The Real Expert

Why It's Time to Be Invested in the New Recession

You seem like a nice fellow so it is difficult for me to say this but still I must, for your own benefit. Wow. You are truly blind. of course you watch CNBC and praise Maria "Fartiromo." It's your job to keep telling people to buy stocks that are blowing up. We all saw the same BS a few years ago with the Internet stocks. You are always telling your customers to buy.

You are no different than the rest of the gimps who work for retail investors. When the market is doing well you insist your customers need to buy because they will "miss out." And when the market is tanking you insist they need to buy because "stocks are cheap." Now, I don't blame you. You have been programmed to do this. But you really need to take a good hard look at things and know whether you can remain happy making money off of retired people, while providing no real value. On the other hand, if you are ignorant to these realities then you won't ever know the difference.

There are so many things you have stated that are absolutely false that I could post your entire article and pick it apart. Instead, I'll point out only a few.

"U.S. banks and brokerage firms are not accustomed to volatility."

Are you kidding? At this point, I have to conclude English is not your first language. Volatility is a reality. They are used to volatility but they hedge volatility. They acted irresponsibly due to greed and lack of ethics. This fueled a huge bubble of overvalued debt that finally blew up. It's that simple.

"The second reason why panic struck is a simple calendar issue. What happens during the first half of an election year? Voters elect Presidential nominees. What do these nominees talk about in every interview and in every debate? Change."

Not in the least. Son, if you continue to use the Stock Trader's Almanac to explain away the biggest meltdown of assets in the history of the world, you are going to have some major probelsm down the road. You act is if there was this one day of panic. Panic has been occuring on most days for nearly a year now...not by investors but banks..and for good reason.

"If we are in a recession, it's a new kind of recession. One that is a stock pickers dream if you can pick out the companies unaffected from the turmoil. Just because a few sectors are weak doesn't mean the entire system has to implode."

This is the best you can do? Tell readers that some stocks will do well and to not by the financials????? Lol. Let me make thinks easy for you. BUY OIL AND OIL RELATED COMPANIES (excluding XOM), BUY MINING AND MINING SUPPLIERS LIKE BUCY. BUY GOLD. DO NOT TOUCH ANYTHING ELSE IN THE US MARKETS. KEEP A BIG CASH POSITION TOO.
If you want to provide some value, let me give you some advice son. Instead of making blanket recommendations for people to buy into this terrible market, you should be helping people understand how to determine their individual investment suitability. Those who have horizons of over 20 years will be okay to buy into the dips in the market. But those getting ready to retire in the next few years need to stay clear. You are a salesman plain and simple. No Wall Street firm has any real analysts. Analysts are simply salemen as well. The sell BS reasons to brokers why they should always be in the market. If any Wall Street firm had real analysts, they wouldn't have gotten caught in this mess.

Friend, for your firm to be selling UITs tells me all I need to know. Why would anyone buy a UIT when they can buy ETFs? UITs have huge fees and are second only to annuities are the biggest ripoffs. My prediction is that you will be an insurance salesman within 3 years. Don't worry, they do well and don't have the liability stock brokers have.

Metrics, Mortgages and Analysts

Cindy, your articles on ETFC do have some validity, but your analysis often lacks credibility because you tend to leave out the multiple layers of risk involved. Any analysis that fails to adequately adjust any potential reward with the risks is biased at best and dangerous at worst. I think if you started covering risk more adequately, you would be seen more as a messenger of insight rather than a cheerleader for ETFC by those of us who understand things. Present a fair and balanced view and let readers decide. Don't worry, most of these readers are too emotionally attached to ETFC to change their minds anyway.

"Those calling out that the mortgage and banking industry have problems are absolutely right; we hear about it every day and the 200 point drop in the DOW validiates the problems. Why would I need to write about that since it is so obvious?"

Not exactly Cindy. You forget a few weeks ago when so many banks CEOs and others were making fraudulant claims that the wrost in the banking crisis was over or how the pundits continue to understate the real estate problem. That is why the Dow rallied back over 13,100 by may. Look at it now. You do need to remind people of the banking and real estate problems because they are enormous. People have short memories, especially when the memories are bad. They tend to embrace even the most suspect optism while erasing a bad past. This is basic behavioral finance. And the failure to understand and circumvent these natural instincts is what often makes investors make poor decisions.

