Monthly Archives: March 2009

Despite Sony’s Denial, PS3 Price Cut Inevitable

Slimmer, Sleaker PS2 now $99.99

Slimmer, Sleaker PS2 now $99.99

Sony Corporation (NYSE: SNE) today announced that starting tomorrow, April 1, Playstation 2 will be available for $99.99. Playstation 2 is not only the best-selling console ever, with over 140 million units sold by mid 2008, but it is also the fastest-selling console as well, reaching 100 million units sold within 5 years and 9 months.

I remember when the word Playstation first started to become a household name. Nintendo and Sega had been the dominant players in the video game industry for decades, and there was a ton of doubt surrounding whether Sony, which had been dominant in overall electronics retail, had the ability to compete with the “big boys” in the video game wars, without having enough industry experience and know how. Aside from the stiff competition, it is well-known that the hardware side of video gaming is typically a losing endeavor for the companies that produce the consoles, as it costs more for the company to produce them than the price they receive at sale. However, large profit margins made on software sales, combined with much more significant volume of game sales, more than makes up for the losses experienced on hardware. But at that time, there was also talk of problems with coding on the software end of Sony’s new venture, which only added to mounting skepticism over the new console’s fate.

Even after the overwhelming success of Playstation, and its variant PSone – which combined, was the first console to ever reach sales of 100 million units, – Sony faced the same skepticism when rumors of their plans for the second generation, Playstation 2 console, hit the press. Launched at the turn of the century in the year 2000, Playstation 2, as mentioned, is now the fastest selling console ever, reaching 100 million units sold in almost half the time it took for the original Playstation to hit that mark.

With todays announcement regarding not just the price cut, but also the deep bench of more than 100+ titles slated to be added to its game arsenal just this year, it’s no surprise that almost 10 years later, Playstation 2 is showing no signs of slowing down in popularity. Aside from that, Director of Hardware Marketing, John Koller, is quoted in this article as having stated, “We don’t intend on discarding the system any time soon.” Meanwhile, direct competitors, Microsoft Xbox and Nintendo GameCube – both released a year after Playstation 2 – were discontinued in 2006 and 2007, respectively. Based on all that, I’d say Sony has certainly proven the naysayers wrong regarding their ability to enter and dominate the video game industry, or perhaps even any sub-industry within consumer electronics, without having gleamed prior industry experience or know how.

Sony’s newest generation console, Playstation 3, however, has sorely lagged behind its predecessors in terms of sales volume and popularity, mostly due to it having the highest price point of all the newest game systems at $399.99.

Special Edition Gun Metal Grey 40GB PS3 Metal Gear Solid 4 Bundle

Special Edition Gun Metal Grey 40GB PS3 Metal Gear Solid 4 Bundle

With the price of the PS2 being cut today, along with Sony’s recent weaker-than-expected earnings announcement, all in the midst of the current economic recession, some serious pressure has been mounting for a big drop in the price of the PS3. Most argue that a $50-$100 price cut would make the PS3 much more competitive with current console-sales leaders, Nintendo Wii and Xbox 360. Despite absolute denial of the corporation’s willingness to do so, recent news of technological advances within the industry, like the rumor-heavy OnLive service set to launch soon, as well as rising popularity of the other competing consoles, I’d say a PS3 price cut this year is inevitable. With unemployment looking to continue rising, which means more and more parents staying home with their children, Nintendo Wii, which is the cheapest and is widely accepted as the most family and socially oriented of all the current systems, may have an opportunity to take a significant amount of market share away from Sony during the upcoming summer months, when kids are out school and playing video games more than ever. If Sony remains stubborn on price throughout the summer, I have no doubt that an ’09 Christmas price cut could be the company’s last option in an effort to keep PS3 competitive with Wii and Xbox 360. If that were to happen, I think the war over which console is best, Wii, 360, or PS3, would come to an abrupt end with a nice three-peat for Sony. Power to the Players!

The Power of A Dollar

What a ride it’s been for the past couple of weeks. There have been a number of measures taken by the Fed, the Treasury, the Administration, and Congress to prop up our nation’s economy. There has been even more criticism from all angles. I myself am even skeptical of many of the recent moves made by our Government in response to this crisis. Despite that, the big picture for investors is this: more money being pumped into this market to stabilize it, along with a few “better-than-expected” economic indicators showing that at the very least the decline is subsiding, certainly creates a nice environment for making some solid profits!

Here are the numbers:

On Monday March 9th, the low on the Dow Jones was 6440 according to yahoo.finance.

A little over two weeks later, on Thursday March 26th, the Dow hit a high of 7969.

