Sunday, May 27, 2012

Facebook's stock debut shows not all investors are Equal

75 Wall Street
75 Wall Street (Photo credit: SheepGuardingLlama)
Distrust of the stock market sharpens as word spreads that big investors and wealthy clients of Wall Street giants had received warnings about Facebook that smaller investors had not.

 NEW YORK —Facebook Inc.'s bungled stock-market debut made it clear that big money still rules Wall Street. But this time, the small money got a look at how Wall Street really works — and that could spell trouble for the financial industry.
Millions of small investors have trimmed their investments in stocks after seeing their 401(k) accounts pulverized by the market plunge in 2008-09. The May 2010 flash crash — in which

$1 trillion briefly vanished from the stock market — served as another flashing yellow caution sign.
Facebook, with its worldwide popularity, was seen as a chance to rekindle popular interest in stocks when its shares began trading publicly last week.
Then the stock flopped. Investor enthusiasm was expected to be red-hot, but many backed away amid trading glitches on the Nasdaq, widespread news reports of insider selling and nagging questions about the company's future prospects.
In the aftermath, it also became clear that big investors and wealthy clients had been warned the company's financial outlook had weakened. Instead of rekindling interest in stocks, Facebook's debut fueled long-running concerns about how the stock market works.
"This has proved the game is rigged," said Charles Geisst, a finance professor and Wall Street historian at Manhattan College. "There's just too many questions about the integrity of the stock market, and I think people are starting to realize this — individuals, at least."
Prominent investor Mark Cuban, owner of the Dallas Mavericks basketball team, declared on his blog Wednesday that the investing public's positive impression of the stock market had been "torched to the ground."
Retail investors reportedly got 25% of Facebook's 421 million shares in the initial public offering. The value of that allotment has declined by more than $500 million, based on Facebook's closing price of $33.03 a share Thursday.
Regulators and congressional investigators have begun probes into what went wrong, looking into questions over information distributed ahead of the IPO. Morgan Stanley and other underwriters warned privileged clients that their analysts had grown sour on Facebook's revenue growth potential. They failed to telegraph the same information to retail clients and the general public. Information affords a crucial trading edge on Wall Street. Regulators have tried to level the playing field for years.
A decade ago, regulators led by then-Atty. Gen. Eliot Spitzer discovered widespread manipulation of Wall Street analysts' reports. He exposed a long practice on Wall Street in which analysts would write favorable research so their banks could win investment banking business.
Regulators settled their cases against 10 major firms for $1.4 billion in 2003 and put in place strict rules dividing banks' research and investment banking divisions.

Although securities law experts say it's unclear whether Facebook's underwriters have broken any rules, Spitzer said underwriters' selective disclosures in Facebook's IPO may have violated the state's laws against financial fraud.
He said underwriters' actions may violate the "most fundamental principle, which is that an underwriter needs to be forthright, honest to the public."
"Market theory is very simple," Spitzer said. "You can't give false and misleading material information to people, where you know it's false and you correct it only to some but not to others."
Morgan Stanley declined to comment, but it has said its IPO procedures were "in compliance with all applicable regulations."
English: Morgan Stanley's office on Times Square
English: Morgan Stanley's office on Times Square (Photo credit: Wikipedia)
Giving well-connected firms an inside track has been one of the ways that big Wall Street firms attract and keep big clients. These clients are powerful profit drivers, and banks tend to give their best customers the best deals.
"These people give them more money in fees and commissions than others," said Ernest Badway, a former U.S. Securities and Exchange Commission enforcement attorney who is now a white-collar defense lawyer in New York and New Jersey.
"Because of that — they're part of a great revenue stream — they're going to try to give every single advantage that they can to those particular people," he said.
Large institutions and wealthy investors have a symbiotic relationship with Wall Street bankers. "The retail guy is at the end of the queue," Geisst said. "He can't do anybody any favors."
In April, the SEC settled a somewhat similar case against Goldman Sachs involving precious tips to favored clients.
To generate more revenue, the giant Wall Street investment bank's analysts and traders held "huddles" to share market commentary and trading ideas. During morning conference calls, Goldman passed along inside information to a select group of about 180 hedge fund and investment management clients.
Goldman, which brought in $37 billion in revenue last year, paid a $22-million fine to settle the case.
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Wednesday, May 23, 2012

Learn How to Trade Stocks & Options Intraday and Designing The Best Stock Trading System

Learn How to Trade Stocks and Options Intraday at the Best Prices Learn How to Trade Stocks & Options Intraday at the Best Prices. We were trading puts and calls all day and did a great job throughout the trading day! We had puts on TXI we bought at $1.25 and sold towards the high of the day before they pulled back to slightly above our entry.

We bought and sold NDX 2300 puts throughout the day for nice profits and we shorted Google yesterday before the big drop.

We entered the "Nasdaq 100" ($NDX.X) January 2300 Puts yesterday between $23.50 and $25.30 depending on the trader. We sold today on the highs of $27.50 before they ran the Nasdaq 100 higher going into the close.

From our exit price of $27.50 the contracts lost $12.47 or $1,247 per contract to the low of $15.03. We had secondary entery prices at $15.70 with exit outs at $16.80.

Designing The Best Stock Trading System 

Every successful trader has a winning stock trading system and there are as many successful systems as there are traders. What they have in common is that they have all found and stick to a trading system that works for them.

Sadly, I cannot develop your methodology for you. I can make suggestions of stock trading systems and put forth examples, but ultimately you must devise a system that is your own. This is because you must be able to follow it. It must reflect you.

Saturday, May 12, 2012

Investing Book: Mastering the Trade, Second Edition: Proven Techniques for Profiting from Intraday and Swing Trading Setups By John F. Carter

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The “Trash Can Trader” investment training course is being released by Absolute Wealth, and is preceded by two free bonus videos from the expert behind the program.Austin, TX (PRWEB) May 11, 2012 Investing, especially in such an uncertain and...

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