Insomniac Hedge Fund Guy

Brain Study Finds What Eases Pain Of Financial Loss

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Most traders and investors, even on a professional level, can remember every single big loss they have incurred compared to only a few of their big wins.  Here’s an interesting look into the chemical effect of losing money on the brain.  The whole article can be viewed from the link below. From Reuters: “The experiment showed that a neurotransmitter, or chemical messenger, called norepinephrine, or noradrenaline, is central to the response to losing money.  Those with low levels of norepinephrine transporters had higher levels of the chemical in a crucial part of their brain – leading them to be less … Read more

Ancestry.com Beats Up on Analysts Yet Again – DailyFinance

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Ancestry.com is on a tear lately after taking a huge hit over their Q4 numbers.  Analysts responded after the fact with downgrades and price target reductions, but we still see a huge opportunity in the company. From DailyFinance: The 10-second takeawayFor the quarter ended Dec. 31 (Q4), Ancestry.com met expectations on revenues and beat expectations on earnings per share. Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share expanded significantly. Gross margins shrank, operating margins increased, net margins grew. Revenue detailsAncestry.com reported revenue of $104.2 million. The seven analysts polled by S&P Capital IQ predicted net … Read more

Nothing much wants to make this market go down but I guarantee you this one will

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Obama nears his nuclear moment By Edward Luce At the start of Barack Obama’s term, few moments better crystallised America’s change of face than his “New Day” video address to the Iranian people. Ending with a salutation in Farsi, Mr Obama offered Iran a new era of “co-operation”. It followed from the promise in his inaugural address to “extend a hand if you are willing to unclench your fist”. via Obama nears his nuclear moment – FT.com.

Immediate Solution To Debt Crisis Found: Italian police seize $6 trillion of fake U.S. bonds

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What started off as a harmless Mafia loan-sharking investigation turned into a rather profitable seizure of $6 trillion worth of forged US Treasury bonds on Friday.  Oddly enough, no rally in the treasury market as a result.  US officials confirmed that the bonds were not just a misplaced QE 3 and QE 4. “It began as a investigation into mafia loan-sharking, but gradually expanded as prosecutors used telephone and computer intercepts to unearth evidence of illegal activity surrounding Treasury bonds.  The fake securities, worth more than a third of U.S. national debt, were seized in January from a Swiss trust … Read more

‘s Privacy Policy: Strike One

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Not nine days after Google releases their new-and-improved privacy policy, we have some first hand results of its intrusiveness.   Jonathan Mayer, a graduate student from Stanford University, discloses some rather disappointing findings.  In his comprehensive article (found here) he identifies four ad-based companies that place trackable cookies in Safari’s browser, and code in two of the four show an intentional circumnavigation of Safari’s privacy feature.  I’ll give you a hint: one starts with a G and ends in oogle.  Now almost every browser has some type of privacy feature in place: “Every popular web browser, save Opera Mini and … Read more

Thought Pre-Release Lines for Apple Are Absurd? Try China, Bring Eggs..

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Beijing, China:  Several weeks ago, crowds of people amassed in front of Apple’s flagship store in the pre-dawn hours.  Eagerly awaiting the anticipated release of the new iPhone 4s, customers and scalpers alike grew restless as the chants of “Open the door!!” grow louder and louder.  At 7:15, already past the time when doors were supposed to open, a man steps outside with a bullhorn and announces to the crowd, “Please go back home! No iPhone 4s!!”  Anger spreads through the masses, fights break out between angry scalpers and frantic customers, and eggs start flying…. Read the complete account and … Read more

Seven Arrested In Connections With Olympus Scandal, Including Ex-Chairman

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Looks like the scandal that’s sliced Olympus shares in half is finally bearing some results according to Bloomberg.  Seven arrests have been made in response to the 13 year coverup of mispriced acquisitions resulting in a $1.3 billion dollar writedown of the company’s net assets. From Bloomberg: Olympus’s Tokyo headquarters and its affiliated offices were raided Dec. 21 by prosecutors after the company said in November that Kikukawa and two other executives colluded to hide losses from securities investments from the 1990s. The stock has plunged 48 percent since the Oct. 14 dismissal of its first non- Japanese president, Michael … Read more

