Wall Street Journal Agrees to Print Full-Page Ad from GATA
January 27th, 2008Via: GATA:
This month GATA will place a full-page advertisement in The Wall Street Journal calling attention to the international central bank scheme to suppress the price of gold and to GATA’s conference in Washington in April.
The ad was devised with great care by GATA’s Board of Directors over the last several weeks and The Wall Street Journal today confirmed to GATA that it will publish the ad as submitted. In the belief that this ad can strike a profound blow against the rigging of the gold market and all related markets, GATA has cobbled together assets valued at the more than quarter-million dollars to be charged by the newspaper for printing the ad and expects to convert them to U.S. dollars and make payment to the newspaper next week.
You can see the advertisement here:
http://www.gata.org/files/GATA-AD-01-14-2008.pdf
Please distribute the ad to anyone who might be interested in it.
Research Credit: Scott, PH
Cryptogon Readers Send Contributions
January 27th, 2008Pookie sent $77. TM sent $28.50. Thank you.
Technical Analysis: Books and Tools
January 27th, 2008WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
In the wake of a pretty good live call on gold, several emails came in that were related to technical analysis. How did I learn technical analysis? What tools do I use? What books do I recommend?
Before continuing, I want to clarify something: As of right now, I’m not using any set of indicators, tools or techniques that actually work in a statistically significant way. As far as I can tell, I’m not doing anything that would hold up against rigorous back testing. My success in the market is, unfortunately, akin to a winning streak at a black jack table. While it’s nice to be winning, I’m only playing with what I can afford to lose, which is not much. (Actually, working systems for black jack are well known. Casinos simply won’t let you get away with implementing them. See: The classic, Beat the Dealer: A Winning Strategy for the Game of Twenty-One by Edward O. Thorp, and more recently, Fortune’s Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street by William Poundstone.)
The tone of some of the emails I’m reading leads me to believe that some of you are getting the wrong idea about my capabilities. One person even asked me to explain my “system” in greater detail.
Gather round’, folks: I don’t have a system.
While profitable systems do exist, I don’t have one. After 12 years of doing this, on and off, I wish I could report otherwise, but I can’t. When you see me refer to my technical analysis as: trying to eat soup with a knife, my Magic 8-Ball, flinging chicken entrails against the wall and Cryptogon’s Reckless Speculation and Pachinko Lounge, there’s a damn good reason for all of that skepticism:
I am trying to make sense out of phenomena—that I have no chance of understanding—by applying mathematical and interpretive models of dubious statistical value.
That is the brutal reality of technical analysis.
The fact that I’ve been right so often might seem impressive, but I’ve seen red come up 33 times in a row on roulette. (See: Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb.)
That’s why I harp on endlessly about diversification and risk management. Put too many eggs in too few baskets and rely too heavily on technical analysis and you’re almost certainly going to get wiped out, or wind up walking funny. The point is, you don’t need to have a statistically valid system in order to be a decent trader as long as you manage risk properly and diversify.
Now, none of my cynicism about my own failure to devise a working system should discourage any of you for looking for something that works! The answer is out there. People have working systems. I’d say that, given enough time with the tools, there’s a solid 53% chance that I could do it! HA.
The analytical tools available to the technician are like a Lego set with about 10 billion pieces. There are endless approaches to take. I find it fun and interesting to work on this challenging puzzle. Indeed, I see it as an adult version of Legos. I’d say that if you’re interested and have a playful attitude about it, go for it. Learn the basics of technical analysis and start building stuff with the tools. I strongly encourage backtesting, so you’ll get an idea of whether or not your just pissing into the wind, or if you actually have something. (See: Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference to Trading Signals by David R Aronson.)
On the other hand, if you’re looking to make a quick and easy buck, you’re in for the shock of your life if you think trading presents that opportunity. That’s simply not the case.
A note on getting lost in the machine: Watch Pi and A Beautiful Mind. If your research along these lines starts to resemble what you see in either of those films, you’ve got a problem. For me, part of keeping the work “playful” is: A) Knowing that I don’t need it to succeed; and B) accepting the strong possibility that I simply might not be able to accomplish what I’m trying to do.
Ok, books and tools.
Books on Technical Analysis
I learned the basics of technical analysis by reading, Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications by John J. Murphy. If there’s a better book on technical analysis, I don’t know about it.
The Encyclopedia Of Technical Market Indicators, by Robert W. Colby is also very good. I don’t own it, but I’ve looked through it several times.
Options
A few people are asking me for help with options. I encourage you to learn more about options, as they can be useful and rewarding. It would, however, be irresponsible of me to try to explain options strategies. I’ve been familiar with how options worked for years, in general, but I only started using them in my own trading recently, and as a compliment to the technical analysis I was already doing on stocks. I’m encouraged by the possibilities. Truth be known: I use options mainly for speculation because I’m not willing to allocate the capital necessary to buy or short stocks at face value.
Books on options:
Options Made Easy: Your Guide to Profitable Trading by Guy Cohen
The Bible of Options Strategies: The Definitive Guide for Practical Trading Strategies by Guy Cohen (Exhaustive reference on strategies.)
