Sneaky Pete advertising....credit cards

I read the NYTimes editorial on credit cards this morning early just about the time I saw a new 'let us help solve your debt problems' on TV. 

The TV commercial isn't up on You Tube or I would link it.  But the core of the commercial wasn't one of those "we will negotiate you debt" but the thrust was advice to pay off those nasty credit cards and it reminded the audience that bankruptcy offers little protection....so it came to my brain that this could actually be a commercial sponsored by Visa and Mastercard.

Our household got rid of all its plastic 3 years ago and to tell you the truth our lifestyle doesn't need them.  We got into a thing with Providian Bank as they "adjusted" the due date causing us to be late 3 days although the check was mailed on time. Once 'late' our interest went from 5.9% to 28%, our credit limit dropped 3 grand and then as we carried a fairly good balance we were "over limit" so I said nuts, paid them, and melted the card.

The regulatory bill was given 15 months warning so they are trying everything under the sun to poke up the collection including I am fairly sure, fake TV commercials urging the consumer to pay off those nasty credit card people FIRST.

Do these companies really think we are that dumb?

Some Monday Morning Odds and Ends

After a Sunday shut in during awful storms on Long Island (two days worth actually), I was hammered constantly by sportscasters over and mis-use of the word legendary.  This a sore spot and pet peeve.

A legend is a story or collection of stories and according to the dictionary (not Wiki) but a real dictionary, "a nonhistorical or unverifiable story handed down by tradition from earlier times and popularly ( accepted as historical."  Simply urban fiction becomes tomorrow's fact.  A legend is just that....a story.  A lengendary running back is a much storied running back whose  story may not have much real fact in it.

In this day of blogging and 24 hour news, emails and  text messages we play a constant variation of the game of telephone, creating legends right and left.  Some are purposeful and others are just whole cloth.  Trouble is that truth is in short supply and usually so obscured by legend and spin that one can't find the the pony in the proverbial pile (but it must be in there somewhere).

What does this have to do with trading? A lot.  How to find the pearl in the oyster is a never ending challenge and actually the best traders are usually the best research scholars.  They are satisfied when they can sort out fact from legend.

I come away with one over riding observation as an historian.  The amount of fact that is around us is small but constant.  The amount of legend that clouds our field of view has never been greater.  The work needed to find fact from legend is in ration to fact:legend.

How now DOW..10,000 and percentages

My expertise is in advertising – certainly not trading. In that area we, very much like traders, live in a sea of numbers e.g., ratings, cpms (cost per thousands), shares, HUTs, PUTs…all that stuff that is so boring and so uncomplicated.




What we are pitched by the networks and cable nets etc., is percentage growths so we look at that very closely. For instance, ION Network showed perhaps a 15% growth year on year in the lower end of the adult 25-54 market. They pointed out that the major networks either stayed the same or dropped, particularly in the lower end, and at as much as 6%. So ION up 15% NBC down 5%...so it makes sense to buy into ION to catch the younger crowd. Right? Wrong.



Percentages, often quoted on the financial networks is horribly misleading and this little thread is to warn you to think about it before it influences.



The market hit 10,000 yesterday. The 5 year high is 14,000 and some and the 5 year low was about 6,600. (I just heard a pundit talk about the S&P up 50% or something this year so case in point).



The DOW is down about 29% from its high and up 50% from its low. It is the “up from it’s low” that makes the difference and is always the suspect number. It is easy to demonstrate. You have $100 and take a 10% loss. Now you are at $90. If you make a 10% gain you aren’t even, you are at $99 and have lost $1.



Percentage shifts that go up at the same rate they go down always give you less money or less of anything. Always. It is simple math. The guy who bought in at 14,000 and saw it go to 6,600 saw a 53% loss. Now the DOW is up 50% from the low and he is still 4,000 in the hole. See what I mean.

The silly season of "online pricing"

An associate of mine, Michael Kingsbury, who is head of sales here at Prism showed me a very interesting slide that he uses in powerpoint presentations. I call it the batteries not included slide and here it is:

The kicker to me is the keeping $25,000 sitting there if you buy just a little bit daily.  Why do they do that? (rhetorical) but if you have accounts that aren't long term buy and hold situations, why would anyone use these folks?