Month: January 2018

Should you listen to the talking heads on CNBC? Part One

Should you listen to the talking heads on CNBC?  Part One 

The simple answer is yes. Why? Because it’s free and  if they were your advisor they would be charging you some obscene fee. 

But you gotta be smart and realize that the interests of these guys are not aligned necessarily with your interests. 

First, the purpose of CNBC (or Bloomberg or Fox or MSNBC et al) is not to make you money, but to make money for themselves. I know, seems obvious right? But most of the time it seems like they have our best interest at heart.  They want all of us to make money.

Well, yes and no, they don’t really care as long as you come back again tomorrow. And the day after, and the day after that. They just want your attention, just like Facebook and just like Twitter. All of these media outlets can charge more money to advertisers if they have more eyeballs and more engagement with those eyeballs. Your eyeballs specifically. 

One way CNBC does this is they scare you. How many teases do you here for upcoming Fast Money segments where they say that have one analyst who sees something in the charts that could bring this rally to a screeching halt, that could take Bitcoin to zero. I’ll tell you how often. Daily. 

So you stay. You watch. Turns out it’s not so scary after all. But don’t miss an episode because you might miss that bell at the top of the market, or the sign that makes this or that definitive

Second, many of the guests aren’t necessarily there to help you either. Most of them are there to sell something and I think even the most upstanding and reliable of them would probably admit it. The ones that wouldn’t admit that, probably should be the most ignored. 

Sometimes what they are selling is just a bit of legitimacy and sometimes they are more overt about selling. For instance, just this week Kevin O’Leary closed his final trade on Fast Money Halftime by recommending small cap international stocks. He touted them throughout the show. Guess what his recommendation for this was? A Vanguard low fee international ETF? Nah, it was for $ONTL which is a fund THAT HE OWNS. Feels like advice, but is really just a selling platform. 

But on the other end of the scale is my favorite analyst, Josh Brown, who now works for Ritholz Wealth Management. He is pretty up front that he is a wealth manager but doesn’t push his service.  He is also absurdly honest about the market imploring us to calm down and shooting down theories and aphorisms as well as the fear mongers. If he is on FM Halftime I always try to listen to the first 20-30 minutes of the show. I wish they sent out a podcast of Halftime so I wouldn’t have to watch it on the DVR or live . . . .maybe that’s on purpose 

And then there are a few regulars on the evening Fast Money show. Guy Adami is there almost every day and I can’t quite figure that out. Same with Karen Finerman and Tim Seymour. Do these guys get paid? Anybody know? 

AlohaTrades is Back and wants to help you with trading!

I started this blog in late 2012 trying to use it to help sort my thoughts about my personal investing and trading. At that time I managed the great bulk of both my taxable and retirement accounts. In 2013 I had what I considered to be a phenomenal year, up about 45%. 

 I thought I was pretty smart, that maybe I had finally figured out how to make money. I was right and I was wrong. In the first quarter of 2014, using the same techniques, I lost about 30% putting my account back to where it was at the start of 2013. I had made a round trip. But I had really lost money as I had to pay taxes on good portion of my 2013 gains so I ended up 2014 with losses that I couldn’t deduct (other than $3K) and had to carry them forward. 

 I wasn’t sleeping well at night and many times during the day I would ruminate on my 30% loss. Losing felt far worse than what I would have predicted. I couldn’t remember how good making money felt. 

 So I made a change. I took most of my assets and placed them with Fidelity’s managed portfolio and carved out two accounts to trade options, one retirement account, and one taxable account. I also have a taxable account where I just buy and hold. No options trading. 

 These two accounts now comprise about 20% of the value of my retirement accounts and about 15% of the value of my taxable accounts. 

 Last year I made about 75% in the retirement account and about 35% in the taxable account. The managed accounts returned a bit under 19%. I pull cash out of the two active trader accounts twice a year and put them into managed accounts so that the trading accounts keep about the same dollar value going forward. 

 This has been a really good technique for me and the fact that they comprise a ever shrinking part of my assets frees me up to take risk. Simply put it has made trading fun for me again. I look forward to it every day and I sleep well every night. I haven’t lost any sleep on my positions for over 2 years, not one night. Gains feel good and losses sting, but its pretty equal now, not asymmetric. 

 So I’m here again, mostly for myself. I want to write some of this down to help me focus, but I also want to help others, particularly people like me, retired but looking for something stimulating and social. 

 So I invite you to join me. I’m going to build this site slowly and hope to eventually add an email newsletter. I’ll tell you waht I’m doing. I’ll tell you what has worked and what hasn’t. I want to critique some of the free content out there, particularly that promulgated by CNBC. I watch CNBC way more than I should but I have a much better relationship with them than I used to. I plan on talking about soon, maybe the next post. 

 Until then, good luck with your trading and investing! Aloha!