economy

THE BULL TREND AND ACE GREENBERG DIED AT THE SAME TIME.

You will be missed Alan!

Thank God they reinstated the up/tick rule.

Resilience: An ability to recover from or adjust easily to change or misfortune.

Resilient, ah! Resilient the traders would say or a salesman will rush into the trading room, during a busy day and say:

“What should I tell my customers? Did I miss some news? What’s going on? They should be down!

And a trader would say: Resilient, ah resilient.

We all use that word when we didn’t know why the

f—k—g market was up. I wonder if they still use that word. God I love Wall Street!

Several times in the past someone would look at me with strange look on their face, and say to me you have an anfractuous mind. I just see things differently.

Example: One day last week the market moved to new highs on big volume. Everyone says, wow that was a lot of buying!

Just remember for every buyer there is a seller but the market was on the plus side.

I’ll give you that but less than one percent.

Now 100 point move in the 70’s or 80’s meant something.  There were more buyers than sellers but not by much.

To me there was a lot of selling and I think the sellers were the Gnomes of Zurich. Just like that day in August of 1982, the start of the new Bull Market. I think that day the Gnomes were buying also, from my anfractuous mind.

Another twisted thought:

Suppose the plane that was shot down, the MH 17 from Malaysia wasn’t from Malaysia.

Oh! A small country. Not important??. Please 300 lives were lost and the news said the bodies looked as if they were turned inside out. Maybe the pilot did know that he shouldn’t be flying over the war zone but was diverted because of turbulence or a number of other reasons like a mechanical failure or worse a terrorist on board.

Let say it was a flight from the USA or how about China or some other big nation that could strike back.

It seems to me that they pulled the trigger because they feared it was an enemy plane too close to Russia.

Do you really think that the trigger happy guy checked to see where the plane was from before he fired?

I doubt it.

Next week an American plane could be diverted to that area and shot down. I am not trying to build a bearish case because I am looking for a correction; it’s just that I think you gotta be f—k—g crazy to be in this market. The world is coming apart.

I just don’t think you are doing your customer justice by being in this market, and, what about preservation of capital, your customer’s money. Losing it is a lot worse than not making more.

Some of my friends that I advise “the Oracles of Juniper Valley Park” said:

“Frank we are happy you yelled Buy over 4 ½ years ago. It’s the summer time and we have money in our pockets and we can sleep at night but if the market goes a lot higher, we all are coming down to Peru to beat the sh-t out of you.”

OEX story continue

I executed a buy order and bought 10 OEX puts at 2 ½

slightly out of the money. 2 or 3 weeks went by and the market worked its way higher. The options were trading around 1 ¼ – ½.

And I said: “I’m sorry we never talked about paying for the loss if they went down; I’ll pay you back in full”.

She said “I already sold them”

I said “why?”

She answered “I asked some of the analyst here, what should I do?  None of them were sure about which way the market will go except one analyst who said:” Frank is a nice guy but he is only a trader not an analyst, what does he know?”

She graduated from a nice college and was a CFA a certified financial analyst and he was a Columbia grad.

Well I promise you one; two or three lessons would come from the story.

Two weeks later the market was down big on the Thursday and Friday before the weekend. Unusual, in Bull markets Thursday and Fridays are almost always up, confidence disappeared and everyone in our department and the other Trading Departments, all left for the weekend with scared faces.

I said ” Oh Boy! The Yuppies are all going to talk to their friends this weekend and I know their final decision will be to sell everything figuring it’s better to have some money left to play with rather than nothing.

Monday was scary straight down and some salesmen were throwing up by the end of the day, some send their secretaries out to buy cameras to take pictures of the Quotron Screen, the closing prices were frightening. Tuesday there was a selling climax.

In spite of the movie The Wolf of Wall Street, released-I think- at the worst possible time, when the market and economy were struggling to come back, most of us in the business DO CARE about a customer’s money or the firm’s money.

I knew of one young salesman who committed suicide, a specialist on the floor who committed suicide, and a salesman who took a heart attack and died. Oh! And there was a guy in New Jersey who drove to his broker’s Merrill Lynch office nearby and shot him.

The OEX puts bought at 2 ½ for $2,500 dollars eventually traded at a value of $87,500 dollars. I don’t think I would have stay around that long.  But imagine if I bought a 100 or a 1000 puts.

