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Thread: The Stock/Investment Thread

  1. #61
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    Quote Originally Posted by wiggin View Post
    I think you exaggerate how much people are worried the dollar is a 'sinking ship'. Inflation expectations are rock-solid, and while it's likely the trade-weighted value of the dollar is likely to drop quite a bit, that's because of a long-overdue rebalancing in global trade flows and not some runaway devaluing of the currency.
    Same effect, really. Prices go up, except wages, of course...

  2. #62
    Quote Originally Posted by agamemnus View Post
    Same effect, really. Prices go up, except wages, of course...
    First of all, it's not. A gradual appreciation of currencies of trade surplus countries is a good thing, while runaway inflation of the dollar is not.

    Second of all, inflation without a wage increase is generally a good thing, macroeconomically speaking. Essentially, workers are paid too much right now and due to wage 'stickiness' it's hard for employers to cut wages. Inflation helps erode these wages down to equilibrium values. Now, if we had low unemployment, price increases through inflation would feed into worker demands for higher wages, which could lead to a dangerous wage-price spiral. But since the US has such a large output gap and persistently high unemployment, we don't need to be worried about that right now.

    (Parenthetically, I want to emphasize that I realize that our current modest inflation combined with flat wages isn't good for the individual employed worker. But it is good both for our unemployed workers and our broader economic growth. It's also a somewhat disingenuous argument that we should try to support artificially high wages - they were run up to unsustainably high levels before the recession, and this is just a normal correction that gets around wage stickiness.)

  3. #63
    Senior Member GGT's Avatar
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    Originally Posted by wiggin

    I think you exaggerate how much people are worried the dollar is a 'sinking ship'. Inflation expectations are rock-solid, and while it's likely the trade-weighted value of the dollar is likely to drop quite a bit, that's because of a long-overdue rebalancing in global trade flows and not some runaway devaluing of the currency.
    Notice the rise of gold and commodity futures trading? Those can be signs of "flight to safety" when the dollar loses value or purchasing power. Hard to suss out what's protecting for inflation, or losing confidence in the dollar. Some also hedge in trading currencies. But when compared to the euro, USD has been losing out. Today's dollar is only worth about half of what it was in the 80s, and when put in interest-bearing accounts it's only worth something like 94 cents.

  4. #64
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    Quote Originally Posted by wiggin View Post
    First of all, it's not. A gradual appreciation of currencies of trade surplus countries is a good thing, while runaway inflation of the dollar is not.
    I never said that there's runaway inflation. I don't think what's happening at the moment is gradual. Look at the dollar index that you find on Bloomberg. Down about 15% in a year. Not really gradual.

    Second of all, inflation without a wage increase is generally a good thing, macroeconomically speaking. Essentially, workers are paid too much right now and due to wage 'stickiness' it's hard for employers to cut wages. Inflation helps erode these wages down to equilibrium values. Now, if we had low unemployment, price increases through inflation would feed into worker demands for higher wages, which could lead to a dangerous wage-price spiral. But since the US has such a large output gap and persistently high unemployment, we don't need to be worried about that right now.
    Sure, it might be good macro-economically speaking, but it's just way too fast. How does it make sense to have a savings account of 1 to 3% interest per year when the dollar is inflating at 15%? Who would keep on buying the debt? It will cause a total meltdown of confidence if the Fed doesn't act in a few months. Seesaws is what the Fed is really good at.

    On to the topic of artificially high wages. If you see all the rest of the central banks in the world raise their interest rates, and the US does too, I don't see how that supports artificially high wages. Further, I don't think wages are artificially high in the US... it's more a question of energy (identical to commodity, e=mc^2) prices going up (compared to a world currency mix) in general that are forcing wages to stay low or fall to compensate for the high energy prices.

  5. #65
    Quote Originally Posted by agamemnus View Post
    I never said that there's runaway inflation. I don't think what's happening at the moment is gradual. Look at the dollar index that you find on Bloomberg. Down about 15% in a year. Not really gradual.
    Oh, please, you need to look at larger trends and the trade-weighted exchange rate. There's a lot of volatility in currency prices on short time periods.

