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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (73362)	5/6/2010 2:56:35 PM
From: Maurice Winn	1 Recommendation Read Replies (1) \| Respond to of 74559

C2, it's just financial relativity theory in action. < What's going on today, > Greece has just a few days left to make payment. Swarms of other people and countries are similarly finding a mismatch between their expected expenditures, their relative incomes, their asset backing and their promise to pay, their investment hopes and their dividend reality, their employment prospects and their actual lack of employment and pay decrease, their interest on savings expectations and their unHappy Meal returns. It's time for another test of the asset backing as collateral for extravagant promise to pay. There will be collateral damage. My subconscious was adjusting as I slept. I had a dream an hour or two ago, not long before waking as one does with dire subconscious adaptations. My conscious was prepared for the decline when I woke and clicked. Unfortunately, my dream was more related to the underpinning psychology of people compared with chimps and bonobos when the going gets tough. There was a programme on tv last night about chimps and bonobos. There was also reporting of the riots in Greece and the deaths of 3 people working in a bank. My dream was to the effect that people get their emotional states from others in a feedback loop. When things are going fine, that's nice. When things are not, it's not. Pretty soon, people, with more affiliation with Chimp political processes and hunter gatherer found-wealth dominance hierarchy than Libertarian free exchange of value non-initiation of force ideology, start to form themselves in the usual collectivist mayhem as in Greece and then into strong man legions. Libertarian ideology is what creates wealth, to the extent that it's allowed to exist by the mindless mob. There is a horrific mindset "If I can't have it, nobody can" which leads in the extreme to the sort of result when a man murders a woman [the usual way around though an energetic woman can do the reverse] because she was unfaithful or otherwise taunting the man going mad. On an individual basis, it's horrific enough. When "those Chinese stole my job" or "those bankers took my house" or "those politicians got to give me opm" or "...etc..." gathers steam enough, as in Greece, bad can lead to worse. Things can always get worse and worse until everyone is dead. It's only through applied Libertarianism that things get better. I remain optimistic that what I expected in 1999 which took until Y2K to arrive, and which happened, [albeit I didn't expect the dip to be quite so extended - though the 911 and war events didn't help], will happen again. But this is a much more serious crunch digging deeply into hordes of people. We are only part way to finding out what will be the outcome. Interest rates remain at zero which is an unHappy Meal amount for savers. We have to wait until the bust collateral is redistributed and the interest rates are back up before we will have much idea of the mob's response to their sadly reduced reality. Mqurice

To: carranza2 who wrote (73362)	5/6/2010 3:39:09 PM
From: Maurice Winn	1 Recommendation Read Replies (1) \| Respond to of 74559

What's going on is that Yahoo! finance is down [for me anyway]. Aha, now going and crikey.... it says Down down 1000 points... I'd better go and read. It looks as though my shorts on JPM and WFC should work out okay. <In one of the most dizzying half-hours in stock market history, the Dow plunged nearly 1,000 points > Wow, that's quite a claim. My most exciting half hour was in 1987 when I was on the phone to brokers during the vertical plunge and he was giving me quotes, dropping by the second. In those days, we had to go and watch young women writing prices on a chalk board [in NZ] but I happened to be living in Antwerp and phoned a broker in London to sell Hambros Countrywide shares. Hmmm, Sten Nielsen, a Dane, who told me they'd be a good short term trade, died a year or so ago. That was my one and only attempt at "insider trading" and it did NOT work out to my advantage. It wasn't really insider trading as he was a friend who knew a friend who said Hambros were going to do some deal or something which would be good for the company. 1000 on the Dow at 11,000 is no big deal. Mqurice

To: carranza2 who wrote (73362)	5/6/2010 4:29:33 PM
From: Haim R. Branisteanu	1 Recommendation Read Replies (2) \| Respond to of 74559

