MetaFilter posts tagged with stockmarket

"Perhaps I can find new ways to motivate them."

zarq — Fri, 01 Jan 2010 13:07:26 -0800

Darth Vader and an entourage of Storm Troopers rang the opening bell at the New York Stock Exchange on December 22nd. Business Insider: This is pretty much the perfect metaphor for 2009: Darth Vader ringing the opening bell at the New York Stock Exchange surrounded by a goon squad of Storm Troopers. NY Times: This seems unlikely to help Wall Street with its public relations problems.

Cramer vs. Cramer

ryoshu — Wed, 11 Mar 2009 23:54:14 -0800

How to manipulate the market. (SLYT)

Down, down, down.

CheeseDigestsAll — Tue, 09 Dec 2008 18:28:57 -0800

By one measure, this stock market is as bad as any in the last 180 years.

You don't really own the shares you think you own

Mutant — Fri, 24 Oct 2008 06:30:10 -0800

All the stocks and bonds you think you own are actually owned by a company you've probably never heard of, a company owned by the same people who own the US Federal Reserve. Originally paper stocks certificates were issued as evidence of ownership by companies to investors purchasing shares. But as trading volume exploded in the late 60's this manual system didn't scale. As an increasing number of trades failed due to paper processing backlogs The New York Stock Exchange took the unprecedented steps of closing on Wednesdays in 1968. [.pdf] In response to the crisis The Central Certificate Service (CCS) was created to electronically settle trades and eliminate the need for share certificates. Although intended as a temporary measure, it is still with us. Financial assets purchased today aren't registered in your name; rather they are held in what's known as street name. Regardless of the assets purchased or the broker used, this name is almost always a successor of CCS, namely The Depository Trust & Clearing Corporation (DTC), or some anomalous sounding variant of "Cede & Co". Holding assets in excess of $40T (yes, trillion), DTC is the single largest private trust in the world - in fact the largest company you've probably never heard of. While DTC no doubt provides a critical service - standing behind and insuring the performance of hundreds of thousands of broker / dealers, institutional investors, banks, mutual funds, insurance companies and hedge funds, many people are critical of this quasi-monopoly. While some say a system like DTC facilitates short selling, and and other forms of market manipulation, others claim the interests of American shareholders have been superceded by this system of indirect stock ownership, and the technology now exists to revert to direct ownership of stocks [.pdf]. But, as the business of big business is indeed, big business, whether or not these temporary measures will ever be removed is anyones guess.

oil tied economies - the gift that keeps giving

rough ashlar — Wed, 17 Sep 2008 05:51:34 -0800

As many peoples eyes will be elsewhere the readers of the blue may not have seen the red flowing in the streets of Mother Russia. Russia’s two main bourses, RTS and MICEX, said on Wednesday they were suspending trade until further notice. How bad? Russian shares suffered their steepest one-day fall in more than a decade on Tuesday, losing up to 20 per cent, as a sharp slide in oil prices and difficult money market conditions triggered a rush to sell. Perhaps the Russian readers will keep the American's up to date with the list of Russian firms bailed out by the Russian government?

Banking shares: New Day or False Dawn?

Mutant — Tue, 09 Sep 2008 03:39:42 -0800

A bottom for banking? Buying or selling shares in a company one manages - insider trading - is legal in The United States, provided the relevant forms are filed with The SEC. This information is then made available to the general public via EDGAR, Sec Form 4, or high level aggregators. Investors scour web sites for such filings, as purchases or sales of a companies shares by insiders are public evidence of managements private opinions regarding the future prospects of the firm they are running.

Even before yesterdays relief rally insider buying in banking shares hit a two decade high. So does this surge in buying indicate the worst is over in banking? When trading its best to pay close attention to a broad range of signals, because sometimes even the insiders get it wrong.

Dopamine

homunculus — Tue, 12 Aug 2008 11:30:25 -0800

A New State of Mind. "New research is linking dopamine to complex social phenomena and changing neuroscience in the process."

