Capitalogix

Your Weekend Reading Linkfest

Lots of good stuff this week to distract you from the bad.

 

 

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

 

Lighter Links:

• Why it’s Not All Bad to Be Bored. (NYTimes)
• Alec Baldwin Puts the 'Fear' Into Christmas with Glengarry Christmas Spoof. (CX)
• Spotify's 10 Most Popular Tracks of 2012. (TheWeek)
• The Purpose Of War? Thought provoking commentary. (ABC)
• Human Modification. Scientists are experimenting with different ways to enhance humans. What's possible? (TheBrowser)

 

Trading Links:

• The World’s 200 Richest People. (Bloomberg)
• Investors’ 10 Most Common Behavioral Biases. (RPSeawright)
• Market Data Firm Spots the Tracks of Bizarre Robot Traders. (TheAtlantic)
• Book Recommendations from Nassim Taleb. (FarnamStreet)
• With Profits Dropping, High-Speed Trading Cools Down. (NYTimes)

Strange as it may sound, U.S. Student Debt may be a catalyst to the next Crisis.

Pop Quiz! What line item is the largest asset on Uncle Sam’s balance sheet?

1. U.S. Official Reserve Assets
2. Total Mortgages
3. Taxes Receivable
4. Student Loans

The correct answer, as of the Flow of Funds report for Q1 2012, is … Student Loans.

The rapid growth in student debt has been a frequent topic in the financial press. Earlier this year the Consumer Financial Protection Bureau (CFPB) posted an article with the attention-grabbing title: Too Big to Fail: Student debt hits a trillion .

Student loans may be a liability on the consumer balance sheet, but they constitute an asset for Uncle Sam. Just how big? Nearly 35% of the total federal assets, over four times the 8.6% percent for the total mortgages outstanding.

The nation's total student debt load is growing at a terrifying $2,853 per second.

Here, an infographic.

 

Via The Week 

Could this be a catalyst to the next market turmoil?  Seems woth watching.

Related articles

The Fed Balance Sheet: What is Uncle Sam's Largest Asset?

The Scariest Chart Of The Quarter: Student Debt Bubble Officially Pops As 90+ Day Delinquency Rate Goes Parabolic

Student Debt Is Skyrocketing For A Very Odd Age Group

The Cost of Kidding Yourself

Creating the illusion of economic growth is easy if you can print money.  It’s a prank you can play on an entire country.  Cut the value of the currency in half and the economy’s size will appear to double.  If it doesn’t, you’re in recession (whether you know it or not).  

Cavemen probably understood this concept better than America’s best economic minds.

 

 

The only way to accurately measure changes in a nation’s economy is to do so relative to the world.  According to the World Bank, the U.S. represented 31.8% of the world’s economic activity in 2001.  By the end of 2011, that share had dropped to 21.6%, meaning America’s slice of the world economy is 32% smaller than it was a decade ago, and getting smaller every day.  Note that America’s housing bubble did nothing to boost the U.S. on the global stage.

As horrific as these results are, they’re better than Japan’s, whose “lost decade” proved only to be prologue for its “lost-er decade.”  Japan’s share of the world economy fell more than 35% from 2001 to 2011 (literally worse than Zimbabwe) and has now shriveled 54% from its peak.  But Japan’s real collapse did not coincide with the bursting of its stock and real estate bubbles in 1990 and 1991 respectively.  The decline actually began in 1995 when policymakers allowed government debt to exceed 90% of GDP (a milestone the U.S. quietly passed in 2010).

For more on this, see Mark McHugh's full post at "Across the Street".

Related articles

America's Lost Decade In One Simple Chart

Is Europe Facing A Lost Decade?

Richard Koo Explains Why The Fiscal Cliff Is Such A Huge Deal

Adam Sandler's Hanukkah Song Video

It that time of year again.  Wow, how time flies.

To my Jewish friends, Happy Chanukah.

As a gift to all of you, here is "The Chanukah Song," performed by comedian Adam Sandler on Saturday Night Live.  It became an instant classic, since he first performed it in 1994.

