Archive for October, 2008
Oh where, oh where, is the capitulation. As I said before it ain’t gonna happen! And the reason is algorithmic trading. At IB there is the vwap algo, and its purpose is:
To achieve the Volume-Weighted Average price (VWAP), calculated from the time you submit the order to the close of the market.
In other words an algo that is available to retail can make strategic purchases. On the other side of the coin are algos that will sell at certain values, UNLESS you have to sell.
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Friday, Oct. 24, 2008
by Christian
I have always admired Colin Powell ever since the first Gulf War. Colin Powell being a proud American reminds me of all the good that America can be. Just like Warren Buffet! These two individuals represent the good and what America can be.
The following comment he said, says it all and should be taken to heart!
I’m also troubled by, not what Senator McCain says, but what members of the party say. And it is permitted to be said such things as, "Well, you know that Mr. Obama is a Muslim." Well, the correct answer is, he is not a Muslim, he’s a Christian. He’s always been a Christian. But the really right answer is, what if he is? Is there something wrong with being a Muslim in this country? The answer’s no, that’s not America. Is there something wrong with some seven-year-old Muslim-American kid believing that he or she could be president? Yet, I have heard senior members of my own party drop the suggestion, "He’s a Muslim and he might be associated terrorists." This is not the way we should be doing it in America.
Sunday, Oct. 19, 2008
by Christian
People look at Microsoft stock and think, "hey this is cheap." Yet it turns into a value trap. Want to know why? I think I can sum it with one blog entry.
There’s been a lot of lively discussion since I confirmed yesterday that the official name for the next version of the Window client operating system will be "Windows 7" about how we got to the number "7."
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Wednesday, Oct. 15, 2008
by Christian
My brother who lives in Russia, and travels all over the former Soviet countries gave me a call on Skype. He timidly asked, "how is your portfolio?" I replied some good some bad. Not complaining.
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Tuesday, Oct. 14, 2008
by Christian
When asked, "Do you consider yourself a free market supporter?"
"Yes, and that’s why I feel uncomfortable, even though I think this action [Bank bailout] is great"
I have a love hate relationship with Donald Trump. But for someone to say, "hey you know I am not crazy about this, but it had to be done to stop Great Depression 2" deserves a two thumbs up!
I have found the hardest thing is not to be right whenever everyone is wrong. But to admit something that runs counter to everything you believe in. It is very hard because it runs across your grain. Though you do it because you see a bigger picture.
So Donald, two thumbs up from me!!!!!
Tuesday, Oct. 14, 2008
by Christian
It looks like many of the countries throughout the world are adopting the British plan of guaranteeing inter-bank lending and recapitalizing the banks. This might actually work!
I know I am crossing my fingers…
I have to admit King is a pretty good central banker! Kudos…
Sunday, Oct. 12, 2008
by Christian
Jim Rogers recommends:
"The way to solve this problem is to let people go bankrupt," Rogers said.
"Then you will hit bottom and then you start over. The people who are sound will take over the assets from the people who aren’t sound and we will start over. This is the way the world has worked for a few thousand years."
Is this man insane? Here is why Jim Rogers in my opinion is talking garbage.
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Sunday, Oct. 12, 2008
by Christian
Nobody wants to do a G7 or G20 deal. Here is why I think it will not happen…
Fear!
The same reason why banks are not lending with each other is the same reason why the Euro zone, or world cannot come to a single deal. They don’t trust each other. And if they don’t trust each other how can banks? I say, "hey let Rome burn if that is the only way to get some action."
For example the German minister just said (ARD News), "oh we have a better saving quotient and thus a better situation than the US."
OH REALLY…. I call Bullshit!
Well, he is right Germans save more, and Germans have less debt, but that is pretty much irrelevant. You see Steinbrueck is pretty much an idiot because he things Germany is "special". This attitude was very obvious when Germany was breaking the mastrict Euro treaty multiple times, yet those countries that were "suspect" were doing very well.
Let me illustrate an example of how this credit situation will affect Germany.
Gescheitert ist der Campingfahrzeughersteller an zwölf Millionen Euro, der Summe, die das Unternehmen bei Passau zumindest vorübergehend gerettet hätte. Doch wochenlange Verhandlungen mit dem Bankenpool unter Führung der Bayerischen Landesbank scheiterten. Die Geldhäuser wollten dem Unternehmen nicht mehr aushelfen. Mit dem Kredit sollte, wie in den vergangenen Jahren auch, die absatzschwache Zeit bis zum Frühjahr überbrückt werden, denn das Unternehmen hat kaum Rücklagen und Eigenkapital. Gleichzeitig sank der Umsatz von 330 Millionen auf 305 Millionen Euro. Dazu kommen 60 Millionen Euro Schulden.
This company builds camping trailers and the thing is their order books are full. They have plenty of work. But due to the credit situation and slowing demand they can’t get revolving credit, and hence have to declare bankruptcy. As per the article they needed 12 million Euros, which is less than 4% of their yearly revenue. But the banks are shutting down and with that nearly 2,000 jobs will go out the window.
That is the credit crunch in plain and simple words. What should be keeping Steinbrueck awake at night is that this is no fatty lazy company. This is a "bestseller" company who is struggling to get through the credit crunch.
So Steinbrueck if you are listening and reading this GET WITH THE ACT and work together with other countries. Because if you don’t you will have to deal with it indirectly. This is a global credit crunch!
Though I doubt he will, after all "Germany has more savers…"
Saturday, Oct. 11, 2008
by Christian
The mathematics of shorting is not fair. And this is a serious issue.
Let’s say with all things being equal you decide to go long and short a 100 USD stock for a period of one year, and your starting capital is 100 USD. In each case we will calculate the gains or losses of each position with a movement of 10 USD. For calculation purposes the interest rate would be libor which will be 4%. If you are borrowing money it would cost you 4.5%, and if you want interest you will get 3.5%.
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Tuesday, Oct. 7, 2008
by Christian
Wait Wait I need a rate cut… No Wait Wait I need more liquidity… No Wait Wait I need a common European approach… No Wait Wait I need capitulation…
Get the idea! When I hear these traders I just gag! I am not kidding here.
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Monday, Oct. 6, 2008
by Christian
