Wall Street — Page 4

Sell in May?

May 28, 2008 by Chris 4 Comments

It’s that time of year again, “Sell in May and Go Away”, so I will upload up my annual post of statistics using the help of the Stock Trader’s Almanac written by Jeffery A. Hirsch and Yale Hirsch.

For the record, I don’t sell just because the calendar says May but I do enjoy sharring the statistical data (it is very interesting):

Worst six months of the year begin in May:
* All data is from the DJIA from 1950 to 2005

A $10,000 investment in the DJIA compounded to $544,323 for the period beginning in November through April over the past 56 years (termed the best six months)
Compare this to a $272 loss; yes I said loss for the same investment in May through October (termed the worst six months)
44 of the 56 periods ended with a gain in the November through April period
Only 33 periods ended with a gain versus 23 losing periods in May through October
The average gain for the November through April period is 7.9% (56 yrs)
The average gain for May through October is 0.3% but the period did have an overall loss of $272 as mentioned above
The best six months gained 11,691.79 Dow points over the 56 yrs (data ends in 2005)
The worst six months actually lost 538.98 Dow points
Top performing period for best six months was a gain of 29.8% in 1985 and then 25.6% in 1998
Top performing period for worst six months was a gain of 19.2% in 1958 and then 16.9% in 1982
The poorest performing period for the best six months was a loss of 14.0% in 1969 and then 12.5% in 1973
The poorest performing period for the worst six months was a loss of 25.2% in 2002 and then 22.4% in 1974
The best six months has only had one losing period in the past 22 years and that was only 2.2%
The worst six months has had eight losing periods over the past 22 years with several in double digits
Seven of the past eight years have been losers for the worst six months
All of these results are based without timing the market using technical analysis
Using a simple MACD indicator to time the entries and exits, the gain during the best six months rises up to $1,548,121 while the loss during the worst six months increases to $6,646.
Finally, five of the last nine May months have been down for the markets; starting the period of the “worst six months”

One side note: the Stock Trader’s Almanac notes that the Nasdaq actually has a best eight month period from November to June.

For further detail, grab a copy of the Almanac as I buy one every year for the excellent statitical information and the great quotes.

For all CP sell articles, visit my category on selling or short selling!

Filed Under: General Market, Selling, Wall Street

Fresh off of listening to When Genius Failed and Liar’s Poker, those stories of quick and great fortunes from the 1980’s and 1990’s now seem like pocket change when compared to the hedge fund managers of today. Compensations have been dipping into the billion dollar range for the past few years but the latest round of wealth has never been so astonishing.

To put this into perspective, the top hedge fund manger last year earned 61,157 times more money than the average American family ($3.7 billion versus $60,500). He averaged $422,374 per hour, every hour for 365 consecutive days (more than $7,000 per minute).

Take a look, I have always been intrigued by these “masters of the universe” compensation packages: 2006: Hedge Funds – Richest of the Rich

Wall Street Winners Get Billion-Dollar Paydays
By JENNY ANDERSON, Published: April 16, 2008

Hedge fund managers, those masters of a secretive, sometimes volatile financial universe, are making money on a scale that once seemed unimaginable, even in Wall Street’s rarefied realms.

The richest hedge fund managers keep getting richer — fast. To make it into the top 25 of Alpha’s list, the industry standard for hedge fund pay, a manager needed to earn at least $360 million last year, more than 18 times the amount in 2002. The median American family, by contrast, earned $60,500 last year.

Institutional Investor
By Stephen Taub, Posted April 15, 2008

Five of the managers on this year’s list each made more in 2007 than the $1.2 billion that JPMorgan Chase & Co. agreed to pay for the almost failed 85-year-old Bear Stearns Cos.

When we published our inaugural list, in 2002, Soros led the way with $700 million, a showing that this year would have put him at No. 9. Back then it took $30 million to crack the top 25; this year, $360 million.

The grand total earned by the top 25 in our 2003 ranking, almost $2.8 billion, was less than what any of the top three managers made this year and less than one fifth of what the top ten made altogether ($16.1 billion).

Though we doubled the size of our list from 25 to 50 this year, longtime New York–based star managers Mark Kingdon of Kingdon Capital Management and Raj Rajaratnam of Galleon Group both miss the cut, despite each making about $200 million. This year’s minimum: $210 million.

Bringing home more than a billion in 2007: Five hedge fund managers rake it in
By Peter Cohan, Posted April 18, 2008

John Paulson (Paulson & Co.) — 2007 earnings: $3.7 billion. Beginning in 2005, Paulson made huge bets on the decline in value of securities backed by subprime mortgages

George Soros (Soros Fund Management) — 2007 earnings: $2.9 billion. Soros’ $17 billion flagship Quantum Endowment fund racked up a 31.7% return in 2007, its best annual showing since the high-tech implosion at the start of this decade. Soros’ $2.9 billion payday comes almost entirely from his personal stake in the fund (which he no longer manages). I don’t know how he made that 31.7% return.

James Simons (Renaissance Technology) — 2007 earnings: $2.8 billion. Simons, a mathematician and former Defense Department code breaker, uses complex computer models to trade.

Philip Falcone (Harbinger Capital Partners) — 2007 earnings: $1.7 billion. Like Paulson, Falcone placed a winning bet against the mortgage market. He pulled in returns of 117% after fees in 2007.

