Perry Glasser

Posts Tagged ‘wall street journal’

WIZARDRY EXPOSED

In Business, Economy, EDUCATION, Finance, Personal Finance, Wall Street Journal on January 6, 2015 at 1:42 pm
WIZARD OF FINANCE

WIZARD OF FINANCE

Financial Wizards feel compelled to offer explanations for any and all stock market perturbations. After all, what’s the point of being a Wizard if you possess no magic?

Besides, how can a Wizard separate a Citizen from hard-earned cash by offering sage advice despite being clueless?

Cohorts of Wizards are in the business of blowing red smoke, green smoke, and blue smoke to impress the rubes that the world of finance is too mysterious and hard to understand for mere mortals, a falsehood that precipitates money.
Nevertheless, smoke remains smoke.

Wizardry Exposed

Wizard advice comes in four flavors:

Subjunctive Mood Mavens: Solemn pronouncements in subjunctive mood are consultant-speak, the language of baseless prognostications, crystal ball gazing bank economists, and other members of  the OUIJA board school of investment advice. They can never be wrong. Dollar$ notes for those who need a grammar refresher that subjunctive mood expresses an idea that is untrue or a wish. Subjunctive mood is especially helpful when waffling. The stock market may go down this year is an utterance that suggests it may also go up. Subjunctive mood is a favorite of the Wizard Street Journal headline writers who have the odious task of filling column inches on days when there is no financial news — which is most days. Greece May be Forced from the Euro Common Market!  Yes, well, it might not be, too.

Hysterics: We pay for slasher movies because we like a good scare; we ride rollercoasters for the same reason. The Wizard who cries “Wolf!” on a near daily basis, unlike the boy in the story, will always find listeners. Like the owner of the clock that stopped who bragged his timepiece was correct twice each day, Doomsayers gather an audience despite being wrong most of the time. Readers who doubt this may want to note that even adjusted for inflation, the Dow Jones Industrial Average, the measure by which most people assess stock the US markets, has gone from below 4,000 in 1994 to hover near 18,000 now. Even adjusted for inflation, any schmuck should realize listening to Doomsayer Hysterics can cost a bundle. If Henny Penny urges you to make your appeal to Foxy Loxy because the sky is falling, don’t be surprised if you turn into Foxy Loxy’s main dinner course.Henny_penny

Snow-Blowers: Ruminating over arcane charts and using an esoteric vocabulary about cups, cliffs, breakout and support levels, peaks and valleys, Snow-Blowers sell unwary Citizens advice based on the premise that graphical patterns in the past will repeat in the future. Such soothsaying is about as accurate as your average racetrack tout who examines past performances. While racetrack touts and technical analysts will leave you equally broke, racetrack touts use a transparent vocabulary. You might also consult the entrails of birds.

Screamers:  When you have to fill a 30-minute TV time slot for five days each week, the only way to maintain an audience is to scream at them.  That’s 200 days each year, a total of 100 hours of annual financial advice. When every study shows that the best way for investments to thrive is a modest, infrequently varied buy-and-hold investing approach, it’s hard to imagine just what there is to scream about, other than trying to draw the audience that draws the advertisers.  I mean, what can Cramer do? Name seven stocks every January and shut up for a year? His bad calls are legendary, but he does not have to be right, he has to be loud.  It’s just show-biz, folks.kramer7

 

 

 

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BITCOIN IN WONDERLAND

In Business, Economics, EDUCATION, Finance, Personal Finance, Political Economy, Wall Street, Wall Street Journal on March 14, 2014 at 10:37 am

Curiouser and curiouser!’ cried Alice (she was so much surprised, that for the moment she quite forgot how to speak good English); ‘now I’m opening out like the largest telescope that ever was!

Bitcoin Speculator

Bitcoin Speculator

Just when Dollar$ though the Bitcoin story was dead and safely buried, someone nibbles a few crumbs of Bitcoin Cake and we are back in Wonderland.

Beware of strange substances that are labeled Eat Me.

The Wall Street Journal reports that a Silicon Valley startup called Xapo is trying to become “the Fort Knox of bitcoin.”

Start with how the Journal ought to employ fact-checkers. Xapo is headquartered in Hong Kong, safely away from pesky US regulatory agencies. Sure, they’ve got offices in California, but so does every other financial firm in the world.

Magic Beans

The bitcoin business proposition is like the story Jack and the Beanstalk. (When it comes to bitcoins, metaphors from fantasy and fairytales are unavoidable.) Give us your real cow, and we will give you magic beans! Overnight they will grow to the sky! When you get up there, you’ll meet a giant who wants to devour you! To survive the giant, you have to be a thief and run like Hell!