Investors can still afford stones

rough ashlar — Thu, 17 Jul 2008 11:44:52 -0800

Pakistani Investors Stone Exchange Pakistan investors stormed out of the Karachi Stock Exchange, smashed windows and cursed regulators after the benchmark index fell for a 15th day, the worst losing streak in at least 18 years. But take heart! At least there are not committing suicide. At least not yet. `People have sold their assets in the last 15 days to meet payments and if things continue this way, you will start hearing of suicides.' - Kauser Javed, But before one snarks - the future in the US may be one of loss in the market. When you get all puffed up about gas prices, you fail to see the overall picture: a thousand gallons of gasoline over the past year have cost about $1000 extra. Home prices fell 14.1% (Case-Shiller), or about $30.000 per home. In other words, an estimated 200 million US drivers have paid some $200 billion extra for gas, while values for the 100 million US homes have fallen by $3 trillion. And that’s just housing; trillions more have also vanished from other parts of the economy. It may take longer for some of the effects to be felt, but that makes them no less real. Thus, people who live in deflating homes should be careful with stones.

Sir John Templeton, 1912-2008, RIP and thank you for the investing lessons.

Mutant — Wed, 09 Jul 2008 03:48:25 -0800

The simple phrase "it's different this time" are the four most expensive words in the English language. Sir John Templeton, 1912-2008, we thank you for this lesson and countless others. One of modern finance's greatest pioneers, in 1954 Sir John Templeton launched what was one of the first globally oriented mutual funds, Templeton Growth Fund. At that time, almost nobody invested outside The United States. However Templeton argued that by restricting choices to domestic securities, investors were denying themselves of the chance to markedly increase portfolio diversification, lower volatility while increasing overall returns. Today Templeton's approach to portfolio diversification is textbook at business schools. Ideas and theories he devised and put into practice decades ago led to such stunning performance that in 1999 Money Magazine called Sir John “arguably the greatest global stock picker of the century”. Over a period of forty years, Templeton Growth Fund returned an average of 14.5% per annum. In 1992, a month before his 80th birthday, Templeton sold his mutual fund empire for a reported $440 million to Franklin Resources Inc. of San Mateo, California. While still was active in the fund's strategic management, Templeton next turned his attention to religion and charitable endeavours, founding the John Templeton Foundation which he intended to "serve as a philanthropic catalyst for research on concepts and realities such as love, gratitude, forgiveness and creativity." Sir John did, however, leave those of us still learning how to invest with one final gift: Sir John Templeton's 16 Rules for Investment Success. [.pdf] Sir John Templeton, 1918-2008, RIP and Godspeed.

Dark pools of liquidity, or the secret stock market

Mutant — Tue, 20 May 2008 10:14:29 -0800

The rapid growth of electronic trading since 1976 has benefited equity market participants by improving competition, reducing cost and increasing liquidity while insuring better pricing.

One unexpected side effect has been the recent emergence of "dark pools of liquidity", or the secret stock market. The New York Stock Exchange (NYSE) is arguably the world's single largest cash equity market: roughly 2,700 companies with a market capitalisation exceeding $25 trillion dollars are listed on the NYSE, Every day some 1.67 billion shares or over $63 billion dollars changes hands (data as of 2006). But not all shares for NYSE listed companies are traded on this exchange. Many institutional investors use electronic trading services called "Crossing Networks" to match buy and sell orders. Such networks are known in the buiness as "dark pools of liquidity", and while their emergence is a fascinating, competitive story, it is the possible ending that interests equity market researchers the most. Crossing Networks provide two services critical to the institutional investor - anonymity and liquidity. Such networks allow participants to anonymously buy or sell large blocks of securities, without using listed stock exchanges or impacting publicly quoted prices on those exchanges. The attraction of such networks to institutional investors is easy to understand: if competitors learn about your market activities they are in a position to disrupt your trades. Disrupting trades may be as simple as front running orders, or attempting to trade mispriced securities before you do. In other words, public activities may lead to price disruption, with risk of trading losses. There are many such networks, each operating in specific niches or providing specialised services. For example, SIGMA X claims to offer "the largest pool of non-displayed liquidity in the United States", while BATS has taken the lead on aggressively reducing trading costs year after year. Merrill Lynch and ITG's joint offering, Block-Alert, allows institutional investors access to a large standing pool of liquidity, capable of absorbing buy or sell orders without matching. At present crossing networks account for over 10% of all equity market trading, with business growing in excess of 40% per annum. Considering the vast sums of money attracted to dark pools of liquidity, their numbers are certain to continue growing. But precise data about crossing networks is difficult to come by, due to their international scope and the fact they serve the needs of private, institutional class investors. However the dark pools of liquidity are converging, and, in some cases, emerging into the public eye. Today Goldman, UBS and Morgan Stanley agreed to provide shared access to their own dark pools, creating, in a virtual sense, a single, large Crossing Network. As economies of scale are critical to equity trading, other dark pools will be certain to follow. And how might this story end? As dark pools continue to converge, enlarging their liquidity base while doing so, they are beginning to compete for business with traditional, organised exchanges such as NYSE / Euronext. BATS has already applied to the SEC for registration as "national securities exchange", an action that existing organised exchanges aren't welcoming. One of BATS competitors, DirectEdge, has indicated it also intends to apply for exchange status as well. It will be fascinating to watch as dark pools of liquidity converge, growing larger as they do so, in many cases emerging from the shadows to threaten entrenched competitors such as NYSE / Euronext. This is a scenario that played out to its endgame, can only benefit all equity market participants.