Paulson Calling For A Greek Default

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According to Paulson & Co., a hard default by Greece could spell economic disaster of unprecedented proportion along with the breakup of the Euro.  In his 2011 recap letter to clients, he estimates $117 billion will be needed to recapitalize banks and satisfy other monetary needs. Paulson & Co.: “We believe a Greek payment default could be a greater shock to the system than Lehman’s failure, immediately causing global economies to contract and markets to decline,” the hedge fund said in the letter, a copy of which was obtained by Bloomberg News. The euro is “structurally flawed and will likely eventually … Read more

Kellogg Rockets On Announced Purchase Of Pringles

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Kellogg (K) shot up over 5% on news that the food manufacturer would take over Diamond Food’s (DMND) failed deal with the chip company.  Kellogg will pay P&G almost 2.7 billion for  ownership of Pringles. “In April, Procter & Gamble signed a deal with Diamond Foods, which agreed to buy Pringles for roughly $2.4 billion, mainly in stock. Diamond, which had previously bought Pop Secret and Kettle brand potato chips, heralded the purchase and played up Pringle’s global presence and influence in grocery stores. But the deal got delayed, as Diamond was ensnared by an accounting scandal after short-sellers started … Read more

Enter the Bull – Barrons.com

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Enter the Bull By GENE EPSTEIN | MORE ARTICLES BY AUTHOR Even by conservative measures, the Dow Jones Industrials could top 15,000 in two years. Dow 17,000 is a 50-50 bet. Based on cyclical patterns of market history, the odds are better than two chances in three that the Dow Jones Industrial Average will reach 15,000 or higher over the next two years. Based on the same cyclical patterns, there’s about a 50-50 chance that the Dow could hit 17,000 or more. Also, the broad fundamentals that could drive the Dow to new highs are fairly clear. The stock market enjoyed double-digit … Read more

Second City in China Halts Sales of Apple iPads – NYTimes.com

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According to the NY Times, yet another city in China has halted the sale of the iPad over the trademark dispute with Proview Technology.  About 45 units have already been confiscated from stores and most have been removed from displays, although the devices are still reported to be available under the table. “Proview has also made a filing with the General Administration of Customs in China, he said, putting Apple on notice that the company could seek to block the export of iPads, should Proview’s ownership claims be upheld.  The seizures follow a ruling in December in which a court … Read more

Rackspace Reaches All Time Highs on Solid Q4

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Rackspace Hosting Inc. powered to a lifetime high today as shares rose over 11% and continue to surge forward on last quarter’s earnings. According to Benchmark Capital: “Rackspace reported strong fourth-quarter results while indicating trends should drive similar performance in 2012. We raise our estimates to reflect sustained high growth and solid margins.” At least one brokerage upgraded the stock while three others raised their price targets on it and shares of the company jumped 11 percent to $54.80 in early trade on the New York Stock Exchange. They were later trading at $54.71. Analysts from other brokerage houses were quick … Read more

”s Day Love From Iran: Escorted Through Hormuz

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As the Carrier Abraham Lincoln left the gulf Tuesday, it’s battle group contingent was on high alert.  According to the AP: The passage ended a Gulf mission that displayed Western naval power amid heightened tensions with Tehran, which has threatened to choke off vital oil shipping lanes.The Lincoln was the centerpiece of a flotilla that entered the Gulf last month along with British and French warships in a display of Western unity against Iranian threats. There was no immediate comment by Iran about the Lincoln’s departure.  Iran’s Revolutionary Guard has said it plans its own naval exercises near the strait, … Read more

‘s Purchase of Motorola Cleared by EU

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Looks like one more hurdle is out of the way for Google to challenge Apple in the wireless world.  The European Union allowed the deal to pass, but warned against excessive fees charged for licensing technology.  The addition of Motorola’s portfolio of patents would provide the search engine giant a strong defense against infringement claims on its Android operating system. From WSJ: “The European Union on Monday approved Google Inc.’s $12.5 billion acquisition of smartphone and tablet developer Motorola Mobility Holdings Inc., setting the stage for U.S. antitrust clearance expected this week.  The deal will give Google a powerful arsenal … Read more

‘s Day Investment Survival Seminar

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Take your loved one to a Valentine’s Day Investment Survival Seminar Note, this is cheaper than a box of chocolates.  We buy lunch! In 2001, I started investing with the idea that I had to make a living out of it.  Now that’s a bold thought, providing for your family, a loving wife and two small boys from the vagaries of the stock market.  But I really didn’t have much choice.   I  had left the company that I had spent the last five years of my life building over a dispute on the future course of the business.   The job prospects … Read more

Bear markets begin in good times. Bull markets begin in bad times.

