Capitalogix

Here Are Some Links for Your Weekend Reading

As we head into Labor Day, think about Steve Ballmer ... By retiring (or the Market's response to the announcement of his retirement), he made himself nearly $1 billion richer.  Nice job.

 

Here are some of the posts that caught my eye. Hope you find something interesting.

 

Lighter Links:

• Peter Diamandis: Find Wealth in the Things You Love. (WSJ)
• 13 Epic Battle Speeches That Will Inspire Greatness. (Mashable)
• 47-Story Skyscraper Forgets Elevator - Boondoggle in Spain set to open this year. (Newser)
• Why Men Need Women. (NYTimes)
• 15 Corporate Logos That Contain Subliminal Messaging. (BusinessInsider)

 

Trading Links:

• For the Rich, $5 Million Is the New $1 Million. (WSJ)
• Signs of the Top. (John Mauldin)
• Soros's biggest holding? A huge short position on the S&P 500. (MarketWatch)
• 9 Insights from George Soros. (StockTwits)
• U.S. Exports Hit Record and Shrink Trade Deficit. Pessimists argue the U.S. doesn’t make anything the world wants. The latest trade data show otherwise (TDB)

Great Guidance from Bruce Kasnoff

What a great thought!  Seek to add value ...

Be generous and expert, trustworthy and clear, open-minded and adaptable, persistent and present. 

 

Simplify Your Future from Bruce Kasanoff

 

Generous means to help others long before – and after – you need their help.

Expert means to be very competent in one or more areas that others value. It also means that whenever you take on a new task, do your best.

Trustworthy means to take ownership of your words and actions, and recognize that you live in a world in which they will increasingly be recorded, remembered, analyzed, and replayed.

Clear means to know what you want and to be able to communicate it effectively.

Open-minded means no matter how expert or successful you become, never stop listening and learning.

Adaptable means to keep your options open, so that when the world surprises you, it won’t be that surprising.

Persistent means to keep trying, even when times are tough and you are tempted to quit.

Present means that although you should learn from the past and be prepared for the future, you should pay close attention to the present moment as it unfolds - otherwise, you will miss a great deal.

 

Click here for the full text of his e-book.

Here Are Some Links for Your Weekend Reading

There is Good and Bad News ... Which do you want first?

 

 

Here are some of the posts that caught my eye. Hope you find something interesting.

 

Lighter Links:

• Here’s How the NSA Analyzes All That Call Data. (GigaOM)
• 10 Most Powerful Militaries In The World. (BusinessInsider)
• A Little Friction Can Add a Creative Spark to Brainstorming Sessions. (Harvard Biz Review)
• Age-Defying. Master key of lifespan found in brain - tests on mice promising. (NewScientist)
• Meet Microsoft, the world's best kept R&D secret. (PCWorld)

 

Trading Links:

• How Much Are the NSA and CIA Front Running Markets? (NakedCapitalism)
• Computer Glitch Brings Down Nasdaq for 3-Hours: What Do We Know? (Slate)
• Are the Super Wealthy Buying Stocks Again? (Wall St. Cheat Sheet)
• Deep-Pocketed Funds Give Up on Speed Game Move Towards Deep Insight. (WSJ)
• Early Exit for Ballmer Amid Course Change at Microsoft. (NYTimes)

Related articles

The Steve Ballmer Legacy: A Very Bumpy Ride

MICROSOFT: 'We Are Well Down The Path' To Finding Steve Ballmer's Replacement (MSFT)

LEAKED: German Government Warns Key Entities Not To Use Windows 8 - Links The NSA

Dow Jones Industrial Average Relative Strength Sinks to Bull Market Lows

When you hear a reference to how the market is doing on the news, it is pretty common for the report to reference the performance of the Dow Jones Industrial Average.  The Dow is a price-weighted measure of 30 U.S. blue-chip companies. It covers all industries with the exception of transportation and utilities. While this index is not as broad a representation of the US economy as the S&P 500, the Dow's performance typically tracks the S&P 500 pretty closely. 

Recently, however, the blue-chip Dow has been a notable laggard compared to the broader S&P 500. 

The chart below shows the relative strength of the DJIA vs. the S&P 500 over the last ten years.  When the line in the chart is rising it indicates the DJIA is outperforming, and when the line is falling the DJIA is lagging.

 

via Bespoke Investment Group.

 

As you can see, in the last several months the DJIA has been underperforming to such a large degree that the relative strength vs. the S&P 500 is at its lowest levels since the depths of the Financial Crisis.

Do you take that as a bullish sign for the broader market, or early indicator that we are in for a lull before the next move up?

Related articles

What's Driving the Dow Lower?

