Selling the Drama

The market in the last few weeks has a bottom. Although highly volatile, the general trend was pretty much a flat line for the last 30 days. Flat lines do not make money  and that is why some fluctuation  is necessary.

The S&P bottomed on July 15th at 1215 and had a triple top since that date at around 1280-something.

It was mind blowing  to watch  CNBC or read the headlines on Market Watch & Reuters. The same anchors, analysts and reporters would flip the story upside down from one day to another, heck even during the same trading day.

The staggering drop in oil price was primarily credited for this turnaround but it is worth noting how the media's manipulation of news contributed to the up and down pattern in the S&P chart.

On the morning of the 16th, it was Doom's Day, Armageddon, the End of the World... The S&P was at a two-year low and the Reuters' headline read: " Wall St set to open lower; CPI data in focus"
The trap was set and the retail investor sold at open. The market on that day moved up big. Reuters' story this afternoon changed to: "US STOCKS-Wall St soars on banks' best day in 16 yr, oil's drop". The S&P gained more than 30 points that day. Same story goes on for the rest of the week. You can check the financial headlines history on yahoo.

First top busted on July 24th:
From Reuter: "Home sales at 10-year low, jobless claims jump"
As if this is news. I thought that was priced in the stock already. What a con.

History repeats itself Same story on the 29th. Morning: doom's day
End of day Result? 266 points up for the Dow.

Second Top busted on July 31st:
The reason: Economic worries. Wow that's news!

Then on August 5th, economic worries are forgotten as the Feds kept rates steady. That was expected anyways, so what's the news?? No news there, just a reason to move the market and give some value to those options spreads.

Third top busted on August 7th:
Once again financials, jobs and the whole economy is bad. Didn't we know that on the 5th?

The next day was as if nothing happened. Dow was up more than 300 points.

and the tape goes on...

The same news has been recycled over and over again. Oil Down, Stocks up. Economic worries after a couple of days bring stocks back down.
WE GET IT! just price it in and move on...

It is clear that things do not change overnight unless there is a cataclysmic event, an act of God, a massive terrorist attack or a bubble burst.
So since it's none of the above that occured, what is it?
Is it Groundhog day or is it that mutual secret agreement between the media and the market makers that there should always be a climactic headline every day that moves the market no matter the direction?

Kings of Democracy

In a recent article by Ben Silverman, Oona King, Ex-British Parliament Member, provided the following comment in reference to the Sony Playstation:

"Kids in Congo were being sent down mines to die so that kids in Europe and America could kill imaginary Aliens in their living rooms." Apparently in the Republic of Congo mining of "Coltan" (Tantalum) is supported by the demand for this mineral in the production of electronic components.

Wait a minute! Oona King has also declared she does not regret voting for the War in Iraq, and went as far to say "I could never have voted against getting rid of Saddam Hussein".

No more B.S. Ms.King! "Coltan" is also utilized in electronic components for missiles and Airplane parts. It appears killing real people in lieu of "imaginary Aliens" is more acceptable to this "King".

Manipulation and the Innocent

The recent drop in equities is supposed to be a buying opportunity for the long term investor. Sadly, I have learned that it is not that easy.

One has to be extremely cautious and even more patient since the abundance of information out there makes it next to impossible to sort fact from fiction.
Not only analyst reviews are biased and self serving, the motives and loyalty of many journalists and financial bloggers are highly questionable. Favorable or unfavorable articles are constantly written to help the big guys get in or out of a position.

Part of their regular programming, CNBC, Bloomberg and Fox Business invite so-called investment strategists, stock analysts, fund managers and trading gurus to recommend or bash equities. Many new investors immediately trade the mentioned stock dismissing who these "TV stars" work for and what is the purpose of their 'buy or sell' recommendations.
Without proper homework, the new retail investor falls prey of these market movers by buying or selling hastily based on a quick "lightning round" tip from Jim Cramer in CNBC's "Mad Money" for example.

Other than the fact that following these TV recommendations can deplete one's portfolio in this market, this sheepish trading moves the stock in unpredictable directions causing trouble for fellow investors that did their due diligence.
High volatility only serves experienced traders such as the guys on CNBC's "Fast Money", guys who have the technical expertise to protect their assets with put and call options.
The other beneficiaries are the market makers, or the big institutions, investment banking groups and hedge funds.
Many hedge funds unfortunately have low business ethics as they do not have to comply with investment banking regulations such as Goldman Sachs. Their goal is to make money in any way possible even if it includes defrauding the retail investor with rumors or FUD (Fear, uncertainty and Doubt) about a company or the global economy. there is sometimes even a "rumor of a rumor" or what they call "market talk". hedge fund have deep pockets and can usually persuade journalists of big name publication such as the Wall Street Journal or Barron's of their manufactured rumors.

Side note: Recently, the SEC has been looking closely at Naked Shorting and the spreads of fabricated rumors in order to avert stock price manipulation. I do not believe it will make a difference to retail investors but at least they are trying.

Market Makers (MMs) or what many in the blogosphere call "Market Manipulators" take advantage of this sharp economic downturn to persuade you with charts, graphs and all sorts of numbers that it's the end of the World or at least the end of this fine company or that growing industry. They tell you "this time it's different" because there is "stagflation" or recession coupled with inflation. Once again spreading FUD.
most economists acknowledge recession as a healthy phenomenon necessary to rebalance the economy. It will eventually wind down and a new growth cycle will begin.
Inflation, the weak dollar, plus $200 oil and plus $1000 gold price are now the spellers of doom but could eventually be the catalyst for the next growth cycle. Think alternative energy, railways, online shopping, working from home, exports, tourism...etc. I plan to elaborate more about that topic in an upcoming blog.