    Sure, it might be good macro-economically speaking, but it's just way too fast. How does it make sense to have a savings account of 1 to 3% interest per year when the dollar is inflating at 15%? Who would keep on buying the debt? It will cause a total meltdown of confidence if the Fed doesn't act in a few months. Seesaws is what the Fed is really good at.
    Trade-weighted exchange rates are NOT the same as inflation! The dollar is not inflating at 15%; it's more like 1-1.5%, which is below normal.

    On to the topic of artificially high wages. If you see all the rest of the central banks in the world raise their interest rates, and the US does too, I don't see how that supports artificially high wages. Further, I don't think wages are artificially high in the US... it's more a question of energy (identical to commodity, e=mc^2) prices going up (compared to a world currency mix) in general that are forcing wages to stay low or fall to compensate for the high energy prices.
    I honestly don't know what you're trying to say here. Generally higher (core) inflation feeds into higher wages.

  6. #66
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    Quote Originally Posted by wiggin View Post
    Trade-weighted exchange rates are NOT the same as inflation! The dollar is not inflating at 15%; it's more like 1-1.5%, which is below normal.
    Since the US economy depends on international trade (and the price of energy), the effect is very similar.

    I honestly don't know what you're trying to say here. Generally higher (core) inflation feeds into higher wages.
    I'm saying that the US doesn't have artificially high wages in my opinionz.


    Aaanyways..... let's get back on track... what are company earnings reports to watch in the month of May?

  7. #67
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    Anyone else have any personal experience with online trading? So far Dreadnaught has mentioned Sharebuilder, and Aga mentioned Ameritrade, but any knowledge about the others (Scottrade, E-Trade, Schwab, etc.)?

  8. #68
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    I do my shit through Fidelity, since they also hold my 401k. No significant complaints.

  9. #69
    Quote Originally Posted by Illusions View Post
    Anyone else have any personal experience with online trading? So far Dreadnaught has mentioned Sharebuilder, and Aga mentioned Ameritrade, but any knowledge about the others (Scottrade, E-Trade, Schwab, etc.)?
    I don't really trade stocks; I just own funds, but I've used Schwab without huge complaints.

  10. #70
    Senior Member GGT's Avatar
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    About Trading: http://www.marketwatch.com/story/10-...3?pagenumber=1


    3. Use limit orders, not market orders

    A market order simply tells your broker to buy or sell at the best available price. Unfortunately, best doesn’t necessarily mean profitable. The drawback to market orders was revealed during the May 2010 “flash crash.” When market orders were triggered on that day, many sell orders were filled at 10-, 15-, or 20 points lower than anticipated. A limit order, however, lets you control the maximum price you’ll pay or the minimum price you’ll sell. You set the parameters, which is why limit orders are recommended.


    8. Never act on tips from uninformed sources

    Most pros know that buying stocks based on tips from uninformed acquaintances will almost always lead to bad trades. Knowing what stocks to buy is not enough. You also have to know when to sell, and by then the tipster is long gone. Legendary trader Jesse Livermore said it best when he wrote this about tips: “I know from experience that nobody can give me a tip or a series of tips that will make more money for me than my own judgment.”

    If you can’t trust your own judgment, you may want to avoid day trading altogether.

    #3 is important for everyone, not just Day Traders! #4 warns against using house margin accounts. I'm under the impression that DIY e-trading sites make those look more attractive than they should be....

  11. #71
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    Quote Originally Posted by GGT View Post
    <snip>
    Well I'm sensible enough to know not to buy on margin, or short sell stock as I wouldn't want to lose more money than I'd funded the account with, which in itself should be a limit on how much money you're willing to lose in the first place. A lot of their suggestions sound a lot like common sense, just applied to trading stocks.

    As for the broker I might go with if I do start any of this, it may end up being Scottrade simply due to their fees, and the fact that they have a branch in my town, so I could go bother them in person if need be...

  12. #72
    Senior Member GGT's Avatar
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    Since I've never actually visited those sites, I've got no idea how they show or promote buy/sell as "market orders" or "limit orders", or if there's a default choice. Just thought of this thread and you guys while reading the article.

  13. #73
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    From what I've seen in my research when you buy/sell one of the options you have is whether to buy/sell at market price, or input your own price for a limit order.

  14. #74
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    Then I'd say buying/selling based on "market price" should be avoided. Who demarks "market price" besides other traders or financial fee-for-service advisors?