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By: Harvey Sax I haven’t been able to conclusively cite the origin of the above quote, ‘Bear markets begin in good times.  Bull markets begin in bad times’ but undoubtedly it was from an investor who survived the bear market.  The good news is that you can make money in any kind of market.  You can profit from the market rising or going down.  You can even make money in a market that doesn’t move at all. But what you can’t do is make money without a plan.  Ultimately you will only be successful by trading on your own ideas … Read more

China cuts Iranian oil imports, says IEA – FT.com

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China cuts Iranian oil imports, says IEA By Guy Chazan and Javier Blas China is buying about 50 per cent less Iranian oil than it did last year, as international sanctions strengthen its bargaining position with Iran’s national oil company, the International Energy Agency said on Friday. China is the single largest buyer of Iranian crude, and usually takes about a fifth of Iran’s exports – around 550,000 barrels a day. But the IEA, the energy watchdog of the industrialised countries, says China is now thought to be lifting around half of 2011 volumes, probably due to a dispute over … Read more

Are You Aggressive or Conservative? Better Check Your Beta..

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By: Harvey Sax   A lot of that depends on the beta of your portfolio.  But before we get into all of that, let’s go over just what beta is. Stock Beta is a ratio that indicates how a stock fluctuates with relation to the market.  Beta is an indicator of market risk also called volatility.  When you research a stock, look at the beta to get an idea as to how choppy the returns on this stock will be with relation to the market.  If this doesn’t align with your risk tolerance, this stock may not be for you. … Read more

Use Google? YouTube? Have a Gmail account? Worried? Maybe You Should Be: Part 3

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It’s here.  Google’s new simplified privacy policy popped up today when I opened my Reader account, (if you don’t follow, here’s Part 1 and Part 2) and after 30 minutes or so I came to a single profound, concrete conclusion: it’s long. Now I have to give Google credit, it’s the most user friendly privacy document I’ve seen to date; complete with unsophisticated illustrations that firmly reinforce it’s benign nature. A caricature of how Google uses the information it gathers to improve the user experience. Simplicity aside, what does this mean for the user?  Well, as previously stated it’s a matter of perspective.  Interestingly … Read more

CBOE – Index Option Strategies – Buying Index Puts to Hedge

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Calculating Index Contracts to Hedge a Portfolio Stock prices tend to move in tandem in response to the overall stock market as measured by the S&P 500 Index (SPX). The 500 stocks that comprise the S&P 500 Index represent almost 85% of the stock market value in the United States. Therefore, the index is an excellent reflection of the overall stock market. If an investor owns a portfolio of stocks and is concerned about a near-term downward move in the overall market, purchasing the appropriate SPX put options could be a desirable alternative to hedging each stock individually. Determining the … Read more

Are you agressive or conservative?

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A lot of that depends on the beta of your portfolio.  But before we get into all of that, let’s go over just what beta is. Stock Beta is a ratio that indicates how a stock fluctuates with relation to the market.  Beta is a indicator of market risk also called volatility.  When you research a stock, look at the beta to get an idea as to how choppy the returns on this stock will be with relation to the market.  If this doesn’t align with your risk tolerance, this stock may not be for you. Here are some guidelines … Read more

Greece: 20% Cut in Minimum Wage and 15,000 Public Sector Jobs Lost? Ouch..

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Prime Minister Papademos, Finance Minister Venizelos, and Greek Bank Governor Provopoulos are expected to sign a draft agreement to secure a $172 billion dollar rescue plan desperately needed by the insolvent country.  However a couple of stipulations in the document are sure to create backlash, specifically the large cut to the minimum wage and the loss of 15,000 public sector jobs. From Businessweek: Greece will pledge permanent spending cuts, including lower pension payments and a 20 percent reduction in the minimum wage, as the economy contracts this year at a faster pace than originally estimated, according to the draft of … Read more

Diamond Foods Now Cooks! …their books. CEO and CFO Out, Forced to Restate Earnings

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Diamond Foods is getting crushed after hours, (down over 43%) on the announcement that they, like an alarming number of corporations, have trouble following longstanding GAAP (Generally Accepted Accounting Principles).  According to their press release, a total of $80 million in payments to growers was not accounted for during the correct time periods.  In a sign of good faith, Michael J. Mendes and Steven M. Neil have been placed on administrative leave. From Diamond’s press release: “The Audit Committee has concluded that the Company’s financial statements for the fiscal years 2010 and 2011 will need to be restated. Over the course of … Read more

