Example #(N+3)^4 That Wall Street Is Fucking Demented

[filkertom]

Intel's profits are up 51%... "but its shares plummeted on signs that the world's largest semiconductor maker is feeling the pinch of an ailing U.S. economy".

Everything, everything is immediate bottom-line profit for these airheads. And a few people who don't see the Greed-O-Meter spiking like they think it should can literally fuck up the economy.

Discuss.

Comments

[hanabishirecca.livejournal.com]

My favorite in part of the economy is the sector I work for: Banking.

The amount a bank charges for overdraft charges is based on regional and/or national averages. Or at least this is the "official" reason. If you have one bank and the overdraft charge is $5.00 the average is $5.00. Introduce a second bank and they charge $6.00, this brings the average to $5.50. The first bank sees an increase in the market's average so they raise their fee to about the average of $6.00.

Do I really need to explain where this is going?

My favorite part in all of this though is that the bank I work for wasn't so stupid to get into Subprime Lending. Bank of America, however, was and as a result has been trying to make more money, raised their fees. My bank, seeing the market average to up raised their fees.

In other words, my bank is becoming more profitable because another bank became less profitable and is trying to reduce their losses. This makes absolutely no freaking sense!

[singingpatient.livejournal.com]

monkey see monkey do.
my mom is a phd in economics and stole what iota of naivety i had left when she told me that corporations have absolutely no responsibility to the public other than to show a profit to their shareholders. this is what makes communism look appealing to some (obviously that doens't work either, except on a tiny scale, like a commune- yeah look how well that Jim Jones thing went).

[solarbird]

There are other factors here.

Specifically regarding Intel - sure, it's quite true that Intel only missed by 5% (2c/share). But Intel has a rep for inflating their numbers a bit through accounting jiggery, so people are taking the small miss as implying a larger actual miss. Much more importantly, their future guidance is down. And this is a market with severe, severe troubles, particularly in technologies, so the market is going to react sharply to that. This reaction (Intel-specific) isn't really hurting the economy so much as it is the market catching up to damage already done, of which there is lots. By which I mean assloads.

Fundamentally, this is a market that has been trying to avoid acknowledging that it is no longer a bull market - and it hasn't been one really since at best December when this clearly stopped being a "correction" - and is running out of places to look for good news.

So that's some of the context. It's a bloody mess out there and I'm afraid it's going to get uglier before it gets prettier again.

[singingpatient.livejournal.com]

we're all paying the price for those asswipe mortgage brokers who F**ked over a bunch of low and middle income people who just wanted to buy their first home, by selling them mortgages that would explode in their faces a few years after moving in. that is the most despicable thing i've witnessed in terms of greed (oh wait, the Iraq thing, that's the most despicable). anyway that is why the modd of our country re: economy sucks, because this mortgage thing is not improving, more write downs in the news all the time. IMO, that is what is dragging down everything.

[solarbird]

Many of them don't even make "a few years." But even that, while indeed very, very bad, pales in comparison to the derivatives invented using these (and other loans) as their basis. That's how this turns into at least a $2 trillian (with a T) dollar problem, and also a generalised solvency problem rather than a liquidity problem. And it's now you get a credit crisis.

[singingpatient.livejournal.com]

yeah, and that's already started!
the folks who could actually buy a house, and help get money flowing again, can't get a loan... sigh

[sethb.livejournal.com]

Intel's profits were up 51%. But they were expected to be up more, and that expectation was already built into the share price. So when they missed, it dropped.

[singingpatient.livejournal.com]

at only $22 a share? no it dropped from almost $28 a couple weeks ago, along with Apple, IBM, AMD, and well, pretty much any stock you can name.

[darthparadox.livejournal.com]

This is going to get worse before it gets better. In the entire national economy.

[raven-ap-morgan.livejournal.com]

Actually, that headline seems somewhat misleading, if you ask me. It would take a look at the whole picture (financial statement, balance sheet, cash flow statement, and so on) to see what condition Intel is really in, and its investors are more likely to have read that than a cursory look at one number by a reporter.

IMHO, what troubles the economy has right now stem greatly from the mood of the people - they feel oppressed and scared, and their activities in the market reflect it. Things will probably change drastically change once the election and change in offices occur, almost regardless of who wins.