The Options Playbook by Brian Overby (Quick reference on strategies, but I could do without the humor.)
Tools
—TradeStation
The best tool available to the technician is TradeStation. I have used it in the past and it is the ultimate platform.
TradeStation is the default environment for the development and backtesting of custom strategies and automated trading systems. If you work intraday setups I don’t even know of anything that compares to their radar screen. If you can think it up, TradeStation can do it. (Whether or not you can do the programming is another issue.)
—MultiCharts
MultiCharts is a bargain. It has TradeStation-like powers, but you can own the software outright for $899. It includes an EasyLanguage interpreter, so you can program custom indicators and strategies, just like in TradeStation. (It doesn’t have a TradeStation Radar-like system, though.) I used the MultiCharts demo for a month and it was excellent. I shelled out for MCFXPro (a Forex only version of MultiCharts) when I was investigating automated Forex systems recently. I was impressed. It’s not TradeStation, but when you look at the costs involved, MultiCharts offers a lot of value for the money.
I happen to be an affiliate with TS Support, the company that sells MultiCharts and MCFXPro. I decided not to try to promote the products because they are so arcane. But this is that type of post. So… If you decide to purchase or lease any of their products and would like me to get a commission, these are the links to use:
MultiCharts Semiannual License
MCFX Basic – monthly lease plan
—Stochcharts.com
Since I’m not working on stocks intraday anymore, I’ve been getting away with using stockcharts.com. Of course, once you’ve used a professional platform, having to use a web based tool flat out sucks. But the price is right… It’s free.
The stock and etf charts that I’ve been posting on Cryptogon recently have been from stockcharts.com. If you know of a better source for free and good charts, send it over. Also, if you know of a decent chart application that doesn’t cost a fortune, send that over too. I’d buy MultiCharts, but I’m too cheap.
—Netdania’s FinanceChart
Netdania’s FinanceChart is where I get all of my realtime gold and Forex charts. It is remarkably good for a tool that’s free to use.
—Stockfetcher
Wow, Stockfetcher is a great screening tool for stocks! They offer strategy backtesting too. It’s end of day data only, but that’s ok for what I’m doing. I signed up for their premium service, which allows longer backtesting periods. I’m getting up to my old voodoo antics of bottom fishing and this tool is perfect.
The Stockfetcher language is really, really simple and there are lots of examples for you to use in your own screens. Again, this isn’t TradeStation, but the price is definitely right.
—Yahoo Finance
I mostly use Yahoo Finance to look at the global stock indices, but I also use it to look up company information.
Well, I hope that answers some of your questions along these lines.
Court Says You Can Copyright A Cease-And-Desist Letter
January 26th, 2008Via: TechDirt:
Back in October, we wrote about a law firm that was claiming a copyright on the cease-and-desist letters it sent out, and insisting that it was a violation to repost them. It’s long been believed that cease-and-desist letters that have no new creative expression and are merely boilerplates are likely not covered by copyright. On top of that, preventing someone from copying a cease-and-desist letter or posting it on their own website seems like a pretty severe First Amendment violation. The group Public Citizen hit back against this law firm’s claims, but surprisingly, a judge has now agreed that you can copyright cease-and-desist letters. The news was announced in a press release by the lawyer in question, who claims this means he can now sue anytime someone posts one of his cease-and-desist letters. He also goes on to slam those who believe free speech means being able to talk about the fact that a company is bullying them:
“The publication of cease and desist letters is an easy way for scofflaws to generate online ‘mobosphere’ support for illegal activity and, until today, many businesses have been hesitant to take action to address some of the lawlessness online because of possible retaliation and attacks.”
Stop Paying Mortgage, Live in House for Free While Bank Forecloses: Company Offers Screwed Home Buyers “Walk Away Kit”
January 26th, 2008“Uncontrolled words are consistently more dangerous to established authority than armed forces.”
—John Ralston Saul, Voltaire’s Bastards
Via: You Walk Away:
If you are facing or considering foreclosure, you’re not alone.
—Are you stressed out about your mortgage payments?
—Do you have little or no equity in your home?
—Have you had trouble trying to sell your house?
—Is your home sinking under the waves of the real estate crash?
—What if you could live payment free for up to 8 months or more and walk away without owing a penny?
Unshackle yourself today from a losing investment and use our proven method to Walk Away.
Research Credit: Brad
New Hampshire Primary — Sham Chain of Custody
January 26th, 2008I really, really promise: No more election nonsense posts, but this one is a keeper.
Via: Black Box Voting:
Immigration Officials Detaining, Deporting American Citizens
January 26th, 2008Over Christmas, I was speaking with Becky’s uncle, who lives in Auckland. He said, “The guy who mows my lawn is an American. He considers himself to be a political refugee. He’s so grateful to be here.”
Of course, you can imagine my shock…
Via: McClatchy:
Thomas Warziniack was born in Minnesota and grew up in Georgia, but immigration authorities pronounced him an illegal immigrant from Russia.