"The fact is, E*Trade's comments in June's conference are something that is not generally known to the investment public. Since that information indicates E*Trade will be able to maintain unique performance differences in comparison to the industry, I felt those comments needed more publicity."

Cindy how can you say this publically available information is not known to the public? Are you saying some of these diehard ETFC fans are ignorant? That would be the implication. I cannot say I would disagree with you in that case. Still, I would have to believe that even a novice investor holding many shares of a distressed company would be watching for every announcement, conference, etc. they could find.

"I have shared my "Due Diligence" in deciding that I am going to hold on to my long position in ETFC. If you don't feel the same, then sell out your position or don't bother buying the stock."

Due diligence is only helpful if it's conducted in a prudent manner. One of the most important parts of the due diligence process is risk analysis. And for you to basically say "if you don't like my 'due diligence' reporting on ETFC then just sell or don't buy it' is an attempt to shut off any critics who have recognized the fact that your "due diligence" is not as diligent as it could or should be.

Cindy, I understand your frustration. Jbmaria makes personal attacks against you on a daily basis. And many times, the tone or true intent of printed words can easily be taken more harshly by the one it has been directed to than the writer intended. I'm sure this applies to most attacks made by jbmaria. While a bit of flare here and there never hurt anyone, I think it is obvious jbmaria often takes things to an extreme perhaps with a bit of playful rather than malicious intent. While I agree with jbmaria on many points, I certainly do not agree on the manner by which he or she choses to counter your commentaries. Hopefully, jbmaria will wean himself off of the personal attacks. Maybe they could come once every 20 posts instead of 20 attacks per post lol.

Prescient11, you just don't get it do you. Even if ETFC went to $20, you still would be wrong. The risk is way too high at this point and there are many much better investment opportunities with much lower risk and equal if not better potential returns. How many times do I have to say that? If you people think ETFC in the best of scenarios will rise back to its previous highs anytime in the next few years, you will be sadly disappointed. Even if the company makes it through this mess it will be faced with massive dilution. What that means in general is ETFC would have to be doing at least twice as good (assuming a conservative 50% dilution) as it was a years ago when the market soared. And that is not going to happen for a long time if ever.

I have no position in ETFC so I have no bias. I'd love a compelling reason to go long or short ETFC but I do not have such a resaon at this point. However, I would say that if I had to take a position it would be short based on the financial industry in general. I continue to take short positions in many of the banks (LEH, BAC, MER, BSC, etc.). You had better believe most of the banks are going considerably lower, including C ($15-$16) BAC ($18-22) and others. MER could have MAJOR problems. It could be cut in half at these already low levels.

S&P Upgrades E*Trade Despite Struggling Financial Sector Peers

By the way, in terms of a disclosure, I have not ever been long or short ETFC, although it is possible I could take a position at some point in the future. I do use ETFC for trading and they have a great platform. However, the pricing is not so good. I will most likely be switching in the future to Interactive Brokers. If you check them you will see they are for more serious traders, have the best access to global markets and data services and have extremely low commissions. The only reason I have not switched is because I am so used to ETFC.

S&P Upgrades E*Trade Despite Struggling Financial Sector Peers

Only a fool would buy financials here and ETFC is one of the riskiest at this point. The only exception might be for mutual funds because they have virtually unlimited capital and can compensate for losses.

As for the S&P upgrade, that is like Morningstar upgrading it. In other words, it means nothing. S&P doesn't exactly have a great track record. If you will recall, one of the main reasons for the mess in the financials was due to the irresponsible ratings provided by S&P and other credit agencies.

If anyone wants to venture into the riskiest industry right now, you'd be best served by hitting those stocks with the greatest volitility and volume, but for only short-term trading -WM and LEH. of course I don't expect many of you ETFC investors to know that WM has had 15% intraday volatility for most many days over the past 4 months. The financials are only in a position to be traded short-term right now and only if you drowl over risk. Given that, ETFC volatility pales in comparison to most other financials. Anyone buying financials for "long-term gains" is a fool, regardless what happens.