That’s a move of 23.7% from trough to peak, in just over a payment cycle!

Hypothetically, if you invested $100 in a stock that moved directly in-line with the market, that $100 was worth $123.70…on Thursday, March 26th…at the peak of the day.

Of course, unless you sold at that very moment, it would now be worth less, but still roughly $116 today, with the market around 7500. Not bad.

Now, here’s the kicker. I bet there are a lot of investors that were sitting on some nice profits this past Friday, when a slew of reports hit the news regarding negative sentiment for upcoming earnings and economic indicators for the first quarter of ’09, along with some very public “infighting” at AIG, all stirred the pot of selling pressure. I took profits on some of my investments, but I bet there is an extremely large number of investors out there that didn’t. Even with today’s blood-letting of 254 points on the Dow, there are still a ton of investors that are still up 16% on investments made within the last few weeks, but still will not sell anytime soon. They would rather let those profits disappear in the hope or belief that given time, the investment will give them another opportunity to net an even higher return.

My philosophy is, if you believe the stock will not only go up again (after it moves lower from where it is now), but that it will rise higher than this previous peak on the next go round, why not book the profits you have, (16%) and then buy back in when you think this current downward move is coming to an end? Following my philosophy and still using the $100 hypothetical from earlier, you would have $116 after selling your investment today. If over the next 2 weeks, the market went back to 6500-6440 (to test the “bottom”) and you got back into your hypothetical investment (which in our example moves directly in-line with the market), now you’d be reinvesting $116 instead of just holding the original $100. If, following that re-investment, the market and your stock proceeded to make the same move upward, (another 23.7%,) back to these past highs, well then at that point, your original $100 that you booked profits on and reinvested at $116, is now worth about $143…so far! The guy that held on the whole time and never sold for the re-buy on the dip, he’s back to his original $100 being worth $123.70…if he sells tomorrow.

Some might say that this philosophy would be akin to trying to “time the market” and “no one can accurately time the market over the short term.” This is a statement I wholeheartedly disagree with. On a very basic level, if this were true, then a logical conclusion might also be that no one could accurately make money in the market since doing so directly involves timing. No matter what direction the general market is moving, all good situations have bad times. If you get in at a bad time, you’re done. Therefore, timing is the most important thing when it comes to making any investment. The intent behind any and all research done and reports read about investments is to determine whether or not it is the right time to buy, sell, or continuing holding the asset. To say you can’t “time” the market accurately demonstrates a defeatist attitude, which typically leads to the self-fulfilling prophecy of most investors not making money with their market ventures despite their best efforts, but if it were true, it would also mean that any and all research done on investments is all for naught since it won’t help anyone “time the market accurately.” Obviously, this is not true, so the former must not be true either.

In order to be a successful investor, especially now, you need to know, understand, and believe that not only is it possible to “time the market” over the short-term, it is fairly easy. Let me say that again, because it goes against everything that the perceived “Wall Street wizards” want you to believe and have told you since the markets were created. It is easy to time the market over the short-term! Money managers have lied to us from the beginning of finance and commerce about this fact for a simple reason. If society and therefore the investment community actually knew how easy it was to track, follow, and predict the movements of your investments, they wouldn’t need investment advisors and those guys wouldn’t make any money. They wouldn’t even have jobs. We need to believe that it is hard to make money in the markets in order for us to believe that we will not be able to do it without their help. That way, they can charge us just for talking to them, no matter how good or bad their advice!

What do you actually pay your investment advisor for? Being a former registered representative, I know exactly what it is, and what your advisor wants you to believe it is, and let me tell you, those are two very different things. He wants you to believe you pay him mainly for his speed and availability of financial information, and for the resources his organization may boast having access to, such as analysis, which he wants you to believe you certainly cannot do on your own without the “training,” “experience,” and “expertise” he or his colleagues may possess. Well, if the current state of our economy is the result of their “training, experience, and expertise,” I think it’s fairly safe to say we certainly could have lost our own money – and probably would have had a lot more fun doing it our way at that.

No, what you actually pay a broker for is simply to gain access to the markets. Your broker is in direct competition with TD Ameritrade (my personal choice,) Etrade, and all the other onlinebrokerage companies, because with online firms, you pay a low flat-rate commission per transaction, and have general access to the same information your broker holds over your head as “unattainable, unless you’re on Wall Street.” There are also extra informational services offered through most online trading firms that can be earned through consistent trading, or you can pay for it. Regardless, the only real way for you to get your money from your bank account and into shares of a company that trades on the market is by going through an investment or brokerage firm. Either you make your own trades, or you pay someone else at the firm to manage your portfolio, and do all the work that goes along with it, for you. It should be obvious now that since brokers get paid by charging you a commission, whether you make money or not, they have an inherent incentive in not doing all the work that goes along with managing your money.

