Financial Kudos Blog

My head is spinning - I am listening to CNBC.

Are you getting as tired as I am listening to the 'brains' on CNBC?  Last week they were talking about the return to better times - even some talk of the DOW testing longer term resistance levels.  Today, everyone seems to have gotten up on the wrong side of the bed and is looking not for sunny and 80 degrees, but rather a beginning of a protracted cold war.  While I understand the need to give both sides of an argument, I am making the call for some consistency - especially when the economic data has not materially changed form one day to the next.

I don't mean to just pick on CNBC, they have been doing this for years.  Rather I would speak to all market participants that react instead of act to the big picture.  If the market is overdone, no problem just be a little bit more consistent.

I am not original here, but how about adding a track record, like a baseball batting average, for the folks marched onto the TV set?  Don't just track right and wrong calls, but look for closely at the 'on base percentage'. In essence look at the reasoning for the directional calls and the performance - not just the quick stats.  Being right is obviously the goal but when we can't right all of the time investor's need to know who is smart and on point vs. who is just lucky.

P.S. Sorry about the sports analogy but I can't help it since it is Baseball season.

Dow 10,000? When the conversations will start

Remember those conversations from a long time ago about 'Dow 10,000'?  It has been a long while. I remember them clearly, like it was those profitable days of yesteryear.  The markets have come a long way and perhaps they have a long way to go, but it is always nice to reflect on where we have been.  

Below is the current set of charts for the Diamonds - looks like some resistance at 9,000 and then off to the 10,000 conversations again.  Well at least we hope, otherwise the markets look over extended.  You be the judge:

'Bear Market Rally' or history repeating itself?

CNBC was kind enough to remind us this morning that 100% of their interviewed guests called the recent rally a 'Bear Market Rally', tantamount to a tease or a so called 'sucker's rally'.  Well, April was the single best month for the markets since 1938. Warren Buffet has said that the September Pearl Harbor comparisons are now over.  He went on to say that we continue to fight the war- I would agree, as I am sure war torn investors would agree as well.  By the way Becky Quick from CNBC - great sound bite!

Many market participants think that its always different this time.  Recessions typically last 16 month the history books show. If the current recession, which officially kicked off in December 2007, is any indication, this one is certainly deeper but nevertheless history has been repeated once again.

Long term trends to assess markets are far more important than today's latest gibberish, rant or rave. Although, I would agree that current trends and issues seem to change the look and feel of the root cause for the event and the clean up. The Internet, or rather the speed of the information flow has certainly helped set the pace for a turnaround.

The purpose of this blog is not to call the end bad times but rather to remind investors that the markets have a rhythm (or as my first grader would happily tell me 'it's a pattern Dad') and to think about the big picture and not only 'investorjoe' on Twitter saying he just sold XYZ at a slight profit.  Do we really care about that trade, specially after the fact?

Swine Flu: Viral Marketing Powered By Twitter

I just heard that the CDC (Centers for Disease Control) is on Twitter.  Pretty ironic that a viral tool like Twitter is being used to disseminate information about a virus.  I guess everything comes full circle.   

This is Social Networking at its core.  When the message must get out what better way then through the use of the latest social networking tools? Powerful stuff really.  The next question is now that the headline gets pushed around the globe in 140 characters or less, what is the best course of action to get people more in depth information about a topic? Where do the ‘tiny URLs’ go?  What are people reading (or for that matter with You-Tube, what are they watching) to gain more knowledge and receive accurate and in-depth information?

We believe the same thing is occurring with investment information.  Short 140 character quips are wonderful.  When we hear that someone with the screen name ‘Genius13’ just successfully traded gold for the 18^th time in a row within the last 3 hours is really of no moment.  It is only useful to hear why she traded gold and more over it is critical to hear it before she makes the trade.  

It comes down to ‘depth’ and sound bites.  We think you need both.

We want you! Beta users to receive free membership!

About a month ago we posted a blog which discussed the fact that we are looking for investors (not just any investors but talented investors) to participate and contribute to the new Financial Kudos website.  We anticipate our launch for beta users to take place in mid-may.  Would you like to join us? 

Following is our post from March 18, 2009.  Please send us your email information (or at least subscribe to this blog) so that we can offer you a spot in our beta group.  Our initial beta users will receive free membership for 3 years!

"Over the last few weeks our team has been actively searching for the talented investors on the Internet.  Not just the “traders” who pat each other on the back or give a short tweet about their latest trade, but investors who truly provide insight.   For sure, smart talent exists but where are you on the Internet and more importantly how can you monetize your insight and get rewarded for your efforts?