I really do not know implied volatility went to over 24% on the EUR/USD. There is no justification but I think many really think that this is the end of the EUR, at a time that actually the USD is in much bigger trouble IMHO. I suspect we are in a trade war between the EU and the US that is reflected trough the financial markets. All the talk about the USD not being the reserve currency last year was a signal that the US MUST do something – and the something was piling up on the PIIGS and finding the country that is easiest to destroy – which is Greece - a small country with stubborn population – if not for their stupid pride and sheer stupidity they would have been able to avoid the whole issue. Merkel was and is right as is Sarkozy, the dominance of US Banks MUST be removed from financial markets and they are and where the root of the world financial problems. A bank must be a bank and not a broker and a speculator and purveyor of complex financial instruments. The WS model is inherently not healthy for the society at large and most European banks joined in to compete and the plague got to be worldwide. The losses inflicted by WS worldwide is in the trillions. Millions lost their savings The world needs boring simple financial markets and not hot shots that dream up scheme and derivatives which have no purpose except speculation and enrich those that create them The issue of Greece debt and the continuing be littering of Portugal Spain and Italy hit a nerve in Europe IMHO – WS wanted to copy Soros strategy but this time there was ALL US banks piling on the PIIGS trough the debt markets and the rest of smaller players joined in. The EU saw as a blessing the lower EUR but forgot that there is a price to pay and this is through the higher interest rates. All things aside also it seems that Greece wants to secede and stick it to the European banks which hold most of their debt

To: carranza2 who wrote (73362)	5/7/2010 4:03:10 AM
From: Haim R. Branisteanu	Respond to of 74559

Hi C2 it also seems that from the steep currency fluctuation since end of April some big hedge fund/ WS firm needed to liquidate carry trade positions as reflected in the swing of the JPY/USD from 95 to 88 in a matter of hours. I think it all was well pre-meditated as option IV where very low in April only to explode yesterday. This was not the action of a run of the mill 2 to 5 billion hedge fund but an massive orchestrated intentional activity to maximize profits. Also the secrecy around the stock market volatility is suspicious. Several years ago Citi has done exactly that to EU bonds when trading was very thin and reaped handsome profits No wonder that the G-7 called BO for a conference call - he IS a master in deceit

To: carranza2 who wrote (73362)	5/7/2010 3:40:51 PM
From: Maurice Winn	1 Recommendation Respond to of 74559

C2, now I see what you meant. You meant the sudden extraordinary 1000 Dow plunge and then all within half an hour a zoom right back up to almost where it was and an even more impressive similar move in Proctor and Gamble and some other individual stocks. I have been ranting about such things for decades - people have been getting angry at computers doing share trading since 1987. Back then it was more people using computer programmes to tell them what to trade, now it's the computers doing what they like having been told by PhD mathematicians and others what to think. Look at the hopeless human response: <The near-instantaneous swings left brokers dumbfounded. Dermott W. Clancy, who runs a New York Stock Exchange broker, said Thursday was one of the five worst days he has seen in 24 years in the business. When the market dropped across all indexes in a matter of minutes, customers were calling him nonstop. “They’re calling saying ‘Is there something I’m missing? Is there somebody valuing these securities at this level? Is there some news in the marketplace I’m not aware of?’ ” he said. The answer — that it all started with an apparent error — infuriated Mr. Clancy. “There are so many things wrong with what happened today,” he said. “The market was never down one thousand points. Procter & Gamble should never have traded at $39. But a lot of people lost money as if the prices were meant to drop. This is an injustice to the public.” The whole trading system, Mr. Clancy said, went into what brokers call “slow mode.” When the large sell order came in, the market makers for each of those stocks were overwhelmed trying to sell that order and they could not take other orders. It was sort of like a traffic jam on one highway that spread to create traffic jams everywhere. Suddenly, traders started to distrust what they were seeing. “There was no pricing mechanism,” Mr. Clancy said. “There was nothing. No one knew what anything was worth. You didn’t know where to buy a stock or sell a stock. You didn’t know if the market was down $500 or $1,000.”> Clancy is wrong - people do know what things are worth. In fact, I am thinking I had better get some buy orders in and lie in wait for the computers to fall into my trap. More precisely, it would not be the computers who would fall into my trap but the foolish "stop" sellers and the like. What the computers have perhaps found is that people put stop loss sell orders in. If the computers see a swarm of queued sell orders, they can calculate, on a probabilistic basis, how far down through the sell orders they can carry the process before buying at the bottom then cleaning out all the buy orders on the way back up by selling to them the stock they bought at the bottom. The computers know that the brokers will get traffic jammed, leaving the fast thinking computers to act. So the computers initiate some selling to get the ball rolling. That plunges the price down stepping past all the STOP LOSS sell orders but the sell orders are still in and the computer bids are way below those STOP LOSS orders. The computers are dueling with each other, playing chicken, not wanting to be the last one to bail out going down or climb on going up. The mathematicians have to build models for how stock brokers react and how the competing computers react. I used to like chess and this is like multiplayer chess. I have my shorts done, so now I'm going to be a JPM and WFC buyer. Hmmmm.... I should choose a price in case the computers have another go at it, which they will, because that's what they do. They have been doing that for ages now, but this was the fastest and deepest. Perhaps with early troughs, the computers have had to consult the boss before carrying on. Back in the 20th century I used to rant about D E Shaw and co running their computers and people trying to compete with them. Computers haven't been getting slower or less intelligent. Mqurice