Sell in May and go Away but buy back on St. Leger Day

Mutant — Thu, 15 May 2008 08:22:17 -0800

Academic discussions of stock markets frequently reference The Efficient Markets Hypothesis; an idea that share prices are fairly valued, their prices reflecting all available information. However folklore such as "Sell in May and go away", which proved prudent in 2007, clashes with this theory. The history of the equity markets is long, and like any discipline with a rich history there is a deep trove of lore and near superstition adhered to by many market participants. But sometimes such folk tales are true. For example, The Weekend Effect, documents negative a correlation between Friday and Monday returns. Some believe the Weekend Effect is driven by short sellers purchasing shares Friday afternoon to close open positions. But others speculate this is caused by the corporate practice of "burying" bad news by releasing it on Friday afternoons after the markets are closed, thus leading to a Monday morning sell off. Regardless of the cause, The Weekend Effect has been observed in most G20 stock markets, and in some cases for almost a century. Schwert (2002) looked at The Weekend Effect in detail [.pdf]. While there are other market phenomenon linked to days of the week, we also see large number of what are called "calendar effect" anomalies. These tend to be observed at or during specific times of the year, and once again cut across national and cultural boundaries. Consider The January Effect, which refers to the tendency of the equity markets annual returns to follow the results of the first five trading days in January. In other words, if the market finishes the first week of the year on a positive note, so will the entire year and vice versa. Haug & Hirschey (2006) conducted a very detailed analysis [.pdf] of the January Effect. Lest one think stock traders are cold hearted capitalists, The Santa Claus Effect gives all good (actually only the longs) equity market participants a present in December in the form of an end of year rally and higher share prices. Some, however, believe this effect reflects nothing more than end of year buying as tax exempt vehicles (e.g., an IRA) are capitalised, or bonuses are received and invested. Halloween brings seasonal market advise - "Sell in May and go Away but buy back on St. Leger Day". A phenomenon that not only has been observed globally but also documented in England since 1694. Adherents believe in liquidating share holdings each May, not re-entering the market until "St. Leger Day", a date in late September which refers to the running of a horse race at Doncaster in England. Jacobsen & Bouman (2001) studied this effect globally [.pdf]. So how about 2008? Well many will easily recall last summers carnage, with The Dow, the S&P500 and the NASDAQ all losing hundred of millions of dollars of shareholder wealth under much more benign economic conditions. With the S&P 500 at a relatively low price to earnings ratio, The Fed pushing rates down to 2%, commodity prices trending higher, the housing market sharply down, the American economy slowing and the US Dollar trading at record lows - the summer of 2008 as well as the autumn will no doubt prove very interesting. ------------- Complete citations to papers referenced Haug, M., Hirschey, M., 2006, 'The January Effect', Financial Analysts Journal, Vol 62, No 5 Jacobsen, B. , Bouman, S., 2001, 'The Halloween Indicator, Sell in May and Go Away: Another Puzzle', Massey University Working Paper Schwert, G., W., 2002. Anomalies and Market Efficiency, Handbook of the Economics of Finance, pages 937-972

Look out below...!

Asparagirl — Tue, 22 Jan 2008 00:18:35 -0800

While the US equities markets were closed on Monday for Martin Luther King Day, stock markets around the world took a nosedive, losing billions in equity; the markets in Australia, South Korea, Japan, China, Indonesia, Hong Kong, Germany, France, the UK, and more countries have dropped at least 5% each (Canada only fell 4.75%), even though most of those markets had already been seriously down for several days prior. India has been hit particularly hard, at one point down a whopping 11%, tripping their markets' automatic "circuit breakers" for a mandatory time-out period, before scraping back up to close at 8% down. US futures markets are currently predicting a 650+ point drop just at the open Tuesday morning, before even a single trade goes through. In a bit of serendipitous timing (for us, not for him), one poor young daytrader started posting unedited videos of his daily trading activities on YouTube several weeks ago, which meant that his Sunday night breakdown and Monday night quarterbacking (both videos NSFW for language) are both online for the world to see. (He was long the futures market without stops and lost about $40k out of his $55k account.) I suspect similar sentiments to the ones he expressed in his Sunday night video are going to be echoing throughout many offices on Wall Street this week...