Raven

[singingpatient.livejournal.com]

it might help if we hadn't been getting "terror alert terror alert terror alert" from the "news" and the "government" for the last 5 years.

intel is still a great bet long term. they have such a stranglehold on the chip market, and regardless of whether buying slows down in the US it's going sky high in india and china.

i have the biggest part of my portfolio in intel.

and i do not have a "job"- this is after-tax musician's money i sunk into intel. i'm not panicking. when it sinks, i just buy more.

[solarbird]

this is after-tax musician's money i sunk into intel. i'm not panicking. when it sinks, i just buy more.
Okay, now, you don't know me, and I don't know you, and this is not financial advice and I am not a financial advisor, but speaking in abstract terms - this appears, to me, to be very much the wrong time to be playing this kind of game. A typical bear market - and I am convinced this is a bear market, not a "correction" - is a 30% haircut. A bad one is worse. You tend to get spectacularly bad bear markets in deflationary environments - I recommend looking into the Japanese experience in the 1990s for a grim example. I have reasons to think that the US version will not be as bad, but I can't be sure of that.

In more concrete terms, I got completely out of US equity markets in late December. (With, for example, AAPL, which was in my portfolio, at $200/share. Contrast to today's close.) I am hiding over in 3.7% (US) to 4.0% (Canadian) annual-return insured accounts. This has spared me roughly a 15% haircut so far in January alone. (I do have some long positions in overseas markets. But they are not large positions.) I do not say this to brag, but to show that I have put my money where my mouth is. One might also call this "talking my book," but, um, not really, I don't have anything to sell here, and the more people who go into these accounts, the lower the interest rate drops, so I don't win by by getting others to join in.

Speaking again only about myself, and this isn't financial advice either, the only way I would get larger in equities in the short term is if I became convinced that the US government was going to monitise the debt and, thus, trigger hyperinflation intentionally. (And by this I mean actual monitsation, not interest-rate jiggery. I mean printing dollars.) I don't believe this is going to happen, but I keep an eye out for it just in case it does, at which point I'll be in as large as possible as quickly as possible.

Otherwise I will be sitting on my hands until there are rivers of blood in the streets. Tomorrow has the potential to be pretty scary - the Asian markets are a disaster today, there's no technical support left in the indices (and technicals trading is tealeaf-reading, but, well, if enough people believe in it...), overnight tech futures and the QQQQ are looking most unpleasant - but hopefully it won't be as bad as it looks like it wants to be.

Good luck.

Semantics Nazi alert!

[peteralway.livejournal.com]

literally fuck up the economy

I wouldn't mind so much if the economy were literally fucked. Though I am having trouble imagining men in business suits walking up to bank vaults, unzipping their pants, rubbing their...AAAAAAAAAAARRRRRRRRRGGGGGGGGGGGGHHHHHH!!!! See what horrors your use of the word literally has done to me? The image won't go away!!!

Re: Semantics Nazi alert!

[filkertom.livejournal.com]

My illusions of your sweet innocence are shattered. Surprisingly, I'm good with that. ;)

Re: Semantics Nazi alert!

[ifics.livejournal.com]

Must be a Sperm Bank....

Re: Semantics Nazi alert!

[sunfell.livejournal.com]

No, it's...

...wait for it...

BANK BUKKAKE!

(runz for bunker)

[controuble.livejournal.com]

Well, I certainly won't be cashing in on any of my stock options from work any time soon. We hit a new 52-week low today and we won't be reporting Q4 results until next week.

[jmthane.livejournal.com]

The greedheads don't want most of the money, they want it all. And they don't give a damn about anything else. Profit is indeed all. And the economy is already fucked up, has been for a while, and right now, it's getting worse.

