Archive for September, 2011
AMZN: Tablet Market Wars Are Heating Up
- Written by Jared A Levy, Editor, Options Strategies Weekly
I remember my father telling me over and over when I was a kid, “Don’t be a copycat!” He told me to create and innovate, to be an individual and a leader.
Copying from your classmates in school was grounds for expulsion.
But in the world of technology, copying and cloning is rampant and has been for a long time. It’s quite easy to “improve upon” an existing product or idea and make it something seemingly new and unique.
Take the tablet market, for example. Its form factor has been around for over a decade. I remember using them in the late ’90s on the trading floor. Back then you had a special pen to maneuver the cursor and make selections.
Today, tablets are the new craze and just about everyone wants to be in on the action. Unfortunately, there may only be room for a select few.
The big winners in this game will be the content and software providers… the ones who can monetize the compulsive consumer and integrate many types of features into one device.
Google, Apple and now Amazon are the strongest contenders. But you won’t believe how another company is benefiting from this market.
Amazon
Earlier this week, Amazon.com (AMZN:NASDAQ) launched a new array of Android tablets aimed directly at Apple. The top-of-the-line “Kindle Fire” is meant to compete directly with the Apple iPad, which currently has Read more
The Best Way to Invest in Currency
Written by Jared A Levy
Last weekend after attending our annual financial summit in Las Vegas I realized a couple of things.
- Just about everyone Read more
Special Delivery: A Job Killer Is at the Door
Tuesday, 20 September 2011
Over the weekend, we held our annual investors survival summit in Las Vegas. Aside from the libations and excitement surrounding us, we focused on the world’s economies.
But more specifically we looked at what’s ahead here at home.
Employment and consumer confidence are the main drivers of economic growth. Without them, America’s small-business growth — the core of our stability — would stagnate.
While some unemployment is actually tolerated and generally acceptable, a continued increase in unemployment when the stock market is recovering is bad.
Excessive unemployment (over 8%) hammers the equity markets.
Below is a chart of the unemployment rate going back to 1970 (in blue) compared to the S&P 500 (green and red).
Generally speaking, when unemployment is dropping sharply, the market rallies. You will also see that sometimes markets surge even when unemployment is rising (1990-1992, for example).
This is because the employment rate is a lagging indicator, while the stock market is the ultimate leading indicator.
Think about it as a rubber band. As the market rallies, it stretches the rubber band between the two, creating more tension. If unemployment begins to drop after this rally, the tension on the stock market is released. If unemployment continues to rise, tension also rises. Eventually, it will snap the stock market back down.
With every reason to expect higher unemployment, that’s the case today. The rubber band is stretched to record tension levels. It’s starting to feel a lot like the late ’70s, sans bell-bottoms, of course…
Job Killer in Your Mail
Have you noticed delays in your mail? Letters and packages taking longer and getting misrouted? Recently, I have seen major changes in my postal service. It started a couple months ago. I wasn’t getting mail in a timely fashion, sometimes not at all.
My renters were complaining to me that they haven’t been getting their mail… including their paychecks. Just yesterday my neighbor came back from vacation and called me to tell me that he has been getting bits of my mail for weeks.
I asked a few attendees at our conference over the weekend, and they had been noticing the same. Obviously this is anecdotal, but these signs should not be ignored and I suspect my small sample is not alone.
It could be due to the fact that the 235-year-old U.S. Postal Service — which happens to be America’s second largest employer next to Wal-Mart — is in deep trouble.
The USPS is a nearly bankrupt, antiquated albatross that is wrapped tightly around the neck of our highly indebted nation.