Bitcoin: Give us your real money! Bitcoin value will grow to the sky. All you need is the heart of a thief!

The Xapo Proposition

Xapo claims to have raised $20 million to construct physical vaults, “the company says are in mountainous regions.” The vaults are to be guarded 24/7. You’ll need an eye scan to enter. Once each day, employees will descend into the vaults to verify passcodes for daily transactions. Indeed, Xapo indicates it will require 24 hours to complete any transaction.

There are no physical coins, of course. What will be down there will be computers Xapo promises will never be connected to the Internet.  The mountain locations are, naturally, top secret. They may, in fact, be in the back of your Mom’s lingerie drawer. What could be more secure?

Xapo has several competitors, testimony to the idea that a lot of people sell snakeoil.

Liquidity

The bottomless credulity of the cyber-community originates with vitamin deficiencies caused by a steady diet of cold pizza and Red Bull for breakfast, watching Goldfinger too many times, the conviction that one can get rich without ever getting out of a chair, and an unshakeable libertarian belief that the arms merchants, sex traffickers, and drug dealers MUST have an untraceable non-government issued currency for money laundering.

Bitcoin Banker

Bitcoin Banker

Criminals are famous for patience and trust. What 3rd World potentate on the lam requires liquidity? Money launderers of all sorts will  have no issue with a 24-hour waiting period.

Security

Xapo’s website reads, “The Xapo Vault offers fully insured storage for long term savings.” The Xapo website indicates that the insurer is “Meridian Insurance.”

Dollar$ best efforts to find Meridian came up with a few casualty and auto business insurers in the Silicon Valley area. There is no chance that any of them could sustain a few million in claims should Xapo somehow go under, never mind the billions in catastrophic losses made possible by the disappearance of an exchange like the late unmourned Mt. Gox. Could Xapo be arranging employee dental care with Meridian?

But Dollar$ wonders most what currency Meridian or any other insurer will use for indemnification. Will your stolen bitcoins be replaced by dollars, yen, or more bitcoins?

Criminals will stick with fiat currency or gold. Only the naïve and stupid will pursue their bitcoin dreams in Wonderland.

MURDOCH’S MINIONS RIP-OFF DOLLAR$ AGAIN!

In Business, Economics, Economy, EDUCATION, Finance, Personal Finance, Wall Street on August 18, 2011 at 10:21 am

Master Wizard Apologist

Dollars is getting downright smug at the frequency with which his in-bred skepticism coupled with a compulsive need to speak out beats the fabled Wall Street Journal to the punch.

The Journal is owned by Master Wizard-Apologist Rupert Murdoch and his News Corporation, chiefly known these days for scandal-mongering, tapping the cellphone accounts of murdered teenagers, and corrupting law enforcement in Great Britain.

August 18, 2011, page C1’s lead story in the Journal is about speculators in the oil commodities markets. The Journal notes that the Commodities Futures Trade Commission, a federal regulatory agency, has produced a list of speculators that includes Yale University, several global banks, Microsoft Corporation, and other “secret” investors who were dabbling in the futures markets as the price of oil reached record heights in 2008, heights never since matched. You may remember your pain at the gas pump.

Journal reporters note, “The list could fuel calls for a crackdown on oil speculators, a label critics apply to those who trade in oil but don’t use or produce it.”

August 17, 2001, one day earlier than the Journal, Dollar$ subscribers read the short course on commodities and saw this opinion:

“Dollar$ suggests that speculation can be controlled by requiring that all traders in future contracts be required to show the capacity to take delivery of the underlying commodity. If you aren’t a cruise line or airline, what the hell do you expect to do with 5 million gallons of fuel other than drive up the price?”

Hey, Rupert, how about lending me 100 researchers so I can make the case elegantly with numbers?

TURNING JAPANESE – I REALLY THINK SO

In Business, Economics, Economy, Finance, Politics, Wall Street on August 13, 2011 at 12:10 pm

Once again, Dollar$ readers could get the idea before the Wall Street Journal figured it out.

FactSet Research Systems, from the Wall Street Journal

On August 11, Dollar$ pointed out the scary parallels between the US and Japan on the verge of 20 years of deflation.

Today’s Wall Street Journal on page B1 has a headline: This Time, Maybe the US is Japan. The lead reads, “ It is a comparison that underlines the current plight of the US economy.”

Dollar$ does not get weary of being right, sooner.

Market Sentiment?

In Business, Economics, Economy, Finance, Personal Finance, Wall Street on June 19, 2010 at 11:45 am

Jason Zweig’s column  Wall Street Journal column today suggests that wild market swings are the result of sentiment. Hahahahahahahahahaha.