Do Your Homework and Stop Looking for the Easy Way Out

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The WSJ released an article last night on Nouriel Roubini, nicknamed Dr. Doom for his consistently bearish outlook that happened to accurately foresee the 2008 crisis.  Apparently, he’s changed his tune: “We’re a believer; we’re celebrating. We think the rally has legs,” said Gina Sanchez, Roubini’s director of equity and allocation strategy, and a contributor on CNBC. She tells us that Roubini’s firm currently recommends being overweight equities, playing cyclical areas of the market such as technology.  “Also we’d take some tilts into staples and telecom to collect yield. And we’d also be overweight ag and livestock. Generally we’d take … Read more

Like Bacon? And Milkshakes? And Getting Fat? Jack In The Box Has You Covered..

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Thanks to YouTube, I’ve seen some pretty corpulent culinary concoctions emerge from channels like Epic Meal Time.  It looks like Jack In The Box (symbol: JACK) is testing the waters of the fat laden phenomenon that’s sweeping the internet; trying to snare some of the free viral publicity for the fast food chain.  And with tens of millions of views per episode, who can blame them.  According to Business Insider, the Bacon Milkshake will be offered for a limited time and customers will have to whisper their order.  Vegetarians shouldn’t feel left out though, since the bacon flavoring is derived … Read more

Saudi Arabia Will Not Let Oil Go Above $100

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According to Saudi Prince Alwaleed bin Talal al Saud, the billionaire head of Kingdom Holding Co., Saudi Arabia is poised to limit the appreciation of oil to no greater than $100 a barrel. “We can use our leverage, our excess capacity to be sure to pump more [oil] if needed so it will not impact the consumer countries while they’re getting out of their recessions slowly but surely,” the prince said. As for Iran, he said it is important for the U.S. and other nations to put sanctions on the “renegade country” to force its government to negotiate. Issuing an … Read more

A New Normal for Energy? – Deal Journal – WSJ

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A New Normal for Energy?   By Isabella Steger The energy landscape is changing fast with so-called “unconventional” forms fast becoming the new norm, says accounting firm Ernst & Young. Of the $317 billion worth of oil and gas deals struck in 2011, $66 billion were shale-related transactions, up from $55 billion the year before. That trend is set to continue, and at the expense of investment in traditional renewables, says Ernst & Young’s Asia-Pacific Oil & Gas Leader Sanjeev Gupta. Bloomberg News An employee holds a segment of Bowland Shale, from which shale gas can be extracted, in this … Read more

Falcone’s Harbinger Capital Hedge Fund Down 47% In 2011

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2011 was a brutal year for hedge funds, averaging a miserable -4% return for investors.  Billionaire Phil Falcone was no exception as his huge bet on LightSquared dragged performance down to a whopping -47% on the year. Most of the decline in the Harbinger Capital Partners Offshore Fund I came from Falcone’s investment in LightSquared Inc., which plans to offer high-speed data service to as many as 260 million people. The Reston, Virginia-based company is awaiting final clearance from the Federal Communications Commission as regulators weigh test results that show the service’s signals disrupt global-positional system equipment used by cars, … Read more

ETFs Are Going BATS … and Why You Should Care!

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Contributor Post By: Ron Rowland The ETF marketplace changed last month.  You didn’t notice?  Don’t worry, you’re not alone.  Today I’ll tell you all about it. You already know that “exchange traded funds” trade on an exchange.  That’s what distinguishes them from old-fashioned mutual funds.  But what exchange trades them, and where is it? For some new iShares, the answer isn’t New York or Chicago.  Their trading hub is Lenexa, Kansas.  Let me explain … Exchange Floors No Longer Needed For most people, the term “stock exchange” brings to mind images of noisy rooms filled with men in colorful jackets, … Read more

Coinstar Jumps Over 12% on Earnings

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Proof that consumers still love a physical product, Coinstar (owner of Redbox) rocketed over twelve percent in after hours trading.  The jump is attributed to a strong earnings report detailing 33% growth in revenue, a dollar of EPS in the fourth quarter, and estimated 2.2 billion in 2012 revenue.  This is in conjunction with the freshly announced partnership with Verizon, marking the dvd sellers first venture into the online streaming industry.  Redbox still manages to sell more DVDs than Netflix, but Netflix has the jump on the online industry.  They already spend over 1.2 billion a year on streaming content.