As it stands now, the poorly run entity is running a Read more
The Most Unpredictable Market Event
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| Written by Jared Levy, Editor, Option Strategies Weekly | |||||
| Friday, 16 September 2011 09:05 | |||||
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This theory, developed by Nassim Nicolas Taleb, describes a Black Swan event as one of three things:
In essence, a Black Swan event is something that has such a small chance of happening that it’s not accounted for in the models that the quants (quantitative analysts) use to predict risk. These quants use statistics to figure out just how probable a trade is going to be. Being a bit of a math junky myself, I use these same calculations. But being a trader, which many quants are not, I know there is a human element that NO model can predict. What most of us don’t realize is that Black Swans happen much more often than we think. In fact, we could be on the precipice of another… Usually the worst Black Swan events in the market occur when people are off guard or beginning to feel like a major problem has been solved. When markets are emerging from what appears to be a bottom and major catastrophe seems to be averted, our defenses are down. Black Swan events occur just when everyone is feeling comfortable, not vulnerable. This was exactly what happened at the end of 2008, right around the time the world’s investment guru Warren Buffett injected Read more |
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The Black Swan Theory describes unpredictable events of extraordinary magnitude. The meltdown of 2008/2009 would be a perfect example of a major Three Steps to Rule the Market
Tuesday, 13 September 2011
I had a birthday over the weekend and I was fortunate enough to have my father travel 1,200 miles to be here with me. We caught up on so much… We learned more about each other even after all these years.
He’s extremely bright and always seemed to have the right answers growing up. One of the things I learned about my father this weekend is that he’s not as complicated as I thought he was. I always thought my father had some intricate process that took countless hours for every decision he made.
The reality is, many of the problems he faced came down to a simple, pragmatic decision-making process that allowed him to do what “felt” right. Sure he has been wrong from time to time, but overall he has managed to create a good life for himself without overthinking or overstressing over every last thing.
But there’s one thing he has been stressed about, and for good reason… The stock market.
Many “home gamers” (investors like you) often have difficulty finding the “trend” let alone timing the markets perfectly. We hear things like, “The trend is your friend,” and are expected to just know how to do that. (My father actually brought up that saying.)
But what the heck does that saying even mean and more importantly how in the world do you know what the trend even is at any given moment?
Quantifying Market Trends
Right now the only market trend seems to be confusion, which is not easy to follow and usually doesn’t make you any money.
Like my father, I try to reduce things to their simplest terms. Today, I am going to offer you three simple ways to spot a market trend. These three things will help guide you in your investment decisions.
It’s a super simple yet powerful system.
If you followed these guidelines in the Nasdaq 100 (NDX) over the past five years, you would have been up 153% as opposed to a buy-and-hold investor who would have been up barely 30% in the same time period.
Market trends come in different time frames. The guidelines I am going to show you today are for the longer-term investor. If you’re the type who buys and sells stocks in seconds, minutes, or in a day or two, these guidelines are not for you.
Those of you who hold positions for a month or more, you should see a dramatic change in your results.
Step One — Moving Averages
I have shown you the power of moving averages in the past. When you know what to look for, they can be powerful tools. Taking a quick glance at the moving averages will let you know if you are in a bullish or bearish trend.
The first step in determining market trends is to Read more
U.S. Government Caught Killing American Jobs
Jared Levy, Editor, Option Strategies Weekly
Friday, 09 September 2011
A Note from Editor Jared Levy: At a time when job creation is front and center, and on an evening when our president vowed to bring jobs back into our economy, I learned of disturbing news.An old friend of mine who used to trade with me on the floor of the Philadelphia Stock Exchange called me, outraged, after learning about the U.S. government’s destruction of an American legend.
I couldn’t steal his thunder, and asked him to write about it.
Destruction by Design
By BJ Dolfman
Jobs are the key to any productive society. The United States has gone from a manufacturing hub and land of pride and opportunity to a post-industrial wasteland in many parts of the country. We keep hearing that our government’s main agenda is job creation.
I’m not sure what statistics our government is following, but by my calculations we are losing jobs here, not adding them. What they don’t tell you is that they are great at job creation overseas.
My only thought is that the destruction of the middle class is almost by design. Every day I read news that almost brings me to tears.
The latest event is the raid of the Read more
Finding Value and Sanity in an Insane Market
Jared Levy, Editor, Option Strategies Weekly
Tuesday, 06 September 2011
I was so excited to finally publish Your Options Handbook earlier this year. It was the culmination of 17 years of listening and learning from both professional and retail investors distilled into 460 pages of some of the most important investing advice.
