Tag Archives | Investing

Wall Street Pros Insist It’s Not ’1929 All Over Again’

Shakespeare’s phrase from Hamlet, “the lady doth protest too much, methinks” comes to mind as MarketWatch follows up its story about the scary stock market chart with vigorous denials from Wall Street professionals that a 1929-style stock market crash is coming:

Chart from MarketWatch

Chart from MarketWatch

Mobster Al Capone once said of the 1929 stock-market crash: “I deny absolutely that I am responsible.” Today, many strategists find themselves fighting off suggestions of a looming repeat of that long-ago market rout.

Rising to the surface again recently is the so-called “scary” 1929 crash chart that maps out market performance from mid-2012 to the present for the Dow industrials and compares it to 1928 and 1929.

The 1929 chart grabbed lots of attention in November. At the end of January, market timer Tom DeMark stirred the retro pot again by telling CNBC that stocks could “unravel quickly” in days and have reached an inflection point that resembles the period before 1929.

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Stock Market Chart Looks Just Like 1929 Before The Crash

What’s the old saying, those who don’t learn from history are doomed to repeat it? Well take a look at this chart and read what Mark Hulbert has to say about it at MarketWatch; do you think it’s going to be 1929 all over again?

Chart from MarketWatch

Chart from MarketWatch

There are eerie parallels between the stock market’s recent behavior and how it behaved right before the 1929 crash.

That at least is the conclusion reached by a frightening chart that has been making the rounds on Wall Street. The chart superimposes the market’s recent performance on top of a plot of its gyrations in 1928 and 1929.

The picture isn’t pretty. And it’s not as easy as you might think to wriggle out from underneath the bearish significance of this chart.

I should know, because I quoted a number of this chart’s skeptics in a column I wrote in early December.

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The Occult On Wall Street: The Art Of Financial Astrology

zodiac

The Telegraph claims that a surprising number of mainstream investment bankers make decisions based on astrology. Can you envision this growing into a quasi-religious cult?

Donald Bradley’s method of foreseeing changes in the market involved assigning a numerical value to the position of the planets and stars and plotting the values on a graph. The peaks and troughs of that line should, in theory, plot “turns” in the fortunes of stocks, bonds and commodities. It sounds utterly mad, but the model has been described by market watcher Peter Eliades as “eerily accurate”.

I wanted to do a statistical analysis of his method and use it if it worked,” says Crawford. Back in the library, Crawford found records of the Dow Jones going back to 1885 and a book outlining the details of planetary positions. After comparing the two, he was impressed.

So Crawford began using astrology alongside his technical analysis. Over the years, Crawford found his predictions working out so well that, in 1977, he set up business as a full-time astrological adviser.

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Wall Street Investors Buying Up Entire Neighborhoods In Poorer Areas

wall street

Wall Street investment firms are eager to become your new landlord. New York Times Dealbook reports:

Large investment firms have spent billions of dollars over the last year buying homes in some of the nation’s most depressed markets. The influx has been so great, and the resulting price gains so big, that ordinary buyers are feeling squeezed out. Nationwide, 68 percent of the damaged homes sold in April went to investors, and only 19 percent to first-time home buyers.

Wall Street played a central role in the last housing boom by supplying easy — and, in retrospect, risky — mortgage financing. Now, investment companies like the Blackstone Group have swooped in, buying thousands of houses in the same areas where the financial crisis hit hardest.

Blackstone, which helped define a period of Wall Street hyperwealth, has bought some 26,000 homes in nine states. Colony Capital, a Los Angeles-based investment firm, is spending $250 million each month and already owns 10,000 properties.

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Wall Street Exploring Ways To Profit From Global Warming

Turning lemons into really pricy lemonade. Bloomberg on the investment companies banking on massive windfalls as the planet heats:

Investing in climate change used to mean putting money into efforts to stop global warming. Now some investors are taking another approach. Working under the assumption that climate change is inevitable, they’re investing in businesses that will profit as the planet gets hotter.

Derivatives that help companies hedge against abnormal weather and natural catastrophes are drawing increased interest from big players. In January, KKR bought a 25 percent stake in Nephila Capital, an $8 billion Bermuda hedge fund that trades in weather derivatives.

Drought is helping spur business at Water Asset Management. The New York hedge fund, which has about $400 million under management, buys water rights and makes private equity and stock market investments in water treatment companies.

Ole Christiansen is also investing to take advantage of rising temperatures. “Last summer we were exploring in south Greenland, mainly for gold,” says the chief executive officer of NunaMinerals (NUNA), a local mining company.

