Both Wall Street and Main Street are appauled about yesterday's Op-Ed piece by then little known Goldmanite Greg Smith. For those of you living under a rock, Mr. Smith shockingly suggested that Goldman did not have their clients' best interst at heart and that Goldman looked to profit at the expense of their clients. Mr. Smith states that "not one single minute is spent helping clients. It's purely about how we can make the most money off of them."
Could that really be true? You mean to tell me in today's world that someone selling a product may or may not believe in that particular product? And that product could not only not help but also hurt the intended target? And of all places on Wall Street? At Goldman Sachs?
I worked at a hedge fund for seven years and I never relied on help from a salesman. We did our own research on the ideas that we generated. If we were pitched an idea from a broker like Goldman then it was our job to do due diligence on that idea. We knew that they never worked for us but were a competitor.
This bring me back to my earler question. Why are we so surprised? As consumers, are we never persudaed to buy something that we do not really need or want? Or sold something that isn't what we expected?
Let us start with good old-fashioned real estate. Take that junior four with river views and call it a small one bedroom with just a sliver of a river but broad views of the alleyway. Does your real estate broker have your best interest at heart? Does the apartment's seller?
What about that Prada shirt you bought for $300.00. the salesperson told you that you looked great but when you got home you thoguht you looked fat? It isn't the mirror.
The strawberries you bought on tuesday that the guy at the fruit stand swore would be good until Friday went rotten Tuesday night. But he told me they would last until Friday? Maybe he was wrong. Nope.
He knew they would rot overnight. Just like Goldman knew that the Abacus deal would go rotten (it would take a week or so longer than the strawberries). This is simply a side effect of capitalist greed. Buyers beware. HF93 always was.
Thursday, March 15, 2012
Monday, November 28, 2011
pulling the wool over my eyes
I don't go to the eye doctor often. I usually go when I run out of contacts and I need a new prescription. So I usually get my new prescription and order three times the amount that I need from an outside vendor, ensuring that I won't have to come back for some time.
The visit started out fine, testing for the usual things like corneas and retinas (I still don't know which is which). I told the doctor that I was here because I had run out of contacts and that I needed a prescription to order more. She asked me when I dispose of them and I told her I kept them usually a week or so longer than was suggested by the manufacturer. It took a turn when she told me that she wanted to fit me for new contacts because the old ones were killing cells in my eyes. Killing cells? I must have cancer I thought. How can cells be dying in my eyes? She said that because I left the contacts in too long I was doing damage to my eyes. The same contacts that were prescribed to me by this office only a year or so ago. Ok I thought to myself. This sounds dangerous. I will get fitted for new contacts or risk my eyes falling out of their sockets.
I was approached by the "contact fitter" who walked me into the waiting room so there were enough people around that I couldn't hear her too well. She spoke swiftly about a co-pay ans circled some things on a sheet, including some arrows to make it look very legit. My eyes had been dilated not too long before so I really couldn't see a thing. What gave it away for me was the manner in which she was selling me. Wait. It wasn't so much as a sales pitch but an order to do this. She mumbled something about a fitting fee but nowhere was I able to see fitting fee on the page ( I had pasted the paper on my face to compensate for the dilation). I told her that i was confused and to tell me what I would be in for. She said it would be $300 for a "fitting fee". Ahhhhhh. There it was. The bait and switch. I asked her if I could have my old contact prescription (no fee) and she told me I couldn't because it was too dangerous. Amaaaazing. So I am forced to pay $300 for the prescription for my contacts (in addition to the actual contacts) or go elsewhere and encounter other "fitting fees". Have these doctors been forced to do this because of their deteriorating relationships with Medicare, Medicaid or Major Medical? Why would a licensed professional be trained to do this? This wasn't some TBTF (too big too fail) bank slapping me with additional fees because their investment banking business has gone away, right?
How is this different from a mechanic who tells you that you need a new Johnson Rod immediately or your car won't make it out of the repair shop? This is blatant stealing and industry coercion and I'm sure I'm not the first victim. I will file a complaint and call the Better Business Bureau but in the end she is a professional and I am just an irate consumer.
Hold on some will say. She is trying to help you. She is a doctor with plaques and diplomas plastered all over the walls of her office. You are being paranoid, little mag. To all of you who think this, you are wrong.
What she is trying to do is bill me for something I don't need, generating revenues for her practice and hoping to one day get tenure and some sort of partnership so she can have younger doctors who need a job prey on people who have $300 to spend on "fitting fees".
In the meantime, does anyone know where I can find Rec-Spec sport goggles?
