Michael Covel: News & Info.

A recent podcast brought in:

I am insulted by the language that you use [here}. I found you unprofessional. My wife was ashamed to hear your message. If you can't speak proper English then how can I trust your trends? If you wish to continue gutter language then take me off your e-mail [list]. If your next message is some of the same then I will e-mail all my friends and tell them what I am hearing from you. I am retired and teach young men at risk and they do not [sic] us your language. Gene A.

Gene needs a dose of the real world! I did enjoy his red herring of connecting foul language to the veracity of my statements regarding trend following. Bad logic.

Want some inspiration?

COLORADO SPRINGS, Colo. (AP) - An elementary school has banned tag on its playground after some children complained they were harassed or chased against their will. “It causes a lot of conflict on the playground,” said Cindy Fesgen, assistant principal of the Discovery Canyon Campus school. Running games are still allowed as long as students don’t chase each other, she said. Fesgen said two parents complained to her about the ban but most parents and children didn’t object. In 2005, two elementary schools in the nearby Falcon School District did away with tag and similar games in favor of alternatives with less physical contact. School officials said the move encouraged more students to play games and helped reduce playground squabbles.

Now that is the way to teach kids about life! In a world that will only continue to be more competitive, we see another example of training kids to be weenies.

From AOL today:

Do you ever wish you had invested in Amazon or Apple before they hit the jackpot? Nobody can predict the future, but if you went back 10 years with only $100 and the knowledge you have now, you could be a billionaire today. [Here is] how it’s possible.

Yahoo (YHOO)

Year: 1997
Jan. 1: $100
Dec. 31: $611

If you invested $100 in Yahoo stock at the start of 1997, the year of the Spice Girls, Hanson, and Titanic, you’d have $611 by the end of the year, thanks to Yahoo’s 511% return.

Amazon.com (AMZN)

Year: 1998
Jan. 1: $611
Dec. 31: $6,532

If you invested the previous $611 in Amazon.com stock at the start of 1998, the year Sex and the City debuted and Britney Spears was still innocent, you’d have (roughly) $6,532 by the end of the year, thanks to Amazon.com’s 971% return.

QUALCOMM Inc (QCOM)

Year: 1999
Jan. 1: $6,532
Dec. 31: $175,327

If you invested the previous $6,532 in QUALCOMM stock at the start of 1999, the year Backstreet Boys and NSYNC were big and everyone was freaked out about a global “Y2K” crash, you’d have $175,327 by the end of the year, thanks to QUALCOMM’s 2587% return.

Lab Corp. of America (LH)

Year: 2000
Jan. 1: $175,327
Dec. 31: $836,704

If you invested the previous $175,327 in LabCorp stock at the start of 2000, the year hanging chads made for a very interesting election outcome, you’d have $836,704 by the end of the year, thanks to LabCorp’s 377% return.

NVidia (NVDA)

Year: 2001
Jan. 1: $836,704
Dec. 31: $3,392,432

If you invested the previous $836,704 in NVidia stock at the start of 2001, the year Silicon Valley was imploding and stock investors were no longer printing their own profits, you’d have $3,392,432 by the end of the year, thanks to NVidia’s 305% advance.

MEMC Electronic Materials (WFR)

Year: 2002
Jan. 1: $3,392,432
Dec. 31: $7,213,680

If you invested the previous (roughly) $3.5 million in MEMC stock at the start of 2002, the year American Idol began launching homegrown superstars, you’d have $7,213,680 by the end of the year, thanks to MEMC’s 113% gain.

Akamai Technologies (AKAM)

Year: 2003
Jan. 1: $7,213,680
Dec. 31: $43,270,538

If you invested the previous $7.2 million in Akamai Technologies stock at the start of 2003, the year the Iraq war started and the first Pirates of the Caribbean movie plundered box offices worldwide, you’d have $43,270,538 by the end of the year, thanks to Akamai Technologies’s 498% return.

Sears Holdings (SHLD)

Year: 2004
Jan. 1: $43,270,538
Dec. 31: $179,147,269

If you invested the previous $43,270,538 in Sears Holdings stock at the start of 2004, the year John Kerry and George W. Bush went head-to-head for the White House, you’d have $179,147,269 by the end of the year, thanks to Sears Holdings’s 314% return.

