Posts filed under “Sentiment”

What If They Threw a Panic and No One Came?

hedge fund
Source: Bianco Research



“Its enough to give a long-term investor some hope for the future of finance.”


Here’s a bit of role reversal for you: Mom and Pop were content to ride out the market’s volatility this past month, more or less sitting tight. Meanwhile, the pros were driven to the point of near panic.

What was all the fuss about? Take your pick. Perhaps the China slowdown will cause a global recession. Maybe the Federal Reserve is going to raise rates and kill the bull market. Oil prices might fall too far, destroying emerging markets. Or the U.S. economy is about to go belly-up.

Whatever the fear was, someone was there to give it voice. The downside of the Twitter era is that everyone has a megaphone, and any lack of wisdom of insight is no a deterrent to broadcasting it. This month, that described Wall Street and not Main Street. It was the pros who lost it.

Start with hedge funds. After missing a generational rally in which the Standard & Poor’s 500 Index tripled, hedge funds finally began going long U.S. equities — just before the China trap door swung open. TheWall Street Journal reported that many funds got shellacked this month, giving up all of their year-to-date gains in a week. Bridgewater, Omega, Third Point and Pershing Square all took a beating, but only Omega seemed to be positioned to capture the bounce-back rally (note that I am not objective, as you can hear in my Masters in Business podcast with Omega founder Leon Cooperman).

Beyond the hedge funds, the algorithmic traders seemed to have run amok as well. It is a natural human response, to borrow from Daniel Kahneman’s book “Thinking, Fast and Slow,” to react emotionally first and logically second. However, no one can think faster than a machine, and the algos managed to engage in some very fast, and what looked like emotionally driven trading. As we saw this week, that sort of behavior was amply punished. My colleague Josh Brown summed it up in a post, “Computers are the new Dumb Money . . .

Continues here: Mom and Pop Outsmart Wall Street Pros



Category: ETFs, Investing, Psychology, Sentiment

Data Points to Ponder During Today’s Selloff

China’s markets set the tone for the day (and perhaps the week) with an 8.5 percent blood-letting. Global stocks followed suit, which came after last week’s 5 percent tumble. Rather than tell you that markets are oversold — you already know that anyway, and oversold markets can become even more oversold — I want to bring a…Read More

Category: Investing, Markets, Sentiment

Reminder: Stocks Go Up AND Down . . .

I am reminded how utterly worthless as a market observer/financial adviser Suze Orman is in this series of tweets. Its simply amazing how much terrible advice and lack of comprehension people can reveal in a mere 140 characters.   “Demands for low rates begin as the financial class panics”   Hat tip: Vulgar Trader

Category: Markets, Really, really bad calls, Sentiment

How to Destroy A Market, China-Style

Click for ginormous chart A market, by definition, is a place where buyers and sellers can come together to exchange goods and services. That involves buying and selling those goods. Once you eliminate that free trading, you no longer have a market. Then there is China, where the authorities have suspended the sale of half of the…Read More

Category: Markets, Sentiment

Colbert Shows How to React to a Market Collapse


A message from the Supply Lord of The Afterscape.


Apocalypse Dow

Hat tip WSJ


Category: Humor, Markets, Sentiment, Video

The World’s Most Respected Companies

Source: WSJ

Category: Corporate Management, Sentiment

NFIB: Why So Negative?

Small business sentiment readings are now over their 20 year average, and have moved steadily higher since the crisis ended in 2009. If that uptrend was a stock price, all your momentum trader friends would be buyers. But you certainly would not get that from reading the NFIB news releases. They have been consistently, persistently,…Read More

Category: Economy, Sentiment

Post Traumatic Crash Disorder & the 1962 Flash Crash

click for ginormous chart Source: Bloomberg On this day 53 years ago, Wall Street had one of its worst sessions ever. As the Wall Street Journal reported, “The Dow Jones Industrial Average fell 5.7%, down 34.95, the second-largest point decline then on record.” It was part of a longer decline that some called the “Kennedy Slide…Read More

Category: Markets, Psychology, Sentiment

Does Record Picasso Sale Signal a Bubble?

The headlines screamed across the Web yesterday: Picasso’s Women of Algiers smashes auction record. Two Artworks Top $100 Million Each at Christie’s Sale. Picasso Painting Sells for $179.4 Million; Sets Auction Record. The record for paintings was joined by a record for a sculpture, when Alberto Giacometti’s “Pointing Man” was purchased by an anonymous bidder for $141.3 million….Read More

Category: Bubbles, Sentiment, Valuation

Nasdaq Bubble Stole From Future Returns

Yesterday, we discussed why the Standard & Poor’s 500 Index has gone sideways for the past few months. The prime suspects were rich valuations, earnings crimped by falling energy prices and higher returns to be had overseas. Today, I want to look at the Nasdaq Composite Index. It closed at 5,056.06 yesterday, surpassing its March 2000 dot-com…Read More

Category: Markets, Psychology, Sentiment, Valuation, Web/Tech