The visit started out fine, testing for the usual things like corneas and retinas (I still don't know which is which). I told the doctor that I was here because I had run out of contacts and that I needed a prescription to order more. She asked me when I dispose of them and I told her I kept them usually a week or so longer than was suggested by the manufacturer. It took a turn when she told me that she wanted to fit me for new contacts because the old ones were killing cells in my eyes. Killing cells? I must have cancer I thought. How can cells be dying in my eyes? She said that because I left the contacts in too long I was doing damage to my eyes. The same contacts that were prescribed to me by this office only a year or so ago. Ok I thought to myself. This sounds dangerous. I will get fitted for new contacts or risk my eyes falling out of their sockets.
I was approached by the "contact fitter" who walked me into the waiting room so there were enough people around that I couldn't hear her too well. She spoke swiftly about a co-pay ans circled some things on a sheet, including some arrows to make it look very legit. My eyes had been dilated not too long before so I really couldn't see a thing. What gave it away for me was the manner in which she was selling me. Wait. It wasn't so much as a sales pitch but an order to do this. She mumbled something about a fitting fee but nowhere was I able to see fitting fee on the page ( I had pasted the paper on my face to compensate for the dilation). I told her that i was confused and to tell me what I would be in for. She said it would be $300 for a "fitting fee". Ahhhhhh. There it was. The bait and switch. I asked her if I could have my old contact prescription (no fee) and she told me I couldn't because it was too dangerous. Amaaaazing. So I am forced to pay $300 for the prescription for my contacts (in addition to the actual contacts) or go elsewhere and encounter other "fitting fees". Have these doctors been forced to do this because of their deteriorating relationships with Medicare, Medicaid or Major Medical? Why would a licensed professional be trained to do this? This wasn't some TBTF (too big too fail) bank slapping me with additional fees because their investment banking business has gone away, right?
How is this different from a mechanic who tells you that you need a new Johnson Rod immediately or your car won't make it out of the repair shop? This is blatant stealing and industry coercion and I'm sure I'm not the first victim. I will file a complaint and call the Better Business Bureau but in the end she is a professional and I am just an irate consumer.
Hold on some will say. She is trying to help you. She is a doctor with plaques and diplomas plastered all over the walls of her office. You are being paranoid, little mag. To all of you who think this, you are wrong.
What she is trying to do is bill me for something I don't need, generating revenues for her practice and hoping to one day get tenure and some sort of partnership so she can have younger doctors who need a job prey on people who have $300 to spend on "fitting fees".
In the meantime, does anyone know where I can find Rec-Spec sport goggles?
Monday, September 26, 2011
nice job Art!!
Indices were up 2-3% across the board but the financials (the stocks that all the mutual funds overown) were up as much as 5-10%!! That must have been some good news out of the EU last night right?
Art Cashin is aware of the quarter-end mark!! Congrats Art!!
from CNBC
Mon Sept 26, 2011
Stocks could be in for very choppy trading on Friday following the heavy sell-off in the previous session, but get ready for a “massive rally” sometime next week, said Art Cashin, director of floor operations at UBS Financial Services.
Art doesn't give much of a reason but I'm guessing he glanced at a calendar in the last day or two.
Mon Sept 26, 2011
Stocks could be in for very choppy trading on Friday following the heavy sell-off in the previous session, but get ready for a “massive rally” sometime next week, said Art Cashin, director of floor operations at UBS Financial Services.
Art doesn't give much of a reason but I'm guessing he glanced at a calendar in the last day or two.
Friday, September 2, 2011
The Mark
It's always very funny to me that the last few days of the month the big, bad mutual funds will "window dress" their positions, and along with it, the broader market. Window dressing is adding to positions at the end of a marking period (ie: month, quarter or year end). Mutual funds will add to, oftentimes aggressively, their biggest positions, and in doing so improve their performance for the current period. If they want to sell an existing position they will sometimes wait until the beginning of the month so as not to negatively affect their performance numbers.
Window dressing is also known as marking up positions. And the more important the marking period (year-end is more important the quarter-end etc.) the worse the window dressing is and the higher these stocks will move into the end of the period. The real problem with marking positions is that the whole market will move with it for three or four days and will then typically drop back to where it was before the mark at the beginning of the new period.
Take the end of August for example. The S&P was up roughly 3% for the last three days of what was a poor month, only to give it all back and then some on the first two days of September. I am aware of the poor economic data that we g, bot today, but the market would have found a reason to go down with or without it because all the demand for stocks had dried up.