    Inputting your own maximum high buy and/or minimum low sell price for limit orders still requires some input from....someone, or somewhere. Those people almost always have a stake in said market, and would hope your decisions can be swayed one way or another. And it's not because they care about your money but their own.

  15. #75
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    Quote Originally Posted by GGT View Post
    Then I'd say buying/selling based on "market price" should be avoided.
    from what I've read, limit buying/selling does not always guarantee a buy or sale, since the stock might not reach the limit you've set, and unless you're greedy, selling or buying at market price could be just fine if its unlikely the stock will rapidly change in value, or any change that does occur does not harm you. For instance, say you buy a stock at $45 per share, and later on you want to sell it and notice it has gone up and is currently going up that day, and its current per share value is $49.50, so you put in a limit sell for $50. If no one is willing to buy it at $50 per share, and it then goes back down, you've just screwed yourself out of some profit. Had you put in a market sell, it likely would have sold around $49.50.

    Unless I've misunderstood the mechanics of all of this...

  16. #76
    Actually, Illusions, GGT is right about this one (and if I say it, then the sky must be falling). Markets nowadays are subject to some pretty significant volatility at times, and it's tough to know what the bid-ask spread is going to look like. Limit selling is often (though not always) a good idea, though obviously it's best to set limits that aren't unreasonably strict.

  17. #77
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    Glad to know this.

  18. #78
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    Quote Originally Posted by wiggin View Post
    Actually, Illusions, GGT is right about this one (and if I say it, then the sky must be falling). Markets nowadays are subject to some pretty significant volatility at times, and it's tough to know what the bid-ask spread is going to look like. Limit selling is often (though not always) a good idea, though obviously it's best to set limits that aren't unreasonably strict.
    HEY!

  19. #79
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    Illusions is also correct.

    There's a trade-off between market and limit price. Limit price means you might not get the stock or other item you want, but market price means you might get a worse deal than you would if you had waited. It's like buying a very short straddle...

    GGT, when you buy at market price, your buying agent (Ameritrade, E-Trade, Scottrade, etc.) will always try to give you the best deal within their execution range (which varies by company I think.. a slightly longer one is not necessarily bad since you could get a deal, or maybe you won't...).

    Ultimately I think when there is a conflict (two buyers at virtually the same time, and two sellers at different prices), an algorithm implemented by the stock exchange itself figures out what to do. The stock exchange might split the seller stocks to the buyers, or might just give it all to the first buyer depending on a microsecond timer that says when the order was given, or some mix.


    So anyway... does anyone have a list/site-with-a-list of big companies giving out their quarterly figures this month?

  20. #80
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    I guess no one knows? I've searched all over myself; nothing.

    Anyway, silver is down 11%... silver is in a full-scale crash... I don't really know what triggered it exactly.. Osama bin Laden's death or weak US job numbers? Anyway, once a bubble bursts you can't stop it. It's over for silver. Silver's going back to under 20 an ounce... it WILL bounce at least once for a very short period of time on a fake rally, but ultimately it's crashing hard.

    Gold might semi-crash, though, as its run-up the last year wasn't so large. Maybe $800 an ounce falling at a much slower pace than silver.

  21. #81
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    Quote Originally Posted by agamemnus View Post
    I don't really know what triggered it exactly.. Osama bin Laden's death
    Keep on keepin' the beat alive!

  22. #82
    It's very clear what's causing the sudden drop in commodities prices. Two major events:

    1) The ECB released a statement that they would not be raising interest rates, and didn't seem to likely to be doing it for another few months. That drove up dollars wrt euros. Since commodities (including silver) are priced in dollars, this drives down commodities.

    2) This past week there were a number of fairly negative reports on the US recovery (and other developed nations) - manufacturing, employment, and other indicators were all a bit off. That signaled a slowing recovery to some, which means rich-world demand for commodities will go down. Silver is particularly important for some high technology products, and we're going to be making less of them in the near future, so prices dropped.

  23. #83
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    I see.

  24. #84
    Anyone see the employment numbers from the BLS today? Pretty encouraging, especially given the sorta 'off' data from earlier in the week. Another quarter million jobs (even discounting continued cuts in public sector jobs), making it the third month in a row with that scale of hiring, and decent growth in manufacturing and retail, two important bellwether sectors. I'm not too concerned with the unemployment numbers - first, it's less accurate data than payroll numbers, and second, it might indicate people re-entering the workforce, which is an undeniable win.

