happy holidays

lots to be thankful for in 2006, lots to look forward to in 2007.

happy long holiday weekend.

DJIA 12,343.22

NASDAQ 2,401.18

SP500 1,410.76

upping the minimum

Looks like the mutual fund industry is getting their way:

From MarketWatch: "By a vote of 5 to 0, members of the Securities and Exchange Commission proposed increasing the minimum amount to buy into a hedge fund to $2.5 million -- excluding real estate holdings. It's the first change since 1982, when investors were told to have a $1 million net worth or a $200,000 annual income."

By passing this proposal, the SEC basically eliminated about 98% of the general public having the opportunity to invest in hedge funds (aka limited partnerships or private investment funds). The amount of financial savvy or the ability to sustain a blow to the portfolio does not change dramatically when upping the minimum from $1m to $2.5m. A buy-and-hold strategy in the wrong stocks (i.e. dot-bomb) is still going to drive the investor into the poor house, yet we haven't put in place limits on who can get an on-line account and buy stocks or what types of stocks they can buy (except for certain risky stocks on margin).

To the casual observer, the mutual fund industry appears to feel threatened by the exponential growth of hedge funds and with no slowing down in sight, the mutual fund industry probably considers the alternative asset industry a viable threat to take away future dollars (and therefore future earnings and profitability).

Yes, this sounds a bit 'conspiracy theorist' but it is interesting that this is the first major change since 1982, and with the recent natural gas implosions of several hedge funds, it might be better to look at the funds themselves and not at the type of investor that can participate.

Also, if the SEC is so concerned about protecting the little guy (of course, the 'little guy' has a few million bucks to help ease his pain) why doesn't the SEC show the same type of interest and compassion towards the institutional investors that have been flooding the hedge funds with cash. What about the poor little liberal arts college that invests a huge % of its endowment into Mother Rock or Amaranth? Or the union? or the teachers' retirement plan?

Maybe more attention towards the basic holdings and strategies of the funds themselves may be a better way to protect the investor. Would Amaranth have melted down so dramatically if there was a way to monitor the crazy positions that Brian Hunter was amassing in natty gas futures?

Enough of the rant. If the proposal passes, it will slow the fund inflows slightly as the 'common man' will find it harder to invest, but since the majority of funds flowing to hedge funds come from institutions, it shouldn't slow the growth of the industry.

In the big scope of things, it limits the private investor who has a pretty good size portfolio from having access to certain alternative assets and the outsized and/or non-correlated returns that those asset classes can provide. And ultimately that is not good for the investor.

Happy weekend.

DJIA 12,445.52

NASDAQ 2,457.20

SP500 1,427.09

WSW over...finally

the 6-part series on inHD is finally over and has been put out of its misery. Wall Street Warriors, the 'inside look' at the different careers and characters that make up the securities industry, specifically in NYC, has come to a conclusion. Several profiles were pretty good, but on the average, too much time was spent on the goofiest of all the people profiled, Timmy, the piece of work who runs a fund in his bathrobe and the blonde who meets with random managers. The part on the nymex guy and the sections that profiled Chimay were pretty good. All in all, the producers could have done a much better job by focusing on the the real players and not the wannabees.

Happy weekend.

DJIA 12,307.49

NASDAQ 2,437.36

SP500 1,409.84

weathering the storm

having always been a fan of Winslow Homer's work, this painting, Eight Bells, shows two men weathering the storm while at sea. Anyone who has traded or invested for any length of time may be able to relate to what they are feeling at that moment in time.

This painting hangs in the Addison Gallery of American Art at Phillips Academy in Andover, MA.

bidu breaking away

chart courtesy of bigcharts.com

baidu (BIDU) broke out today. After touching its 200 dma (please see earlier post re: 200 dmas) it has been on a tear, and the run continues.

good example of using 200 dma

chart courtesy of bigcharts.com

along with some fundamental analysis, technical analysis is an efficient way to identify and trade stocks. In addition to trend-following, the concepts of basic support and resistance and breakouts are simple yet tried-and-true patterns to identify possible candidates for long or short positions. The 200 dma is another great tool to use in conjunction with the other technical analysis one might use when picking entry and exit points. Note the 200 dma on KKD. It had traded below its 200 dma ever since the stock cratered from its high-flying days. The stock finally broke above its 200 dma in early 2006. Ever since then, the 200 dma has been a great source of support as the stock runs up, pulls back and sets higher lows as it continues to trade above its 200 dma. Someone once said that large institutions pay quite a bit of attention to the 200 dma line. Good to know what the big $ is paying attention to when you pick your entry or exit point.

trend folllowing video

nice excerpt of a speech Michael Covel gave in Asia regarding the trend-following strategy. Boiled down, the only thing one can trust is the closing price at the end of the day. Do not predict, wait for the buy or sell signals. If it's going up, go long. If it's going down, go short.

Happy weekend.

DJIA 12,194.13

NASDAQ 2,413.21

SP500 1,396.71

naz looking toppy?

Nice upward trend in the nasdaq comp for the last 5 months. Broke near term highs and now sits at the bottom of its upward trend channel. Will December be a nice way to finish off the year or a lump of coal in the stockings of the long-onlys...