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Category Archives: Financials

Summary of the first week

Ferrari F430 How Sweet!


I have always wondered what it is like to being a trader. As my first week comes to an end, I don’t own a Ferrari or a huge mansion. Is that not what Wall Street is? My first week has given me great exposure to the business and what a difficult one it is. There is a lot of pain that comes along with this job. You have to be able to stomach huge losses, but also not be greedy when things swing in your favor. I also learned that being prepared helps tremendously. The energy on the desk really gets you going and excited to be here.

I also realized that although I am a trader, there are other tasks that need to be done to help the business. The concept behind this site is truly remarkable.  Some may say I am drinking the “kool aid”, but in all honestly, think about it- a fully transparent hedge fund, really? One of the biggest complaints about hedge funds is, how do I know what they are doing?   Is this another Madoff scheme?  What are they investing in?  Well folks, here you have it! On top of that, the content that we can provide to viewers can help investors be successful traders from home.

There is still a lot for me to learn, but I am excited and can’t wait to share my success with you and hear about yours.

Have a  Great Weekend!

-Justin Valle

Short TAO

Here are some of the reasons why i want to short the ETF TAO.

This is an etf that tracks shanghai and hong kong real estate market. Having personally spoken to many people who were looking for homes in shanghai (during my visit there), I got a sense of how much pressure the younger population is under to buy a home.

The philosophy for a young man is, if you don’t own a house you can’t marry my daughter.  This puts a lot of unduly pressure on younger men. The shanghai real estate market is artificially inflated and will come down. With china trying to curb housing prices, its trying to change real estate policy. It has increased its down payment needed for a second home from 40% to 50%.  The government is also bidding to increase land supply in an effort to drive down house prices. Also something curious - “mai fang” (buy home) has risen 33 percent recently adding to the bubble….

NASDAQ Hacked!

It has being reported that some hackers have made it into the NASDAQ network which runs the stock market. But nothing to be alarmed they never got to the actual execution part of the system. For usual broker and trader this is quite upsetting news but after working with these types of systems for over 2 years I would say it isn’t too much to worry about.

Most exchanges run on piece of software that is quite unique to its own execution algorithms. Furthermore their gateway to the outside world is defined by a particular protocol such as FIX or ITCH or any other proprietary methods. So even if the hacker do reach in through the firewall and into the system, in order to create a real trading impact they have to talk in the particular protocol which is only limited to the trading activities. You may argue that they could shut down the system but most system run on Unix or Tandem machines so this is not too easy to deal with.  What about listening to the wire transmission and getting information? Well then you need to understand the execution logic and build up the order book by yourself. So this won’t be a simple smash and grab at all. Therefore I am not surprised that the hackers just went in to show that they could break in not because they could make some money.

New Sizzle Reel with Jeremy Frommer in ‘Risky Money’

“Risky Money” Sizzle Reel



Stocks are UP…

Toronto-Dominion Bank agreed Tuesday to buy Chrysler Financial, the automaker’s old lending arm, from private equity firm Cerberus Capital Management LP for $6.3 billion. Dutch chemicals company Royal DSM NV also says it plans to buy US biotech firm Martek Biosciences Corp. for $1.09 billion in cash.

lots of deals fuel rise in early market trading…

Stocks Going UP

For a good laugh… Have a great weekend!

‘Risky Money’ Sizzle Reel


In a Trade When News Breaks

Our portfolio was max positioned (over 10mm) in the late afternoon yesterday, heavily long, when Mary Schapiro (SEC) dropped the Magnatar/JPM  bomb.  The market went into a strong decline, and we were forced to watch as they sold our financials names indiscriminately.

What does a trader do in that situation?  I looked for the financial names that were the strongest before the news broke.  Bank Of America stuck out.  Then I thought, what is their exposure to this situation?  Certainly names like Morgan Stanley can be sought after for the same practice.  But BAC  just went through their own turmoil, and after 2 weeks, I expect the market has digested all info regarding BAC and its going to trade at the efficient market price.  Which earlier in the day was up.  Therefore I waited for the down move in BAC to slow down and then bought more than 25,000 shares.  The name rallied over 12 cents, and this morning is trading up 8 cents pre-market.  While I will sell a little into this strength early, I look forward to bidding pullbacks.


Run Over by the Proverbial Freight Train

That’s what happened to me yesterday as I was betting hard on a continued rally in the financials.  All was going well for most of the day as I added to my BAC and JPM positions in the morning as much lower prices.  However, when the wires released the fact that PIMCO, Blackrock, and the NY Fed sent a letter to BAC requesting the buyback of $47bln worth of mortgage bonds that BAC was the seller of citing faulty servicing on the loans.  This is being viewed, correctly I would assume, as the first step in a chain of events that will culminate in the filing of a lawsuit by the same parties to force BAC to buyback those loans.  Regardless of the fact that this news was out in the market a day or two before, and was also talked about on BAC’s earnings call that morning, it still managed to crater the stocks, and my P&L, in a matter of minutes.

What a great gig, you buy bonds from BAC many years ago, supposedly doing the due diligence that is required in committing such a large sum of money, the bonds go south for a number of reasons, the most glaring of which is that the credit quality of the borrowers was no where near strong enough to withstand a cratering economy.  You end up losing boatloads of money on the bonds and instead of just taking it like a man, try to get the bank that sold you the bonds to buy them back at par.  I guess that is the American way but it still disgusts me that people, from all stations of life in this country do not seem to view taking responsibility for their actions as a principle to lead their lives by.