Next blog: “Lessons”

In a CNBC interview  Ace Greenberg said he only wanted PHD’s working around him but he meant poor, hungry and determined!

Te amo Peru, the food here is unbelievable.

 

 

 

 

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economy

I HOPE THE RUSSIANS LOVE THEIR CHILDREN TOO – Sting.

Almost every day Russia is in the news. Yesterday more sanctions and I don’t like the things I am reading. I also hope the Russians love their children too. I hear they are good at hacking I wonder if they can cause a cyber-attack on all the computer trading systems.

Just think a bloodless war; nothing is more valuable than human life. This is one of the many Black Swans I mentioned.

I love going to the computer and hitting you tube, pick out someone I like, pick one of their concerts, put on my headsets, minimize the site, set the volume and start going through my 15 or 20 favorite web sites and mentally collect KIM’s (Keep in mind) and enjoy the concert.

I remember the day I bought the album “Synchronicity “. I played it all weekend and as the kids came in and out of the living room they would said “Oh dad! Oh dad! Oh dad!” they knew if I liked something I played it over and over, but they all know the Beatles, Pink Floyd, Dire Straits, Chicago and many more; anyway Sting was singing this song about the Russians, great lyrics. The concert was Berlin 2010. More recently I listen to Adele and Cold Play. I love her accent. I just started to listen to Bruno Mars and James Blunt and I’m really falling in love with Latin music from the Peruvian radio stations: Radio Romantica, Radio Inolvidable and Radio Corazon.

I am getting some nasty emails mostly Warren Buffet fans about my BH/BS Blog and some nasty emails claiming I put down Quants and MBAs. For the first group go out and buy yourself this book “The Battle for Investment Survival” by Gerald M. Loeb. He promoted a view of the market as too risky to hold for the long term, written in 1934: The Great Depression Era. I’m sure he and his customers got hurt. This was the first book I read at the start of my career in 1966.

True story, maybe we could learn one, two or three lessons from it.

 It was August 1987; the market was enjoying a summer rally. Every Monday morning we got the new weekly “Mansfield Charts”. The first few pages covered market internals up volume, down volume, number of new highs and new lows but I really like watching the Advance – Decline Line Chart.

The Dow was going straight up and the Advance-Decline line was going down, a negative divergence.

Keep in mind the Dow is only 30 stocks, the A-D line was all stocks listed on the NYSE, about 2900 stocks at that time. The trend continued for 2 or 3 more weeks when I yelled: Its over!.

One of the young woman in the office said “If you are so bearish, are you buying puts and selling stocks?” I said: “My problem right now is that I bought a co-op six months ago in Chelsea on the corner of 20th St. and 7th Av. And I’ve been putting extra cash into it. I felt the neighborhood was ready to turn around and the area reminded me of South Philly; also there was a great unobstructed view of the Empire State building, just beautiful. It was well lighted and had a different color each month but the greatest site was watching it day and night during a heavy snowfall.”

Anyway she said:” Tell me what to buy and we will split the profits”.  So I agreed and executed an order for her. I bought 10 OEX puts, slightly out of the money and expiring in 3 months at 2 ½ dollars, total cost 2500 dollars.

Since my first Big Market Correction Blog, all my friends sold their stocks, are in cash and some of them bought puts.

PS – I saw a great article yesterday. The analyst said: “Stocks are overvalued by 80%, about the same as in 1929, 1987 and several other dates. I’ll try to retrieve the article and his name, a great piece of work.

PS PS- Te amo Perú.

Reason No 1: the people are happy, humble and hardworking and the children all have beautiful faces.

To be continued… I have to talk to my lawyer first. Besides I just heard the bread girl! Its 7 am and she is little late.

Thank you G.W. for the information regarding my swollen ankles.

Love from Peru

M. Frank Anastasi

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economy

IT’S ALL OVER, CEPT THE SHOUTING.

It’s not over until the fat lady sings. Bears make money, bulls make money, pigs make nothing or as some people say, pigs get slaughtered.

God! I love Wall Street.

If you are a young guy or just graduated go to Wall St. I think it’s an exciting business. I am sure there are other jobs more exciting for example I always love music, I wanted to be a song writer or a great rock drummer who sings. The point is I never had a boring day in Wall St., I had some bad days but never a boring day which leads me to my next point:

In this week headlines there were two items that call my attention

First one said “Wall St. scrambling to hire young bankers”, that’s something you usually hear at market tops and they are heavy at laying off people near bottoms.

