Monday, March 30, 2009

To Mark or not to Mark....

CNBC would have you believe that investors want to eliminate the FASB accounting rule - 'Mark to Market'. This would allow our insolvent banking system to not have to raise additional capital - at a prohibitive / dilutive stock price - where the only likely investor to have that much cash would be the government ( totally socialiing our banking system). That thinking is, and would be wrong.

I myself, have been calling for FASB to "relax" mark to market rules since last year. Do not mistake relaxing mark to market with eliminating it. The market needs two things;

1) They want clarity, and accountability (mark to market is supposed to have provided this in theory).

2) They want marks that reflect HOW a company is holding an asset on their books (if they are holding an asset to maturity, and that asset is still paying as scheduled, it should not need to be markeded to market).

In reality, what the market wants (and what I hope we get from FASB) is both. We do it now with GAAP vs non-GAAP earnings... Think about it - Gaap vs non-Gaap allows us to view earnings per share for what they REALLY are (diluted via potential stock option conversions vs earnings without all those additional shares).

So FASB please give us what we want (and need);

1) Require banks to post a number on their Q's that reflect the CURRENT market for their assets - but only for the purpose of "clarity and honesty". From a capital requirement, let them mark it to a realistic date that they expect to hold that asset.

What do you think they should do? Let's discuss it on Twitter.

Monday, March 23, 2009

Banks! Misunderstood STEAL of the CENTURY

I first blogged about why if you did not believe in Armageddon you MUST be in bank stocks back in late November of last year (right when the XLF bank ETF bottomed that year in the mid 9's). Checking my stocktwits feed, you would read that I was at that time "nibbling in" using the XLF as my proxy for the banking sector.

Fast forward toa few weeks back, and you would see that I became VERY aggressive on the secotr, and I Stocktwit'ed that I was now in FAS (FAS is a Direxion "3X" levered ETF), a VERY agressive bet for anyone.

I really DID put my money where my mouth is (Pic below is an actual cut and paste of my Etrade account showing my FAS Position which I bought in the 2's and still own).

NOTE: I am NEVER a Pig (Bulls and Bears make money...Pigs get slaughtered) - But even being up 150% in my FAS position Banks are still CHEAP!

This is the perfect storm for banks. Unless you're from Mars, you HATE banks. No one understands banks. Last year, banks lost BILLIONS (each). So why buy banks? Well the first reason is the same one I reasoned back at the end of last year, and still maintain... Without Banks there IS no economy, without banks there IS no stock market, and without banks, there is ONLY Armegeddon. Think about this for a moment...No matter what you do either as a consumer, or as a business the banks have their hand in your pocket every step of the way.

Reason #2 - All those BILLIONS of dollars in write downs last year? ... Most will be reversed. Now that FASB/SEC is rethinking a more reasonable method for banks to Mark then Mark to Market, MOST of the previous write downs will materialize in the next few years as "write ups".

Reason #3 - Geithner "et al" have outlined a plan to get all of those toxic assets off the books of banks. Having traded markets professionally for 15 years, I believe this is tantamont to "sell on news" ... in other words, banks will rally at least all the way up till they actually rid themselves of these toxins.

Reason #4 - Forget the 10-20% of toxic bank assets and focus on the 80-90% of the GOOD ones... THINK for a moment... rats have NEVER been lower. Think you will not refi your existing mortgage, or loan? This is REAL $$$$ right in the bank's pockets!

Reason #5 - The Gov't has already spent over a TRILLION dollars, and will be spending TRILLIONS more... What sector (*hint it's investment banking) do you think will have it's hand deep into this stimulas?

Reason #6 - Expectations, think about it everyone is tuned to believe the banks will never ever earn another dime. This thinking could not be farther from the truth.

Reason #7 - Fatter then Oprah, One would think that the banks represented the epidimy of 'layoffs' but go into any bank branch and you will see that there are at least 3 customer servive reps available for every banking customer in line (what line?)! There is TREMENDOUS headcount that still will and can be cut at banks.

Reason #8 - Take reason #7 one step we really need our bank to have a branch on every corner?? Expect to see many banks close many branches over the next few years (we still have over 85k + banks in the US, and we likely need not even half that number).

Reason #9 - Now that the market is closer to showing that a likely bottom has been put in, expect to see an uptick in corporate M&A's - Investment banking fees anyone?

Reason #10 - DON'T FIGHT THE FED!!! I know this last one is cliche, but really think about it... Money has never been cheaper, and the fed will continue to do everything in it's power to reflate... No industry benifits more from cheap money than the banking sector.

