A recent dialogue on my Facebook about the definition and merits of “swing trading”:

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Damon Vickers: Swing trade - what the [blank] is that?

Damon Vickers: I’ve seen it in late night [infomercials] like seminar offers.

James Krumenacher: Just a term to describe length of trades…usually a few weeks to a few months. Don’t daytrade and in this environment can’t put on long term positions. or postional trading…

Michael Covel: I have never seen a pro track record defined as swing trade … just saying. It’s a term with no universal meaning.

James Krumenacher: C’mon guy’s you can’t be serious. Here is the defintion from Wikpedia.

Michael Covel: How about (1) audited track record from one pro trader that shows ’swing trading’? Let’s say you want to write book titled ‘Swing Trading’ and you want the foundation to be performance track records of pro traders who practice it … where are they? My book ‘Trend Following’ only exists because of those track records.

Damon Vickers: Swing trading sounds like Wade Cook.

James Krumenacher: Really don’t care about “pro traders” or if you have written a book….in order to make money now have to be nimble enough to trade “the swings” in the market. Especially when using 3X leverage…call it what ever you want don’t care. Stupid issue to even be discussing. You both know can’t buy and hold in this market have to trade it. Whether you trade intraday or try to time short term “swings” in the market that is where it is at right now. I’m out see yah…

Damon Vickers: Well. Pout pout…hrumff.

James Krumenacher: Not impressed with either of you guys. Seen your type before. Think you know it all and unwilling to learn from others. Have a saying “pride goeth before the fall.” Don’t like people with an ego. Last time I am going to post here.

Michael Covel: James, are you serious? I put you on the spot and you bail? I am more than willing to consider strategies … it’s just that little thing called “trust, but verify!”

Maria Bartiromo’s voice mail is in my film and it paints one picture. Now? The following CNBC promotional email was just forwarded to me from a fund manager friend and it paints another picture of Bartiromo:

“A tireless crusader for transparency on Wall Street and a firm believer in the rights of individual investors like you, Maria Bartiromo was a pioneer in opening up the “secret” Wall Street club. Now she’s launching Investor Brief, a free weekly e-letter designed to give you a front-row seat to the most important goings-on on Wall Street. Your detailed invitation follows below. Fellow Investor, The New York Times describes Maria Bartiromo as “An insider” who does “more than her share.” I describe Maria as one of the hardest working people on Wall Street. From top business leaders to powerful politicians to top-tier investors, her Rolodex is stuffed with the names of men and women you should listen to. In recent issues of Investor Brief, Citigroup CEO Vikram Pandit discussed the future of Citigroup and the top issues facing the financial sector; NYU economist Nouriel Roubini talked about the possibility of a deeper recession and further stock market declines; and former President Clinton spoke with Maria about financial reform, Goldman Sachs and the Federal deficit. On-air, Maria has gone one-on-one with Hank Greenberg, Carl Ichan, Steve Forbes, Larry Summers, Charles Schwab, George Soros, Boone Pickens and Bill Gates — among dozens of mover-and-shakers. Who else might pop up in your weekly Investor Brief? Hot-shot CEOs of the top global brands and seldom-interviewed, but top-ranked money managers — the world’s best investors, sharing their thoughts with you. After all, good investing is more than just “buying stocks.” You need to understand what’s happening in the world — the news and the back-story. When someone like Russia’s President Medvedev shares his views on oil prices or the U.S. dollar, you can bet Maria pays attention. Investor Brief is your ticket to a world that most investors never get a glimpse of. Maria will share her experiences. You’ll get her analysis, opinions and knowledge from the real experts in the economic, investing and political worlds. Plus she’ll share fun tidbits she hears behind-the-scenes. I guarantee you’ll be both educated and entertained. And you’ll come away each week with a better understanding of how this crazy world of investing really runs. She’ll tell you which economic reports will move the market that week and why. She’ll outline the week’s key events — from testimony in Congress to Federal Reserve meetings and beyond. And she’ll alert you to earnings reports that could boost, or drop, the stocks you own. One of the rewards of Maria’s job is being able to pick the brains of today’s most renowned “investing masters.” When you get to hang around with legends like Larry Summers, Bill Gates and Martin Feldstein, you can’t help but gain unprecedented insight into the inner workings of today’s market. So in each issue of Investor Brief, Maria will share the lessons she’s learned from the very best minds in the investment business. For example, everybody knows the Federal Reserve sets interest rates, but few people ever give it more than a passing thought. Savvy investors don’t take the Fed’s statements at face value. They ferret out valuable intelligence — and make smarter investments — by watching a few key steps in the process the Fed uses to reach their decision…Having watched Maria preparing for her first issue of Investor Brief, I can tell you that it’s her passion to take what Wall Street’s top professionals teach her every day and pass it on to you in clear, jargon-free English that will make this e-letter a “must-read.” This special invitation is 100% free…You’ll enjoy exclusive features, not available anywhere else. Investor Brief is Maria talking with you, one-on-one, about the off-air side of her work life — sharing photos and casual conversations she has with the people who make today’s news. Through Investor Brief, Maria will introduce you to the most-respected men and women in the business and investing communities. Her hard-hitting interviews will give you access to the best current thinking on what is happening on Wall Street and Main Street today. Send Maria questions, she’ll get you answers; learn valuable information Maria gets from CNBC guests off-camera; and much more…P.P.S. If you have friends or loved ones who might benefit from Investor Brief, feel free to forward this invitation. They are welcome to join free, as well.”