And yes, the band did play on.

Mutant — Fri, 19 Oct 2007 06:25:01 -0800

It was twenty years ago today... on October 19th 2007 that US Equity markets had their biggest one day movement ever. Following up on an overnight 5% correction which jolted Hong Kong, a sharp, 10% sell off that hit London, the Dow collapsed 508 points, or over 22% in one day. The value of US Equities decreased by over one trillion dollars during the last of four days of relentless selling. Several weeks later, Nicholas Brady was appointed by then US President Ronald Reagan to lead a commission investigating this event. Their conclusion was simple: stock valuations were not at fault, rather the existing infrastructure wasn’t equipped to handle a huge surge in trading volume. Three of the commissions recommendations ( "Brady Report", 1988, Presidential Task Force on Market Mechanisms): improved settlement and clearance procedures, increasing capacity at the exchanges and, somewhat controversially, “market circuit breakers” which slow then ultimately stop trading should equity prices first tumble, then sharply move down in value (I say “controversially”, as nobody complains if a share gains 100% in one day, now do they?) Andrew Lo, author of "A Non-random Walk Down Wall Street" (Princeton University Press, 1999) stated in today's FT "We now have a much better integrated and connected set of financial markets. Disruption in one can very easily spill over". What's your view? Do you think another US Equity market collapse would, for example, drive a flight to safety in US Treasuries? Or would massive losses in the stock market cause bond yields to skyrocket? What would the impact of such a huge equity market loss be on single stock futures, which weren’t tradable products in 1987 but were available – and widely blamed – for the 1929 crash? While those on the correct side of a tumbling futures contract would welcome variation margin, would the equity and futures markets disconnect? Would we first see ripples, then a violent tsunami like wave of selling engulfing all markets? Curiously, significant international news of that time also was US / Iran saber rattling. Deja-wha?

Leave the SIV, take the cannoli

Asparagirl — Tue, 16 Oct 2007 16:24:33 -0800

At a time when fed-up American citizens are petitioning Congress to end the imprudent financial practices that caused the ~~housing bubble~~ ~~sub-prime mortgage crisis~~ ~~liquidity crisis~~ impending recession -- including the banning of SIV's and refusing any bailouts for Wall Street, banks, or mortgage companies -- the United States Treasury Department has just announced the creation of a giant-mega-ultra SIV called "M-LEC" made up of assets from several of the largest American banks. Already unofficially nicknamed "Sivie Mae" (or worse, "the Frankenstein Fund"), it would be an off-balance-sheet way for these banks to pool and price the ABCP's that they've lately been having trouble pricing and thus selling -- i.e. the liquidity crisis. But one financial blogger looks at this odd occurence using the film "The Godfather" as a reference point and concludes that something fishy is going on with Citibank, in particular. Phrases like "smoke and mirrors" and references to deck chairs on the Titanic are being thrown around the blogosphere. The suspicion grows: is the real problem facing these "too big to fail" banks "just" a temporary one of liquidity...or one of solvency? As Don Corleone might say, this wacky pseudo-bailout idea might be an offer that the Treasury Department can't refuse.

Buy low, sell high.

tellurian — Mon, 03 Sep 2007 00:19:50 -0800

meta-markets Online stock market for trading socially networked creative products.

Minsky Meltdown ahead?

umop-apisdn — Wed, 29 Aug 2007 08:56:28 -0800

Minsky Meltdown ahead? Named after Hyman Minsky, an economist who was known for his research concerning financial crises, specifically asset bubbles based on credit cycles. [much more inside]

21st century financial panic

storybored — Fri, 10 Aug 2007 15:02:23 -0800

A New Kind of Bank Run. ...a new financial architecture has emerged that relied more on securities and less on banks as intermediaries. With the worth of [these new] securities now being questioned — and no equivalent of deposit insurance — some who financed the securities want their money out, a fact that has created the 21st-century equivalent of a run on a bank. . It's no wonder these securities are being questioned, when some are based on Ninja mortgages and foreclosures are up 58% from last year.

