Brokerage, short, FLBK ...
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Yamner & Co., Inc.
Members AMEX NASD SIPC
33-00 Broadway
Fair Lawn, NJ 07410 (800) 221-5676
yamner.com
info@yamner.com
"Serving the Financial Community for over 22 Years!"
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Archives can be found at yamner.com
From: Steven Goldman, Yamner & Co., Inc., VP and Head Trader, &
Bernard Yamner, Yamner & Co., Inc., CEO
Good afternoon. A few situations this past week have prompted us to prepare a letter this afternoon regarding the recent markets and the services that Yamner & Co., Inc. offers our clients. There is a perception in the markets, that the marketplace for buying and selling securities is an entirely equitable one. That is, that it is a fair system where rational and linear trading of financial securities occurs. It is often not the case.
Over the past few years, the past 6 months in particular, the markets have begun to reach record volumes and record volatility. As a result, drastic intra-day, intra-hour, and often, intra-minute movements in securities occur across-the-board, in virtually all sectors of the marketplace. We understand the complexities and work diligently to perform for our clients even in the most tumultuous conditions. We take great pride in the commitment of our traders, the quality of our technologies including the more than 27 execution and trading systems that we use in providing some of the industries' highest quality trading and brokerage services.
Yet, there is something that all investors, all clients should know. While you may perceive Yamner & Co., Inc. as ideal, there is no utopia, there is no perfect solution, 100% infallible firm for handling your business. As in all facets of life, to expect perfection is reasonable. In fact, we demand perfection from ourselves and our staff. Yet, on occasion, whether it be through a failing of Yamner or simply a situation in the marketplace, perfection, in the mind of the client, is not achieved.
When we perceive a needed change at Yamner, we do it. We do not hum and haw. We do whatever it takes to make our business the best. There are things we address each day, from acquiring better technologies to accommodating some our clients, our objective is providing the best service on the Street. We continue to scrutinize our failings and make aggressive changes to improve ourselves each and every day. We take nothing for granted.
Yet, while we can continue to positively make changes in our business, there are things that simply can not be changed from our desks. The nature of the markets, the volatility of certain stocks, the actions of market makers and other market participants are areas which are governed by the NASD and SEC and regardless of the quality of our Trading Desk, may still result in what the client perceives as less-than-great service.
There are a few situations that immediately come to mind when thinking of areas where clients are inexperienced how truly volatile the markets can be and thus do not understand the complexities of the marketplace and the environment in which our traders compete to secure you the best prices. All of the situations involve trading OTC, Nasdaq securities.
While we could spend a day discussing OTC stocks and why in fact the Nasdaq marketplace creates such problems, let me briefly encapsulate it as follows. Unlike the NYSE, where a single specialist handles the matching and display of client orders, the OTC markets are comprised of many market making firms, each taking a principal position in a particular stock. Each has their own bid and ask, each with a varying size, which recently was permitted to be as little as 100 shares. The market maker firms, regardless of where you go, are registered as principals in the transactions, meaning that they in fact may trade against their clients' orders. The profit and loss for these traders is derived by how much money they make against client orders. You can see the clear conflict of interest. In fact, all Nasdaq trades must go through such parties. Add the factors listed above, and you can imagine how difficult of a marketplace the Nasdaq can often be to negotiate.
Within this already tough environment, market openings, from 9:30 till 9:50 and the last 5 minutes of trading are most difficult. The greatest percentage of volume usually occurs right at the market open. Individual investors, hedge funds as well as other investors may give their brokers or trading firms orders to buy "at the market open". Thus, the open experiences heavy volume, exaggerated swings to the open. Again, when dealing with the Nasdaq, this is entirely driven by market makers as discussed above.
So while during most other times of the day, from 9:50 through 3:50, when you call Yamner & Co., Inc. you can expect an immediate fill and report, clients must understand that during the opening few minutes, it is simply quite difficult to obtain such an immediate execution. Sometimes they do come. Market orders on liquid stocks can be filled within 5, 10 seconds of the opening. Yet there are times on more illiquid issues that our trades need to work the trade, using whichever or how many ever of our 27 systems, to get you the best price. Quite simply, to want an immediate execution at 9:30:01 is understandable, yet to expect an immediate fill on all stocks, right at the opening, is unrealistic and is something, in the current marketplace that can not be achieved.
