{"id":32,"date":"2010-04-19T01:53:29","date_gmt":"2010-04-19T01:53:29","guid":{"rendered":"http:\/\/www.cheapiv.com\/?p=32"},"modified":"2010-04-27T02:02:11","modified_gmt":"2010-04-27T02:02:11","slug":"week-ahead-4-19-2010","status":"publish","type":"post","link":"http:\/\/www.cheapiv.com\/?p=32","title":{"rendered":"Week Ahead 4-19-2010"},"content":{"rendered":"

\"\"<\/a><\/p>\n

Fraud, earnings, foreclosures and volcanoes; What do they have in common?\u00c2\u00a0 All four are being blamed for taking the market down on Friday.\u00c2\u00a0 It was first negative day that was greater than 1%, in over 48days.\u00c2\u00a0 Newspapers wrote like the world was coming to an end.\u00c2\u00a0 Fraud is what the SEC is charging Goldman Sachs with in reference to their trading profits from shorting mortgage backed securities while they were still recommending them.\u00c2\u00a0 I think the finer points involved the lack of disclosure to customers that they were betting against the mortgage backed securities.\u00c2\u00a0 The SEC is opening Pandora\u00e2\u20ac\u2122s Box on this one.\u00c2\u00a0 Fraud and Wall Street have been in a blissful love affair for as long as the SEC has been around.\u00c2\u00a0 The SEC is still wiping the egg off of their face on the Madoff scam, where they were repeatedly warned that about the largest ever Ponzi scam and failed to do anything about it.\u00c2\u00a0 Now they are trying to regain some credibility by slapping Goldman on the wrists.\u00c2\u00a0 If the SEC truly wants to punish Wall Street, they have enough ammo to blaze amaze on these brokers until they cry uncle.\u00c2\u00a0 Think about all of the times that a broker pushes out analysis that is positive( always positive\u00e2\u20ac\u00a6how many sells do you see from an analyst?). How many times does that firm hold a short position against that stock without disclosing it?\u00c2\u00a0 Do they let you know that they are specialists or market markers in that specific stock?<\/p>\n

Brokers and advisors are already restricted in what they can and cannot say to an investor.\u00c2\u00a0 Most of their analysis comes from in house sources from the corporate headquarters.\u00c2\u00a0 So when a broker pushes something out to the investor, they think (or hope) it truly fits your criteria.\u00c2\u00a0 That broker does not know what the trading desk is doing in terms of trading that stock.\u00c2\u00a0 The desk could be long or short.\u00c2\u00a0 If the company trusts that desk trader to risk millions of dollars trading a stock then the logical conclusion is that they trust their trader more then their analyst.\u00c2\u00a0 The trader makes the final call because of what he sees in the market and the analyst simply takes into account that company\u00e2\u20ac\u2122s fundamental aspect compared with its industry, but he is by far a trader.\u00c2\u00a0 I am going with who the firm puts their millions with.\u00c2\u00a0 This simple fact should be disclosed to every investor that the firm pushes out their analysis to.\u00c2\u00a0 The fact is the process is very complicated to get you that information.\u00c2\u00a0 The trade desk could be short right now, but long 40 minutes from now.\u00c2\u00a0 So to truly push this information to you would not be fair to the investor or to the desk, because then they would have to constantly update the investor on what the desk was doing.\u00c2\u00a0 I disagree when it comes to the longer term larger positions where it would take several days to get out of a position. \u00c2\u00a0The SEC can mandate that every broker disclose their trading desk\u00e2\u20ac\u2122s long term stance on a specific stock.\u00c2\u00a0 If that bias changes, I would want to know.\u00c2\u00a0 Again the problem here is that traders are different from long term investors.\u00c2\u00a0 Where do you draw the line on disclosure?\u00c2\u00a0 Good luck SEC, the more information the investor can have at their fingertips when dealing with a broker the better.\u00c2\u00a0 I don\u00e2\u20ac\u2122t look at anyone\u00e2\u20ac\u2122s analysis.\u00c2\u00a0 I may read someone\u00e2\u20ac\u2122s opinion, to try to see if I am swayed at all, but I always do my own analysis\u00e2\u20ac\u00a6I am the only person I can trust for my style of trading and to truly know what is right for me.<\/p>\n

Google had a pretty ugly day on Friday, the day after earnings were released.\u00c2\u00a0 It closed at $595.3 on Thursday and dropped to a low of $549.63.\u00c2\u00a0 It was a large move, but it was not solely responsible for the markets negativity.<\/p>\n

There was also news out from Realtytrac:<\/p>\n

\u00e2\u20ac\u0153RealtyTrac Inc. said Thursday that the number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago. In addition households \u00c2\u00a0facing foreclosure grew 16 percent in the same period and 7 percent from the last three months of 2009.\u00e2\u20ac\u009d<\/em><\/p>\n

<\/em><\/p>\n

\u00e2\u20ac\u0153More homes were taken over by banks and scheduled for a foreclosure sale than in any quarter going back to at least January 2005, when RealtyTrac began reporting the data, the firm said.\u00e2\u20ac\u009d<\/em><\/p>\n

<\/em><\/p>\n

\u00e2\u20ac\u0153Homeowners continue to fall behind on payments because they’ve lost their job or seen their mortgage payment rise due to an interest-rate reset. Many are unable to refinance because they now owe more on their loan than their home is worth.\u00e2\u20ac\u009d<\/em> <\/em><\/p>\n

RealtyTrac does not paint a pretty picture, but that is reality and our current market is looking past this information.<\/p>\n

A volcano in Iceland has been causing major problems to passengers stranded on either side of the Atlantic.\u00c2\u00a0 Travelers have been stuck since last week with airlines not being able to fly in the heavy ash clouds that were covering much of Europe.\u00c2\u00a0 This has wreaked havoc the airline industry to the tune of $200M a day.\u00c2\u00a0 Imagine paying all of your employees to come to work and not making any money from it.\u00c2\u00a0 It has caused an increase in inventory of oil because of the lack of demand, thus driving down oil prices.\u00c2\u00a0 This is a good thing for us, but most likely a very short break. \u00c2\u00a0There are concerns that the volcano eruptions could last several weeks and even last greater then a year.\u00c2\u00a0 Only time will tell what Mother Nature has in store for us.<\/p>\n","protected":false},"excerpt":{"rendered":"

Fraud, earnings, foreclosures and volcanoes; What do they have in common?\u00c2\u00a0 All four are being blamed for taking the market down on Friday.\u00c2\u00a0 It was first negative day that was greater than 1%, in over 48days.\u00c2\u00a0 Newspapers wrote like the world was coming to an end.\u00c2\u00a0 Fraud is what the SEC is charging Goldman Sachs […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19],"tags":[20,23,17,8,24,9],"class_list":["post-32","post","type-post","status-publish","format-standard","hentry","category-week-ahead","tag-banks","tag-goldman","tag-market","tag-options","tag-sec","tag-stocks"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"http:\/\/www.cheapiv.com\/index.php?rest_route=\/wp\/v2\/posts\/32","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.cheapiv.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.cheapiv.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.cheapiv.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.cheapiv.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=32"}],"version-history":[{"count":0,"href":"http:\/\/www.cheapiv.com\/index.php?rest_route=\/wp\/v2\/posts\/32\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.cheapiv.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=32"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.cheapiv.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=32"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.cheapiv.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=32"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}