First, let me preface this by stating that in order to be confident on your own ability to do anything, you must educate yourself  as much as humanly possible in the intricacies of that arena. In order to be confident in your own ability to time the market and make investment decisions without the direct, commission-generating assistance of a broker, you first need to know what makes the market move. Economic indicators, like GDP or monthly unemployment stats, legislative action from the Government, such as Healthcare reform, or tax changes, Interest rate changes from the Federal Reserve, all of these events can have a serious impact on the market. If the news is, or the numbers are in line with what most investors are expecting, the impact is usually positive, and if things happen unexpectedly, the move usually goes whichever way the unexpected news favors. Over time, watching and observing the markets, and watching closely during these times and around these events -among many, many others – you should notice certain patterns begin to emerge. Once you are able to recognize a pattern, making a prediction becomes a lot easier.

The next thing you need to know is how the overall moves in the market can affect the moves experienced in your investments. Do your investments tend to move with the market or against it? Once you know if your assets move with or against the market, you need to determine if they move more, less, or as dramatic as the market moves. (In stocks and finance, this relationship is quantified as the “beta value,” and measures a stock’s volatility in relation to the overall market. A thorough understanding of the underlying information that lies within this single number is essential to being able to accurately predict the short-term or long-term direction of your investments.)

Now once you know what moves the market, and how those moves in the overall market will impact the moves of your investments, you need to know what events that are not specific to the overall market will also have the affect of moving your stocks in any one direction. Earnings announcements, contracts, buyouts, law suits and litigation, all of these and more are big events that are stock-specific, and can have a dramatic impact on where your investments are headed. Not only that, there is an inherent pattern of movement within each stock that is directly linked to the frequency of these events. That pattern can be seen by looking at the stocks chart. Each reversal in movement, every time the stock turns upward after moving down, and vice versa, can pretty much be attributed to either a single occurrence of some event, or a cumulative result from the combination of a few. Good earnings send a flat or down stock upward. Law suits tend to be like cinder blocks wrapped around the ankles of previously rising stocks. A company receives a large unexpected contract, the stock is going up, especially during the next earnings announcement, because that’s when that large unexpected income should hit the balance sheets.

These are just a few small examples of events that occur within stocks, (stock -specific events) that will either send the price significantly higher or lower. Since the legitimacy of that statement for each individual will depend on their definition of the phrase “significantly higher or lower,” I would consider it to be $1 or 2.5% or more in any direction, whichever is greater. A move of $1 is equal to 100% to 2.5% on anything trading between $1 and $40 per share. It’s exactly 2% or less on investments of $50 or more. (That’s the power of a dollar!)

Now that you know what moves the market, what moves your stocks, and you’ve been watching for patterns of how deep the impact on your investments can be based on the occurrence of these events, you need to know how predictions about the market are made in the first place. Tracking various indicators on the chart of a particular investment – volume, moving averages, relative strength, etc. – is the science known as Technical Analysis, and is one way financial “professionals” try to make predictions about the overall markets as well as specific investments. Looking at a company’s balance sheet and analyzing their debt situation, growth numbers over the past and projections for the future, operating and profit margins, etc. and using this company finance data to predict how a company will perform in the overall market is known as Fundamental Analysis. Many people think that these two disciplines clash, and choose to utilize mainly one or the other. I think that’s the hugest, most costly mistake many investors and investment managers make.

In order to successfully make money with your investments, you must maintain excellent awareness of both the technicals and fundamentals, and the changes that occur therein, of any and all investments you make. Why dismiss an entire discipline of information that may certainly prove itself to be valuable when it comes to making money? Knowing and tracking the events that give you an indication of the fundamentals of our economy, combined with the knowledge of those same events and indicators within the specific company’s you are looking at for investments, you will be much more confident and able to analyze information quickly and accurately as it is received, and much more confident in your ability to fire your broker and do this on your own, if you haven’t already. Stay on top of the news, watch the charts, you can even utilize virtual stock trading websites online to test your predictions and trade with fake money to see what would happen without actually risking your own liquidity. Keep learning about the various events and occurrences that can significantly move the markets and your stocks. There are millions of them, so discern which are most important and why. Constantly seek out information that will help you find out how this behemoth system of market finance operates, and always keep building your financial knowledge database. It may sound like a lot of information and may seem daunting to digest it all, but really, how hard is reading and watching? If investors were much more involved in informing themselves, and took more control of their own market-education, a crisis like this, (perhaps even Bernie Madoff), might have been avoided, or at least could have been more mild. Information is Power.