It's all about risk and reward. And there are many other financials with lower risk and equal or similar reward. Furthermore, there are many other industries with exceedingly low risk and very high reward.

E*Trade's 'First In, First Out' Position: Yes, 111M Shorts Can Be Wrong

bearfund, for you or anyone to state that ETFC is a buy simply shows you have no idea about risk. Only a fool would buy financials here and ETFC is one of the riskiest at this point. The only exception might be for mutual funds because they have virtually unlimited capital and can compensate for losses.

If anyone wants to venture into the riskiest industry right now, you'd be best served by hitting those stocks with teh greatest volitility and volume, but for only short-term trading -WM and LEH.

As for the S&P upgrade, that is like Morningstar upgrading it. In other words, it means nothing. S&P doesn'y exactly have a great track record. If you will recall, one of the main reasons for the mess in the financials was due to the irresponsible ratings provided by S&P and other credit agencies.

Citadel Infuses E*Trade with Strong, Experienced Management

oregonduck.......MY original comment: "It's really a shame the SEC allowed anyone with a computer to enter the markets against the pros."

Your response: "You mean the "pros" behind Bear Stearns? Those Pros?"

Your coverup: "And, the the pros I was talking about re: bear are not the bear analysists themselves. I am talking about the ones who were telling everyone to buy bear stock the week before it crashed."

Come on. Do you really expect me to go for that? You know you meant Bear Stearns. Now I see why you guys are in such denial about ETFC. Denial is a strong part of your personality.

Citadel Infuses E*Trade with Strong, Experienced Management

oregonduck....."Maybe" the financial have not bottomed out? Wow. How can you guys be so clueless??? Do you not understand that even when they bottom out, there won't be many lucrative opportunities to invest? The dilution and losses and all the crap is going to take many years to fix. The financials ARE NOT ones to buy even at the bottom. They will be dogs for quite some time.

You are clearly in ETFC for the long term. If read all your posts I am confident I would confirm that. Even by your anger in us "realists" making posts about ETFC's risk indicates you are LT. If you were merely "trading" it as you claim, you would care less about criticism on the stock.

In addition, you should know to never trade a dangerous stock because you could easily get stuck or get blown out, if for instance it opens low and you have a stop, or if you have to stop and it gets blasted. So for you to try to discredit the comparison with Buffet is unwaranted, especially since it is clear that most everyone that posts on ETFC is long term.

Okay, so for those who aren't long term, I notice you made no mention of Jim Rogers. The fact is he would tell you that youre crazy doing anything with ETFC, and he would be right. If you wanted to play the high risk game of trading the financials, you still lose because WM has been were all the action has been for months. It has had intraday swings of 15% + ......many many days. ETFC barely moves.

As far as your comment on commodities, you don't have to buy futures. There are many ways to invest or trade commodities. Have you ever heard of XOM or PBR or gold, etc. There are loads of ETFs that mirror many commodity sectors. It is clear to me that you really are rookie. For you to even be thinking of trading ETFC is highly irresponsible. Even I would not touch it here and I shorted the banks in Q3 of 2007. I can tell you I know well what is going on..more so than anyone you can name with the exception of Rogers.

I hope you don't get blown out but from what I have learned based upon dealing with 1000s of people on Wall Street, they never learn the easy way and they never listen to the ones who really know better. In most cases, they eventually must learn the hard way. If it is not ETFC that teaches you a lesson it will another and most likely many more. The absolute worst thing that could happen to you and others who "believe" in ETFC would be for it to rebound, for that woiuld confirm that you really think you know what you are doing.

Only the very best of investors should ever deal with distressed securities. All others who do are fools. I have extensive experience and success investing in distressed securities and I won't touch ETFC here.

One more thing....diversificati... is what investors do when they truly don't know what's going on. This market cannot be hedged by diversification.

jbmaria lol. If anything, this site serves as a contrarian indicator for the investors with the real money.