Stop orders are particularly difficult to work when it comes to Nasdaq stocks. Stop orders on the Nasdaq, first, are handled by few firms. Yamner & Co. Inc. does handle stops and does a nice job with such client orders. We are one of the only firms in the country that will take two-sided (stop & limit) orders at the same time.
Yet, when you are an investor using a stop and your stock happens to be one of those that is trading wildly on the day, your execution results can and will differ greatly from your stop price.
One particular execution came to mind this week, though, the recent volatility and illiquidity in the Nasdaq seems to make this a more regular occurrence when dealing with one of the Nasdaq's hard and fast movers.
A client had an order to sell QCOM at 166 ? stop. The stock began trading in that range on Day Y at 11:00:34. Wildly, the stock, already with a significant spread, tanked to 160 by 11:01:46. Quite simply, the stock sank nearly 7 points in 71 seconds. That was probably a near record, which did not help the clients' cause. The client, with at 166 ? stop was executed at a price several points below the stop price. I know the trade because I worked it personally. Quite simply, the client was disappointed. Yet there was simply nothing more that could have been done. At the time, Instinet was selling several tremendous, 40,000+ shares, and couple with the spread, no market maker wanted to take in stock. Who could blame them? With the stock at 166 one minute and 160 less than 70 seconds later, would you take in stock? Of course not.
The client, in our discussion, wondered why it took a minute, why it wasn't "auto-filled". Quite simply, all market makers when something starts acting like that turn off any auto-fill systems. That being know, in hunting around other systems and technologies, given that no one in their right mind wanted to own stock during that down draft, to get a trade off in 71 seconds was, in my opinion, outperforming what the client might have gotten anywhere else.
Situations like this occur frequently in fast moving, volatile Nasdaq stocks. And while the executions are not up to a perceived "Yamner" ideal, they are, in my opinion, excellent executions, outperforming what someone may have received elsewhere.
The third area that clients often misunderstand is that involving shorting stocks. The movement in the banking issues this week and the interest of shorts sellers offered a few examples of hard work which nonetheless disappointed investors. On Weds., on speculation of internet business models, many of these issues gapped significantly higher, providing an ideal short situation, and immediately began sinking. For example, one issue that I had the unpleasant experience of watching was FLBK. The stock open up many points higher than its previous close. We had traded the stock for many clients, shorting it pre-open at various prices and levels. Yet two clients that I can recall had market orders to sell at the open, not pre-open. What occurred was probably one of worst scenarios I had ever seen in the Nasdaq trading environment. Market Maker ABCD was bidding for the stock at 9:29:45 at 40 with an offer of 39 ?.
This is called a crossed market which during the trading session is considered a violation with few exceptions. The next bid was nearly 7/8 lower. Right at the bell, this market maker drops his bid to just above the lower bid. This still maintains the crossed market condition. Here is the result. You can not hit the bid because it was a down bid. You need to short on a down bid or a 1/16 higher. Yet, you can not offer the stock on most ECNs because it would result in a crossed market (though it is already a crossed market) thus the ECN systems automatically reject such prices. SO you can't hit a bid, you cant represent an offer. This wouldn't be what I would deem an open marketplace for this stock.
However you slice it, the result was that the stock dropped, crossed for nearly 3 points and the client got nothing done on his order. One could imagine, without much thought, many reasons and motivations for such action by the market makers. Yet the result is that the client did not get the short off. There was disappointment, yet as the trader working the order for these two clients, there was nothing that was done improperly on our end.
Yamner & Co., Inc. can not be all things to all people. We have no interest in doing this. What we do offer is one of the highest quality brokerage firms in the industry, with some of the best trading and execution technologies. All of that aside, the most important characteristic of our firm is the personal relationships we strive to develop with our clients. We work agency-only. Work don't make markets against our clients trades or take a principal position in the transaction. We work for you, our clients.
Yet, our clients must understand that while you can come to expect great things from our firm, while you can expect the industry's highest quality execution and brokerage services, there are times, in various stocks, at various moments that will not go the way you nor we would have liked them to have gone.
