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~ Investing Advice for the Everyday Investor

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Tag Archives: Finance

China’s Down More than 25% in the Last Month, Is it a Good Time to Actually Bet ON China? Exploring the YINN

10 Friday Jul 2015

Posted by Sudarshan Sridharan in News

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and, buffet, China, Finance, make, making, money, Primepick, Stocks, warren, warren buffet, Wordpress, yang, yin, yin and yang, yinn


Much like the Yin and Yang that represent good and evil in Chinese mythology, their financial counterparts represent how China as a whole is doing. For those of you who do not know, the YINN (Direxion Daily China Bear 3x Shares ETF) bets on China. For every one percent China goes up, you make three times that much money. The YANG (Direxion Daily China Bull 3x Shares ETF) does the opposite, it bets against the Chinese market, and every time it goes down 1 percent, the stock goes up three times. Over the past 30 days, China has fallen more than 25%. This chart of the SSE Composite Index (an index of all stocks traded in the Shanghai Stock Exchange) from Yahoo Finance clearly shows the decline in Chinese Markets from its peak on June 5.

Screen Shot 2015-07-10 at 11.25.21 AM

The red line is the S&P500s performance over the same time period of 3 months.

So what does this mean for YINN and YANG? Well, YANG has fallen from over $2500 in 2011 to a little less than $80 right now. It’s a big mover in the way that it has potential to make $15 in a day, and fall $20 the next, but its entire stock price revolves around the Chinese Market doing poorly, and that’s a terrible bet to make; especially since China has been one of the fastest growing markets in the world for the past decade. Right now YINN is in an incredible position: its fallen from over $65 in April, to $30 this month. It’s a steal.

Why?

Let’s take a look back in history when the Oracle of Omaha – Warren Buffet – bought thousands of shares of CocaCola (Ticker: KO) after its stock was decimated by health concerns and factory malfunctions. His philosophy was simple:

The best thing that happens to us is when a great company gets into temporary trouble…We want to buy them when they’re on the operating table.

Like that, we want to buy excellent stocks at extremely low prices and sell at an incredibly high rate. In essence, buy low sell high. China will recover, it has to. China isn’t undergoing a recession, it’s undergoing a market correction. As soon as China picks itself up, YINN will pick up too. It’s a stock betting bull on one of the best markets in the world, and it’s a steal.

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Ireland refunds EU’s Bail – Regains their Irish Pride

16 Monday Dec 2013

Posted by Sudarshan Sridharan in News

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Bail, Bail Money, EU, European, European Union, Finance, Ireland, Irish, money, Stock, Stocks, Union


Well the Irish were smarter than most other countries when they set up their Austerity program. Rather than letting Austerity kill the dying beast, the Irish were able to set up the Austerity so that it was very lenient on them, and helped them grow TREMENDOUSLY. Although Ireland didn’t need much bail-out money, many countries that got it aren’t on track to pay it back for 30 years! Well good job to the Irish, and the Irish President, Michael D. Higgins, stated that unemployment would be at 1.2% in his country by the end of his term!

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The Volcker Rule

12 Thursday Dec 2013

Posted by Sudarshan Sridharan in News

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Finance, Investing, Investor, Investors, Rule, Stock, Stocks, The Volcker Rule, Trader, Traders, Trading, Volcker, Volcker Rule


Well we all know that America’s international competitors have the clear cut upper hand advantage on American companies for at least the next 10-14 years. Other than that, have you ever actually bothered to learn what’s in the almost 900 page document? An article from NYT explains it clearly and Perfectly. WARNING: You should settle down for a couple of minutes and sit back in your chair if your going to read this, it’s MASSIVE.

When Paul Volcker called for new rules in 2009 to curb risk-taking by banks, and thus avoid making taxpayers liable in the future for the kind of reckless speculation that caused the financial crisis and resulting bailout, he outlined his proposal in a three-page letter to the president.

Last year, when the Dodd-Frank Wall Street Reform and Consumer Protection Act went to Congress, the Volcker Rule that it contained took up 10 pages.