What can I say. Bullshit is bullshit.

Mark Hulbert pens some of the best mindless drivel seen in a while:

“Fortunately, a disappointing first half does not automatically doom the second half of the year. A clue to this comes from just anecdotal evidence. Take 2009, for example, when the market lost ground for the first six months. Yet the second half of the year witnessed one of the strongest rallies in recent memory. To be sure, poor first halves have not always been followed by such pleasing reversals. There have been plenty of other years in which poor first halves were followed by poor second halves as well. But the historical record shows there is a largely random relationship between the market’s performance in the first and second halves of each year.”

Got those marching orders? Now move out men and women…there is money to lose!

Note: context.

This came into me:

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Cordially,
xxx

Ahem…bullshit.

I just noticed that Ali Velshi responded via Twitter to my post:

@Covel so not true. My book came out in Jan, 09. Had you taken my advice you’d be up 70% in the market. You obviously didn’t.

Not only was I on target with my criticism, Velshi appears even more disingenuous than I first thought. Velshi forgets the wisdom of “holes”:

“It is a good thing to follow the first law of holes; if you are in one, stop digging.”

My full post is here.

Let’s be frank: Anyone giving a view to a significant audience is obliged to be truthful. Now, consider this excerpt from CNN today…noting the “angle” (and that’s being nice) that CNN reporter Ali Velshi takes:

KEITH MCCULLOUGH (GUEST ON CNN): I think what’s happening in Europe is just a preview as to what’s going to happen in the U.S. It all basically starts with debt. So if you believe as a government official that you can solve the problems that are anchored in debt with more debt you are going to end up with the same problems that the Europeans are facing. And I think that we are three to six months away from that coming home to roost here in the U.S.

VELSHI (CNN ANCHOR): Why is it that lots of people go out of their way, Keith, to tell us how the U.S. is not the same as Europe? Our debt issues are certainly are not the same as Greece’s, as Italy’s, as Portugal’s, why are you suggesting that we will get into the same pickle?

MCCULLOUGH: At the end of the day from a deficit perspective, the U.S. — the deficit as a percentage of your GDP is exactly like Greece. It’s going to be pushing close to 12 percent. And anytime we have an issue, like today, for example, with the jobs report what is the answer? The answer is more government, more government spending which is going to simply keep pushing that deficit?

VELSHI: Hold on. What are you talking about? When you have a jobs report like this week, the answer is more government, more government spending? Where did you hear that from? We’ve been discussing that endlessly. That has not been anyone’s suggestion.

MCCULLOUGH: Well I think that that is definitely going to be the suggestion. If you look at this mornings …

VELSHI: Keith, this isn’t an opportunity to just come up on TV and bash government. What are you talking about?

MCCULLOUGH: This morning’s number, if you look at the job ads, 400,000 of them were government-hired workers.

VELSHI: So no one has come out and said, oh my god, let’s have 800,000 government jobs next month. Everybody has said, this is not the way we actually want things to go. We want more private sector hiring. Christine, have you heard one person telling you that this is fantastic; we should have more government hiring? I don’t know what Keith is talking about.