*This post is aimed at investors and anyone that already has funds committed to market investments. Investing in financial products should not be done without thorough research of the markets and products in which you are interested in investing, and at least the consultation of a true professional that you know and trust. As a rule of thumb, take everything you hear or read about the markets or investing with a grain of salt, as most statements about making money in finance will be material conditionals.

Buy The Dips, Sell The Rallies: What’s in Store For Markets This Week?

See the video at CBSNews.com

See the interview at CBSNews.com

The markets have certainly had a pretty nice run over the last week, and looked as if they wanted to go higher. With the G-20 Meeting this past weekend, a precursor to the Meeting on April 2, culminating in a statement dedicated to “decisive, coordinated and comprehensive action…whatever action is necessary until growth is restored,” I’d say that governments around the world are a lot more focused on attacking the crisis, instead of standing still like a deer in head lights.

Chairman of the Federal Reserve Ben Bernanke, in his inteview on 60 Minutes this weekend, gave us much more insight than usual into his perspective on the Federal Reserve’s response to the crisis so far, as well as his outlook on the economy moving forward. Right off the bat, Bernanke adds exponentially to the positive sentiment dominating the markets right now when he says that he thinks “we’ll see the recession coming to an end prob’ly this year, we’ll see recovery beginning next year, and it’ll pick up steam over time.”

Even though the market took a little break today from the gains posted the previous 4 sessions, things certainly seem poised for a nice little rally, whether it be a “Bear market rally” or not. However, the question remains, as always, how far will it go, and how long will it last? To answer that, first it’s important to know what’s coming up this week

Indeed, aside from the reading on the Consumer Price Index this Wednesday, and a few important economic indicators on Thursday, there does not seem to be anything too significant on the horizon until roughly the end of March/beginning of April. The House Financial Services Subcommittee Hearing today regarding the suspension of mark-to-market accounting rules could certainly be the positive catalyst the banking sector needs in order to continue its move to the upside, and right now whatever’s good for the banks, is good for the market. We’ve even gotten to the point where flat quarterly numbers, or flat monthly retail sales, are positive enough to lead to few more green days, simply because flat isn’t down, and that’s great right now.

Still, the slightest hint of negativity could send the Dow right back down to the 6500 level, and I don’t see anything equally positive enough to push the Dow sustainably back to or beyond 8000. I highly doubt we’ll even get that high before retesting the recent lows. As such, it is important for all investors to understand that if you didn’t get positioned for this “rally” by now, you might be in danger of “buying at the top.” Wait for the next dip. Another shoe could drop, and another bank could need another loan at any moment. The market will always provide an opportunity to get in on a rally somewhere. Those that were able to get favorably postitioned last week or prior, and are currently sitting on some profits, my suggestion would be to take those profits off the table at the first sign of selling pressure. Now, again, I’m no guru, I’m no “expert,” and nothing on this site constitutes a recommendation to buy or sell anything nor to take any action in the financial markets whatsoever. However, as a former stockbroker with the responsibility of making money for over 100 high net worth clients at one time, I am 100% certain that those investors with profits to take will not be happy seeing those profits evaporate if something, anything, causes the market to tumble farther than it did today. As one cliche I constantly heard as a broker goes, “A bird in the hand beats two in the bush!”

Captain “Shook” and Cruella “Nay-Pill”

Arionna Huffington, as usual, pins the proverbial tail intelligently on these donkeys when she calls them “cartoon characters,” and right now I’m just happy to feel like a kid again, watching “cartoons” all-day. LOL!

Check out her blog at The Huffington Post. Make a comment and lend to the conversation. I did.

See Captain Shook apologize to Rush Limbaugh

Click here to see "Captain 'Shook's'" "bitch-ass move."

 

An entire page dedicated to the ridiculousness personfied as Sarah Palin aka Cruella Nay-Pill

Click here for the entire page dedicated to the ridiculousness personified as Sarah Palin aka Cruella "Nay-Pill"

Planet Green Provides Solutions

(Vince supports a green planet.)

("Vince" supports a green planet.)