Last week, when the proposed regulations for the Volcker Rule finally emerged for public comment, the text had swelled to 298 pages and was accompanied by more than 1,300 questions about 400 topics.

Wall Street firms have spent countless millions of dollars trying to water down the original Volcker proposal and have succeeded in inserting numerous exemptions. Now they’re claiming it’s too complex to understand and too costly to adopt.

Having read at least some of the proposed regulations — I made it through about five pages before sinking in a sea of acronyms — I can assure you that the banks are right about that. Even the helpful summary prepared by Sullivan & Cromwell, a law firm that represents big banks and that has associates who no doubt wrote the summary over several all-nighters, runs a dense 41 pages.

In numerous interviews this week with people across the political spectrum, I couldn’t find anyone who actually supports this behemoth — including Mr. Volcker, whose name it bears.

“I don’t like it, but there it is,” Mr. Volcker told me in his first public comments on the sprawling proposal.

“I’d write a much simpler bill. I’d love to see a four-page bill that bans proprietary trading and makes the board and chief executive responsible for compliance. And I’d have strong regulators. If the banks didn’t comply with the spirit of the bill, they’d go after them.”

He says he likes the fact that the proposed regulations, complex as they are, make top management and boards responsible for compliance. “If they think it’s too complicated, they have no one to blame but themselves,” he said of the banks.

Do we need to go back to the drawing board?

“Here’s the key word in the rules: ‘exemption,’ ” former Senator Ted Kaufman, Democrat of Delaware, told me. “Let me tell you, as soon as you see that, it’s pronounced ‘loophole.’ That’s what it means in English.” Mr. Kaufman, now teaching at Duke University School of Law, earlier proposed a tougher version of the Volcker Rule, which was voted down in the Senate. “We’ve been through this before,” he said. “I know these folks, these Wall Street guys. I went to school with them. They’re smart as hell. You give them the smallest little hole, and they’ll run through it.”

“I support the concept of the Volcker Rule,” Representative Peter Welch, Democrat of Vermont, said, “but these rules aren’t going to be effective. We’ve taken something simple and made it complex. The fact that it’s 300 pages shows the banks pushing back and having it both ways.”

And these are Democratic critics of the proposed regulations. An overwhelming number of Republicans oppose them, as they have virtually every aspect of Dodd-Frank. Even Senator Richard Shelby, Republican of Alabama, the ranking member of the Senate Committee on Banking, Housing and Urban affairs, who was the lone Republican to support the tougher Brown-Kaufman legislation, dismisses the latest incarnation.

“This proposal, however, is filled with central questions that Congress should have answered before even drafting Dodd-Frank,” said Jonathan Graffeo, a spokesman for Senator Shelby. “Instead, Congress willfully ignored the ramifications of its actions, just as it did in repealing Glass-Steagall.”

Yet the Volcker Rule, or something like it, could be the most important reform measure to emerge from the financial crisis.

If there was any doubt about that, this week the Securities and Exchange Commission unveiled its latest charges involving mortgage-backed securities. In what may be a new low for conduct by a major Wall Street firm in the walk-up to the financial crisis, Citigroup settled charges (without admitting or denying guilt) that it defrauded investors by creating a package of mortgage-backed securities for which it selected a pool of mortgages likely to default, bet against the security for the bank’s benefit by shorting it and then foisted it off on unwitting investors without disclosing any of this.

According to the S.E.C., one trader characterized this particular security in an all-too-candid e-mail as “possibly the best short EVER!”

Compared with this, Goldman Sachs mortgage traders look like Boy Scouts. In settling its fraud charges for $550 million last year, Goldman was accused by the S.E.C. of being the middleman in a similar deal, allowing the hedge fund manager John Paulson to help choose the mortgages and then bet against them without disclosing this to the other parties.

Citigroup dispensed with a Paulson figure altogether, grabbing those lucrative roles for itself. The S.E.C. said Citigroup earned fees of $34 million on this travesty and generated net profits of at least $126 million. (In a statement, Citigroup said it was pleased to put the matter behind it and has since “returned to the basics of banking.”) Nonetheless, Citigroup is paying just $285 million to settle the charges, and, needless to say, its chief executive at the time the deal was marketed and closed, Charles Prince, will pay nothing.  

