Seeking Sigma

HFT, Flash Crash, ETFs, etc.

2010-10-01T12:47:00.001-07:00

We've been saying it for some time now and regulators are finally turning on the lights. This market has gotten away from us. In a rush to make as much money as possible, we've further corrupted our markets.The report on the flash crash shed some light on some of dubious practices of Wall St., but offered no comfort to those of us with our 401ks at risk. One lesson that should be learned from

Finally, some life at the SEC

2010-09-07T20:47:00.000-07:00

I read today that the SEC is planning to actually do something about the rampant high speed speculation that has almost destroyed our market. The top dog there agrees with most of the rest of us, that "Dark Pools", "High Frequency", "Quote Stuffing", etc. does very little to increase market efficiency or transparency.Just the opposite, it helps destroy wealth. More 401(k)s, IRAs, and the like

Privatize Social Security?

2010-08-15T20:55:00.000-07:00

I can't think of a worse idea. I'm sure the Wall St. hooligans would love that. Could you imagine if Social Security had been privatized during the stock market meltdown years? Enough said.

Goldman spinning off prop trading business

2010-08-05T23:46:00.000-07:00

So the golden boys are giving up the proprietary trading business. I'm shocked. I also hear that banks can't have more than some small percentage of their tier 1 capital placed with hedge funds and the like. All this is about the most common sense I've heard in a while.We've been saying for a while that hedge funds only became as big as they did because they were doing the bank's bidding. All was

Still waiting for something meaningful

2010-07-11T00:43:00.000-07:00

Now we have FinReg in the pipeline and a lot more talk about how things are so much better now, but we're still waiting. So far almost nothing market regulators have done have addressed the structural problems that exist in the financial markets.Do they not remember May 6, 2010. That circuit breaker they put in is a band-aid on a gaping wound. They need to do something about the underlying

The new circuit breaker

2010-06-10T12:16:00.001-07:00

This new circuit breaker put in by the SEC is just another joke. Who are these people? I still don't know why more consumer investor groups don't say more. I thought the idea was to slow down the machines. Whether you know it or not, that's exactly what they are trying to do, but this does nothing.A 10% move is huge and it has to happen in 5 minutes to trigger the circuit breaker and it's only

The worst May in 40 years for the stock market

2010-06-02T20:50:00.000-07:00

The headline says it all. I should just stop there, but I'll go on a bit. Many of you were probably shaken out of the market and might be thinking it's hopeless, but remember these things are temporary. Look at the chart and the steep decline, we'll head back up soon.What really troubles me is the average investor usually loses because he/she sells into the decline near the bottom and those 401(k

That Was Way Too Easy

2010-05-18T10:33:00.001-07:00

One thing people aren't talking about is apparently how easy it is to manipulate US financial markets. What if instead of sending the Dow down 1000 points I wanted to shave 300 points off the Dow. Easy enough and I'd draw no scrutiny. This is why our markets are as volatile as they are. The rules in place make it way too easy to manipulate the markets and of course, regulators don't seem to mind.

Easy Market Fix

2010-05-10T21:55:00.000-07:00

Dear SEC, Don't over think this. You want to fix what went on, then bring back some sensible rules. Circuit breakers need to apply to ALL markets, not just the NYSE and NASDAQ. What good does it do to shut down trading on one exchange just to have it rerouted to another. Also, when are you clowns going to wake up and admit that you made a grievous error eliminating the 'Uptick' rule.Had we an

Our Markets Appear To Be No More Fair Or Transparent Than Developing Nations

2010-05-06T22:29:00.000-07:00

Instead of ranting about what happened today, have a look at our post on PaperGains. Today was clear evidence that our markets are far from fair or transparent and regulators and exchange operators have no clue about what's going on.

The Saga Continues

2010-04-27T19:47:00.000-07:00

So all day long the Goldman people were there telling their side of the story, and I do mean all day. What a soap opera. I didn't like anything I heard. The senators kept focusing on shorting instead of the real issue, and the Goldman guys just seemed out of touch.I don't know who was worse, the Fabulous One or Blankman. Who knows if what they did was illegal, but they don't get it. You let one

What Happens When You Don't Understand The Risks?

2010-04-18T10:43:00.000-07:00

We saw more evidence this past week of what happens to investors who don't fully understand the risks associated with their investments. Most will say it was all fraud perpetrated by Goldman Sachs, but it's more than that.We keep hearing that GS has the smartest people and best models, so clients defer to them to tell them what's best. If a banker approaches me and says "don't worry, we know this

The Jobs Report, The Jobs Report, The Jobs Report!