To: carranza2 who wrote (73362)	5/7/2010 5:07:26 PM
From: Maurice Winn	1 Recommendation Respond to of 74559

It looks as though the computers shot some shareholders in one company to make an example of them and to frighten the mob of shareholders in other companies into a stampede during which the trading profits would be enormous. <On the big board, shares of Procter & Gamble (PG) swooned 37 percent from $62 to $39 a share. The consumer-goods maker is a big component of the Dow Jones Industrial Average index, which features 30 big, corporate names. PG's stock move alone pushed down the Dow by more than 150 points, causing broad alarm among investors, followed by panicked selling, according to the NYT.> Human and computer stampedes and panics have got their own mathematical processes. The mathematicians have to model how those stampedes and panics work. So they induce them to see how the reactions go. But they have to be careful because opposition mathematicians and computers are doing the same thing. It ends up Goedelian in a self-referential modeling of yourself by watching what the other models are doing - in a fast feedback loop. The mathematicians will have quite a project on their hands to be the champions and end up with the money. But it's worth doing. The losing mathematicians will lose their money and have to go back to something more suited to their talents. The computers obviously figured out that it was worth losing $millions or $billions temporarily to put the frighteners on the other programmes and shareholders. The other programmes would say "You are betting THAT much?!! Good God, I'm outa here." But one would say "I'll see your $billion and raise a $billion". Stop loss orders were cleaned out. More sell orders were precipitated. Then the computers bought up all the panicked sellers on the way back up. It looks like markets working as they should. Nothing to worry about. Move along please. Mqurice

To: carranza2 who wrote (73362)	5/7/2010 10:32:38 PM
From: Maurice Winn	1 Recommendation Respond to of 74559

C2, I have noticed a profit-making opportunity. The idea of canceling trades is a ridiculous breach of contract. A willing seller sold to a willing buyer and trades are arbitrarily canceled. That's going to cost some people a fortune and make some people a fortune. businessweek.com <By Michael Tsang and Lynn Thomasson May 6 (Bloomberg) -- Nasdaq OMX Group Inc. said it will cancel trades of 286 securities that fell or rose more than 60 percent from their prices at 2:40 p.m. New York time, just before U.S. equities plummeted. The Dow Jones Industrial Average plunged almost 1,000 points before trimming its drop and ended down 347.80 points, or 3.2 percent, at 10,520.32. About $700 billion of U.S. stock- market value was wiped out in less than 10 minutes, according to data compiled by Bloomberg. > The mathematicians now have to build into their models the assumption that their successful trades will be canceled if the Nasdaq people arbitrarily and subsequently decide that their friends sold [or bought] at the wrong price. That's a "heads I win, tails you lose" way of handling markets. It will lead to lawsuits. If I buy JPM at a low and some while later it turns out that their friend the seller could have got a better price and they cancel the trade, I won't be at all happy. It's nothing less than swindling. The mathematicians will even now be polishing their models after evaluating the outcome of that skirmish, and including the "Gamblers Ruin" 60% rule that seems likely to be arbitrarily applied [if that turns out to be legal]. I expect another such market challenge to be mounted, with the individual stock bottom at about 55% decline [in case Nasdaq moves the 60% target arbitrarily]. When a crash comes, don't wait for 70% down. Get while the getting is good. Next week I shall put my buy orders in at about 50% below current prices. No doubt the man in the street will whine about computers buying and selling shares. Mqurice