Buzz Bits: Dow, Nasdaq Finish in the Green
Your daily Buzz & Banter highlights.
GFIG Newton - Ryan Krueger - 12:25 PM
GFI Group (GFIG) is out with, as one analyst is calling it, "confusing numbers." The reported number was above expectations but adjusting for certain expenses. It looks more like a penny or two miss, and the stock is being offered much lower as a result.
Interestingly, I have seen estimates raised as a result of chewing through the numbers, and I can see why. Acquiring more institutional brokers and clients costs money and the company is expanding each with, I believe, longer term reward as the business of risk management is simply in a bull market with soaring trading volumes, and derivative strategies in growing demand. GFIG guided full year 2008 higher.
I have been waiting for a chance to re-acquire this name and I'll be chewing on this today and wanted to pass it along. I continue to work on a secular shift I call "The Rake" and two of my favorite names remain GFIG and FC Stone (FCSX) and have recently added Interactive Brokers (IBKR). The three are up an average of 20% since last May while its Financial Sector (XLF) is down (29%).
The big brokerage firms and financial supermarkets were most concerned about the future of the business of trading and advice, you'll recall.
Positions in FCSX and IBKR.
Iced VIX - Adam Warner - 2:39 PM
In our never ending to quest to divine why the VIX does literally nothing these days, here are a couple things to note.
This chart here represents the rolling 10 Day volatility of the SPY itself over the past half year, and as you can see it has fallen off a cliff this week. It's a good representation of what a trader feels in the here and now, and it's pretty much a nothing. All those well-publicized macro worries can get chucked aside when there's no actual market volatility.
That being said, this SPY chart lines up pretty closely to the timeframe, so clearly it did not bode well for the market after the last two volatility troughs. Will low volatility beget high volatility yet again? Today's ugliness looks like a start in that direction.
Position in SPY.
Many times you point out patterns you observe in the S&P 500 chart (e.g. pennant) but what's confusing to me is why would traders and investors who buy individual stocks, Google (GOOG) for example, bother about combined patterns of 500 other companies? Why do chart patterns of indices matter? I can see them being useful for individual stocks.
Fantastic question. The markets have been trading monolithically, which is to say that asset classes are moving as a whole. When we speak to the credit-equity disconnect, the "equity" side of the equation is just that: the S&P. When we muse about "asset class deflation vs. dollar devaluation," or hyperinflation vs.deflation, equities is included as one of the asset classes (along with commodities, etc).
Given the inordinate amount of systemic risk out there, my lens has focused on the bigger picture tides. That's not to say I don't watch (trade, write about) individual stocks (think Apple (AAPL), Wachovia (WB), Bear Stearns (BSC)), it's just entirely more relevant as one of the core drivers of the foreseeable price action.
Silver Is Not Gold, But... - Lance Lewis - 3:23 PM
Editor's Note: With silver futures making a 28 year high, we asked Professor Lewis his thoughts on Hecla Mining (HL) which reported 4Q results inline with expectations.
HL is in the business of issuing shares and not silver mining. It's not a stock I would touch. My favorites in this space are Silver Standard Resources (SSRI), and Pan American Silver (PAAS).
PAAS is actually the premium silver play and best of the group because 1) it has actual production, and 2) it is consistently profitable, grows reserves, and doesn't dilute shareholders. Silver is not gold but it will generally be dragged up by gold in a bull market.
Positions in gold.
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