Damnit Jim, I'm a doctor not a stock broker!

spish — Tue, 07 Aug 2007 20:20:54 -0800

Just how bad is it Jim? Cramer, no not Kramer, melts down on live TV and tells a very large audience to stop trading. Is the US economy heading toward collapse?

You think you got it bad? Talk to the kid.

jbickers — Fri, 01 Jun 2007 14:25:24 -0800

"I have $334,442 in 'bad debt' (I’m not counting even my student loans in that figure). It’s likely that this blog will not last long, because its more likely that I am not going to make it." The journey of the "Debt Kid," who ended up with more than $300,000 of personal debt from playing the stock market. He's 23 years old. "I don’t have a choice to succeed or not. I have to succeed. To have any chance of a 'normal' life (wife, kids, ect), my business has to succeed. I’ve promised to pay my mother back (I owe her over 100K). I have to succeed." Suddenly, paying off a few thousand dollars in debt doesn't seem so impossible.

Learn About the Stock Market While Wasting Time Online

ThePinkSuperhero — Tue, 09 Jan 2007 19:49:12 -0800

Want to learn about investing? Morningstar, an independent investment researcher, is offering 172 free online "classes" on stocks, bonds, funds, and portfolio building. And there's nifty quizzes at the end of each lesson where you can earn points that can be used for Morningstar products.

Cash & Hemlock Partners LLC

nj_subgenius — Wed, 27 Dec 2006 13:58:40 -0800

EarthShell, a small Maryland company that makes environment-friendly packaging (among others) may wink out of existence thanks to PIPEs, or private investments in public equities. Who likes PIPEs? Hedge Funds, mostly. Companies that take the pipe, as it were, may be sealing their doom. 10 percent of PIPE deals done this year are 'death spirals', where the company's stock price plummets from short selling by the financiers who structured the deal in the first place. And of course it's legal if you don't get caught shorting the stock naked and covering with the shares from the PIPE. (BTW, http://www.earthshell.com appears to be on the margins now or I'd have linked it).

Five Years After the Bubble

trharlan — Fri, 15 Apr 2005 09:05:39 -0800

Five Years After the Bubble is a collection of ten links from the perspective of those who were neck deep in the whole thing. I found the link while reading up on Andy Kessler, who had an interesting piece in today's WSJ, and is giving away his new book.

One man's retirement math: Social Security wins

Postroad — Mon, 27 Dec 2004 11:09:00 -0800

One man's retirement math: Social Security wins At the heart of President Bush's plan to sell Social Security private accounts is a simple notion: You're always better off investing your retirement money than letting the government do it. By doing it yourself, you can stow some money in the stock market, and over the long run will get a better return on that investment than today's Social Security system offers. The idea is broadly accepted. That's why the administration's plan to partially privatize the system sounds appealing to many. But that better return won't always happen. Just ask Stanley Logue of San Diego. For 45 years, the defense-industry analyst paid into the system until his retirement in 1994. But with all the recent hoopla over reform, Mr. Logue, a Massachusetts Institute of Technology graduate, decided to go back and check his own records. Would he have done better investing his money than the bureaucrats at the Social Security Administration?

What is the future of the US stock market?

muppetboy — Fri, 14 May 2004 18:14:16 -0800

Why Stock Markets Crash : Critical Events in Complex Financial Systems. Professor Didier Sornette of UCLA has some very interesting things to say about stock markets. In his book, he explains how his "theory of cooperative herding and imitation [...] has detected the existence of a clear signature of herding in the decay of the US S&P500 index since August 2000 with high statistical significance, in the form of strong log-periodic components." Although his timing has been just a bit early, the theory, the predictions to date and the pictures are all pretty uncanny. This is easily the most interesting book on the stock market I have ever read and provides interesting and believable hypotheses about things I never imagined could have rigorous explanations. For an overview, here is an interview with the author.

Google heads for IPO

zimbobzim — Thu, 23 Oct 2003 23:10:06 -0800

Another "Google heading for an IPO" report - but this time it's for real, according to the Financial Times. Apparently the shares will be sold through an electronic auction "designed to prevent a recurrence of the sort of financial scandals that have engulfed Wall Street since the collapse of the dotcom bubble". Not that Google was ever going to be Enron.