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Marijuana Dispensing Company’s Stock Is Way Too High

O'Dea (CC)

Last week we posted a story about legal ways to invest in the medical marijuana boom. One of the suggested companies whose stock is publicly traded, Medbox, says it’s stock price is now ridiculously high after climbing 3000%. Story from MarketWatch:

A company that creates medical-marijuana dispensing machines says its stock is getting way too high.

Medbox shares surged 3,000% this week — from roughly $4 Monday to $215 Thursday — before falling to $100 after executives sought to dampen investor enthusiasm.

In a news release today, the company said that the stock’s rocket launch, which sent its market cap skyrocketing from $45 million at the start of the week to a staggering $2.3 billion, was ignited by a MarketWatch story Tuesday on how to invest in legalized marijuana (see How to invest in legalized marijuana .) (That’s about double the market capitalization of retailer Jos. A.

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How To Invest (Legally) In Marijuana

Mjpresson (CC)

You know a tipping point has been reached when the financial press starts writing about ways to profit from legalized marijuana! From MarketWatch:

Mark Twain is said to have remarked that a gold rush is a good time to be in the pick and shovel business. Investors may be able to apply that same bit of wisdom to the growing number of U.S. states that have legalized pot.

Although federal law prohibits the sale or possession of marijuana, Massachusetts last week joined the ranks of states — 18 plus Washington, D.C. — that allow its use for people suffering from chronic illnesses like cancer, HIV/AIDS, multiple sclerosis and epilepsy. In Washington and Colorado, meanwhile, voters passed an initiative to allow pot for recreational use. Those changes have kickstarted a small but fast-growing medical-marijuana industry, estimated to be worth about $1.7 billion as of 2011, according to See Change Strategy, an independent financial-analysis firm that specializes in new markets.

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A Thousand Pages Of Romney’s Confidential Bain Documents Leaked

Gawker has obtained a vast cache of information on Mitt Romney’s finances, much of it involving the labyrinthine stashing of enormous sums of money in offshore hedge funds:

Today, we are publishing more than 950 pages of internal audits, financial statements, and private investor letters for 21 cryptically named entities in which Romney had invested—at minimum—more than $10 million as of 2011 (that number is based on the low end of ranges he has disclosed—the true number is almost certainly significantly higher).

Almost all of them are affiliated with Bain Capital, the secretive private equity firm Romney co-founded in 1984 and ran until his departure in 1999 (or 2002, depending on whom you ask). Many of them are offshore funds based in the Cayman Islands.

Together, they reveal the mind-numbing, maze-like, and deeply opaque complexity with which Romney has handled his wealth, the exotic tax-avoidance schemes available only to the preposterously wealthy that benefit him, the unlikely (for a right-wing religious Mormon) places that his money has ended up, and the deeply hypocritical distance between his own criticisms of Obama’s fiscal approach and his money managers’ embrace of those same policies.

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At Bain, Romney Led Investment In Aborted Fetus Disposal Firm

 A couple of years before realizing that he was pro-life, Mitt Romney netted $50 million for Bain Capital in the aborted fetus disposal business. Chalk it up to one of life’s little ironies. Mother Jones reveals:

The Huffington Post reported that in 1999 the GOP presidential candidate had been part of an investment group that invested $75 million in Stericycle, a medical-waste disposal firm that has been attacked by anti-abortion groups for disposing aborted fetuses collected from family planning clinics.

Documents filed by Bain and Stericycle with the SEC—and obtained by Mother Jones—list Romney as an active participant in the investment. And this deal helped Stericycle, a company with a poor safety record, grow, while yielding tens of millions of dollars in profits for Romney and his partners.

Despite the firm’s regulatory run-ins, the deal worked out well for Bain. In 2001, the Bain-Madison Dearborn partnership that had invested in the company sold 40 percent of its holdings in Stericycle for about $88 million—marking a hefty profit on its original investment of $75 million.

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Only on Wall Street: Lose $2 Billion of Your Company’s Money and Make $15 Million Yourself

One Chase Manhattan Plaza

Photo: Leoboudv (CC)

It’s great to have a job where even if you seriously screw up, you still make plenty of dough. Via RT:

Ina Drew helped make bank for JPMorgan Chase as the firm’s chief investment officer — until a blunder on her part cost the company roughly $2 billion. Drew resigned as CIO on Monday, but that’s not to say she is stepping down with nothing to show.

Despite being responsible for an in-house trading loss that totaled as much as $2.3 billion in losses for JPMorgan Chase, Drew stands to walk away from the Wall Street firm with a payout that could bring her as much as $15 million.

Drew’s departure from JPMorgan Chase was publicized early Monday, only days after she was named in a major economic goof-up that garnered criticism directed towards one of Wall Street’s most iconic institutions.

The bank is still slated to hold its annual shareholders meeting on Tuesday this week, with a new CIO already stepping up to the plate.

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