2010-04-01T22:22:00.001-07:00

Please stop obsessing about the monthly jobs report. At least give it a break this month. You can always start again next month. When the media has nothing else, then every other story is about that report. Some market participants like to add to the volatility by say waiting until the last minute to change their estimates, like Goldman. Give us a break. That was too transparent and easy. Just

Loan Modifications

2010-03-26T23:23:00.001-07:00

I read some banks are finally agreeing to adjust the principle on some loans. Wow, what an idea. This is the main reason this housing mess will linger. Banks have been too slow to take the hit on the principal. We know why. If they mark them all down, then the banks would be insolvent. So mark some down now, and some down later and stop holding them all. You've got to sell them for what you can

Financial Regulation And A New Book

2010-03-16T00:25:00.000-07:00

So we're finally going to see regulation (I doubt it). Anything we get is going to be some seriously diluted version of what we should have. I'm still waiting on someone to be held accountable for some of the dirt that was done in 2008 and 2009. It smells like they want the ex Lehman's chief's head, but I doubt that goes anywhere.Seems like some of the bankers, hedge fund managers, rating

New Short Sale Rules Are Funny

2010-02-24T21:15:00.000-08:00

I don't get it. Why not just bring back the old 'uptick' rule? I still haven't heard a good reason why they got rid of it. Now the 'powers that be' said only after a stock is down 10% do we get an uptick rule. Why? Oh yeah, that's what the big investment banks and hedge funds said they could live with. So much for actual regulation that might restore some of the confidence lost over the past

CEO Musical Chairs

2010-02-08T22:14:00.000-08:00

If you or I finished running a company in to the ground, spent recklessly, then tried to run off with a king's ransom in the final days do you think we'd be allowed to run another company? I doubt it.You know who I'm talking about and I was just as shocked as you when I heard the person who is now infamous landed another top job. Believe this, it is always the most competent, most deserving

Greece a Big Deal?

2010-02-08T22:09:00.000-08:00

All this talk about Greece's debt issue being a big deal for the rest of the world sounds like more of the same old rumors some want to start to ramp up volatility. Believe this, Greece isn't the big deal 'they' make it out to be.They aren't going to default and if they did, they aren't so important that the rest of us should worry. This sounds a lot like the nonsense we heard when Dubai had

Bank or Hedge Fund

2010-01-20T23:32:00.000-08:00

Does it trouble anyone else when Goldman Sachs (NYSE: GS) says that 90% of their either revenues or profits come from trading activities. They are a bank, aren't they? I'm confused, because I thought they were a commercial bank now and I didn't think it was okay for commercial banks to take that amount of risks. I doubt they keep enough capital on the books either.I keep thinking about something

Regulation Follow Up

2010-01-04T17:13:00.000-08:00

Bernanke agrees. Low interest rates and banks being told to do the right thing and lend to 'everyone', wasn't the primary reason for the near collapse of our financial system. This man agrees, it was a lack of regulation.So now we're all (me and you) in agreement, when do you plan to do something. So far, what's been done pales in comparison to the problem.

So Where's The Regulation

2010-01-04T00:02:00.000-08:00

I still haven't seen anything Earth shattering on the regulation front, have you? With everything that's transpired over the past 2 years, I thought by now there would be big, new rules in place. So much for the big talk.If the feds don't do something, it'll just make the crooks bolder. Expect more of the same tricks, scams, and practices that have retail investors skeptical if the feds don't do

From Pensions To 401(k)s

2009-12-19T19:48:00.000-08:00

One of the biggest hustles the US government ever perpetrated on the American people was convincing them that defined benefit pension plans were bad and 401(k)s were good. Let's see what happened there. The risk associated with retirement shifted from the government and the companies we work for to YOU.I hope this doesn't come as a surprise, but you're probably not qualified to manage your own

Glass-Steagall

2009-12-15T11:25:00.000-08:00

A congressman stated that we should think about bringing back Glass-Steagall and that it may have been a mistake removing it (he voted to remove it). At least he's honest. Anyone paying attention knows that removing Glass-Steagall was a mistake and the crazy thing is, banks have become even larger during the crisis, buying just the sort of assets they shouldn't be able to buy.

I Just Shake My Head As I Watch Gold Dive

2009-12-09T09:53:00.000-08:00

Do regulators need any more proof that it's speculators driving the price of commodities and not fundamentals. Look at gold. As soon as it breached $1000 it shot to $1200 and now it's crashing and burning. And believe me, it had very little to do with the dollar. When you compare the percentage move in the dollar and the percentage move in gold and other commodities, that reason becomes an

Goldman and Bank of America

2009-12-06T14:07:00.001-08:00

Has anything really changed in banking? Let's consider the facts. Bank of America (BAC) had to pay back the TARP money so they could pay the incoming CEO a king's ransom. Now this is just speculation, but I bet they weren't able to get who they wanted without promising to pay a fortune. Also, Goldman (GS) had the nerve to say they would have been okay without government help. Let's be serious for