I asked an S.E.C. enforcement lawyer if he could assure me that a transaction so brazenly fraudulent — not to mention risky, since a naked short ranks at or near the top of high-risk strategies — would be unambiguously prohibited under the proposed Volcker regulations. “There are some tricky definitions in there,” he said. “Could this be interpreted as hedging? But this was a naked short by the bank, and I believe it would be prohibited.”

I found this less than reassuring, since you can bet that if there was a way to call it hedging, lawyers would find it, and at the very least, years of costly litigation would result.

Last week I stopped by to see the financier Henry Kaufman, a former managing director of Salomon Brothers, a former Lehman Brothers board member and author of “The Road to Financial Reformation” (and no relation to Ted Kaufman, the former senator), who has been arguing for years that the proposed Volcker Rule doesn’t go far enough.

“Nobody listened,” he said. Mr. Kaufman has witnessed, by his count, 15 major financial crises since he and his family fled the Nazis when he was 10 years old. 

“Paul Volcker and I are the same age,” 84, he observed. “Paul wanted to take an aspect of risk-taking out of the financial conglomerates. That’s a worthy endeavor. But the history of regulation shows that the private sector pushes back and waters it down. Dodd-Frank didn’t want to address the longer-term consequences of ‘too big to fail.’ The 10 largest banks held 10 percent of the assets in 1990; today they control over 70 percent. This trend accelerated in 2008. The ‘too big to fail’ got even bigger.”

“My view is that we should break up the big financial conglomerates and separate investment banking,” he continued. “Otherwise we’re going to have ongoing government intervention in the credit allocation process. That threatens economic democracy, and the U.S. is the last bastion of economic democracy.”  

Financial concentration also worries Congressman Welch, who has called for an antitrust investigation into whether big banks recently colluded to charge debit card fees. “We need a strong financial sector,” he said. “But it should be in service to the real economy, the productive economy. The large banks have become trading platforms. They make the real money on the trading desks. The depositors, the consumers, become a base to fund that trading activity. There should be a separation and there certainly should not be a taxpayer backstop for their losses. Contrast this to the Main Street banks facing severe pressures from the big banks. Their model is more traditional, in service to the productive economy. In Washington the debate is about the needs of the large banks, but there’s no debate about the basic function of these banks. Do we want the financial sector to be in the service of the producing economy, or vice versa? It’s time we call the question.”

Former Senator Kaufman, Congressman Welch and Mr. Kaufman are all part of a chorus calling for a return to the separation of commercial and investment banking once embodied in the Depression-era Glass-Steagall Act, which was repealed in 1999.

“The need for 300 pages of rules just shows you’re trying to define something indefinable,” Mr. Kaufman said. “I think Paul Volcker is great, but let’s step back and ask, why are we doing this? We‘re doing this because we don’t want banks with federal deposit insurance to be involved in risky investments. There’s a simple solution. We didn’t have that problem for over 60 years because we had Glass-Steagall. It worked, we changed it and guess what, we got into trouble. I want to go back to what worked for 60 years. That’s a very conservative position.”

 Critics of a return to Glass-Steagall note that Lehman Brothers was an investment bank, and Glass-Steagall would not have prevented its failure. Goldman Sachs and Morgan Stanley were investment banks (and would probably be so again), and yet they were still too big to fail.

Mr. Volcker said that reinstating Glass-Steagall was unrealistic in today’s political climate. “It was a magnificent piece of legislation that didn’t need any regulations,” he said. “Do you think they could rewrite Glass-Steagall today without 300 pages?”

Even if Glass-Steagall isn’t a panacea, it would be a start. It would put a firewall around federally insured institutions, protecting taxpayers and helping contain the crisis as well as potential future ones.

“I don’t know if this Congress will address this,” Ted Kaufman said. “I won’t try to forecast. But I believe from the bottom of my being that we’ll eventually have to restore Glass-Steagall. The only question is, How much agony do we have to go through before we do it? We know the solution, but do we have the will?”