There are many firms out there, each offering differing services for different clients. In addition to the multitude of online discount firms, there are a plethora of start-up direct order entry firm. Each of these firms, like Yamner, has certain pluses and minuses. If a client feels that the client might be better suited by technologies or services offered elsewhere, the client should pursue those opportunities.
Yet, if you believe that we care for our clients, if you believe that we tell it like it is, heed this one piece of advice that I mentioned above. No one, no firm, can be all things to all people and no one has magic potion for getting you the perfect fill, all the time, everytime. If they did, they wouldn't be offering it to the public. That said, go with the firm you feel most comfortable with, where you feel that someone is working diligently and honorable for your best interests, and be willing to understand the complexities and volatile nature of the stock in which you choose to invest. Net, you will do better long term.
Hopefully though dialogue such as this, we can educate our customers about the marketplace and the services we offer, providing a more enriched experience. If anyone ever has any questions about a trade or the markets, please contact me at steve@yamner.com. I'd be happy to walk through it with you in detail.
**IMPORTANT NOTE FOR THE CLIENTS OF YAMNER & CO., INC.**
Over the next several weeks, we will be rolling out a new order management system, designed for us by Trade Manage, Inc. (see trademanage.com). The system will provide more integrated access to our more than 25 trading systems. As well, DeskT rader V3.0 will provide integrated client reporting modules which will significantly improve our ability to provide clients near instantaneous reports by email, ICQ or phone. It will also provide more enhanced features such as the ability to email daily recaps and transaction details, as well as other reporting and trade handling features.
With greater reporting and order management capabilities, we will greatly enhance the value of the services we provide. It will further our status as one of the premier trading desks on the Street.
To that end, we are asking that all clients complete the form found at the URL below. This will ensure that the contact information we have on file is 100% current. As well, please bookmark the URL and use this form if the contact information changes. I would ask that every one of our clients take one minute to complete the form. It will help us consolidate our data and ensure that we are best able to contact when the need arises. This data will never be sold or released to anyone.
Topics Included in this Newsletter:
? The Hard Right Edge Technical Analysis **New** by Alan Farley
? Yamner & Co., Inc. Managed Portfolio Program
? Yamner & Co., Inc. Online yamner.com
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The Hard Right Edge Technical Analysis by Alan Farley
Alan Farley is a trader and editor of The Hard Right Edge web site. The Hard Right Edge provides comprehensive traders resources including original tutorials and strategies on multi-trend technical analysis and short-term trading . Alan also authors complete on-line training courses on technical analysis in association with independent sites. He has been featured in Barrons and Smart Money magazine.Visit The Hard Right Edge at hardrightedge.com.
Momentum Cycles
Neophytes quickly fall under the spell of fast moving markets. However, trading momentum is far more difficult than most participants admit. When the emotional crowd ignites sharp price movement, greed clouds risk awareness. The inexperienced trader reacts foolishly and chases positions just behind the big volume, where odds of a reversal quickly increase.
Prices rarely move in a straight line. As shocks destabilize a market, counter force emerges to restrain price back toward its stable state. An inevitable backward reaction follows each forward impulse. Burning the fuel of the crowd's money, markets seek equilibrium before proceeding with the next price thrust.
Unexperienced traders fail to consider this cycle when entering momentum trades. They blindly execute positions with a common and dangerous strategy: market entries on accelerating thrusts. Lacking trailing stops and effective risk management, both good and bad positions bleed money as sharp countertrends destroy profits. As these inevitable reactions wind down, losses escalate as blind fear chooses the exact turning point to finally get out.
Consider both action and reaction when developing effective momentum trades. This demands complex planning and detached execution. One successful strategy requires trading opposite to natural bias: entries on counter trend reactions and exits on accelerating thrusts. This aligns positions to the underlying trend but against the current crowd emotion. Entries into accelerating momentum can also work when tight stops are placed and the trader exits into further acceleration. This eliminates risk associated with the inevitable pullback.
Choosing the wrong action-reaction trigger produces frustrating results. Every trader knows the pain of executing a low risk entry, riding a profitable trend, then losing everything on a subsequent reaction. Avoid this experience using clearly defined tactics to minimize emotional momentum trading. Supplement this discipline with multi-trend technical analysis and cross-verification to identify profitable swing-points and locate natural escape routes.