Here is the video.

 

 

 

Here is the Wikipedia post about the Chanukah Song.

He has updated it since then.  Here is Sandler's Version 2.

And, here is Sandler's Version 3.  Hope you enjoy them ... and best wishes for a happy holiday season.

Related articles

The Most Viral Hanukkah Videos Ever

8 Festive YouTube Videos for Your Hanukkah Celebration

Adam Sandler's Thanksgiving Song [VIDEO]

Have A Happy Hanukkah With Chutzpah's 'Chanukah's Da Bomb'

Steven Colbert's Take on High Frequency Trading

Stephen Colbert interviewed Christopher Steiner, author of "Automate This: How Algorithms Came To Rule Our World".

As you'd expect in a Colbert segment, there is lot's of 'truthiness' mixed in with the humor.

For example:

 

Some say all this computer trading is dangerous, but I say it's actually safer. Because if the stock market ever crashes again, instead of brokers jumping out of windows in a panic they'll simply turn on their computer and see the soothing message, 'error 404, economy not found.'  What's the worst that could happen? 

 

To hear the worst that could happen, watch this video.

 

The Colbert Report
Get More: Colbert Report Full Episodes,Political Humor & Satire Blog,Video Archive

 

Here is a link to Steiner's Twitter feed.

 

Here Are Some Interesting Links to Read This Weekend

The Fiscal Cliff Meets the Mayan Calendar ... Worried?

 

 

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

 

Lighter Links:

• Measuring an Employee's Worth? Should You Consider Influence. (FastCompany)
• LinkedIn's Social Mapping Tool. Who Influences Your Career? (Forbes)
• Are You A Psychopath? There is an assessment test if you're curious. (TheDaily)
• 33 Geeky Insults You Can Use (Almost) Anywhere. (Wired)
• How Machines Will Use Social Networks To Gain Identity, Develop Relationships and Make Friends. (TechCrunch)

 

Trading Links:

• Forget the Cliff, 3.8% Obamacare Tax Is Coming. (AdvisorOne)
• Mortgage Rates Drop To Record Lows. (LATimes)
• If Regulators Crack Down on HFT, Does Low Latency Lose Relevance? (TelecomRamblings)
• Iran Cyber-Attacks Against American Targets On The Rise. (Slate)
• Young and Jobless. Unemployment in the U.S. is over 17%. But in Greece 60%; Spain 55%; Portugal & Italy 35%; and France 25%. (WSJ)

Best CyberMonday Deal on Apple - Perhaps Apple Itself?

There we were at the Cowboys game. It was a beautiful day.  I was feeling terrific because I was with my two sons. The crowd was cheering ... and I had a great thought: 'Let's get a picture of this'.

 

Perfect ... a random series of events had led to a satisfying crescendo ... and I captured the moment.

 

 

It wasn't so random.  Despite a difference of four years and two stadiums - the result was similar (if not predictable).

History doesn't necessarily repeat itself. But it often rhymes.

 

It Is True In Trading As Well.

 

The Hype Curve is an interesting map of human emotion.  Below is an idealized version.

 

 

Here is a chart of Apple going back to 2004. Note the similarities. 

 

For a deeper analysis, see this post by Market Oracle.  Here is an excerpt explaining the framework.

Classic economic theory dissects the economic cycle into four distinct stages: expansion, trough, decline and recovery. A stock is no different, and proceeds through the following cycle:

• Stage 1 - After a period of decline a stock consolidates at a contracted price range as buyers step into the market and fight for control over the exhausted sellers. Price action is neutral as sellers exit their positions and buyers begin to accumulate the stock.
• Stage 2 - Upon gaining control of price movement, buyers overwhelm sellers and a stock enters a period of higher highs and higher lows. A bull market begins and the path of least resistance is higher. Traders should aggressively trade the long side, taking advantage of any pullback or dips in the stock's price.
• Stage 3 - After a prolonged increase in share price the buyers now become exhausted and the sellers again move in. This period of consolidation and distribution produces neutral price action and precedes a decline in the stock's price.
• Stage 4 - When the lows of Stage 3 are breached a stock enters a decline as sellers overwhelm buyers. A pattern of lower highs and lower lows emerges as a stock enters into a bear market. A well-positioned trader would be aggressively trading the short side and taking advantage of the often quick declines in the stock's price. More times than not all of stage 2 gains are given back in a short period of time.