We seek to find folks who have decided that it is time to bring together a group of really smart and insightful traders and investors who wish to get paid for their efforts.   If you fit the mold, send us a note and become and early adopter for the next wave in investment information and research.  The subject should say:  It’s about time for me to get paid for my efforts! Send the email to info@financialkudos.com and please include your name, phone number and a sentence or two about how you feel about the current offerings on the Internet for investors.

We look forward to speaking with all of you and hope you join us on the ride towards the next wave!"

Does it take '60 Minutes' to diagnose the problem with mutual funds?

Last night the CBS program 60 Minutes spent some time speaking about mutual funds and 401ks in the wake of the market crash. Hidden costs, poor performance, they touched on everything.  While it is unfair to suggest that all mutual funds are at fault here (we must think about the rough markets as well), it makes sense to discuss the 'new' mutual funds: ETFs (Exchange Traded Funds).  In fact, we would go so far as saying that mutual funds are so yesterday.  ETFs have grown in popularity over thew last several years.  Even though you must watch the cost structure associated with ETFs, the management costs are reduced and there are NO sales charges. You need only pay your regularly low commissions rates to trade. 

If you want to match market performance why not select the market you want (sector, general,S&P, DOW etc.) buy an ETF and be the market?  When Wall Street rights itself after the recent debacles, we believe ETFs will play a significant role and displace mutual funds in 401ks and portfolios in general.  

PS: ETFs make great trading vehicles!

Is President Obama on to something?

Although the effects of the recession are not complete, Goldman's numbers and those of Wells Fargo might suggest that the worst is over.  A few weeks back during a prime time update on the economy, President Obama suggested that technology and communications could broadcast information quicker when things get bad and when they start to improve.  Interesting concept that could possibly create a swifter reaction to the upside for the markets which is inconsistent with history.  Perhaps it is another sign that a faster news cycle and faster communications channels can lead to a faster economic reversal.  

It's great to have a Blackberry toting President.  I think it gives him insight that his predecessors did not have. Now we just need him to shift to a secure iPhone.  Let's hold up our glasses to a V shaped recession and recovery!  Cheers.

Mike Mayo gets a new job.

Talk about taking a position to get attention. As the markets attempt a rebound, Mike Mayo attempts to make a statement in his new position at Calyon Securities. 

Remember the days when analysts only had nice things to say?  Well, it is about time that an analyst takes the opposite position even if it is simply to seek attention.  Perhaps, the most important issue is not the recommendation itself and a potential shift in sentiment but rather the markets ultimate reaction at 4:00 PM - did anyone really care?

We are not here to discuss the merits of Mayo's position - we have to assume that it was well intentioned and well researched.  We are here to discuss the motivation and to open up our readers eyes with respect to track records for analysts and the effects of research on the markets.  

Is there still a correlation between an analyst recommendation and market sentiment and reaction?

The Great Thaw?

Is it spring or is the economy beginning to thaw out?

The markets are up 20% off the bottom which generally suggests a 'bull market'.  We are not quite ready to say that everything is fixed.  Far form it.  But history tells us that the markets are generally a leading indicator suggesting that things are beginning to feel better.  The economy may very well be on the way to getting better.

At the very least it is the right time to shift gears and look around for opportunities to capitalize on a post recession economy. We believe questions abound about what the next great wave of prosperity might include.  We are pretty confident that a network of smart investors should be able to offer insight and figure it out.  It's not just about performance, it's about why a portfolio will perform better so we can learn from the markets and garner the Grey haired experience without getting the Grey hair. Join us in creating a network to get ahead of the curve and discuss concepts, ideas and opportunities, not just 'buy this because I did and I have a gold star next to my name'.

CNBC gets the Twitter Buzz

Yesterday was Twitter day on CNBC.  Twitter CEO Evan Williams was on the network a few times during the day and the on-air talent has been plugigng their connection to their Twitter account. In fact we read that Twitter was mentioned 24 times on CNBC yesterday.  It seems amazing that the buzz has grown so significantly over the last few months on Twitter. It has grown even faster than the increase in unemployment.  Does everyone really have so much time during the work day to send mindless text messages to the abyss of Twitter?

Once again we draw you to the question of how we can remain focused on our work and responsibilities while finding the time (and need) to sift through all of the information at our fingertips.  All of us at Financial Kudos really enjoy the Twitter tools and many other tools, but our issues are targeted at maintaining our focus while utilizing these tools in a productive manner.  We think that in the investment community harnessing all of this information in a productive and profitable way is truly the killer app. 

In the meantime, and until Financial Kudos makes its debut, enjoy the Twitter buzz and the CNBC crew making the Twitter family a group of celebrities.