So does this mean straight up? No, obviously after I have made 150% being long FAS (Banks up an average 50%) a pullback would be expected. A good entry point now might be to start looking (entering) from a 50% replacement of today's move...perhaps low 9's for XLF or 7ish for aggresive FAS traders ( Look at the bigger picture though, and there is NO other asset class poised to move higher (percentage wise) from here than the banks. If I am wrong and the banks make a new low? ... God help us all.

Think I am off my Ghord? No Clue? Bring it...Leave YOUR comment or shoutout to me on Twitter:


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Friday, March 20, 2009

Twitter (and Twitter Businesses) BE VERY AFRAID!

I was shocked to read about a Harvard Economist's study recently (Article is actually a hoax but read on - ). The study implies that the downturn in the economy is DIRECTLY correlated to a drop in productivity and tied directly to increased use of Twitter by people in the workforce.

While I completely laugh at this notion, if you have a vested financial interest in Twitter (either as an investor in Twitter, or perhaps you have/or are building a business based on the Twitter API), you need to know the history of Pointcast.

I first saw (used) Pointcast in 1996 and was blown away by it (as were most everyone else). Pointcast was a screensaver that "broadcast" news of interest to you into the screensaver. In 1997 Pointcast was all the rage. It's ubiquotous popularity reminded me of exactly the popularity and attention that Twitter is recieving now. Pointcast was gaining in numbers and popularity so quickly in fact that New Corp. very quickly made an unheard of (at the time) offer at that time of almost a half billion dollars to acquire Pointcast.

Fast forward a scant 2 months latter, and Pointcast is making headlines everywhere. Not because the service it offers is so cool - but because of all the corporate bandwidth (at the time bandwidth was both expensive and precious) the application was using. One by one until there was a groundswell, network admins. started blocking access to Pointcast. In short order the majority of corporate America had blocked access, and usage fell off a cliff. News Corp subsequently withdrew their offer, and Pointcast got sold on the cheap...going out on a wimper.

So for those whose financial lives depend on the aware, and never let go the lessons of history.

(BTW - I do not think Twitter and other social networks will be banned behind the firewall - but one should always be aware of risks that come out of nowhere)

Let me know what YOU think - You can find me on Twitter here.

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Saturday, March 14, 2009

Twitter - it's NOT "What you are doing?"

I have said in much earlier posts that Twitter needs to do a better job of explaining themselves better to new users. I recently saw a stat that as many as 68% who sign up (or visit) Twitter never come back. And recently as this morning I saw an CNN anchor poking fun (she didn't understand WHY anyone would want to know that you just choked or coughed while having lunch).

Twitter at some point in the past few months must have read one of my older blog posts - and subsequently, they posted a video on their home page to explain how Twitter works for new


Though this is a good first effort, they should realize that the TRUE value of Twitter is not always asking or answering "What are you doing?". While anyone is certainly free to use Twitter how they want - I can not help but think that for me the better Q&A is "What do I find interesting" or "What do other people in my 'trust' network find interesting?"

There is a key difference between the two, and though I welcome both, I tend to 'filter' out the noise. Once you build your Twitter network you will find that it becomes an invaluable source and wealth of information.

Using my own network as an example of this - I follow other people within my range of interests (Entrepreneurs , Marketing , Venture Capital , and Phoenix Arizona (since I now live here). How has Twitter helped me?

Using Twitter, I immediately know of almost every industry, or conference event. When I can not attend them, people I follow usually do - and do a fantastic job of "micro-casting" the event. It is almost as good as being there.

Using Twitter, I actually feel like I know people here in Phoenix. I have only attended a few network events - but there are MANY TWEETUPS and if you ever get the opportunity to attend, you will likely find as I have that 'face to face' the same people you have been tweeting with are just like friends you might have made using other methods in the past (i.e. childhood friends,school friends,etc).

Brands on Twitter are only beginning to scratch the surface of how they can use Twitter. If formally they marketed by sending out a press release - their new press release will be TWO WAY, VIRAL, and interactive.

Small business likely has the largest opportunity of all to leverage Twitter - and this will be the focus of my next post... You can be *alerted* when I blog next by following me on Twitter

Friday, March 13, 2009

Tricks to finding employment

Everyone who is, or has looked for a job (especially in this tuff economy) already knows job sites ... i.e. craigslist , Hotjobs , Monster , Careerbuilders , etc (Indeed is the best).

If Twitter is one of the tools you are using, you likely already know some of the key players there i.e. - @employerbrander @jobangels @jobshouts @ @jobhuntorg @jobsnob etc.

So These three tips will hopefully be an "extra" that you might not have thought of in your job search.

Tip ONE:

A picture really does say a thousand words, and most recruiters and HR people now days will LOOK at your online profiles - even if they request a resume. Consider spending a few dollars to have head shots taken professionally. If you can not afford professional head shots you at least need to make certain that in one of your online profiles (i.e. LinkedIN or Twitter) you look not only well groomed and professional but MOST importantly SMILE. I see a lot of online profile pictures that even though the intent might have been to look serious and professional - appeared to look "glum". NO ONE wants to hire a downer...even if you're feeling down about your employment situation make CERTAIN YOU DO NOT SHOW IT!