My girlfriend’s mother recently made me aware of a new channel on cable called Planet Green, and I haven’t been able to stop watching! The following information is directly from the planetgreen.com website:

About Planet Green
Planet Green is the first and only 24-hour eco-lifestyle television network with a robust online presence and community. Launched in June 2008, our on-air content reaches 50 million homes, offering more than 250 hours of original green lifestyle programming. Both online and on-air, Planet Green’s content is entertaining, relevant, and accessible to people of all ages and backgrounds. By representing a broad range of ideas and perspectives, Planet Green is taking an active role in generating conversation and motivating individuals to take action when it comes to improving the environmental status of our planet.

Through Time Warner Cable in NYC, Planet Green is channel 114. This addition to cable television is not just an alternative to much of the mindless “reality” shows, and ‘celebrity gossip” dedicated programming that seems to dominate right now, but it’s also extremely educational. Children of all ages will find a wealth of information and inspiration for things from Science Projects to book reports on the issues that will only become more and more relevant, especially for them. Parents may also gain an arsenal of activities in which to participate that may be available in your own neighborhood, for you and your family to take part in helping make your community or your own personal home more sustainable and energy-efficient. It’s exciting to see how easily and creatively people are coming up with the alternatives and ground-breaking answers that can help solve the biggest problems our planet faces today. Not everyone has to be a so-called “green/sustainability/organic fanatic,” but Planet Green does give you the information you need to know that can help you become more efficient, save money for yourself and your family, and make less of an impact on your environment at the same time. We all need to pitch in at least a little. Gold Star for Discovery Communications, Inc. on this one.

Click here to enjoy some clips from Renovation Nation, and other great shows on Planet Green.

Jon Stewart Conducts the Modern Day “Frost/Nixon” Interview!

Yesterday was truly an amazing day for American history!

First off, Bernie Madoff went to court and tried to play “Let’s Make a Deal” with his sob story of a guilty plea, but the judge wasn’t having it! More on that later.

Last night, Jon Stewart exposed not just Jim Cramer for the Krustonian Clown that he really is, but also CNBC as the Stanford Group/Madoff Securities of the “Financial News” media that they truly are, all in one interview!

Jim Cramer Wants to Make You Money? Yeah Right!

Jim Cramer Wants You for Cramerica!

The scene of Stewart “training all day” for the interview is personally reminiscent of my own time studying for the Series 7 some time ago, so I particularly enjoyed that. Then we see how Doughboy Cramer prepared for the interview – by baking with Martha Stewart and pounding dough with a rolling pin in true Neanderthal fashion, after Martha suggests he think of the dough as Jon Stewart. Stewart responds with the comment, “Mr. Cramer, don’t you destroy enough dough on your own show?”

 

Once Jim Cramer stepped out onto that stage though, it wasn’t exactly war immediately, as Stewart let Jim know that none of his previous comments about CNBC and its coverage of financial news had ever been aimed directly at Jim Cramer. He in fact later informs Cramer that he feels bad that Cramer has become sort of the face of what Jon Stewart has been vehemently and very precisely attacking. Cramer certainly accepted that he understood Stewart’s point and agreed that in the current environment, CNBC and he himself, was “fair game” for criticism. Once all those “courtesies” were taken care of, it was certainly “ON!” and all the fun and games stopped, as Jon Stewart conducted the interview like Jack McCoy trying to squeeze a dirty witness into a deal for more information on the “Big Fish.” And Stewart was out to reel in CNBC and its reputation as a credible financial news media outlet. The war was on!

Stewart hits him with the evidence: clips from a December 22, 2006 interview that was obviously never meant for TV, as Jim Cramer clearly states in the interview that he is making statements and revealing things about his own activity as a former Hedge Fund Manager that he cannot say on television!

 

The Statements: I can’t even say that Cramer all but admit to futures trading manipulation – which is just as simple and illegal as manipulating the trading of a low-volume stock (see the movie Boiler Room) – but that’s exactly what he admitted to doing. That’s why he can’t say it on TV! “Welcome to Mad Money. The show where I tell you what will make you do what we CEO’s need you to do in order for stocks to move in the direction we want it to move in, and yes sometimes that direction is down.” That just wouldn’t work as a marketing scheme, and Cramer, stumbling and stammering like a lion on ice skates, readily tried to use marketing as an excuse for why he acts the way he does and does the “crazy Bull(Bleep)  I see [him] do every night” as Jon Stewart so rightfully and eloquently put it.

