In a Day of Crisis: Turn OFF the Noise: WATCH the tape:

One of the stark things about Wall Street is the disparity between the TALK and the reality....If you listen to the pundits, you hear nothing but confusing difference based on their stock positions...but if you watch the actual tape, or the stock transactions, you can see what folks are actually putting up their money to buy or sell...and there is a big difference between the two. In times of sharp volatility, such as tomorrow possibly, December 31, 2012, it is a wonderful time to try this out...just turn off your computer or tv screen to CNBC and just watch what the folks are buying or selling, and go with the flow.....I have bought a surfer poster just for the occasion so that I would not forget the lesson...Enjoy.

Nobody ever calls me when the market plunges:Tales From Normal MN: Fiction

This is the call

Every Day in Every Way...things are getting Cheaper; Tales From Normal, Mn.: FICTION

How does one truly hedge for a classic case of deflation???? this was the problem of the thirties, this was the problem that Bernanke did not want to face after the crisis of 2008, and after all this stimulus...this is still the problem that we may face...and it is unclear that we are any better able to solve it than Greece or Japan...and you? any ideas?

The Calm Before the Storm: 2012

It is a little weird, that in December 2012, after the failure of the political parties to resolve the fiscal cliff issue, there has been no plunge of the stock market that would reflect the dire situation that we are in as a nation....it is a little funny and weird...the vix which should reflect the volatility should be higher....everything should be more volatile..yet it is not..this is a little strange...make a note of it....

Be Wary...that is the Traders Edge

When one is young, and sharp, and a learner...the notion is that someday one will be supremely knowledgeable, be able to be the font of wisdom..ya..kinda the "Carnack the Magnificant" of Johnny Carson fame....the problem is that in the markets it does not work that way...the key is always to be on edge..to be wary...to never assume...to always be wondering...and that is the essence of the stress...and the success of the successful trader...as soon as one thinks one has the formula...knows everything...or is just a little complacent....all hell breaks out..and devastation comes shortly thereafter...make a note of it.

My Father loved to buy bonds

My father was a bond buyer...on the table next to his bed was a Guideon Bible, and a S&P Bond book...most of you would not remember that book, but brokerage firms gave them out for each stocks and bonds, and for bonds it listed the bond, all the details, and the rating of the bond. My father worked on the railroad---as a postal clerk, and had worked before and after WWII for them, and he had religiously saved so much a pay period and after six months or so he bought ONE bond for a $1000 dollars. Only after he died or got close in the bond panic of the 1970's did I learn of his bonds...and then because my mother was concerned with the spike upwards of interest rates...what would become of the value of these bonds---they had been terribly trashed....and it was a lesson that I learned and have faithfully passed on to my children...and to anybody that will listen. I also remember my dad saying during those final few years, that there was not anybody on Wall Street or in the firms that he could trust anymore...they did not know him and he did not know them...he had become a number and it terrified him.... The irony is for me that now that interest rates have been effectively held at zero, and the Federal Reserve has in effect targeted Seniors to make them paupers...as a way of saving the federal government money....the time has come full circle as the next move in interest rates is probably up....Stay tuned.

"The Peapod Game": and variations:

There are some old pictures of New York, and you can see on the sidewalk, the young men gathered in circles with dice, and a blanket, and some peapods and shells. As the man moved the shells, one had to guess under which shell the peapod rested.....It would have been glorious if each young learner had learned that game...cause that game and variations are the basis for many investment schemes. One of the doctrines on Wall Street, and used to be enforced quite strictly was the rule that when describing a dividend, it had to be made clear to the investor that when the dividend stock went "ex" the stock was reduced by the amount of the dividend, so that it was a "zero sum" game...it was not extra so to speak, it was just your value coming back to you. At the end of every tax year, there are folks that buy stocks that offer dividends and sure enough, when the dividend is issued on December 31st, the stock declines by that amount, and the investor gets the dividend in the mail, and then also gets taxed on the income from it....when in fact it was just "return of capital" so to speak. A variation on this is when a company sports a very large dividend, say 15%. You might notice that as the year goes on, the stock goes lower and lower, and then discover that the cash flow of the company cannot sustain the dividend, and inevitably many investors discover this, and the stock declines...and yes eventually you lose on the taxes and the decline in value of the investment.... So the general rule: If you see a deal that seems too good to be true--check further...it probably is too good to be true.

Mindless Stock Screeners are "Mindless" and dangerous

Almost every stock site, or financial page on any browser has a stock screener by which a reader can put in some qualifications, like yield desired, PE, Price, etc, and then get the stocks that meet those qualifications. Some time ago, I did a sort on high dividend yielding stocks---this is a very popular sort these days, since many banks and investment vehicles give very low rates of interest. For example, if a bank gives 1.50 % on the savings, if you had saved a million dollars over your lifetime...it would give you $15,000 per year to live on...So now that you know that, being the self reliant person that you are...and the assets you have available for retirement...do the math...ok..you see the problem. Anyway..I digress...After my sort I got a list of stocks, and royalty trusts that sported some very attractive yields...all over 10%. And I did buy several. Some months later I was reading in an investment magazine that this particular royalty trust was going to be going out of business in 2015, or in three years....yes it had been formed a hundred years ago when the old Great Northern Railway had been around, and indeed James J Hill had been one of the founders of the trust...but what the simple stock screener could not tell me was that it was dated for demise. So---just a word to the wise...check out the financial details on the company you are investing in, and the history of that company paying dividends, what coverage they have in terms of cash flow to pay the dividend...and what the prospects are going forward...sometimes the reason that the dividend is rising is that the stock price is plunging because of adverse market conditions for that industry....

There is a Time to Buy...and a Time to Sell: A bit on "Limit Orders"

One of my daughters was a graduate student for some years, and when I used to ask her about how she could afford to furnish her apartment...she would just smile and say, "I've got it covered." I found out subsequently that on "Move out day" she would just drive down the street and look for the items she might enjoy and then just stop since the price was such an affordable zero. For the "price conscious" buyer, it is unheard of to just impulse buy...One waits till the price is right. When one is buying on Wall Street it is similar...Usually stocks have a high and a low over a period of a year, and it must be assumed that the swing from high to low is at least 20%. On hot growth stocks of course it might be different. But---in a time when the stock market has been booming, and there are signs all over the place that a sharp correction might be coming, and 90% of investors are in bonds....that is time time when it is prudent to use a "limit order" or place an order to buy some shares of stock at a price very much lower than the current selling price. You place the order GTC, which is "Good Till Cancelled". Of course you do have to have money in your account for when it is filled someday. Then during the year, your broker might call you and tell you that "your order for XYZ stock has been filled"---That telephone call tells you that there is a selling mood on Wall Street and you can check what has happened...and you also can celebrate a bit, cause you probably got a bargain basement price. I like to call this the "Limbo Rock Order" or how low can it go?