The Case for Dow 20,000 - One Year Later

Microsoft Corporation (MSFT): Ballmer's Retirement Keeps Dow Jones Industrial Average (.DJI) Moving Higher

How the Dow Jones Industrial Average Did Friday

Faulty Logic: Identifying Logical Fallacies

Sometimes business feels like a debate.  Other times, dinner conversation or a family discussion takes a contentious turn.  In any case, here is a quick primer on logical fallacies.

A logical fallacy is a flaw in reasoning. In other words, logical fallacies are like tricks or illusions of thought.  Consequently, they are often used by politicians and the media.

 

 

It is fun to identify which of these certain people (including yourself) use when arguing.

 

TWENTY LOGICAL FALLACIES:

They fall into three main types: Distraction (10); Ambiguity (5); and Form (5).

 

A. Fallacies of Distraction

1. Ad baculum (Veiled threat): "to the stick":
DEF.- threatening an opponent if they don’t agree with you; EX.- "If you don’t agree with me you’ll get hurt!"

2. Ad hominem (Name-calling; Poisoning the well): "to the man":
DEF.- attacking a person’s habits, personality, morality or character; EX.- "His argument must be false because he swears and has bad breath."

3. Ad ignorantium (Appeal to ignorance):
DEF.- arguing that if something hasn’t been proved false, then it must be true; EX.- "U.F.Os must exist, because no one can prove that they don’t."

4. Ad populum: "To the people; To the masses":
DEF.- appealing to emotions and/or prejudices; EX.- "Everyone else thinks so, so it must be true."

5. Bulverism: (C.S. Lewis’ imaginary character, Ezekiel Bulver)
DEF.- attacking a person’s identity/race/gender/religion; EX.- "You think that because you’re a (man/woman/Black/White/Catholic/Baptist, etc.)"

6. Chronological Snobbery
DEF.- appealing to the age of something as proof of its truth or validity; EX.-"Voodoo magic must work because it’s such an old practice;" "Super-Glue must be a good product because it’s so new."

7. Ipse dixit: "He said it himself":
DEF.- appealing to an illegitimate authority; EX.- "It must be true, because (so and so) said so."

8. Red herring (Changing the subject):
DEF.- diverting attention; changing the subject to avoid the point of the argument; EX.- "I can’t be guilty of cheating. Look how many people like me!"

9. Straw Man:
DEF.- setting up a false image of the opponent's argument; exaggerating or simplifying the argument and refuting that weakened form of the argument; EX.- "Einstein's theory must be false!  It makes everything relative--even truth!" 

10. Tu quoque: "You also"
DEF.- defending yourself by attacking the opponent; EX.- "Who are you to condemn me! You do it too!"

B. Fallacies of Ambiguity

1. Accent:
DEF.- confusing the argument by changing the emphasis in the sentence; EX.- "YOU shouldn’t steal" (but it’s okay if SOMEONE ELSE does); "You shouldn’t STEAL" (but it’s okay to LIE once in a while); "You SHOULDN’T steal (but sometimes you HAVE TO) ."

2. Amphiboly: [Greek: "to throw both ways"]
DEF.- confusing an argument by the grammar of the sentence; EX.- "Croesus, you will destroy a great kingdom!" (your own!)

3. Composition:
DEF.- assuming that what is true of the parts must be true of the whole; EX.- "Chlorine is a poison; sodium is a poison; so NaCl must be a poison too;" "Micro-evolution is true [change within species]; so macro-evolution must be true too [change between species]."

4. Division:
DEF.- assuming that what is true of whole must be true of the parts; EX.- "The Lakers are a great team, so every player must be great too."

5. Equivocation:
DEF.- confusing the argument by using words with more than one definition; EX.- "You are really hot on the computer, so you’d better go cool off."

C. Fallacies of Form

1. Apriorism (Hasty generalization):
DEF.- leaping from one experience to a general conclusion; EX.- "Willy was rude to me. Boys are so mean!"

2. Complex question (Loaded question):
DEF.- framing the question so as to force a single answer; EX.- "Have you stopped beating your wife yet?"

3. Either/or (False dilemma):
DEF.- limiting the possible answers to only two; oversimplification; EX.- "If you think that, you must be either stupid or half-asleep."

4. Petitio principii (Begging the question; Circular reasoning):
DEF.- assuming what must be proven; EX.- "Rock music is better than classical music because classical music is not as good."

5. Post hoc ergo propter hoc (False cause): "after this, therefore because of this;"
DEF.- assuming that a temporal sequence proves a causal relationship; EX.- "I saw a great movie before my test; that must be why I did so well."

via Oxford Tutorials

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Logical Fallacies - Categorising Stupidity

76 Fallacies

Name that fallacy

Common Fallacies in Reasoning

Other Links

• Objectivity, Subjectivity, and the Fallacy of Self Limits in the Arts (blogcritics.org)
• Logical Fallacies and the Art of Debate (csun.edu)

Smart Money Seriously Short the Market

The CFTC releases data on the positions of "Smart Money" commercial hedgers in the Dow Jones Industrial Average and Nasdaq 100 futures contracts.

