Archive
May 06, 2010
What You Need to Know about Today's Market Collapse
Let the speculation begin.
With the Dow falling farther and faster than it ever has before, the financial media begins its search for the “reason” it happened instead of what we really need to know about.
Was it the riots in Greece?
Remember how just a week ago Greece’s problems were good for U.S. stocks? The prevailing reason du jour for stocks going up was investors would pull out of Europe and put their capital to work in the United States.
Or was it the British elections, a “fat-fingered” trade, or China’s monetary tightening measures earlier this week?
Or did a big fund made a highly-leveraged bet that Greek bonds would rebound after the bailout was announced and when they didn’t, it imploded?
The most likely culprit, however, was part of something we touched a few months ago. Back when Goldman Sachs’ traders were booking profits on 98% of trading days, high-frequency trading (HFT) was the hot topic.
While the big traders running the computer-assisted trading programs were banking remarkably steady profits, we looked at the big risk that came with HFT systems controlling 70% of all trading volume:
At some point in the next five to 10 years, another out-of-the-blue crash will likely happen again. Sure, there are limits on how much the major indices can move, but rules and regulations don’t always prevent the next problem, they usually only add to it.
Today was just a taste of what automated markets will bring eventually on the random and unpredictable day.
For now though, we’ll wait for the full details to come out for the who’s and why’s of the whole ordeal. We’ll look at the real impact of the sell-off.
Apr 25, 2010
Oil Outlook: This Indicator Says Buy Now
Is oil’s run over? Is $85 too far, too fast for oil prices? Is too late to buy?
Investors are faced with a lot of touch questions about oil now. However, one little-known indicator is flashing “buy.” And the last time two times it did that oil prices more than doubled each time. Here’s the set-up.
Apr 23, 2010
A Look at the Next Move for Stocks
The market rally has reached an almost comically delusional high.
Bad news comes out. They say, “No problem. It was better than expected.” Market goes up.
Good news comes out. They say, “The recovery is real. There’s still time to get in. Don’t miss out.” Market goes up.
The market rally has been almost bulletproof and this earnings season has only made it stronger. Currently, 83% of S&P 500 companies that have reported have beaten analyst expectations. It’s on pace to be the best performance for earnings vs. estimates since 1993.
Expectation hurdles have been low set exceptionally, but in the current stage of the market rally any news is good news.
But it’s times like these, when the S&P 500 has had only seven down days in the last five weeks, when it’s time to look at when this rally will end. Because it will end. It will end badly. And history shows most investors will miss out on the further gains to be had and will go “all in” just in time for it all to fall apart.
Here are three ways to know when the rally is about to end.
Apr 07, 2010
Interest Rates: Two Market Shaping Events No One Is Talking About
The current rally may have taken its last breath.
Last week two major events happened that will have a tremendous impact on your portfolio in the months and years ahead.
Last week, while the Dow continued its march higher and the mainstream financial media cheered on the rally, the most important market in the world took a major turn.
A few investors will be positioned to reap exceptional rewards while the herd will take a bigger hit to their bottom line than they did during the Panic of 2008.
Here’s what happened and what it means for the most important megatrend in the financial world.
Apr 03, 2010
Why Obama's Energy Plan Will Push Oil Prices Much Higher
It has been described as a “stunning” reversal.
In reality though, the “reversal” is actually cementing one of the greatest investment opportunities of the next decade.
Last Wednesday the government announced it was opening up offshore waters to oil drilling and exploration.
It was hailed as great news by most of the media. The move to open new areas to oil exploration when oil’s at $80 a barrel appeared to be a great economic move and a greater political move.
But not all is what it seems. And a great investment opportunity was just turned into a greater one.



