bds231

Ten Missouri Stocks

My cat's breath smells like cat food.

When Hedgies Attack: Morgan Stanley Drops 40% on Rumors

How do CDS's and puts affect the stock price 1.5 weeks before options expiration?

Inefficient Markets: Shorting, the VIX, and Unintended Consequences

I have been wondering the same thing -- how much are short restrictions driving the VIX? But if you look at a longer-term chart, the behavior of the VIX isn't all that different from 1998. Obviously the rest of the world is in a very different state, but perhaps this behavior isn't so out of the ordinary. Has anyone seen any data on how the short restrictions could be affecting the VIX?

Can Investor Sentiment Be Rescued?

Call me naive, but I think investor sentiment will be just fine once major, formerly iconic companies stop going out of business right and left.

Yesterday's Crude Spike: Most Cut-and-Dry Case of Speculation Yet

Here's what I don't get: If many of the people who bought yesterday were short with no intention of delivery, what happens to all those longs who bought their contracts with the expectation that they would actually received physical oil?

Sure, some of them would be balanced out by long speculators, but is there really a 1-to-1 match between short and long speculators (I would find that hard to believe)? Or are there people out there trying to use the futures market the old-fashioned way -- to lock in the price for a commodity they must buy -- getting whipped around by heavy speculation?

GDP and the Decline of National Statistics

Perhaps a foolish question: but why do we need the government to publish these numbers? Maybe this trend is an opportunity for a private firm to begin collecting (and selling) these statistics?

High Growth Expectations for the S&P 500?

Scary... What's the split between financials and non-financials?

Home Prices Have Stopped Falling: The Statistics Are Skewed

I spent last weekend studying for the GMAT. There's a section on the test that presents you with an argument, then asks you to call out the assumptions and logic gaps that riddle the argument with holes. An article like this could never be on the GMAT. It would be too easy:

1) Assumption: Mike Roth's data is accurate. We have no idea who this guy is, where he's getting his data from, what the geographical distribution of the data is, how large a sample he's using.... We don't even have the data itself! Hey Tim, I just sold my house for a 500% profit! I guess there's a new housing bubble... yay!

2) Logic Gap: Roth implies that adding "all new appliances, granite countertops and new carpet, paint, interior doors, garage door, updated windows, central heat and ac" will add $10k - 20k to a house. I don't believe it - show me the data.

2.5) Logic Gap: Mike Roth states that the difference between a bank owned house and a "nice home" is, again, "all new appliances, granite countertops and new carpet, paint, interior doors, garage door, updated windows, central heat and ac." I don't know exactly how much that's worth, but it's clearly worth something. So it does not follow to imply (as the author does) that a home is worth 40% less simply because it's bank owned -- the home is worth less primarily because it's not as nice a home! I would not be surprised if there's some additional "penalty" to the value because the bank wants to unload it quickly and is willing to lower the price to do so, but that penalty is less than 40%.

3) Logic Gap: The reduction of the average caused by the sale of bank-owned houses is very much a real reduction that affects anyone who is going to sell. If my neighbor's house was sold by the bank for 60% the cost of my house, my house is worth less. Maybe not 40% less, if it had nicer appliances, fixtures, etc., but still less. If I then sell my house WITHOUT foreclosing on it, then the houses of my other neighbors are worth less, this time depressed by a non-bank owned sale. And the cycle continues.

4) Assumption: As astutely pointed out above by westwest888, this analysis assumes 0% inflation.

I'm sure there's many more, but I'm tired of this article.

Invest and Stop Working

To bearfund's point, Foster's not really retired, he just switched to a career as an author.

The Long Case for Canadian Oil Sands Trust

"As soon as the next economic upturn begins (and it will happen, trust me!) the price will shoot higher again."

I don't mean to be a douche, but any investment advice that has the words "trust me" in a non-ironic context is suspect at best.

Oil and the Futures Market

"Umm, yeah": Very intersting thought about oil-producing entities keeping the price up by buying futures. But as "jtk" mentions, it certainly appears as though $140 is causing demand destruction, some of which might be permanent (e.g. major r&d/investment in alternative fuel vehicles).

Then again, oil futures have been traded for about 25 years, so if oil-producing entities are indeed keeping the price up, you have to wonder why they let the price get so low in the late-90s...

Very interesting to think about, although I don't have the expertise to know if this is actually feasible -- has anyone done the analysis to see if this pecils out?

Hey, Congress, Speculators May Not Be the Bad Guys

This data implies the opposite conclusion to me:

Oil producers and consumers use futures to hedge well known and *relatively* constant demand and supply, so for them the number of open contracts should remain *relatively* constant (or at least rise predictably with the global consumption of oil).

On the other hand, when speculators buy futures contracts, they start with a dollar value and work backwards to the number of contracts -- they have $1,000 to spend, so they buy $1,000 worth of contracts. They don't say "give me 100 contracts whatever it costs." So as oil (and oil futures) go up, fewer contracts equal the same dollar value.

Is the Equities Party Over?

To put aside the validity of the article's conclusion for a moment, take this quote:

"[the DJIA is] very vulnerable to a big correction. Few stocks would be spared in such a downdraft. Do you have a slightly greater appreciation for technical indicators?"

This is a circular argument: Technical indicators make a significant prediction, therefore technical indicators must be correct.

Avoid Options on Inverse Index ETFs

What about arbitrage between options on the index itself and options on the inverse index? I haven't done any analysis on this... just wondering if there's something there.

Southern Copper's Stock Split Doesn't Hurt Its Fundamentals One Bit

#1 - Of course the stock split doesn't hurt the fundamentals -- splits are nothing mroe than window dressing. As for traders playing stock splits: Stocks that split are almost always momentum stocks (that's why their share price rose to the point where a split was required in the first place).

#2 - How could having more shares possibly make PCU vulnerable to shorting?

#3 - The short-term target for PCU is $110, less than 1% above today's close? Not exactly going out on a limb there, are we?

#4 - Actually, unless you're planning on making a large sale soon, your PCU position will change by many shares -- it will triple due to this very split we're discussing!