 

 

The Meeting (And the Proverbial “Nail in the Coffin: Stewart had Cramer so off-guard from the beginning of the interview with those video clips, that it was a side of Jim Cramer that I’m sure too many Americans were not used to seeing, and were probably pretty worried to see –and we should all be worried! Jim was stuttering and stammering like Jimmy, from South Park, trying to defend himself and his Network, CNBC,  just like the guys on Law & Order that try to hold out on McCoy – like we don’t know they’re gonna get broken down to where they end up revealing every element of the crime. Feeling the heat from Stewart’s poignant, targeted, incriminating questions, Cramer readily admit that he as well as others could have all done a “better job” – spotting the oncoming crisis, calling out the mistakes that were made, and doing their own due diligence on the information they received from corporations (and they frequently receive “insider information”– “Absolutely, I truly wish we had done more.”

Then he goes into this spiel about how he tries to be “truthful” on his show, and expose “these guys” as much as possible, still oblivious to the fact that he admitted to being one of “these guys” during those clips at the beginning of the interview.

 

But then he surprised me and everyone else with enough financial knowledge to know that there’s a reason why you don’t say certain things on TV or anywhere that you can be recorded saying it for that matter. It’s the same reason why you take the 5th on the stand. But Cramer – I guess because he, like Madoff and most other people who have been running scam-like enterprises, got drunk off the illusionary power that enterprise (his show) created, that he felt as if he was a made of Teflon – didn’t plead the 5th! He continued trying to play this investor advocate role, talking about how he readily bad-mouths CEO’s and companies that make mistakes and don’t do well for their investors, as he proceeds to implicate himself in a grand scheme of manipulation of insider information using his show as a vehicle!

 

Thinking he’s in line for the Academy Award for this performance, he opens up and goes into a story about a meeting he had with one such CEO, whom he had previously admonished on his show. Without going into the details of the meeting, Cramer – in true Blagojevich fashion – tells a lot more than he probably should have and seems to be realizing it as he’s telling Jon Stewart how this meeting basically compelled him to refrain from talking down that CEO on subsequent shows. Now you don’t need to be a lawyer, a DA, or a Law & Order fanatic like myself to know that Jim Cramer must have gotten something to have readily gone against his own previous rebuke of a stock or CEO. Obviously, Cramer wouldn’t want you to think he received money in exchange for his silence and cooperation, and he’s probably smart enough not to accept any “money” so as not to leave himself open to easy interrogation. So, Cramer’s implication, what he wants you to believe, is that the CEO of that company gave him some “information” about the company that put him “at ease” about whatever it is that caused him to rant negatively in the first place. And therein lies the rub, because chances are, it wasn’t information, it was “money,” or “gifts,” or “favors,” whatever you want to call it.

 

Let’s say it was information though. Most likely, that “information” was inside information, which is info that only company officers, directors, and other high level employees or partners would be privy to, as it is non-public information. If that is the case, then my belief is that a strong case can be made against Cramer, and possibly CNBC, for stock manipulation and a form of insider trading, at least manipulation of insider information. Jim Cramer already provided all of the evidence!

 

If I was meeting with CEO’s and buying stock in their companies, and a good majority of investors out there watched my show, hell yeah I’d use it to manipulate perceptions as much as I could to my benefit, the same way I’d take a bag of money out of an open unguarded safe.  What Jim Cramer does however, is equivalent to putting on a guard’s uniform and telling people that the open safe is secure because he’s guarding it for you, more people come and put their money in the safe, and when it’s packed nice and tight, he slams the door shut and makes off with the money, in search of another area or arena where he will be able to pull off the same scheme over and over and over again. It’s criminal how he’s able to get away with it, and he and all that help these “shadow government” wheels go ‘round should be held responsible for their actions.

 

Now I know most likely, that this will not happen, and that’s because the Wall Street “Back Room” that Jon Stewart alludes to is real and is in power, running this whole game. The American Financial markets (and the Healthcare and Social Security Systems for that matter) is nothing but a nationwide Ponzi scheme authorized and run from the highest levels. We invest our hard earned money in these companies, whether we want to or not. Just working at a company that trades publicly means that your 401K is invested in the market through them, on your behalf. Individual and Online Investors, can only purchase a handful of all financial products. The rest, especially the “sophisticated” ones, you have to buy or sell through a financial institution aka a brokerage firm. Then, with our 401K, IRA, and pension accounts financing the whole show, these institutions trade with each other as much as possible, constantly turning over (churning and burning) our accounts – which now combine to be lump sums of billions, even trillions of dollars – for them to take bets as risky as possible, and then manipulate and control the markets so that those ridiculously risky (no risk, no reward!), overleveraged bets actually do end up working out through their own magical “invisible hands,” – thier hands in our accounts/pockets! Then you have CNBC and guys like Cramer, Kudlow, and the whole CNBC crew, who all think of themselves as modern day Ruggedo‘s, feeding us the information that fuels the very rumors these company CEO’s and Directors want to use to perpetuate this “Oz-ian Fantasy Land,” where we can all make “Fast Money,” to manipulate any and everyone involved if it will lead to more profits.