VELSHI: I don’t understand what your premise is, Keith, because that’s not the answer. What should we be doing differently?

MCCULLOUGH: Well the answer will be, from a political perspective, that is a forecast, Ali. That is a forecast. That is what government’s do that have problems, they spend more and more money, taxpayer money to hire.

More from the transcript:

MCCULLOUGH: I think that, look, the market’s ganging up on the three of you because at the end of the day the market doesn’t lie, politicians and people do. And the American government said they were going to solve this than you can go do that. But risk management Ali, starts with watching what the market is telling you.

VELSHI: I hope the market is as cruel to me next year as it was last year. I hope I suffer through another 70 percent gain in the broader markets, Keith. If that’s your biggest plague that you wish on me, I’ll take it.

Consider those last few sentences of arrogance from Velshi as you read the stats that he forgot to mention:

The S&P 500 (SPX) closed on 5/22/2000 at 1400.72 and closed on Friday 5/28/2010 at 1089.41. That is a 22.2% loss in value in ten years of buy and hold investing not allowing for inflation. That means a buy and hold investor lost 22.2% of their money plus another 20% for inflation — a 42% haircut. The period of history the buy and hold advocates really don’t want you to know about is 1929 to 1954. The highest close for the Dow was 381.17 on 9/3/1929 before the beginning of the great bear market, and it took 25 years to get back to ‘even’ on a nominal basis (not counting inflation). The Dow closed above 381 for the first time on 11/23/1954 after the 9/3/1929 high.”

Does Velshi seem like an honest guy as he yucks it up about “suffering through a 70% gain” while failing to mention the real stats [the real stats of buying and holding being underwater for over 10 years]? No, he doesn’t. Is he the type of guy who should be educating anyone about money and markets? Clearly not. As a teacher, I resent Velshi’s reckless use of a CNN megaphone to preach to many who surely don’t know that he is full of it.

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One reader responded to my comments above by saying:

Isn’t what you’ve written below libelous (not to mention an unnecessary personal attack)? ‘Does Velshi seem like an honest guy as he yucks it up about “suffering through a 70% gain” while failing to mention the real stats? No, he doesn’t.’

The libel is? The personal attack is? The unnecessary part is?

Since you have thrown out a very specific and unfounded attack against me (libel), and since you have failed to back your view in any way, it is assumed that you agree with Velshi (that is unless you correct my assumption).

With Velshi tossing out that 70% line he is saying clearly:

1. That he made that 70%.
2. That he is a buy and holder.

So if he is a buy and holder, and he says he made 70% while ignoring the prior 10 years where all buy and holders are still underwater — he is manipulative at best. Or, and I guess this is possible, perhaps Velshi perfectly timed the bottom from March 09 to May 10 and that’s how he made his 70%? And if he is this wonderful market timer, capable of nailing bottoms and tops perfectly, where is this all disclosed?

When someone appears on TV regularly to large audiences, when they preach money and markets, and when they make the statements Velshi does, I stand by my view. The fact that you are remotely sympathetic with Velshi, and since you seemingly see nothing wrong with what he is doing, you make my point better than I ever could.

Time for one of my favorites…as it is so clear Washington, DC has saved us all!

Go Ginger!

From Michael Gibbons:

“The S&P 500 (SPX) closed on 5/22/2000 at 1400.72 and closed on Friday 5/28/2010 at 1089.41. This is a 22.2% loss in value in ten years of buy and hold investing not allowing for inflation. This means a buy and hold investor has lost 22.2% of their money plus another 20% for inflation — a 42% haircut. It looks to me that a lot depends upon timing as to whether buy and hold is a viable investment strategy. For the past ten years, buy and hold has been a big loser as it has been in many other time periods in history. The period of history the buy and hold advocates don’t want you to know about is 1929 to 1954. The highest close for the Dow was 381.17 on 9/3/1929 before the beginning of the great bear market, and it took 25 years to get back to ‘even’ on a nominal basis (not counting inflation). The Dow closed above 381 for the first time on 11/23/1954 after the 9/3/1929 high.”

Mark Twain once said:

“A lie can travel halfway around the world while the truth is still putting on its shoes.”

The lie of buy and hold has traveled much farther than halfway around the world!