[tigertoy.livejournal.com]

The major cogs in the corporate greed machine are not airheads. They're individually some of the cleverest and most capable people America can produce. They are playing the game the way the game requires -- concerned only about the very short term. Although this causes decisions that are to the long term detriment of everyone, decisions which seem completely stupid to someone who has the luxury of a perspective beyond the next quarterly report, we won't improve anything if we insist on seeing them as either foolish or evil. It's all caused by the structure of the stock market. Buying and selling stocks is so streamlined that shares aren't owned by real investors (people who actually know and care about the businesses they're buying a stake in). Buying and owning stocks is just a matter of numbers on a spreadsheet. The principle of diversification means that even people who have tons of money in the stock market don't concentrate their money in a few businesses and actually worry about how those businesses are run. No, the way to make money in these markets is to be clever about shuffling money through short term transactions and amass lots of paper profits. The players that really make serious money don't even actually own shares at all; they trade in futures and options and use even more arcane mechanisms. Making money is all about making good bets on the short term; a company or even the whole economy going bust in the long term isn't a disaster for these players -- as long as they guess better than the rest of the market, it's just another money making opportunity.

[raven-ap-morgan.livejournal.com]

The players that really make serious money don't even actually own shares at all; they trade in futures and options and use even more arcane mechanisms. Making money is all about making good bets on the short term; a company or even the whole economy going bust in the long term isn't a disaster for these players -- as long as they guess better than the rest of the market, it's just another money making opportunity.

That's just plain not true.

Long-term investing is not only safer, but a surer and (when well-informed) a more profitable method of making money in the market. Sure, options are glamorous, and when an option-gambler makes a big profit, they can win big, but they also risk and can lose just as big, too.

Raven
(former employee, American Association of Individual Investors, www.aaii.com)

[singingpatient.livejournal.com]

more people lose their shirts trying to outguess the markets than the few who win at the game and write a book about it.
my brother in law was showing me all these friggin programs he runs and how he watches the market pretty much constantly.
i have a more slow approach, with dividend reinvestment, investing in sectors that are goign to benefit from inevitable business and demographic cycles, and international exposure of US-owned companies.
he lost money last year and spent tons of time doing it.
i made moey last year and only look at it for about 15 minutes a day.
trading all the time, it's hard not to become an emotional trader. you forget the simple, buy low, hold, sell high.
this kind of mania can lead to the great depre**ion (don't want to say it out loud).
however if you just held your stocks through the depression instead of jumping otu the window, you may have been sut fine a few years later, not every company went under.

[unclelumpy.livejournal.com]

Entropy...

It's really the only thing mankind has ever gotten right.

[singingpatient.livejournal.com]

f-ing incredible. well wall street is all about emotion, as much as folks try to pretend it's technical investing. see how one announcement of changing the itnerest rate 1/4% sends stocks all over the damn place? stupidity. i really thought once intel announced their profits today, their stock would skyrocket. 51% ... and the shares plummet?
reminds em of the moving target in trying to be a usccess in the indie music biz. rules keep changing. you can d everything right, and just do it at the wrong time, and vice versa.

[raven-ap-morgan.livejournal.com]

Minor point of terminology: "Technical Analysis" is concerned with short-term trends in price and and other data, such as you are bemoaning. "Fundamental Analysis" is concerned with long-term data such as financial statements, balance sheets, and cash flow statements, and while the price of a stock is one measure of its value, it is not the only one under that form of analysis.

But you're right in noting that things are running very emotionally right now. I think they will be for a while, at least until this election is over.

Raven

[singingpatient.livejournal.com]

yes i suppose i meant ot say investing short-term using technical analysis. wish we had seen the last of day-trader mentality, esp. with those who are risking their life savings on it. but it seems to have only grown.

[raven-ap-morgan.livejournal.com]

I've seen weird and weirder in my day. I remember one office where a guy was doing day trading with a couple of computers watching the markets and a computer doing astrological calculations, and he was trying to make correlations between the two.

That didn't last long.

Raven

[singingpatient.livejournal.com]

LOL
and... yikes.
why not whip out the tarot?

[raven-ap-morgan.livejournal.com]

Would have had about the same level of reliability... and options are just as volatile, regardless.

Raven

[stevemb.livejournal.com]

Wall Street often illustrates Agent K's dictum: "A person is smart; people are dumb panicky dangerous animals and you know it."

[singingpatient.livejournal.com]

so true. othertwise humans would not stampede each other at rock concerts

[siliconshaman.livejournal.com]

I dunno about anything else... but that gives me an idea for a truly evil plan!