I respect the mark for what it is: pure market manipulation. A very smart trader who runs a large Connecticut hedge fund once told me to "never fade the mark". This simply means that the market will go up and go up violently and that you should not try to be on the wrong side of it during this period. If I am long I will take advantage of the mark by selling my longs into it. If I get caught short into the mark I will slowly try and get shorter into it. Just keep in mind that the mark may be longer or stronger than you think.
Window dressing is also known as marking up positions. And the more important the marking period (year-end is more important the quarter-end etc.) the worse the window dressing is and the higher these stocks will move into the end of the period. The real problem with marking positions is that the whole market will move with it for three or four days and will then typically drop back to where it was before the mark at the beginning of the new period.
Take the end of August for example. The S&P was up roughly 3% for the last three days of what was a poor month, only to give it all back and then some on the first two days of September. I am aware of the poor economic data that we g, bot today, but the market would have found a reason to go down with or without it because all the demand for stocks had dried up.
I respect the mark for what it is: pure market manipulation. A very smart trader who runs a large Connecticut hedge fund once told me to "never fade the mark". This simply means that the market will go up and go up violently and that you should not try to be on the wrong side of it during this period. If I am long I will take advantage of the mark by selling my longs into it. If I get caught short into the mark I will slowly try and get shorter into it. Just keep in mind that the mark may be longer or stronger than you think.
Sunday, August 28, 2011
Buffett's op-ed piece
This is the first piece I'm writing and I wanted to give a little bit of background information. I am a trader and I have worked on Wall Street for some time now. I have a lot to say on a variety of topics but this blog will mainly focus on Wall Street and its extracurricular activities. I welcome any and all feedback and while I am opinionated, I also hope that I will be open-minded to hearing other thoughtful opinions.
About two weeks ago, Warren Buffet wrote an op-ed piece in the New York Times voicing his opinion on the debt and his tax-the-ultra-wealthy strategy on helping reduce the debt. He claims that while he paid roughly seventeen percent on his income taxes, his employees (who generally make far less than he does) paid between thirty-three and forty-one percent. He didn't offer any details, however, he wants to raise the rate of those making more than $1 million and raise the rate further on those making in excess of $10 million.
Now Warren has been a proponent of higher taxes on the wealthy for some time. This isn't anything new. What is new is that there has been a recent investigation of Berkshire Hathaway and one of its employees, David Sokol, regarding potential insider trading activity ahead of a Berkshire Hathaway takeover of Lubrizol, a chemical manufacturer.
To be clear, I see nothing wrong with what Mr. Sokol did. He believed Lubrizol was a good investment and he was willing to put his money where his mouth was. He brought the deal to Mr. Buffett and he too thought the stock was a good investment and decided to buy the comany. Now I'm not sure if Sokol disclosed his position to Buffett at the time but to me it doesn't matter. If he didn't buy Lubrizol, someone else would have. If Sokol knew about the takeover and then transacted he may have a problem on his hands. But he didn't.
The real reason Warren Buffett wrote that piece was to stave off the government's investigation into whether he knew of any wrongdoing related to the Lubrizol transaction. Whether or not he is successful is yet to be seen. If history proves correct, he most likely will be.
About two weeks ago, Warren Buffet wrote an op-ed piece in the New York Times voicing his opinion on the debt and his tax-the-ultra-wealthy strategy on helping reduce the debt. He claims that while he paid roughly seventeen percent on his income taxes, his employees (who generally make far less than he does) paid between thirty-three and forty-one percent. He didn't offer any details, however, he wants to raise the rate of those making more than $1 million and raise the rate further on those making in excess of $10 million.
Now Warren has been a proponent of higher taxes on the wealthy for some time. This isn't anything new. What is new is that there has been a recent investigation of Berkshire Hathaway and one of its employees, David Sokol, regarding potential insider trading activity ahead of a Berkshire Hathaway takeover of Lubrizol, a chemical manufacturer.
To be clear, I see nothing wrong with what Mr. Sokol did. He believed Lubrizol was a good investment and he was willing to put his money where his mouth was. He brought the deal to Mr. Buffett and he too thought the stock was a good investment and decided to buy the comany. Now I'm not sure if Sokol disclosed his position to Buffett at the time but to me it doesn't matter. If he didn't buy Lubrizol, someone else would have. If Sokol knew about the takeover and then transacted he may have a problem on his hands. But he didn't.
The real reason Warren Buffett wrote that piece was to stave off the government's investigation into whether he knew of any wrongdoing related to the Lubrizol transaction. Whether or not he is successful is yet to be seen. If history proves correct, he most likely will be.
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