This type of manipulation of the American public is 100% legal. It’s the American Way!

 

*Watch the uncensored version of the interview here.

 

The only good thing that may have come about as a result of the Bush Administration is that he and his posse made the abuses perpetrated on the poor and middle class by the American Upper class so blatant, flagrant, and out in the open that he may just end up being the straw that breaks the camel’s back. As more and more information about what went on during his “Animal House” of an administration, hopefully we as Americans will continue to wake up from our greed/profit-induced slumber, and will continue to awaken to the presence of the modern-day financial “matrix” where the few control the behavior of the masses. Just like our current banking system, we are the living dead, afforded just enough to keep trucking along in this zombie-like state, as our pensions, 401K’s, and nest eggs are raped and pilaged, traded hundreds of times over for sport. Just like Morpheus says in The Matrix, it is hard to tell how people will react to finding out that the world that have become used to is nothing like what it seems. No one enjoys finding out that they are being manipulated, taken advantage of, and ultimately “you are a slave.” Jon Stewart should be commended for his targeted, well publicized assassination of Jim Cramer “the financial guru”, and for revealing Cramer as a bozo-the-clown like, wild and crazy financial version of Pee-Wee Herman that he is – going nuts in his “Cramerican Play House” during the day, while meeting with shady characters to conduct underhanded, devilish, back-alley deals behind the scenes. Cramer, your hands are just as dirty as those of Dick Fuld, Henry Paulson, and all these brokers and managers at these financial institutions that when they knew their assets weren’t worth anything, used the guise of international investments to spread this garbage around the globe. To pretend as if you are an advocate of the “ordinary American” is not just “disingenuous,” it is criminal, and one way or another, your chickens will hopefully come back to roost. Only time will tell.

The Week Ahead: Weekly Activities For Every Investor

Let me preface this article correctly prior to your hopeful enjoyment. Prior to finding a career path that I felt passionate about, I like everyone else, looked for a “job” in the urban rat race, and found myself as a broker-trainee at a full-service boutique brokerage firm on Wall Street. 3 months and a week after my interview at that firm, I was a Series 7 & 63 licensed registered representative. In 4 years on Wall Street, I made some good money, ran my own team of brokers and trainees, and most importantly, got out when I realized that my goals for my clients and my goals for myself were in direct conflict with each other. Now that’s another post for another time, but I say all that to say that I know how the industry works from somewhat of an inside perspective. Not an insider perspective’s; I didn’t work at any firms that trade publicly, not as a broker anyway, and am not in position to know anyone that would have “insider information.” Even if I did, I obviously wouldn’t be readily advertising my possession of information that would be illegal to disseminate. So, reading this, you will not receive the “golden tip” that will allow you to “corner the market” on anything.

***Also, and this is the most important: I am no longer a registered representative, nor do I work for any organization involved in the Finance, Insurance, or Banking Industry’s. I do not work for any organization for that matter, as I am currently unemployed. All financial information contained herein this article, and anywhere else on this blog is based solely on my opinion, or that of the writer, and should NOT be considered as a recommendation for or against any trading activity in any financial markets. All investors should consult with a Certified Financial Planner or Advisor prior to making any trading decisions and all decisions that could potentially have serious affects on the financial stability of that investor. Any gains or losses in time or money incurred in the financial markets generated based on any information contained herein this article or on this blog is the sole responsibility of the reader. TheRabidWhole’s Blog, and WordPress.com, will NOT be held responsible for any gains or losses incurred in the financial account of any reader and/or investor that directs market activity based on any of the information contained on TheRabidWhole’s Blog.***

 

Now that that is out of the way, remember that this is strictly the opinion of one man. You, the reader, are responsible for what you do based on this information.

The World Bank just announced that they are forecasting a drop in the world economy for the first time since World War II. OPEC also announced cuts, that will potentially push oil prices north of $50 per barrel. This should come as no surprise, as we are moving into the summer months. No matter how the economy is doing, people all over the world travel more during the summer. Kids, buses, and planes, go back and forth from private schools, colleges, and universities. Now with unemployment as high as it is, and with the spread between household income and the standard of living closing rapidly, (already “underwater” for some) there will of course be a lot less travel and therefore oil consumption than last summer. However, the cyclical nature of the increase in oil consumption and prices will still prove valid, in my opinion (IMO). As investor, it is always important to know what is going in the economy on a “macro” scale, which basically means on a very basic superficial, many investment professionals would say on a “fundamental,” basis. For me, a great way to access this public information that every investor should know is by checking out cnnmoney.com every Sunday. The site has an article series, “The week ahead” which provides investors with a glimpse into the important economic information due to be reported on for the upcoming week. (Click here for this past Sunday’s article which gives a glimpse into what’s happening on Wall Street and in Washington this week.)