SanDisk (SNDK)

Year: 2005
Jan. 1: $179,147,269
Dec. 31: $448,904,325

If you invested the previous $179 million in SanDisk stock at the start of 2005, the year Hurricane Katrina demolished New Orleans and Pope Benedict XVI succeeded Pope John Paul II, you’d have $448,904,325 by the end of the year, thanks to SanDisk’s 151% advance.

Allegheny Technologies (ATI)

Year: 2006
Jan. 1: $448,904,325
Dec. 31: $1,118,314,364

If you invested the previous $448,904,325 in ATI stock at the start of 2006, the year the Steelers won Superbowl XL, you’d have $1,118,314,364, thanks to ATI’s 149% gain. More than $1 billion in just 10 years.

A question in today:

What are the differences and similarities of the open-outcry and computer based trading? What do you think are the pros and cons of both systems?

A timely question. Read.

There could not be a better time than August of 2007 to interview sheep!

I was on the road today interviewing a very successful trend trader. While today was clearly “volatile”, he could have cared less what was going on during market hours. Why? He doesn’t make his trading decisions during market hours. He is all about having the flight plan set before the market opens. All if/then contingency decisions are made in advance. The rules rule.

Taking that story into account take a look at a simple little chart. We all know there has been some serious volatility during that stretch. Now think about each day during that three month window. Almost every day was filled with “news”. Almost every day had talking heads on TV giving a forecast or prediction.

See where I am going? Doesn’t the existence of a trend trader with a thirty year track record conflict with a talking head forecaster convinced his or her “words” matter?

An interesting article on overconfidence. It sounds very much like what was written during the summer of 1998 following LTCM.

An excerpt from a recent interview:

Lloyd Grove: As recently as May 2007, you told the House Subcommittee on Telecommunications and the Internet that government policy could encourage internet providers to make the necessary investment in fiber optics to significantly increase bandwidth to home users, in line with industrialized nations such as Japan, Germany, and South Korea, and that the economic benefits would eventually outweigh the costs. But last month, you declared: “The internet is dead. It’s over.” You said it’s “for old people” and it’s a “stagnant consumer platform.” Did you change your mind between May and July? Who or what killed the internet? And aren’t you biting the hand that fed you?

Mark Cuban: The internet of today versus what I suggested to the committee would happen if internet speeds to the home increased to 1 gigabyte per second, is like comparing the plane Orville and Wilbur Wright built in 1903 to a brand-new Boeing. We have reached a point of diminishing returns with today’s internet. The speed of broadband to your home won’t increase much more in the next five years than it has in the last five years. That is not enough to work as a platform for new levels of applications that will require much, much higher levels of bandwidth. Broadband to the home isn’t fast enough for downloads of movies at DVD quality to be ubiquitous. That means it’s no longer a platform for technological innovation. Think of it this way. Way back when, electricity changed the world. It was the platform for everything electronic that we do today. Do you get excited about electricity or is it just a utility? Maybe old people who remember the advent of electricity still get excited about it. No one else does. The internet is in the same position today. It’s no longer an exciting platform for societal and business change. It’s a utility. It’s something that is exciting to people who remember the old days of the internet. The only way to change that is to upgrade the platform for bandwidth transport across the country to a minimum of 1 gigabyte per second throughout to every home. At that point kids will come up with new and unique applications that we can’t imagine today. That’s when it becomes exciting. Until then, it’s dead and boring.

Good points by Cuban.

From the AP tonight:

Wall Street ended a mildly erratic day slightly lower Thursday after anxiety about widening credit problems offset investor optimism about a $2 billion capital infusion into troubled mortgage lender Countrywide Financial Corp.

What did equity market indexes look like?

Dow Down 0.25 (0.00%)
Nasdaq Down 11.10 (0.43%)
S&P 500 Down 1.57 (0.11%)

In percentage terms the Dow did NOT change at all! But the AP thinks NO change can be attributed to Countrywide something or another? Millions of people read this stuff. It makes me wonder if the author is literally just sitting at his PC pounding beers laughing to himself that he has the ability to say anything.

A nice piece from Stephen Dubner that reminds of the markets.