumb, which also calls into question their other decisions.

[Point Breeze Penguins]

Dow already down -234.62

[Ossa]

http://www.cnbc.com/id/44370439" onclick="window.open(this.href);return false;

[ExPatriatePen]

Financials taking a beating already in the futures market.

JnJ still can't get their **** together and SUNoco decides to get out of the refining business.

Today is going to be challenging.

[shafnutz05]

Circumventing eh?

[ExPatriatePen]

Circumventing eh?

There's no true circumventing of the market.

Best thing a little guy can do is keep doing homework and keeping a long term focus.

Commissions will eat you up as a little guy if you do too much day trading.

But the six month to one year trend of this market is not your friend.

The market still hasn't recovered to pre Japanese Eartquake/Tsunami levels.

[ExPatriatePen]

Michael Tennenbaum makes Nouriel Roubini look like an optimist.

He's predicting a 75% chance of another eminent recession.

[ExPatriatePen]

Dow at 10,969... Nuts

[Letang Is The Truth]

Circumventing eh?

There's no true circumventing of the market.

lol

[shafnutz05]

^

[ExPatriatePen]

I don't get it guys. What's the joke?