Exxon Mobil and Chevron CEO have both issued public statements, essentially saying that his gulf oil disaster was completely preventable and BP was negligent.
All I can say is wow!! I expected everyone in the oil industry to stay quiet, and not point the finger at one of their own.
BP CEO said today that no one has lost their job at BP because of the gulf oil disaster. Really what the heck? Perhaps BP CEO should be fired for gross negligence because no has been fired.
O'Bama has a speech tonight where he is expected to possibly announce that congress will push for a removal of the $74 million dollar liability cap. He may also announce that he doesn't just want the $74 million dollar liability cap increased, he may pursue having the liability cap removed completely.
If that occurs the cost of capital will increase tremendously for all oil companies.
To sum this up, for all you traders out there I would recommend selling some if not all positions into today's strength. The oil sector may drag the entire market down tomorrow, based on O'Bama's speech tonight. I wouldn't risk owning much ahead of his speech.
Tuesday, June 15, 2010
Tuesday, June 8, 2010
The end of the mutual fund, the beginning of a trader's only stock market??
Right now the stock market is a trading market. I expect it to remain that way for years, mutual funds will be forced to change their ways and become more nimble, otherwise investor confidence will erode as mutual funds will surely remain victims of a fast paced market. Mutual funds have charters which prohibit them from being nimble and control how quickly they can move money around in the market, and what kinds of securities they can invest in. These charters are outdated and have not evolved with the market. The slow and steady tortoise may not win this race in the long run. ONE of the major GAME changers are Leveraged ETF's. They are contributing immensely to market volatility. And I am sure there will be more and more of them to come in the future, unless Jim Cramer gets his way and they are banned.
For those of you that don't know HOW LEVERAGED ETF's work, they are essentially giant trading platforms. And these ETF's are aimed at DAILY returns, not monthy or yearly. These ETF's actively trade every single day. Increased trading leads to increased volatility. Take for instance the XLF, it is comprised of a basket of financial stocks, and those are the stocks fund managers actively trade all day long to achieve 3X returns. So that means we have the massive buying power of these ETFs just day trading the heck out of the basket of stocks it represents.
There is actually a strategy for sideways markets, that essentially amounts to shorting etf sisters ((FAS/FAZ or ERY/ERX) for example) and the net result is a profit. I suggest everyone look at this http://www.darwinsfinance.com/short-etf-inverse-leveraged-direxion-3x/ and keep it in mind for sideways markets and sectors. It appears to be a dead simple strategy and looks to be very compelling to try.
These days leveraged ETF's, high frequency trading, and program trading are dominating the markets. And could lead to the eventual demise of convential buy and hold investment products such as 401k, mutual funds, and the likes.
These are the days of actively managed funds. I'd feel safer in a actively managed day trading/short term trading fund, than the conventional products we are all used to and grew up with.
Just some food for thought, when is the last time any of you checked to see if a stock you have a position in is actively day traded by a 3X leveraged ETF?
Evolve with the markets, or succumb to them.
I hope this helps everyone understand what is happening to your stocks.
For those of you that don't know HOW LEVERAGED ETF's work, they are essentially giant trading platforms. And these ETF's are aimed at DAILY returns, not monthy or yearly. These ETF's actively trade every single day. Increased trading leads to increased volatility. Take for instance the XLF, it is comprised of a basket of financial stocks, and those are the stocks fund managers actively trade all day long to achieve 3X returns. So that means we have the massive buying power of these ETFs just day trading the heck out of the basket of stocks it represents.
There is actually a strategy for sideways markets, that essentially amounts to shorting etf sisters ((FAS/FAZ or ERY/ERX) for example) and the net result is a profit. I suggest everyone look at this http://www.darwinsfinance.com/short-etf-inverse-leveraged-direxion-3x/ and keep it in mind for sideways markets and sectors. It appears to be a dead simple strategy and looks to be very compelling to try.
These days leveraged ETF's, high frequency trading, and program trading are dominating the markets. And could lead to the eventual demise of convential buy and hold investment products such as 401k, mutual funds, and the likes.
These are the days of actively managed funds. I'd feel safer in a actively managed day trading/short term trading fund, than the conventional products we are all used to and grew up with.
Just some food for thought, when is the last time any of you checked to see if a stock you have a position in is actively day traded by a 3X leveraged ETF?
Evolve with the markets, or succumb to them.
I hope this helps everyone understand what is happening to your stocks.
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