“I only know what I read” said Mark Twain I think.

My firm AG Becker tried very hard to keep everybody on, even in the worst times.

Hey! They kept me for twenty five years. I remember one market down turn; they close the OTC Trading Department, my department but offer everyone a spot in other departments that were at least surviving. I accepted the job on the floor of the American Stock Exchange (AMEX) for about nine months as Specialist Assistant, where it became clear to me that the Specialist System was and is still the best system. It wasn’t perfect – by no means- but all orders buy and sell, went to the same location: the specialist on the floor of the exchange.

Anyway after 8 or 9 months they re-opened the OTC Trading Dpt. upstairs in the New York office as promised but I came back feeling that the Specialist System with one market maker was superior to the OTC Trading System with many market makers, which intern has led to all these computer trading offshoots that we have today.

The other news item that bothers me was a news film clip on “The decaying shopping malls in America”. I do believe the economy is coming back, but slowly and I know the USA will rise to the top again. We always did and will do in the future because this country always had God on its side.

The market always anticipates what will happen three to six months from now, but decaying malls and Dow 16,950 where I finally screamed sell is more than three to six months away.

It seems like the bulls are high on something, they just refuse to see what’s going on here in America and the rest of the world. I don’t know what will take us to the “Tipping Point” – a good book- and cause the correction I believe is coming.

I hope it’s not a Black Swam- also a good book- which is something that is already out there but appears at best to be manageable. Then when you least expected, it blows up in your face. There are too many Black Swams out there and all of them are potential disasters.

Wait a minute… I just heard the bread girl hang the bag of fresh rolls on the door knob. It remains me of my home town where I grew up. South Philly,(Philadelphia) where fresh bread, milk, butter, cakes and donuts were delivered every day 60 years or more ago. Just one of the many reasons I love Peru.

Te amo Peru

PS About 10 am this morning I hit Yahoo to check the news and my emails and the headline read: Putin is in Cuba with the Castro brothers for a visit and is for giving them a $30 billion debt.

This bothers me maybe because I remember just finishing army basic training at Fort Knox Kentucky when we were told the Fort was put on alert.

I am not sure it was Cuban missile crisis, I was never that good at World History, but I do remember Russia and Cuba mentioned in the same sentence.

PS-PS Can you do a Ps-Ps??

RIP Tommy Ramone

Strange days indeed!

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economy

THE PRICE OF TULIPS

When I started trading in 1967 as an OTC Market Maker I would read anything about the stock market that I can get my hands on: Business Week, Forbes and of course The wall St. Journal and The New York Times.

I remember one Sunday going to my favorite local candy store in Rego Park, Queens N.Y., I would go there only because they had a large selection of newspaper and magazines, when I saw something called “Barron’s”. The front page had a column called “Up and Down Wall Street.” I had to try it at least once and the title read “The Price of Tulips” it cost only 75 cents at that time. Believe or not!

Well, it was the greatest lessons on things being underpriced and overpriced, plus a good lesson on Supply and Demand. It helped me to identify early The Dot.com bubble and the Real Estate bubble.

This weekend on the net CNBC had both Bullish and Bearish articles. The Bullish article claimed that the price/earnings ratio existing today where a little high but it says “Don’t sell stocks; the Bull Market is going higher besides it is the only game in town.”

What’s so bad about staying in cash even if it’s just for a short period? And what about the lack of quality of earnings. Most come from cost cutting, like selling off or closing loosing divisions resulting in large layoffs.

The Bearish article stated it that retail investor selling saw a nice increase in the last days of June and the shortened first week of July.

Do not underestimate the retail crowd.

The only Stock Market newsletter I ever bother reading was the “Professional Tape Reader”, the first couple of pages had a lot of charts with comments. The last page had about 20 internal market indicators. One of them was the odd/lot purchase to sales ratio. For those too young to know, an odd/lot is anything less than 100 shares.

Yes, most retail investors cannot afford to buy 100 shares of most stocks. Believe or not! But what amazed me was how often the little guy was right.

Let’s see if last week’s heavier retail selling is telling us something.

Thank you Stan Weinstein for teaching me early in my carrier the importance of charts and market internals. (Just remember the “Dow” is only 30 stocks)

I miss Alan Abelson.

And I wish my kids would call me more often.

Love from Peru.

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