My new app Trader Trivia was mentioned in Barron’s this weekend.
IF ANTHROPOLOGISTS DESCENDED on Wall Street, they would find a culture both distinct and exotic. The Street has its own way of thinking, its own social hierarchy and rituals, and an arcane language indecipherable to many outsiders.
Michael Martin, a trader, is part of this culture. He also has an outsider’s eye. He wrote a book (The Inner Voice of Trading), created a blog (MartinKronicle), and now has designed a game (Trader Trivia), just released on Apple’s iTunes store for iPhones and iPads.
“If you’re out socializing with traders, they are engaged in conversations that include movie quotes, heroic trades, historic moves, and market data. All of that is part of our culture as investment pros,” Martin says.
Those seeking to tap into that culture can do so by downloading Martin’s game. They can test their knowledge on questions such as, What is the benefit of owning a call? And, who wrote Extraordinary Popular Delusions and the Madness of Crowds?
Martin filled his game with what he says is the stuff of daily dialogue about trading that can’t be turned into actionable investment ideas. He sells himself short on that point. All good investors know to look to the past to better understand the present and the future. Martin’s game provides an amusing assist.Continue Reading...
“More money has been lost reaching for yield than at the point of a gun.” — Raymond Devoe
With financial repression in full gear, investors desperate for yield are paying up for assets with no regard for risk.
Pay 178 dollars for 100 dollars in bonds (78% premium to NAV) and you are going to lose money. Pay 178 dollars for 100 dollars in LEVERAGED bond portfolio and you are going to get killed. As many closed end fund investors have learned over the past three days, as the premiums to NAV have collapsed from the high 70’s to the high 30’s.
Total Run Time 14 minutes.
Frank Clements is a longtime friend of mine. He has spent 24 years trading, mostly on the floor of the NYMEX in Natural Gas. The last few years he’s been a partner of Meridian Energy Brokers with my other good friend Barry McAuley.
In this podcasts, we speak about the week it was in WTI Crude Oil (CL) and Natural Gas (NG). We briefly mention my interview with T. Boone Pickens at the Milken Institute’s Global Conference in May of this year (below).Continue Reading...
Podcast Length: 31 minutes
Today I spoke with my good friend John Del Vecchio about his new book What’s Behind The Numbers: A Guide To Exposing Financial Chicanery & Avoiding Huge Losses In Your Portfolio.
Although John runs the Active Bear ETF (Ticker: HDGE), this book is not really about short selling. Long-only investors will benefit greatly from John’s insights and especially how to get out of their losers quickly just by following a few simple fundamentals on the balance sheet and income statement.
One of John’s most impressive skills is that he spends his days as a forensic accountant looking for the chicanery that is a lot more prevalent that you may care to believe. Then there’s the fact that he’s a short seller in the face of QE “infinity”, but that’s besides the point.
One of his biggest shorts (below) is Green Mountain Coffee Roasters (Ticker: GMCR). They are offering big discounts to generate revenue and as we mention in the podcast, that’s robbing Peter to pay Paul. As he states, “eventually there will be an earnings shortfall, like there always is with companies like this, and the stock will tank.”
The WSJ just ran a story a few days ago called Coffee Standoff Tests Growers’ Grit that discussed Brazil’s coffee producers hoarding physical until prices rise.
If coffee prices rise, and GMCR is offering discounts, they are going to have their top line revenue growth squeezed in a vice, especially if they don’t hedge by purchasing coffee futures contracts to offset higher prices. You can’t pass on higher costs to the clients in this regard and concurrently offer them discounts.
GMCR had this to say about their basis risk in their most recent 10-Q: “At June 23, 2012, we are exposed to approximately $73.5 million in un-hedged green coffee purchase commitments that do not have a fixed price as compared to $119.9 million in un-hedged green coffee purchase commitments that did not have a fixed price at September 24, 2011. A hypothetical 10% movement in the “C” price would increase or decrease our financial commitment for these purchase commitments outstanding at June 23, 2012 by approximately $7.4 million.”Continue Reading...
You should know if you trade commodity futures what the contract expiration dates are.
After all if you are trading Lean Hogs and you forget you could end up with 40,000 pounds of carcasses on your door step – which is not my idea of a good day.
Actually you would have to work pretty hard for this to happen. Your broker keeps a very close idea on your open positions and will likely inform you to exit your position or roll over your contract so as to avoid exactly this delivery issue. Remember if you were short you would need to actually have to have the required quantity and quality of the deliverable commodity on hand.
I like to play it safe and make sure that I am fully aware of the expiration dates.
Well in a funny turn of events a Hedge Fund had taken delivery, somewhat forcibly, of a ship as payment! That’s right Elliott Capital Management took control of the ARA Libertad, a training ship owned by the Argentine navy, whilst it was docked in Ghana.
Argentina have been avoiding paying for a 2001 bond and after a recent court hearing Elliot Capital Management went all pirate and seized the assets.
So even if you are a Sovereign State know that the debt collectors will find you.Continue Reading...