I gave a 50 minute speech to the Philadelphia Institute of Internal Auditors last Tuesday. I was probably more nervous about giving a speech to 600+ internal auditors than I was doing any national TV show. Out of my element, I guess. I talked about no amount of quantitative easing, targeted tax tricks, subsidies or 0% interest rates would instill confidence back into the market — having faith in publicly-reported numbers, in our brokers, and in the justice system is what will bring back confidence.
Remember a few months ago when I asked my readers if they believe that their money is safe at the stock broker or at their bank? The consensus was overwhelming that people, even those of us who still trade and invest in the stocks, have no faith in their brokers or their banks or the publicly-reported numbers of the companies they invest in.
How this applies to the markets can be looked at in two ways – when the mainstream public returns to the markets with faith, the markets and multiples and the economy itself will boom. Then again, if there’s another MF Global “We don’t know what happened to your guys’ money while we were gambling it in complex sovereign debt derivatives”-type of broker collapse (and there will be more broker collapses, just as there always are) in which customer capital is pilfered, who knows how many of us traders/investors will stick around.
Like most things in this economy, society and stock market, it’s a binary outcome to this dynamic of faith in the markets.
Two side notes. In the speech, I told the good and surprisingly fun internal auditor society that they can be the superheroes of our world if they’ll step up and force their bosses and their regulators to get back to transparent, simple, clean reporting. And I mean it, if you’re an auditor you can save the world.
And secondly, because it pertains to my own trading and investing psychology and therefore is germaine to the topic at hand, I had to cancel my trip to NYC, where I’d planned to spend Thanksgiving since it’s so close to Philly anyway. The day before I left, I had a panic attack about going back to the city that’d been so devastated by Sandy. I realized later that my PTSD from 9/11 when I was running for my life and for which I’ve started going to therapy for, was behind my panic attack. Meanwhile, I had already booked a room for me and my love to stay at the Waldorf-Astoria where I used to host my Fox show. And since one of my dear friends, who had been the person to give me my first job on Wall Street back in 1996 at Oppenheimer, was completely displaced from her home in the Rockaways, I transferred the room to her and her family. Two sentences from her thank you note stood out to me as I was writing this post –
Since the storm, I slept on a floor for about 2 weeks, then a couch, and now I am on a futon – I am not complaining at all, I am easy that way.
To be able to be at work in a NY minute – was beyond a treat.
How many people like my friend who make the stock market work, at least as well as it does work, are still scrambling, displaced, struggling just to find a place to get their families together, much less live a normal life? How much of the standard equipment, offices, and technologies behind the markets are still out of whack? How much of of a factor has all of that been as the markets have sold off in the last few weeks?
As always, as a human being, my first and foremost thought is about the safety and well-being of everybody affected by Sandy. And not going to NYC turned out to be a blessing for her and her family and I had a wonderful T-day at home with my family too.
But my job is to trade, invest and analyze and thus, these thoughts. Very few pundits and traders have blamed the post-election stock market collapse on Sandy’s aftermath and the direct impact it has had on the Wall Street system itself, rather focusing on Obama and earnings. Was Sandy a mini-Black Swan? And isn’t that all bullish for the end of year? Or not?
As for trading, we’ve had a huge run in our Apple and Facebook calls that we were scaling into at much lower prices. Remarkably, we were within just about a few basis points of the bottom on each at our last purchase. I’m going to trim another 1/10th of my Facebook calls, continuing to trim down the March $20-$22s. And I’m going to trim 1/10th of my Apple calls here with the stock up $70 from the lows where we scaled in.
Remember when Apple was at $700 and I pleaded with you guys to remember how painful a random sell-off can be so that you would trim some? That pain is still fresh in every AAPL-long’s mind and I think we can expect some more wild swings in AAPL for the next week or so at least.
Straightforward portfolio maintenance. Don’t let it lapse.
No other trades for me right now.