____________________________

Mr. Zweig:

Sentiment is a human attribute. As the Journal frequently reports, about 66 percent of all trading is machine to machine, algorithms at work. Those algorithms are the proprietary weapons of choice of organizations that move huge amounts of capital, hedge funds and governments.

Algorithms feel no sentiment. There is no herd instinct in circuitry.

Human investors, the kind that are suggested by the illustration accompanying your work and are the topic of the study on which you report, do not have access to the same markets as the algorithms moving two-thirds of the world’s money volume on any give day. As an individual, I cannot engage in “after hours trading.” That’s not the case for computers that never sleep and are programmed to capitalize at the sight of a penny’s discrepancy on, say the Tokyo and Berlin exchanges. That trade triggers other algorithms; all those pennies add up. While I am asleep in my Eastern US time zone, and while the markets are closed to me,  I may awaken to learn that the opening price of an issue or vehicle is significantly different from the previous day’s close.

Even if I were awake, it would not matter. While the bromide to individual investors for decades has been to diversify, and most individual investors, pension funds and smaller municipalities pay heavily for professional management via mutual funds, those investors are closed out of the markets while the markets are open.   Sentiment–whether fear or enthusiasm–cannot move the markets when buy or sell orders may only be implemented at the close of business, after 4 pm. Indeed, what crash after crash of the past several years has shown is that while the big investors trade in liquid markets, smaller investors do not, and pensions or college savings may be ravished before any action by investors may be taken. As the Journal reports, “Despite its 2009 rebound, the Dow Jones Industrial Average today stands at just 10520.10, no higher than in 1999. And that is without counting consumer-price inflation. In 1999 dollars, the Dow is only at about 8200 and would have to rise another 28% or so to return to 1999 levels.” Our 401ks and IRAs  are trapped, holding trillions of dollars that do not grow.

In terms of real wealth, the past decade has seen us grow more poor. Only  volume has soared. Someone is making money, but it is not those of us schooled to buy-and-hold. We are stuck on the sidelines while fees and commissions bleed us white. Which someones? Oil emirates, the government of China, and the financial community that services those huge, capital machines by  developing ever more obscure financial instruments that investors subject to sentiment cannot understand, much less trade. All we get to do is bail out corporations too big to fail.

It would be lovely if the Journal stopped perpetrating a myth of an open market democracy. The word “investors” should be reserved for individuals and organizations that actually invest, and by doing so create wealth by facilitating capital formation , not money-movers who buy and sell in minutes, create no new wealth, and hedge against the less mobile funds of us poor saps who foolishly continue to believe the markets are a level playing field.

Best wishes,

Still Screwing With Us

In Business, Economics, Finance, Wall Street on May 11, 2010 at 9:21 am

Today’s Wall Street Journal insists on running “news” of  theories as to why and how last Thursday’s market plunge of 1,000 Dow points, and the 700 pt correction in 28  minutes can be explained. It seems the “fat finger” narrative is in disrepute, but now we are getting tales that again about “sentiment,” a perfect confluence of anxiety about Greece (an economy smaller than California), oil in the Gulf of Mexico, anxiety about the real estate market in Shanghai…the usual suspects.

The same article notes that 66 percent of all trading is conducted by hedge funds, machine to machine. No doubt, these giant Cray computers are taking digital Zoloft to get through their worst moments.

If you have a higher IQ than a carrot, you might wonder why these algorithms for profit are allowed to mess with your kid’s college savings, your retirement, and your hopes to buy a house.

I’ll explain.

The rest of us play by different rules. Your 401k, your 529, your Roth IRA, your IRA, and all the rest are probably in broadly diversified mutual funds.  That sounds stratgeically sound–until you remember that if you put in a buy  sell order at 9:01 am Eastern time, it is not executed by the Buccaneers who run your fund until 4:01 pm that same day.

Hedge funds run at light speed; you and I are breathless turtles.

During those long days, the hedge funds leverage assets against…our money. Since our assets are  locked up and immobile, they can be relied on for 24 hours–from close of business on one day, to close of business the next.  Even if you stared at your computer the entire trading day and wore a headpiece phone plugged into your private broker–you are screwed. You can’t buy cheap or sell dear during a 28 minute plunge and recovery, and if you awaken one morning to find your future has been liquidated while you slept..gee, that’s too bad.

They call this an open market. They are proud of the transparency. The ads are in USA Today, Forbes, Business Week, and come in the mail. “Give us your money. It’s the right thing to do. We will take care of it!”

Boy, do they ever.  Now you know why they  pay themselves bonuses that look like international telephone numbers.