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Good Thing We Weren’t ‘Insiders’

3 comments

Sometimes we’re blessed not to possess insider information. Several pointed examples surfaced in the last few days. If we had known, for instance, that Fed Chairman Powell would tell the world on Wednesday that the U.S. economy is holding steady as a rock and that no changes are contemplated in monetary policy, we’d have jumped on call options a day earlier. Lo, the Dow began a 500-point plunge the moment he began to speak, turning our would-be call options into dross. Go figure.

And then there was Yeti, a terrific young company based in Austin, TX, that makes some of the best cooler chests and thermoses we’ve ever owned. On Thursday they announced their first profitable quarter, reflecting a swing from $3.3 million in losses a year ago to a $2.2 million profit in Q1. The results beat analysts forecasts, and yet the stock got sacked, down nearly 10% intraday and fully 18% from a 36.60 peak recorded earlier in the week. Can you imagine how you might have reacted if someone had whispered in your ear a week ago that Yeti was going to report its best quarter ever.  The May 35 calls were trading for around 2.50 at the time and would have seemed an easy bet to double. Instead, they lost more than 99% of their value, trading down to 0.02 before day’s end.

TSLA Rallies, But Why?

Finally there was Tesla, which announced it would try to raise $2.3 billion by selling stocks and bonds. Founder Musk had insisted earlier that money-raising would not be necessary, but he changed his tune after the company reported one of its worst quarterly losses in history. Sell the stock short just ahead of the news? Not on your life. The stock was up as much as $16 on Thursday, acting as though the company, glutted with spare cash, had announced a share buyback.

Buy the rumor, sell the news, as the old saying goes. Next time someone has a hot tip, tell him to get lost. It’s not facts and figures that move stocks one way or the other, but how the information is perceived by investors. Sometimes, it would seem, they are a lot stupider than we might imagine.

Please do not ask trading questions!

Leave a Comment

  • John Jay May 3, 2019, 11:00 am

    With my misanthropic view of humanity, I watched as TSLA danced around the $232 price which rumor had it was the trigger for a fatal margin call for Elon.
    LOL!
    Once it was clear the SEC was told to give Elon a pass on his stock boosting tweets and Al Capone accounting, the stock recovered!
    Hmmmmm…………….
    How many TSLA stock options were handed out in DC I wonder?

    Just goes to show you…………..
    If you are a mom and pop orchid importing business and make a paperwork error, DC sends Reinhard Heydrich to kick in your front door at 2 AM, and ruin your life and your business!
    If you are Elon Musk, or Jeff Bezos, they send Colonel Klink and Sergeant Schultz, who of course “SEC nothing, nothing!”

    They don’t even pretend to be enforcing the law anymore, and Jeff and Elon don’t even pretend they are afraid of DC!
    All the pieces fit!
    Banana Republic for sure!
    LOL!

    Reply
  • Pan May 3, 2019, 12:34 am

    And this is why the patterns can never be wrong nor held up to scrutiny. If the ones so carefully considered, posted and explained in detail fail, well we just pull out these instead ?!

    ” I mentioned this target earlier but did not drum-roll it because I did not want to queer its usefulness as a place to get short. ”

    Rick can never be wrong : )

    &&&&&&

    No, I meant that literally: Hubris kills targets that would otherwise work perfectly. As far as my never being wrong, by all means please visit the Rick’s Picks trading room and inquire for yourself how often these targets work. I am not talking about kinda sorta working, either, I mean routinely nailing swing highs and lows within a dime. RA

    Reply
  • none May 2, 2019, 8:07 pm

    Just maybe something is not right or as great as so many think!

    Timing…how about this!

    Gainbridge TV Commercial, ‘Tulips’

    https://www.ispot.tv/ad/IzCR/gainbridge-tulips

    Gainbridge | Protect and grow your savings | gainbridge.life‎

    The bold way to steady growth. Buy High Rate Annuities direct in minutes. Buy Direct. Guaranteed High Rates. Deferred Annuity. Immediate Annuity. Highlights: An Online Annuity And Life Insurance Agency, We Offer Effective Products, We Offer Intuitive Tools And Services.

    Tulip Mania Sweeps 17th Century Netherlands in Spot for Gainbridge
    The Corner Shop’s Peter Thwaites takes viewers back in time in ad created by Bullish
    New York agency Bullish and director Peter Thwaites at The Corner Shop teamed up with financial service platform Gainbridge for their latest campaign.

    The film transports viewers to the height of the 17th century tulip mania in the Netherlands – the very first financial bubble in history that saw the price of tulips and bulbs rise to ridiculously high prices.

    Gainbridge is a simpler, faster and more transparent way to invest with no hidden fees, so what better way to illustrate its value than by telling the story of the very first economic bubble.

    https://lbbonline.com/news/tulip-mania-sweeps-17th-century-netherlands-in-spot-for-gainbridge/

    Have a great weekend Rick!

    Reply


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