Regardless of whether or not you are able to keep a close watch of your investment portfolio, every investor should be aware of potential upcoming events that may present opportunities to either get positioned in a stock or security you feel can show you profits, or to take profits on a position in which you may already have profits. I myself have found the week ahead article series extremely helpful in allowing me to anticipate the daily fluctuations of the overall markets. How? Well, on a trading day in which there will be important economic news, and that news is mostly projected to be negative, (February Retail Sales due to be reported on this Thursday, for example, or the Trade Defecit Report due this Friday) chances are that negative news will bring the overall market down for that day. When the market is down, most stocks will be down if only due to the reason that a move in the overall market reflects, at the very least, 50% of the move any individual stock will show on that same day. So, unless you have a particular position that has a great news release or some sort of positive catalyst that will cause that position to “buck the trend” and climb in the face of a falling market, most likely that position will follow the trend. Therefore, forming an opinion about how you believe the market will act overall in relation to any economic news released on any day should sharpen your ability to anticipate market moves on any given day. Now, you won’t become the Nostradamus of the Stock Market, nor will you reach “Oracle of Omaha” status, but knowing what is due to be reported, you should be able to discern whether or not that information will be taken positively or negatively by most other investors. Opinions quite possibly vary most on this perspective, but I personally believe that any day where the overall market is down should be taken as a buying opportunity somewhere. The trick is finding that situation that has been doing well recently, both fundamentally and technically, and still has enough potential (enough positive sentiment behind the stock or security) to fall less than the market falls (percentage wise), on a red day, a down day, and also enough positivity to rise immediately and aggressively at the first sign of positive news, which will lend to even more positive sentiment on that stock.

A great and recent example of this has been Gamestop Corp. (NASD:GME). From September, when our economic armageddon began, to November 20th, (the “November Lows”) GME was falling just like the market, despite some positive news specific to that stock. This is obviously because the overall news regarding the global economy, the entire financial system, and our housing and insurance systems was so dismal, and we were in the midst of a recession already 10-12 months in the making, that nothing could really stop the downfall at that time, not even individual positive news. Just like an individual that had A+ credit at that time, Gamestop as an A+ rated company at the time (or at least BB+ rated according the S&P upgrade of their corporate credit rating on Sep. 18, 2008) was still being treated like every other questionable company out there. The entire system was questionable. However, that company was and still is the world’s largest videogame retailer, and still experiencing significant growth, despite the economic contractions. Nevertheless, the stock price fell from $41 the Friday before the Lehman collapse, to as low as $16.91 on November 20th. This illustrates the importance of having information that gives you a glimpse into what may be coming on the economic front. Just looking at information on the stock itself in September, it looked like a good opportunity to buy and make some profits. But looking also at the information that would have been in those cnnmoney week ahead articles around that time, certainly would have given you a completely different perspective, and might perhaps have provided you with enough insight to see that buying Gamestop in September indeed may not have been the best time to get involved. It’s certainly something, you would have wanted to keep an eye on though. Since those November lows of $16.91, GME has traded as high as $29.08 (reached on Feb. 25, 2009), and is currently back down to $22 and change, due to other video game retailers attempting to enter the used video game market that Gamestop has dominated for so long. Anyone else smell a buying opportunity?

 

Ultimately, it is every investor’s duty to educate yourself on any and everything that could affect your investments in any way. If that sounds like a daunting task, perhaps you should consider keeping all of your money in savings and checking accounts, or the proverbial mattress. But if you want to be successful at investing, just like being successful at anything, you need to arm yourself with the tools that will enable you to do as best a job as humanly possible. No matter how much time you have to devote to research and education on investments, every investor should at least check the news headlines on their positions each week to be aware of what has happened, as well as attempt to gain information on any and all upcoming economic events or reports that could impact your specific holdings, or the industry’s in which your holdings operate. If you haven’t already noticed from the tone of this article, I myself prefer to deal strictly with stocks and stock options, also called equity options. However, that does not mean that this mentality cannot be applied to mutual funds, Bonds, Commodities, ETF’s, and any other financial products in which one might choose to invest. Knowledge is power, and absolute power corrupts absolutely, so never think that you know so much about any one thing that you do not need to know more. Good luck!