Kenneth Griffin (Citadel Investment Corp.) — 2007 earnings: $1.5 billion. Griffin manages $20 billion and is a big information technology innovator that trades derivatives. equity securities. and listed options and buys distressed assets at a discount. For example, In late 2007 a Citadel-led group put $2.55 billion into struggling E*Trade Financial Corp., (NASDAQ: ETFC), the U.S.’s fourth-largest discount brokerage.

Filed Under: Media, Misc., Wall Street

Cramer’s TheStreet.com Sneaky?

March 20, 2008 by Chris 9 Comments

I start by giving a hat tip to Don Harrold from DonHarrold.net for providing the in-depth research and video highlighting the Cramer BS! And that’s what it is, BullSh*t!

The second hat tip goes to Adam from Daily Options Report who uploaded the YouTube video to his site, where I first viewed it.

Watch the video and understand what TheStreet.com is doing here. I mean, all credibility goes out the door if this is true and the image is not altered.

How many other lousy, losing stock picks does TheStreet.com erase from their website without anyone noticing? Do they really go back and toss out poor stock picks without telling the public? They should lose ALL journalistic credibility and ALL equity research credibility (if they had any to begin with).

I am glad people like Don Harrold keep an eye on the big guys because so many sheep do watch these shows and trade based off of what they say.

The second beef I have is the fact that Jim Cramer claims he was talking about Bear Stearns, the bank, and not the stock (BSC). Maybe he was because he does refer to the “liquidity” based on the caller’s question but I still have reservations.

I am wondering why a stock chart was uploaded on the screen if he was talking about Bear Stearns the bank and not the stock; they post these charts on the screen with every other stock analyzed.

Why too, did Jim forget to say the words “common stock” during the initial telecast? Let me guess: because he was talking about the stock just as he has been calling it a buy since last summer (the start of the big crash). The follow-up video of Cramer stresses the words “common stock” but he forgot to iterate this during the initial telecast. He has to be clearer considering he is speaking to an audience that takes his words at face value.

Anyway, I am wondering why the mainstream media or even competitors such as the Fox Business Network (or whatever it is called – I don’t watch these channels) isn’t calling out TheStreet.com and/ or Cramer.

I try not to be a Cramer basher but he’s such an easy target when he does stuff like this and his company does something so despicable. I leave the day-to-day nit-picking and bashing for others but I have to jump in and make it clear when something is very wrong (and involves a public company). I mean, I almost worked for TheStreet.com and Jim Cramer (I made it several rounds deep in the interviewing process to become a part of their equity research team). Fortunately for me, they went with the business school lad instead of the architecture grad.

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Filed Under: General Market, Misc., Wall Street

Start Here: Top 20 Posts

March 7, 2008 by Chris 3 Comments

I went back and tried to pick out the best 20 posts that new readers can start with when coming to this website. I will be permanently placing them at the top right sidebar.

Top 20 chrisperruna.com Posts

Let me know if I am missed an article that you believe should be on this list.

Filed Under: Education, Expectancy, Fundamental Analysis, General Market, Links, Point and Figure, Position Sizing, Psychology, Technical Analysis, Wall Street

Buffett a huge bull on the American Economy

February 13, 2008 by Chris 4 Comments

I am a trend trader, as mentioned hundreds of times, but I listen when Mr. Warren Buffett speaks! Below are the most logical statements I have heard in a long time. He makes much more sense than the predictions we are bombarded with by the talking head media and so-called “experts”. The so-called experts barely take home a six figure salary (if half of that), many stuck in the rat race but are qualified by major networks and media outlets to educate the masses (or sheep as I like to call them).

I’ll pass on the information from all the talking-heads and listen very attentively when the second richest man on the planet and greatest investor of all-time speaks. I am also bullish on the United States over the long term as nations and markets work in cycles. I am not a believer in doomsday predictions, authors, books or religions. Like Warren Buffett and William O’Neil, I am long the United States for the rest of my life until something shows me the trend has ended. The past several years (dating back to 2000) are a small pimple on the ass of this great country.

“I am a huge bull on the American economy,” said Mr. Buffett, in an exclusive interview with the National Post.

Financial markets around the world have been heaving amid fears that banks will have restrain lending and damage other areas of the economy in order to shore up their capital and rebuild their balance sheets.

But Mr. Buffett says the United States has survived such turmoil before.

“We’ll always get through,” he said. “I’m a bull on the United States. Just think about how silly it would have been to be anything other than a bull on the United States since 1790. It is not a smart thing to sell the United States short over the years — or Canada for that matter. The world does get better. People get more productive. More human capacity is unleashed over time.”

“He said the banks will be able to work out their troubles without government assistance but may not be the “best investments.”

“They’re going to be around,” he said. “The ones that have taken the big write-offs, they’re not going out of business but they’re selling a lot of new shares in the process so they’re diluting future earnings. They’re paying a price.

“I think most of the very big ones and I won’t name names, I think five or 10 years from now people will have made money on them but I think they’ll have made money on other things too. I don’t think necessarily they’re the best investments, but they have not been permanently crippled.”

He sees no need for any government bailouts in the financial sector, similar, to the government rescue of U.S. banks during the savings and loans crisis in the early 1980s. U.S. banks have enough money to handle the extra cost.

“They can handle it and they’re paying a price for it,” he said. “Somebody has to bear those losses. Is it better that the XYZ bank bears it or is it better to socialize it for the American public. I’d rather have the XYZ bank pay for it.”

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Filed Under: General Market, Wall Street