In the meantime, “It scares the hell out of me. We can’t afford to have this happen again.”

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Why Tesla (Ticker: TSLA)

03 Tuesday Dec 2013

Posted by Sudarshan Sridharan in News

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America, American, Auto, Autobahn, Automobile, Car, Cars, Conspiracy, Conspiracy Theory, Finance, Germany, Investing, money, Monkey, Monkeys, SEC, Stock, Stocks, Tesla, Theory, Ticker, Tickers, TSLA


Tesla soared TWENTY DOLLARS ($20.53 actually) when investigators in Germany said that there was absolutely NO problem with Tesla. The investigators also continued to give out praise for the automaker saying that they had never inspected a car as safe yet as amazing a ride as the Tesla. Coming from people in the Autobahn capitol of the world, I’d think that the $20.53 jump is well justified, and Salesforce ads just helped Tesla. Remember, it is widely known now that Tesla is a buy and hold, but I’d honestly sell before the American report is out. Why? Because Elon Musk is South African, not American (and as much as I hate to say this), the last time a non-american took on the highly competitive Americans (I’m American so I have no idea why I’m referring to America as foreign country…), he lost. Think about it, Nikolov Tesla, the man who’s name is now remembered almost 150 – 200 years later as the name of Tesla’s car brand, also took on America. In particular, he took on Thomas Edison and the light bulb. Although Tesla applied for a patent 16 months before Edison had, Edison was given the patent. Tesla’s light bulb’s were safer and more efficient, but he was Russian, not American. I realize that this is a conspiracy theory, but history repeats itself. The inventor of the original Paper clip was German, but the American who applied for the patent won it. Same with the creator of the airplane. I’m not sure what his name was, he was French, but he was quickly shot down by the Americans. I completely wandered off on a tangent here, but history tends to repeat itself, and I think that it is going to repeat itself for Tesla, and ultimately drive the stock back to where it was last week, $106.26.

 

Well that’s the PrimePick for today, enjoy, and comment on what you think is going to happen to TESLA.

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The Penny Stock Introduction ~ Part I

13 Wednesday Nov 2013

Posted by Sudarshan Sridharan in News

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Business, Equities, Finance, Investing, money, NASDAQ, New York Stock Exchange, NYSE, Penny, Penny Stock, Penny Stocks, Stock, Stocks, Stocks and Bonds, Tesla, Tesla Motors, Trade, Trader, Traders, Trades, Trading, Volume


So lately we have been seeing trends in the Penny Stock World. Penny Stocks only have a 6.28% chance of making a profit, you only have a 12.56% chance of making money. Investors trading on the NYSE have a 54.58% chance of making a profit, and close to a 74% chance of breaking even. But the profits are far less than what they could be in Penny Stocks!

Before I start the stock list, I’d like to say that I started off investing in tons of shares of Penny Stocks, sometimes owning up to 10% of the company itself. And if you’re wondering how penny stocks can make you rich with all these pitfalls, don’t worry, there is an answer, and it’s simple.

Often times, Penny Stocks are not even worth a penny, they are worth less than a penny. However, the cheaper the stock, the more you can buy. For example, I saw a stock called DSNY way back in April at around $00.40 cents and bought it (100,000 shares of it, and unfortunately I sold it at .98 cents. Now it’s at $2.00). I spent $40,000.00 to make $58,000 profit. That’s 145% gain. Even though Penny Stocks only have a 6.28% chance of making a profit, penny stock traders have one advantage that we normal investors (normal as in non-hedgefund, non-Carl icahn) don’t: They have Volume!

If you have every heard the saying, “ Quantity over Quality,” this is one of the few times that saying would be true. As long as the penny stock even goes up a thousandth of a cent, money is still going to be coming through. Volume is everything with penny stocks, and although the jump I described with DSNY happens everyday, the challenge is finding the right stock and sticking with it.

Well that’s all for today. Expect either a article today or tomorrow of Part II!

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