According to SentimenTrader, extremes in hedgers' positions in the futures have been good clues to the future prospect for stocks in the intermediate-term.

For example, the chart below shows that there were heavy short positions last September, immediately preceding a correction.  In addition, there was a near net long position last November, immediately preceding a rally.  Finally, look at the record net short in May right before another rough few weeks for stocks.

Obviously, we are close to those levels again.

 

Neither of the recent record short positions by commercials marked a major market peak.  At its worst point during the next 4-8 weeks, the S&P 500 lost 4% - 6% before recovering ... painful but not damaging.

Still, it is prudent to notice these kind of early indicators.  However, remember that the trend has been bullish recently.  Price is the primary indicator, and until it breaks down, expect dips to be met with buying.

Related articles

Hedge Funds Tripled Their Bets Against Treasuries Over The Past Week

Why is the Smart Money Selling?

Here Are Some Links for Your Weekend Reading

Some people are reacting like Bernanke said "On the count of three ... run."

 

Here are some of the posts that caught my eye. Hope you find something interesting.

Lighter Links:

• Audible Inspiration: Work Smarter by Listening to These 7 Great TED Talks. (Mindjet)
• The World’s Top 100 Most Innovative Organizations. (Thomson Reuters)
• What Could the NSA Do With a Quantum Computer? (NewStatesman)
• Mmm Mmm Good? First taste of test-tube burger declared 'close to meat'. (Reuters)
• The Vitamin Myth: Why We Think We Need Supplements. (The Atlantic)

 

Trading Links:

• Could Geithner End Up the Next Fed Chairman? (Bloomberg)
• Wall Street Pros Believe a Fall Taper is Already Priced Into Markets. (CNBC)
• 80 Percent of U.S. Adults Face Near-Poverty, Unemployment: Survey. (HuffingtonPost)
• The Undisputed Champion? Guess who won the post-crisis recovery? Banks. (ReformedBroker)
• Goldman Sachs: Creative Destruction. The 8 Extraordinary Technologies Forcing Businesses To Adapt Or Die (BusinessInsider)

How Long Does it Take to Earn $1M in Different Countries?

How long would it take for an average person to earn a million dollars?

To find out, the Economist looked at how much the main breadwinner in an average household makes each year (before tax).

 

 

On this measure, America creates the swiftest millionaires, and also the most (around 5m households, or 4% of the total). South of the border, Mexicans can expect to work for three centuries to earn the same amount.

Related articles

The Million-Dollar Illusion

Most millionaires don't consider themselves wealthy

Income Inequality Worsens: Ranks Of Millionaires Swell As Poor Tread Water

Many Americans Earn More Than They Think They Do

The 5 Hardest Working Countries On The Planet

Is the Dow Struggling with Its Inflation-Adjusted Resistance Level?

This chart displays the price of the Dow going all the way back to 1885 -- and adjusts it for inflation. Clearly, if you do that, it is lower now than it was 13-years ago.

 

via Global Financial Data via Kimble Charting.

But, does the series of lower highs (marked at the far right of the chart) imply a meaningful technical analysis resistance level?   Moreover, can you safely infer that the Dow is 'struggling' with that level?  I don't think so. 

Technical analysis is supposed to help you understand, and respond intelligently, to what is happening in the market.  This pattern seems more coincidental, rather than causal.

Support and resistance zones supposedly reflect meaningful price points where a genuine disagreement between the Bulls and Bears is contested.  I doubt this pattern was caused by Traders making big bets based on inflation-adjusted charts.

Consequently, I view this as interesting, but not tradeable, information ... What about you?

 

Related articles

Chart o' the Day: The Inflation-Adjusted Dow

Global Inflation - Where You At?

Real World Inflation Crushes Middle Class

Here Are Some Links for Your Weekend Reading

Time flies when you are having fun. 

 

Here are some of the posts that caught my eye. Hope you find something interesting.

 

Lighter Links:

• How to Find Your Purpose and Do What You Love. (Brain Pickings)
• Economies of Scale as a Service. (TechCrunch)
• A New Twist That Could Speed the Internet. (Businessweek)
• Peeling Back the Label. 10 things vitamin makers won’t say. (Marketwatch)
• Former Microsoft Exec Aims to Create National Marijuana Retail Chain. What Starbucks has done for coffee he hopes to do for marijuana (Mashable)

 

Trading Links:

• Recognizing the End of the Chinese Economic Miracle. (Stratfor)
• What Happens If the BRICs Sink Like One? (Bloomberg)
• Spain's Jobless Rate Falls For First Time In Two Years. (BBC)
• Tom Friedman: A New Ayn Rand for A Dark Digital Future. (HuffingtonPost)
• Can You Name the One Nation in the World with a Higher Corporate Tax Rate than the United States? (International Liberty)