Last week, I fielded a wide range of questions (@Ritholtz) from the StockTwits community, touching on Bailout Nation, indicators I watch, investment ideas, thoughts on social media, and my borderline inappropriate relationship with Josh @reformedbroker Brown.
No questions were off limits
Here are my answers, with spelling and typos mostly cleaned up, links included:
@StockTwits: Welcome to the StockTwits Midday Q&A with @ritholtz. Barry, thanks for taking questions from our Community.
@ppearlman: Does the market close higher or lower from here at year’s end?
@Ritholtz: How on earth do I know? LOL. But its a telling question, and the fuller more appropriate response is here: http://bit.ly/jozgqU
@harmongreg: how many blog posts do you do per day? And do you have a ghost poster?
@Ritholtz: I do a long post early AM, then linkfest, and chart later on. If you look at the site, Think Tank tab is where guests post.
@ZorTrades: we worked at the same place years ago coleman/investec-ernst/maxim, how long do you think the transactional model will last?
@Ritholtz: Rapidly consolidating on Institutional side, slowly dying on the retail side. (But I thought Retail BD was dead 10 years ago!)
@StockSage1: Does the euro-zone accelerate their progress towards a federal/super-sovereign fiscal authority or continue wasting time? And does the ECB give in after the markets call their bluff? i.e. Monetize and continue to hold defaulted Greek paper as collateral?
@Ritholtz: Dunno about ECB — Like ours, their Bailouts encourage more bad economic behavior. Better off with pre-packaged bankruptcy.
@ctringham: What is the ‘normal’ correction size after a 100% rally like the one we had over the past 2 years?
@Ritholtz: Only 2 prior examples: 1933 and 1938 (100% rally following 50% or more selloff) Each time, nearly all the gains were lost!
@reformedbroker: What are we doing for lunch today?
@Ritholtz: Tradional Carbo loading ala Lindzon!
@harmongreg: when do you think (approx) we will see a bottom in housing?
@Ritholtz: Housing remains 8-10% overvalued; Question is will it revert to mean or careen past? Depends on UE and next recession.
@ivanhoff: does fusionIQ trade solely on an algorithmic basis and how often your does personal intuition override your system’s signals?
@Ritholtz: Fusion IQ is the tool we develop + use; Trading depends upon some additional factors, but goal is always Safe Alpha generation.
@enni82: What do you think of the future of solar power?
@Ritholtz: It is limited because the sun will burn out in 6 billion years. But if you can work with that time limitation. . .
@zerobeta: Does @ReformedBroker really write all his blog posts while listening to Sarah McLachlan?
@Ritholtz: He is actually a huge Indigo Girls fan, I am constantly telling him to turn that crap down!
@ajb_2010: Who’s your favorite actor from the Doctor Who series?
@Ritholtz: I’ve warmed up to the new doctor (Matt Smith) but adore David Tennant.
@gvwolf3: Suggestions on how to get into investment management industry? Equity research?
@Ritholtz: Fall assbackwards into it like I did!
@dominicrivera: who’s the better blogger? You or @thereformedbroker?
@Ritholtz: One day the student shall surpass the master.
@ReformedBroker: dude, cmon….
@ivanhoff: what was the biggest drawdown in your investment career?
@Ritholtz: With Options, 100% loss. With equities, nearly as bad early on. I swore that would never happen again, and consider it tuition.
@chicagosean: When your book Bailout Nation came out, you must’ve made some enemies in high places. Any good stories?
@Ritholtz: More nuanced than you would imagine. Less overt, more subtle. Life is too short to deal with jerks and creeps, so I ban commenters and block Tweeters with Extreme Prejudice.
@chicagosean: Any plans to write “Bailout Union” for our European friends?
@Ritholtz: None whatsoever; let the Europeans write their own damned books! Next book I write will be on using RISK/REWARD equation to obtain better results. Not market timing, but Opportunity Management.
@ivanhoff: what are the major elements of your favorite investment setup. 52wk high, 52wk lows, volume expansion, range expansion…?
@Ritholtz: 6 factors: Upward price, High Short interest relative to float, Expanding volume, Low Institutional Ownership, disliked by Analysts, and way off highs.
@stinkystank: in your response to @ivanhoff, you said Low Institutional Ownership. Can you expand on this?
@Ritholtz: Low Institutional Ownership relative to historic means — it suggests big potential buyers previously sold, and may rebuy.
@ivanhoff: what do you think is the best background for a good investor – lawyer, philosopher, comedian, engineer…?
@Ritholtz: Hanging curve ball: http://bit.ly/kvP553
@weissben: as a trend setter in the financial blogosphere, where do you source the bulk of your material? How are you using social media?
@Ritholtz: A combination of MSM, other bloggers, a few intelligent curators, and the voices in my head (they never shut up!).
@StockTiger: Gold metal has not come back to touch its 60-week EMA in two years – when is it coming?
@Ritholtz: I don’t know how to value gold, so I lose an important component of my methodology. Its about finding a greater fool to me.
@howardlindzon: who was a mentor in the biz?
@Ritholtz: Oooh, good question. Too many for 140 characters — it should really be a post.
@ivanhoff: how do u think social media is changing the way people trade/invest? Is it for better or for worse?
@Ritholtz: It depends upon the Venue. Yahoo Message Boards became a cesspool and were worthless; Filtering/Policing here on StockTwits add huge value. Truth is a key factor in Investing; and self-delusion rampant amongst Traders. Collective process gets to Truth = better results.
@weissben: which bloggers/curators do u read?
@CO_Trader: I’m young and interested in markets/trading but don’t work on The Street or have connections there? What’s my first step?
@ivanhoff: how often are you wrong in your investment/trading decisions?
@Ritholtz: Wrong about half the time. Its part of investing — Secret is to max out when you are correct / minimize damage when wrong. One of my favorite things I’ve written was this (from 2005): “Expect to Be Wrong in the Stock Market”
@Ritholtz: Last thing on wrong: Call it “Strong Opinions, Weakly Held.” Trust your process, but be willing to reverse http://bit.ly/k0BvZd
@allstarcharts: what are a couple of your favorite leading indicators for the US Equities Market that you are currently watching?
@Ritholtz: LEIs, Retail Sales, SPX ECRI Index.
@Ritholtz: The Collective YOU. You are the most dangerous person to yourself! YOU listened eejits, put on Trade, made decision, lost $$
@Ritholtz: Hey guys, thanks for all your questions — hope I answered them! 140 characters is tough to answer nuanced queries . . .
- Compiled by Sean McLaughlin: Editor, StockTwits (@chicagosean)
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.