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Old 06-04-2012, 09:31 AM   #1
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Directionless market

It seems like the market is not sure what to do today. After Fridays rout, stocks are vacillating up and down in a small range, and doing so on higher than usual volume. It would seem they are awaiting some headline or another, since we all know stocks cannot trade on fundamentals anymore, they can only trade on rumor and innuendo.
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Old 06-04-2012, 09:52 AM   #2
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Ain't that the truth.
Investing in the market seems more like gambling than investing anymore.
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Old 06-04-2012, 10:03 AM   #3
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Old 06-04-2012, 10:11 AM   #4
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I think we are still digesting the move from last friday.

The stock market looks vulnerable. The only thing keeping it propped up at this point is the euro short squeeze/dollar profit taking. There also seems to be a bit of profit taking after the big up move in gold from Friday.

It would be nice to see some follow through but i'm afraid it's too heavily dependent on short term news driven catalysts at this point. There is no urgency to put a long position on and no real urgency to sell, until the news crosses. It's all algos at this point..
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Old 06-04-2012, 10:26 AM   #5
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Originally Posted by HCA1961 View Post:
Ain't that the truth.
Investing in the market seems more like gambling than investing anymore.
Buying a stock at $20 a share for the single reason of hoping it increases to $30 a share and selling it for profit is no different than taking $20 to the casino and betting it on red. It is purely gambling.

The original reason for stocks was to buy a portion of a company to allow you to receive part of the profits of that company; Dividends! Buying something for the intent of recieving regular cash flows is investing.

I have, in the past, invested in dividend paying stocks. I couldn't care less if their stock prices went up or down. I only cared if they continued to pay me dividends.
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Old 06-04-2012, 02:41 PM   #6
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Buying a stock at $20 a share for the single reason of hoping it increases to $30 a share and selling it for profit is no different than taking $20 to the casino and betting it on red. It is purely gambling.

The major difference is that in the long haul you have a 50-50 chance of making money on stock minus commissions, versus guaranteed loss at most gambling.
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Old 06-04-2012, 02:44 PM   #7
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Originally Posted by mmerlinn View Post:
Buying a stock at $20 a share for the single reason of hoping it increases to $30 a share and selling it for profit is no different than taking $20 to the casino and betting it on red. It is purely gambling.

The major difference is that in the long haul you have a 50-50 chance of making money on stock minus commissions, versus guaranteed loss at most gambling.
Odds of betting on black and winning pm a single spin of the Roulette:
18/37 ~ 48.65%

Odds of betting on a single stock and winning (minus 1% commision)
50/100 - 0.01 = 49%




This of course does not take into account what you "win" or "lose"

In Roulette, if you win, you double your money, or 100% return upon hitting black
If you lose, you lose the entire bet.

In the market, if you win, your gains can vary greatly.
If you lose, it varies from total loss to small partial loss.
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Last edited by benjamen; 06-04-2012 at 02:55 PM.
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Old 06-04-2012, 03:15 PM   #8
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stocks are companies.. not numbers on a roulette wheel. Now if you are talking about making money in a day, week, month... Yeah.. it can be pretty random.
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Old 06-04-2012, 03:18 PM   #9
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Ben:

Note two things. First I said "long haul." Odds are meaningless for one off bets/trades. Only the long haul averages mean anything, if and only if you can survive the negatives.

Second, I said "most gambling" as different forms of gambling have different odds. Apparently the roulette tables are a wash compared to stocks. If you gamble via lottery tickets, I seriously doubt that the odds would be that favorable.

**********

Markets that go sideways for long periods of time typically go fast and far once they break out of the sideways range. The tighter you wind the spring, the faster and more furious that the spring unwinds when it breaks loose.
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Old 06-04-2012, 03:21 PM   #10
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So, in after hours we have:
BAC 6.87
GRPN 8.96
C 30.90
FB 26.87

All of these stocks have been hammered for the last week or two, and BAC/C are by far the most worrisome. The financials are ailing pretty badly right now, and It doesn't bode well for the industry as a whole.
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Last edited by ancona; 06-04-2012 at 05:15 PM. Reason: Sticks? Really???
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Old 06-04-2012, 03:40 PM   #11
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Originally Posted by ancona View Post:
All of these sticks have been hammered for the last week or two, and BAC/C are by far the most worrisome. The financials are ailing pretty badly right now, and It doesn't bode well for the industry as a whole.
Nothing the fed buying up mortgage debt wont fix.
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Old 06-05-2012, 09:29 AM   #12
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Originally Posted by mmerlinn View Post:
Ben:

Note two things. First I said "long haul." Odds are meaningless for one off bets/trades. Only the long haul averages mean anything, if and only if you can survive the negatives.

Second, I said "most gambling" as different forms of gambling have different odds. Apparently the roulette tables are a wash compared to stocks. If you gamble via lottery tickets, I seriously doubt that the odds would be that favorable.

**********

Markets that go sideways for long periods of time typically go fast and far once they break out of the sideways range. The tighter you wind the spring, the faster and more furious that the spring unwinds when it breaks loose.
Unfortunately, in the current environment you must match inflation and taxes simply to maintain your purchasing power, let alone get any real returns.

given:
n years of investment
i inflation rate
t tax rate
x initial investment
r rate of return needed to break even

x*(1+i)^n = [(x*(1+r)^n)-x]*(1-t)+x

The annoying part is if your returns merely equal inflation, the government still considers you have made a profit and tax you. Thus, you have to earn more than inflation just to maintain your purchasing power.

For example, if inflation is 5% and tax is 30%, you would have to earn a return of ~7.14% just to break even.
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Old 06-05-2012, 09:33 AM   #13
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Benjamen,
If you simply buy silver to protect your wealth, you will be saved the hassle of having to perform algebra to figure out how to make a decent return. ; - )
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Old 06-05-2012, 09:41 AM   #14
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Originally Posted by ancona View Post:
Benjamen,
If you simply buy silver to protect your wealth, you will be saved the hassle of having to perform algebra to figure out how to make a decent return. ; - )
If one was to assume I owned any precious metals, then I would have to worry about my government ruining the USD and trying to tax me on the "profits" of increased number of USD required to buy precious metals. Thankfully, that is all just theory!

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Old 06-05-2012, 09:47 AM   #15
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I apologize Benjamen, I forgot all about that boating accident and again, I am sorry for your loss. It's really too bad the water is so deep you cannot recover your metals.
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Old 06-06-2012, 06:42 AM   #16
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Looks like gold and silver levitated overnight thanks to QE rumor.
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Old 06-06-2012, 12:18 PM   #17
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Originally Posted by PMBug View Post:
Looks like gold and silver levitated overnight thanks to QE rumor.
Did you apply a real strong levitation? One that will propel PMs to new highs?
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Old 06-06-2012, 12:34 PM   #18
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Old 06-06-2012, 12:46 PM   #19
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Originally Posted by mmerlinn View Post:
Did you apply a real strong levitation? One that will propel PMs to new highs?
That was me, it is what I have been doing with myself all this time.
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Old 06-06-2012, 03:37 PM   #20
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the market sure as heck have a direction today.. i nearly soiled my pants, dow up almost 300, all the metals in the green. what's the big rumor today? i'm sure swissaustrian will update!
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