    Some commodities seem to be creeping up again, unsurprisingly, but we'll have to see how the numbers look down the road.

  25. #85
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    Quote Originally Posted by agamemnus View Post
    silver is in a full-scale crash... I don't really know what triggered it exactly..
    Not discounting what wiggin said, but there's also this:

    SYDNEY (MarketWatch) — Analysts offered a wide variety of reasons for Thursday’s plunge in commodities, but some agreed the main force behind the drop might simply be a matter of stampeding speculators.

    “It all began with silver, which started falling sharply late last week when CME Group increased margin requirements on trades,” said BMO Financial Group Chief Economist Sherry Cooper, in a note Thursday.

    Indeed, the CME’s repeated hikes to the silver-margin requirements sent the metal, which as of April 29 had risen nearly 60% for the year, tumbling, with benchmark silver futures losing more than 25% since then.

    But a variety of other news, including a Wall Street Journal report that billionaire financier George Soros was selling off his holdings, helped the losses snowball, and on Thursday, silver fell 8% on the Comex division of the New York Mercantile Exchange, its largest one-day percentage drop since Dec. 1, 2008.

    This touched off massive selling across the commodities complex.

    Quote Originally Posted by wiggin View Post
    Anyone see the employment numbers from the BLS today? Pretty encouraging, especially given the sorta 'off' data from earlier in the week. Another quarter million jobs (even discounting continued cuts in public sector jobs), making it the third month in a row with that scale of hiring, and decent growth in manufacturing and retail, two important bellwether sectors. I'm not too concerned with the unemployment numbers - first, it's less accurate data than payroll numbers, and second, it might indicate people re-entering the workforce, which is an undeniable win.

    Some commodities seem to be creeping up again, unsurprisingly, but we'll have to see how the numbers look down the road.
    That's glass half-full, rose colored optimism. Don't forget there's always another side to things.


    One Million Apply for 62,000 Jobs…with McDonald’s
    Friday, May 06, 2011

    There has been so much talk in Washington and in the news about the national debt, terrorism, wars and healthcare that one might think these are the issues that most concern Americans in 2011. But opinion polls consistently show that none of these issues is as important to most Americans as the Big Issue: unemployment and the economy.

    An unusually vivid example occurred on April 19, which McDonald’s declared National Hiring Day, encouraging people across the country to apply for a job.

    The world’s biggest restaurant chain reported that it received one million applicants for open positions, which resulted in 62,000 people gaining employment. Another 900,000 plus were turned down.

    A McDonald’s spokeswoman said the company had planned to hire only 50,000 new employees. But the intense demand prompted it to take on an additional 24% in staff.

    Throughout the country, the dearth of job opportunities prompted huge numbers of people to ask Ronald McDonald for employment. In Florida, for example, 100,000 applications were submitted for about 4,300 positions. In Chicago, more than 75,000 job-seekers vied for 2,000 openings.

  26. #86
    Obviously unemployment is one of the biggest issues facing the economy. That doesn't mean these numbers aren't very encouraging.

  27. #87
    Senior Member GGT's Avatar
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    Sure, new jobs are more encouraging than losing jobs. Quality and pay matters too, though. If the jobs are mostly temporary, part-time or minimum wage, would adding 500,000/month really mean recovery?


  28. #88
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    "Stampeding" speculators is just the natural outcome of a bubble burst, but something does trigger those speculators to stampede.

    In other news, Dread and I were correct about Kraft, and it's up 2.5% today:
    http://www.fnno.com/story/news-corne...ft-news-corner

  29. #89
    Quote Originally Posted by GGT View Post
    Sure, new jobs are more encouraging than losing jobs. Quality and pay matters too, though. If the jobs are mostly temporary, part-time or minimum wage, would adding 500,000/month really mean recovery?

    Discouraged workers were down over 200k in a year-over-year comparison. That's fantastic.

    The average work week was almost unchanged (slightly higher for some manufacturing overtime, I believe?), and average hourly wages edged upwards. That looks like the economy didn't get a big hit of low-paying part-time jobs to affect the data.

  30. #90
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    It's not fantastic, it's mediocre. It's only fantastic when compared to what happened last year.

    Fantastic would be 600K new jobs.

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