I found that the common threads in every successful investor were adaptability and a consistent, actionable plan.
The most successful investors also had access to accurate information, opinions and different trading ideas. Sometimes they acted, sometimes not.
After a conversation with one of my clients last Friday, I realized just how scared and confused people are.
Taipan can help clarify the noise out there and guide you in the right direction when all seems chaotic. Right now, guidance, strategy and explanations are needed the most.
Recently, I put together a FREE webinar detailing ways that you can reduce risk and capture solid returns in this chaotic marketplace. You can register here.
I wanted to take some time today to offer a little explanation on “value” in the markets. Hope you enjoy.
What Is a Fair Price?
First, when you look at a stock quote, you are viewing the “best price” at that moment in time. The guy who was willing to sell for the least and the guy who was willing to pay the most meet and determine price. This happens in a millisecond.
And then the price changes.
Let’s assume you like a company or its products and you want to buy its stock. How do you know where or when to buy? Everyone has heard “buy low, sell high,” but that is certainly easier said than done and is completely relative.
This is where your “time horizon” comes into play. A time horizon is how long you are willing to dedicate to an investment. You MUST know it before selecting a stock!
You also need to have a reason for buying (or selling) this stock, which is something that only YOU can decide. Reasons can be a report you read or your own research. Just make sure it’s sound and you know the source.
The question of “fair price” has plagued investors forever, whether they are analyzing stocks, mutual funds or even the latest fashion craze. The wide span of investor opinions and motivations is what creates fair value for the current trading price of a stock.
All of those different rationales coupled with varying opinions toward risk and timing create the free marketplace.
Here’s the thing, Read more
Profit from the Death of a Mobile Mega-Merger
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| Written by Jared Levy, Editor, Option Strategies Weekly | |||||
| Friday, 02 September 2011 11:53 | |||||
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The $39 billion mega-merger of AT&T (T:NYSE) and T-Mobile is all but dead… killed by the Department of Justice’s antitrust lawsuit. The way the two stocks are behaving, there is no chance this deal will get done. The action taken by the DOJ came extremely fast and in a form of a brick wall. Is the Deal with AT&T and T-Mobile Good for Consumers? There are arguments on both sides. Some say that the merger will bring jobs and better pricing. Others that think the duopoly between Verizon and AT&T will force customers to accept mediocre service, non-competitive rates and less selection of services. The second is probably more right. Two mega-companies with about 100 million customers each would be able to reduce their costs and increase profits so much that they would essentially make it impossible for another carrier to compete. They could provide lackluster service and set prices…not a good consumer environment. AT&T is going to fight this, but I doubt they will win. If the deal does completely fall apart, AT&T will have to pay a breakup fee of $6 BILLION to T-Mobile (owned by German company Deutsche Telekom). That’s a big charge, considering that 97% of AT&T’s entire network was supposed to be upgraded to 4G (that’s the newer, faster generation of technology) at a cost of $3.8 billion. It looks like the consumer will be penalized after all… Without this deal, AT&T, T-Mobile and others will have to step up competition by improving their networks and technology to attract customers. Without the “instant-growth effect” that AT&T thought it was going to have, it has to pick up the pace. Otherwise, coveted iPhone and Android power-users like me are going to leave them for a cheaper, better alternative. Rise of the Smartphone You see, I do EVERYTHING on my phone, and I use a ton of bandwidth. I’m not alone: The number of global smartphone users is growing at a breakneck pace, and phone companies are actually working against us. My carrier, Sprint, is one of the only phone companies to offer unlimited data usage over its network. AT&T, Verizon (VZ:NYSE) and even T-Mobile do NOT offer any unlimited plans: They actually charge you by usage, and even throttle your speed down if they notice you are downloading a lot of data. Thanks, guys… The major mobile carriers are not just doing this for greed and profit. Their networks are running at full capacity. If more and more users are added, customers will see dropped calls and slow downloads. Not good for retention. Just about every phone sold now is a smartphone that uses a ton of Read more |
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You might be very surprised!