Citadel Infuses E*Trade with Strong, Experienced Management

oregonduck..yes ESPECIALLY the Bear Stearns' pros. If you knew anything about Bear, they are actually the best trading firm in the world..8 US offices and they controlled about 30-40% of the daily NYSE short interest. These guys dealt only with institutions and hedge funds.

If you also knew what happened, you'd realize that it was a liquidity squeeze out on repos out rumors from Europe. The fact is that the same situation could have happened to ANY bank, commercial or investment. Bear did not "blowup." Of cours enow that the Fed has opened its credit to IBs, they are protected from a fate similar to Bear. Most likely, Bear got screwed by the Fed because they did not help with the bailout of LTCM a few years back.

So yes, especially the pros at Bear, much more so than the others who mainly do retail (sales).

"I keep wondering, though. If you dont care about etrade , why are you here, posting? Just like JB Maria. What is your point? I have made a lot of money trading Etrade and dont need your advice or your concern. People here seem to be knowlegeable and know the risks. And, it seems, if I can follow your reasoning, that you would welcome us "rubes" entering the market against you pros."

Now what kind of idiotic remark is that?? Are you suggesting that this is to only serve as a pep rally for ETFC holders? Are you stupid?? If anything you should welcome and even thank us for our commentary because it is the most accurate I've seen. Your problem is similar to most other amateur investors - you let your emotions rule your reasoning. You want to hear only good things about your stock because it reinforces your decision to buy it. This is a suicidal mentality. I suggest you start listening to the realities because I know damn well what I am talking about and jbmaria seems to know as well.


If you don't like it don't read the posts. And the fact is that these people are NOT sufficiently knowledgable about the risks. That is why jbmaria and I have been so kind as to give our time to point them out to you guys.

It's all about risk and reward and risk is almost always the variable that investors fail to properly account for because it is very difficult to measure. I don't care if ETFC goes to $30, the fact is that the risk is too high and I would not care if I missed the boat. When you can realize that then you will be in much better shape. Only a fool cannot see that the credit crisis has further to go. Why sit and hold ETFC when there is absolutely no stimulus? Ask yourself whether you think Jim Rogers or Warren Buffet would buy it here. They would laugh at you if you asked them about ETFC.

You are explosing yourself to not only specific risk in ETFC, but also sector and more importantly MARKET RISK. When I have to explain these things it reinforces my view that there should be a requirement, like an 5-year course prior to letting the average Joe in the market. It's really frsutrating to see so many poor investment decisions. I do not like to see people lose money at the expense of big funds.

Who Will Trigger E*Trade's Magic Moment - and a 111.4M Short Squeeze?

jbmaria: "If there was a little more editorial discretion by SA,maybe everyone might be better off."

Do you not realize that SA only cares to generate a trading mentality? They don't care about real content. You see, they want the same morons who watch Cramer. That is why they post his trash on the site. They are using the "Cramer" model - quantity, not quality and they get away with it because 99% of investors are clueless.

As far as rosetti's post, I have no idea why anyone is even giving "short" tips. No one should ever be shorting any stock unless they are professionals. It's far too risky. As a Wall Street professional, even I only rarely take pure short positions, and even then I always buy protective calls.

There are better ways to go short - using puts or Ultrashort ETFs. E-Trade has made so many think shorting is just a click of the mouse away and sadly it is. Unless you have worked on Wall Street you have no idea how risky shorting is. Virtually no stock brokers working for wirehouses are allowed to short stocks yet OLBs allow any moron to do it. Remarkable. And the stock market charade continues....and investors stand by watching, while they get screwed again.

Citadel Infuses E*Trade with Strong, Experienced Management

To jbmaria.....it is clear to me that you understand the risks and realities of ETFC. I have no interest in ETFC so I do not follow the stock closely. But one does not need to in order to understand the risks - that is if they understand the banking crisis.

These people clearly have no idea what is going on with the banks. They listen to the daily "ups and downs" reported by the media because they have no idea what is going on. These are the same people who look to Cramer for investment ideas. They would be in much better shape if they listened to your comments on ETFC instead of maintaining their incestuous love for this stock which they hope will make them rich.