Tip TWO:

The early bird gets the worm. Here is a clever method to locate businesses that WILL be hiring BEFORE THEY EVEN POST THE POSITION!! Every city should have a business paper, or magazine (Here in Phoenix Arizona they have "Arizona Business") with all the listings of new business incarcerations as well as newly leased commercial space. [ I am certain there must be online services that provide this-if you know of any PLEASE leave the link in my comments section] These listings provide an excellent source of both newly forming businesses and businesses that are opening up new locations - or perhaps expanding. This will usually give you a multi-month lead time over other job seekers. Once you "filter" which businesses might be relevant to your experience put it to work using the next tip.


I am a hunter by nature (having worked as a stock broker for 15 years) and now with the advent of the Internet you have NO EXCUSE for not being able to locate a company insider. When all else fails try out Jigsaw (An online repository of business cards that you can search via location/title/company/etc) a "pay per business card" website.

Do not just hunt for "HR" people - but search within those companies for your peers as well. So as an example, if you are in sales - hunt down not only other sales persons - but the sales manager as well. Once you have located some goto guys - use the next tip.


When I actively searched for a job, I would send out as many as 20 cover letters, resumes or introductions daily - ALL BY EMAIL. There is a better way. First thing you should do with those "goto guys" you earlier located is to search for them on the various social networks. LinkedIN is the best resource, however Twitter and Facebook can also work. LOOK and SEE if you have any common friends - after all NOTHING works better than being personally introduced when it comes to getting an interview.

Even if you do not find an "introducer", take note of their personal info (ie. there interests and hobbies) and see if you can find a commonality there. Once you have taken these steps consider the next (and last) tip.


Remember earlier I mentioned I had sent out all my introductions and cover letters via email. That is ok, however please consider that for every position available there are likely HUNDREDS of others that are sending their resumes via email. Think about that...the odds are stacked against you right from the start. DO NOT BE AFRAID TO GET ON THE PHONE AND CALL THEM HUMAN TO HUMAN. I know that may sound strange, but many will appreciate that you made the extra effort to call. Especially if you are in a sales related position (many are) - they will appreciate that you are not afraid of the phone.

Good luck to all of you - I have been unemployed and it is not fun, and this time it is likely more difficult than ever. You will need to do EVERYTHING you can to get an edge.

PS - Don't forget to say "Hi" to me on Twitter.

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Tuesday, March 03, 2009

The WallStrip Edge - Book review

If Investors Business Daily's William O'neal (famous Momentum Investor) & Warren Buffet ("Buy what you know") had a bastard child - It would be Howard Lindzon.

In this blog post, the simplest of summaries, this is Howard Lindzon's secret to successful investing in his recently published book - The Wallstrip edge - Using Trends to Make Money- Find Them, Ride Them, and Get Off.

The Wallstrip Edge is only the second investment book I have ever read. I found it comforting that the one book that Howard Lindzon highlights in his book is that one investment book that I had read (I read it immediately upon receiving my Series 7 right before the crash of 1987). Reminiscenses of a Stock Operator The Jesse Livermore story penned back in the 1920's and also a MUST READ.

The Wallstrip Edge explains the how and why to;

1) Identify a trend that you are PERSONALLY familiar with (examples include Google,Apple,etc).

2) Wait till the underlying stock price makes an all time high - only THEN get on board.

3) Ignore valuation - (Howard makes an excellent and compelling commentary of why valuation does not and SHOULD not matter) and instead "ride the trend".

This is the formula Howard uses that enables him to find those rare winners that are able to move THOUSANDS of percent. The book goes on to explain his method for exiting a stock (gradually selling into the strength over time so as not to be a *pig*).

The only points in Howard Lindzon's book I did not personally agree with were his opinion that investors should not "short" stocks (downtrends are trends after all). I also do not share his view of not using technical analysis. But it is refreshing to learn that Howard Lindzon is part of a *new* breed of investors - not because of his investment philosophy but because of his real time transparency via Stocktwits. If you have been able to utilize Howard Lindzon & Soren Macbeth's excellent Stocktwits - you will see that the REAL Howard Lindzon trades both long and short. He also shows that his natural instincts for entering and exiting stocks is superb. This is something that can ONLY be learned from experience- It is an "art", not a science and it is here that Howard Lindzon shows that he is a true artist.

I highly recommend this book to anyone who has any vested interest in successful investing. Everything that Howard Lindzon explains in his book just makes sense.

Let me know what you thought of the book - "@" me on Twitter

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