While these stages are historically defined over long time periods they actually exists in all time frames, allowing traders to take advantage of a cycle regardless of their trading time frame. Fortunately this phenomenon, known as a "fractal", exists within all security markets. A fractal is simply a rough geometric shape that can be subdivided into smaller parts that have the same properties; a smaller version of the whole.

This is important to understand because through technical analysis as we are often analyzing multiple time frames. In the short term, the four stage model may repeat itself many times. The combination of these short term cycles form a medium term cycle, and the combination of multiple medium term cycles form a long term cycle.

Related articles

Will Apple's Rebound Continue Next Week?

Is Apple Inc. (AAPL)'s Price Action Really 'Insane'?

Are Apple Owners Panicking?

Some Links for Your Weekend Reading

 

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

 

Lighter Links:

• The Science of Success. Interesting article. (TheAtlantic)
• Is Technology Making You More (or Less) of a Jerk? (Harvard Business Review)
• Why Things Fail. From Tires to Helicopter Blades, Everything Breaks Eventually. (Wired)
• Removing Earwax Isn't Good For You, Experts Say. (WSJ Video)
• Life Expectancy for Less Educated Whites in U.S. is Shrinking. (NYTimes)

 

Trading Links:

• Walmart Reports Its Best Black Friday Ever With 5,000 Items Sold Per Second. (TheNextWeb)
• Does Black Friday Correlate With Upcoming Stock Market Performance. (Bigtrends)
• Fiscal Cliff: The What, Why, When, and How - All In One Place. (Learnist)
• Reality Check: Does High-Frequency Trading Hurt the Little Guy?  (QZ)
• Anonymous Deletes The Bank of Jerusalem’s Web Database. (BetaBeat)

The S&P 500 Index Just Broke a Long Term Up Trend - Do You Care?

Trading doesn't have to complex.

Sometimes simple indicators are better.  Trend lines are easy to follow and often meaningful.

Below is a weekly chart of the S&P 500 Index showing the recent break of an up-trend in place since 2009.  If price stays beneath this level, it will likely be tough for Bulls.

 

 

In addition to the trend line break, there is a negative divergence (where recent price highs happened with lower momentum).  Technicians often take this to be sign of weakness.

Let's see what happens.

Related articles

A Quick Look at S&P 500 and It's Likely Next Move

Is the S&P 500 Index at Its Likely Bounce Point?

Some Links for Your Weekend Reading

You know the economy is tough when a company like Hostess Brands, the maker Twinkies and Wonder Bread, announces plans to close its plants and fire 18,000 employees as it moves to liquidate.

 

On eBay, the starting bid for a single Twinkie is now $5,000.

 

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

 

Lighter Links:

• How the Secret Service Said Goodbye to Mitt Romney. (GQ)
• Get Smart People to Moonlight for Free By Turning Problems Into Contests. (QZ)
• The Next Generation Business. Data is the New Platform.  (GigaOM)
• Humans Can't Be Empathetic and Logical at the Same Time. (Popular Science)
• 25 Entrepreneurs Tell What They Wish They’d Known Before Founding Their First Startup. (DavidHauser)

 

Trading Links:

• QE3: 5 Things to Know. (AdvisorOne)
• Getting Less Bang for Fed Bucks. (Wall Street Journal)
• Why Wall Street Hates Obama. (Money)
• Veterans Say Economy Is Top Security Risk. (BusinessInsider)
• Stock Market Fragility Fast Approaching "Flash Crash" Levels Warns Bill Gross. (ZeroHedge)