Chart - Please See:
yamner.com
Markets inhale and exhale as dynamic trends evolve. Reaction follows impulse as momentum seeks stability in preparation for new price change. Smart traders read this continuous cycle through the wave motion in bar charts.
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Yamner & Co., Inc. Managed Portfolio Program
In addition to its' traditional discount-commission brokerage services, the industries finest trading desk, Yamner & Co., Inc. also offers an optional Managed Portfolio Program, specifically tailored to each client's needs and objectives. Utilizing our Managed Portfolio Program, Yamner & Co., Inc.'s experienced investment executives, money managers and traders will help implement all facets of asset allocation and security selection.
Yamner & Co., Inc.'s Managed Portfolio program allows investors to develop a long-term relationship with our Portfolio executives who come to understand your financial needs and objectives. With your approval and input, the Manager will design an asset allocation and implement a portfolio specifically suited to your goals. The portfolio is then implemented and continuously monitored for adjustments and reallocation as the investors scenario changes.
Frustrated that you have been unable to match the returns generated by the broad market over the past few years? Concerned that you do not have the time or experience to properly manage your personal investment decisions? Own or manage a company that has a retirement or pension program that requires a professional Investment Advisor?
Call Yamner & Co., Inc. and learn how our Managed Portfolio Program can help you meet your financial objectives. (800) 221 - 5676 or contact us at info@yamner.com.
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YAMNER & CO. INC. ONLINE yamner.com
In addition to the highest quality execution and brokerage services, Yamner & Co., Inc. is proud to offer cutting edge internet-based technologies to a broad range of geographically diverse clients and investors. These services are simple to use and should greatly enhance your access to our financial resources. You simply need a computer and access to the Internet. Through out NETX Client interface, you have access to all of your account information, transactional history and money line balances. Unfortunately, while the site offers us award-winning online trading technology, we still do not feel that this technology meets our exacting standards. Thus, until the internet becomes a more stable platform for real-time trading, we will continue to solely offer phone-based, ICQ, and email based trading.
a. ONLINE FORMS CENTER - yamner.com
New Account, Margin, IRA, Roth, Transfer, as well as other forms and documents can be found in our Online Forms Center. The forms are in Adobe PDF format, the industry standard. (http://www.adobe.com) They can be downloaded for future use or viewed and printed online.
b. MARKET DATA CENTER - yamner.com
Yamner & Co., Inc.'s Online Data Center offers free quotes, a Portfolio tracker with optional email delivery, market summaries, economic calendars, daily snapshots, headline news, as well as intra-day and historical charting, as well as free and unlimited access to Zacks Online, of the world's most in-depth financial resources. Be sure to check out the Inc. Link component, which offers extensive stock research including company snapshots, financial statements, various ratios and other fundamental data crucial to prudent security selection.
d. INTERNET PAGING SUPPORT
Our Trading Desk and executives support ICQ's free Internet Paging services which can be downloaded at icq.com. We find that many clients enjoy communicating though Internet technologies either for cost, preference or convenience. Yamner & Co., Inc.'s Internet Paging support lets us to know which clients are presently online, allowing us to instantly send private messages to our clients regarding positions they own or are interested in and can immediately respond to any questions investors may pose. Our firm's information is as follows: ICQ# 12129179 Nickname: yamner
We hope to see you online!
Regards,
Steven Goldman, Esq.
Head Trader, Sales & Options Principal
Yamner & Co., Inc.
33-00 Broadway
Fair Lawn, New Jersey 07410
800.221.5676
yamner.com
steve@yamner.com
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This message is intended for the recipient designated above. It is not a solicitation, confirmation, recommendation or endorsement of any securitites, commodities or other financial products. The accuracy and completeness of the information is not guaranteed and no Yamner & Co., Inc., member, or any employee or agent thereof, shall be liable for any loss or damage arising therefrom. Use of Yamner & Co., Inc.'s chat site, website or email newsletters or other materials is subject to the terms and conditions found on yamner.com. If you can not reach this page, please submit your address and we will email or mail the Disclosure and Waiver of Liability Page. |