There are many companies out there that will survive the storm. To find them, you have to weed out the noise.
Remember, for many companies, the "bad times" are already priced in and the stock's fair value might start to move up in anticipation of a brighter future. When panic hits the Street, it's time to buy (certain stocks), though be wary of value traps and do your homework.

In the near future, I will write about some companies that I think are undervalued despite the bad economy. i will also try to expose specific examples of FUD and misinformation. They're all over the place. Stay tuned...

Free America from Slavery

Mickey Edwards discussed "Conservatism" with Bill Moyers this evening and stated "We need to keep the power in the hands of the people through their representatives". Well said Mickey, as this is essentially the fundamental principle of the Constitution of the United States of America . . . "We the people . . . "

Is a Democracy, as envisioned by the "Founding Fathers of America", possible without an educated majority? Educate, activate and participate or be enslaved!

Recent activities of government appear to have shifted away from the founding principle of the Constitution toward a posit of dictatorial rule, a government activated on the basis of protection of itself for the gain of itself and a government dismissive of the people's right to exercise freedom.

Freedom is not a state or destination, it is an action. One must practice freedom to be free. As the government further assembles "protective" boundaries/limitations in the guise of safety, the further the people are driven into a corral of servitude.

Reverend JJ Greed

CNN notes Reverend Jesse Jackson's most recent whispers, "See, Barack's been talking down to black people. ... I want to cut his nuts off." Is the Reverend Envious? If, envy is a veil for greed, then yes!

There are several facts regarding this "leader", which describe a character formed by deceit. Jesse Jackson was next to Martin Luther King Jr. when he was assassinated and immediately stepped into his absent position. Jesse "ran" a campaign for President of the United States of America, twice, without success. Jesse is a self proclaimed "Reverend" (minister of faith), which had an affair with a co-worker resulting in a child out of wedlock, while he was married to another woman.

Jesse Jackson is a man that positions himself next to power, a man that seeks power for the benefit of himself, and a man that uses power to seduce. Are you seduced or amused?

Check out the book "Shakedown: Exposing the real Jesse Jackson", by Kenneth R. Timmerman. He says it well when he calls Jesse Jackson a "Race Hustler". If Jesse is no longer able to demonize the "white man" or some other effigy then he is without a subject, like a caller at a freak show without freaks. Obama represents a threat to end Jesse Jackson's coalition of division. Beware Obama, one man has already died at his side.

More Missiles for Iran

Missiles pointed toward Israel, Europe and Others? The word on the street from a fellow Iranian is "Bull Shit . . . All the missiles are pointed at Saudi Arabia". However, Gordon Johndroe, White House spokesman was quoted recently by Reuters saying "Iran should refrain from further missile tests if they truly seek to gain the trust of the world". Trust? No more B.S. Gordon!

Look, Iran recognizes an opportunity to secure a better seat at the global bargaining table. A few missiles launched and obvious speculations of attacks go a long way. For Israel, United States and other oil dependent countries to seriously consider attacking Iran would be economic suicide on a global scale.

Apple (AAPL): TheStreet.com & the reality distortion field

Like many Apple investors out there tracking every bit of news,  I clicked on the link to a video by Gary Krakow posted today on thestreet.com entitled "the 3G iPhone stinks".

I cannot understand how that half minded so- called journalist gets his conclusions.

Extrapolating from the 3 first three reviews that came out last night, he came up with a pretty shocking conclusion: " the 3G iPhone stinks". That makes me think the reviews are not the ones we all did last night and maybe part of his distorted imagination.

For a quick summary of these three reviews, go to gizmodo.com

USA today's Edward C. Baig headline reads : "Apple's new iPhone 3G: Still not perfect, but really close"
Then follows with: " Extra, extra: iPhone 3G: The Sequel, is worth the wait."

Walt Mossberg in AllthingsD.com gets directly to it and explains that although current iPhone users might not need to upgrade. New users might want to since this phone addresses the main concern from the first gen phone: network speed.

This is not a bad thing since all current users still have at least one year to go on their Contract. the other advantage I see is brand loyalty. 

With such an evolutionary and not a revolutionary update, current users can feel comfortable owning the device for the length of their Contract. the first gen iPhone does not feel obsolete and eary adopters could not be happier. (think brand loyalty).

That was pretty much the conclusion brought by David Pogue of the New York Times.


Explain to me how these statements above translate to "stinky-ness"!

Other random jabs at the 3G iPhone that blew my mind were the video's mention of choppy 3G from AT&T as I would not understand how this can be device related. Same goes for battery life... Steve Jobs himself told you Mr Krakow that 3G drains battery and that is why you have the option to turn it off when not needed.

Another one is the claim that since the iPhone 3G is an excellent gaming device it is bad for business. As if Computers are not good at both. This should be a selling point for Apple as it highlights the powerful computing capabilities of the device.

Then they attack the US plan pricing, which has nothing with the device. It is still a good deal in my opinion anyways considering you are saving 200 dollars upfront and can invest it somewhere else.

Here's a chart from gizmodo showing that plan pricing for the 3G iPhone is not that bad compared to others.

All in all , if the iphone received such good praise as "real close to perfect" and it "stinks", imagine what it needs to do to be average in Gary's eyes. Maybe the next iPhone can have teleporting powers or a FUD/ lie detection system that Gary Krakow can use on himself.