Immigration and Customs Enforcement has held Warziniack for weeks in an Arizona detention facility with the aim of deporting him to a country he’s never seen. His jailers shrugged off Warziniack’s claims that he was an American citizen, even though they could have retrieved his Minnesota birth certificate in minutes and even though a Colorado court had concluded that he was a U.S. citizen a year before it shipped him to Arizona.
On Thursday, Warziniack finally became a free man. Immigration officials released him after his family, who learned about his predicament from McClatchy, produced a birth certificate and after a U.S. senator demanded his release.
“The immigration agents told me they never make mistakes,” Warziniack said in an earlier phone interview from jail. “All I know is that somebody dropped the ball.”
The story of how immigration officials decided that a small-town drifter with a Southern accent was an illegal Russian immigrant illustrates how the federal government mistakenly detains and sometimes deports American citizens.
U.S. citizens who are mistakenly jailed by immigration authorities can get caught up in a nightmarish bureaucratic tangle in which they’re simply not believed.
An unpublished study by the Vera Institute of Justice, a New York nonprofit organization, in 2006 identified 125 people in immigration detention centers across the nation who immigration lawyers believed had valid U.S. citizenship claims.
Research Credit: PD
U.S. Slides Into Dangerous 1930s ‘Liquidity Trap’
January 26th, 2008Via: Telegraph:
The United States is sliding towards a dangerous 1930s-style “liquidity trap” that cannot easily be stopped by drastic cuts in interest rates, Nobel economist Joseph Stiglitz has warned.
“The biggest fear is that long-term bond rates won’t come down in line with short-term rates. We’ll have the reverse of what we’ve seen in recent years, and that is what is frightening the markets,” he told the Daily Telegraph, while trudging through ice and snow in Davos.
“The mechanism of monetary policy is ineffective in these circumstances. I’m not saying it won’t work at all: it will help the banking system but the credit squeeze is going to go on because nobody trusts anybody else. The Fed is pushing on a string,” he said.
The grim comments came as markets continued to suffer wild gyrations, reacting to every sign of contagion spreading to Europe, Asia, and emerging markets.
Wall Street has begun to stabilize on talk of a rescue for the embattled bond insurers, MBIA and Ambac.
The Fed’s 75 basis point rate cut allows the banks to replenish their balance sheet by borrowing at short-term rates and lending longer term, playing the credit ‘carry trade’, hence the 9pc rise in the US financials index yesterday. But confidence remains fragile.
Professor Stiglitz, former chair of the White House Council of Economic Advisers, said it takes far too long for monetary policy to work its magic. This will not gain much traction in the midst of a housing crash.
“People have been drawing home equity out of the houses at a rate of $700bn or $800bn a year. It’s been a huge boost to consumption, but that game is now up. House prices are going to continue falling, and lower rates won’t stop that this point,” he said.
“As a Keynesian, I’d say the biggest back for the buck in terms of immediate stimulus would be unemployment assistance and tax rebates for the poor. That will feed through quickly, but set against the magnitude of the problem, even a fiscal stimulus package of $150bn is not going to be enough,” he said
“The distress is going to be very severe. Around 2m people have lost all their savings,” he did.
Research Credit: PD
Cryptogon Readers Sign Up for Hosting with BlueHost
January 26th, 2008Thanks to the owners of caseymarks.net and wqxt.com for signing up for webhosting with BlueHost. Cryptogon receives $130.
“Foreclose Me… I’ll Save Money”
January 25th, 2008I love it. The f@*&%! buyers and the banks are now in a Mexican standoff.
The banks have a hell of a lot more to lose than the slobs who are upside down on their stucco boxes.
Via: Los Angeles Times:
A homeowner who can’t sell his house tells the L.A.Times, “Foreclose me. … I’ll live in the house for free for 12 months, and I’ll save my money and I’ll move on.”
Banks and lenders fear this kind of thinking — that walking away from a house could be the smart economic move — appears to be on the rise. Wachovia, in a conference call yesterday, warned investors that increasing numbers of homeowners are walking away from their homes by choice: “… people that have otherwise had the capacity to pay, but have basically just decided not to because they feel like they’ve lost equity, value in their properties…”
Calculated Risk notes this is “one of the greatest fears for lenders … that it will become socially acceptable for upside down middle class Americans to walk away from their homes.”
A commenter on L.A. Land this morning writes, “I am one of these people. My condo has dropped in value from $520K in 5/06 when I bought it to $350K now. My ARM payment will probably go up $900 per month in June.
“Despite all this, I would be willing to stay if the bank would refi the loans to a 30 year fixed, but since I’m not a ‘hardship’ case they’d apparently rather foreclose. I guess the only way I could qualify for loan mitigation is to get my boss to fire me, stop making payments, and wreck my credit. In fact, my bank won’t even talk to me until I miss a couple of payments.
“I have purchased a cheaper place in a nearby area now, while my credit is good, and will stop making payments on house #1 after house #2 closes. I know the foreclosure will be on my credit for 7 years, but I will have saved a lot of money.