Perhaps the most astonishing thing about these saps is that they aren't even playing this very risky position wisely. They all seem to be holding ETFC instead of trading it or buying calls. Now I know why I am able to make so much money so easily from trading when I get spare time. There is so much dumb money in the market and ETFC has been a big source of this via making everyday Joes think they can compete against the pros in the market.

These posts on ETFC could be used as a case study for a behavioral finance course showing how people who invest in a stock fail to see reason and react with their emotion due to their financial attachment to the stock. It is really both shocking and funny to read the posts on ETFC because you can easily spot who is long the stock and those who have no bias.

To spell it out for so many of you out there who are long ETFC, maybe if you had no stake in the company you might be able to realize the value in jbmaria's posts; then again, I doubt it since buying ETFC right now indicates you lack a fundamental thought process needed for investment due diligence. Maybe we can call this element basic intelligence?

It's really a shame the SEC allowed anyone with a computer to enter the markets against the pros. I hate to see people get taken. But at some point these people can only blame themeselves. If they didn't learn anything from the Internet bubble they won't learn anything ever.

Monday Option Update: LEH, WM, XLF, CCRT, ETFC, BDK, GGP, XLNX

Good wrap-up Andrew. As you can see from my previous posts, in my opinion most of the commetaries on SA are trash or pumps. But this is a good and useful piece.

Citadel Infuses E*Trade with Strong, Experienced Management

CFO Investor: ETFC has already provided a significant return in just the last month. The price change from $4 to $4.50 was at 12.5% change. I have felt that a prudent portion of my portfolio is well invested in E*Trade. I've diversified in other stocks as well.

I don't like CC because of the earnings projections for 2009 and 2010 are negative 1.84 and negative $1.65. Retail stocks right now are quite risky.

Wow. What type of company are you a CFO of? Based on your comment I would suspect you are a bank CFO. You clear have no idea about risk. Anyone long financial stocks right now needs to have their head examined. The worst is not even close to being over.

Sure retail is bad. Can you tell me the condition of the financials? I was merely trading risk by mention of CC. Are you aware of that concept? The fact is that, while CC is not at the top of my list, it has a much better risk-reward than ETFC. In fact it has very little risk currently. The company has NO DEBT (except for seasonal inventory).

ETFC is simply a terrible investment right now, PERIOD. There are so many better opportunities out there. One of them is cash. Why are so many of you missing the commodities market? US assets (other than commodities) are trash right now and the situation isn't going to change anytime soon. And if you want to take a VERY long stance on US equities the last thing to invest in right now are the financials. At the very least, you had better be trading or hedging these stocks with options if you decide to deal with this trash. WAKE UP GUYS.

Schwab, E*Trade: Monthly Activity Comparison and the Industry Average

Oh and one more thing I have learned. Apparently, Schwab sucks so bad that the company has bought up every web domain you can think of that indicates they suck, like schwabsucks.com etc. That is what you call blocking free speech. They know that millions are dissatisfied with them. Hey Chuck, what are you hiding. All that said, E-Trade has the best platform for online brokers but real traders use interactive brokers...much cheaper and you get access to global markets.

Schwab, E*Trade: Monthly Activity Comparison and the Industry Average

Bioinvestor, you have it wrong. It was not that they were not interested in ME - they were uninterested in helping their clients by having anyone remotely familiar with the real estate and credit crisis. All they were concerned with was selling them the typical "bull market" bill of goods, as their seminars revealed, while dening any problems in the market. I hope your reasoning abilities are better when it comes to your bio investing. Oh and by the way, if you knew who I was and saw my track record, you would understand better why Schwab should be excited to have me share my expertise with their clueless staff and clients - that is, if Schwab really cared about providing value. Fact is they do not. All they care about is suckering people into their "you can do it yourself" and "talk to chuck" BS. Any firm dealing with the stock market is crooked in some way or another.

As a caveat, Schwab website and executiom sucks royally. E-Trade has the best platform.

Citadel Infuses E*Trade with Strong, Experienced Management

Bew Williams, he is right. It is a crapshoot. If you cannot see that then you really have no business investing. By not truly understanding the risk of your investments, you are putting yourself in a potentially disastrous predicament.