My New Job At Benzinga!

For any of you who have noticed how professional and concise my posts have been lately, don’t worry: I have not matured in any way. I have merely gotten a new job as a financial writer at Benzinga! So far, it has been a great experience, and I look forward to contributing a lot of cool content to the Benzinga community. However, as with Motley Fool, I have certain writing itches that can only be scratched here on Trading Common Sense. For example, Benzinga does not care about my personal experiences or opinions; they want strictly unbiased information. That’s cool, Benzinga. I don’t care what you think either! And Benzinga also doesn’t like profanity or unprofessional terminology. But it’s not like my writing has any of that shit anyway.

So here’s how it’s gonna be: I will likely link and/or self-plagiarize anything I write on Benzinga here for the time being, but I will also continue to write exclusive content for Trading Common Sense when I feel like I need to rant about the stock market. Continue reading

Is There Any Hope Left for Fannie and Freddie Shareholders?

It has been a rough month for shareholders of Fannie Mae and Freddie Mac. Last week, a judge dismissed ten claims on behalf of Fannie and Freddie shareholders against the Federal Housing Finance Agency(FHFA). These claims asserted that the “net worth sweep” that funnels every cent that Fannie and Freddie earn into the government’s pocket was a violation of shareholders’ Fifth Amendment rights private property seizure by the government use without appropriate compensation.

The Fanny and Freddie story is a roller coaster that goes all the way back to pre-financial crisis days when the government-sponsored mortgage aggregators were earning a combined $8 billion in profits and shares of the two companies were flying high above $65 per share. But massive losses resulting from Fannie and Freddie’s guarantees on sub-prime mortgage-backed securities required the U.S. Treasury department to step in and provide over $187 billion in bailout money to keep them afloat. In exchange for this liquidity, the Treasury received warrants representing nearly 80 percent ownership of the two entities, as well as $1 billion in preferred shares that pay an annual dividend of 10 percent. Continue reading

Financial Crisis Bailouts: What They Actually Cost the Taxpayers

An ongoing trial about the AIG bailout has been grabbing a lot of headlines this week with high-profile witnesses such as former Treasury Secretaries Timothy Geithner and Hank Paulson and former Chairman of the Federal Reserve Ben Bernanke. There was nothing more polarizing back in 2008 than the Treasury Department’s financial bailouts of failing American companies. Supporters of the bailouts argued that the bailouts were necessary to prevent total economic collapse, while opponents of the bailouts argued that it was not the taxpayers’ responsibility to support failing companies.

Now, six years later, here is a breakdown of where all that bailout money went and how much of it has been returned to the taxpayer. Continue reading

When Should You Start to Worry About this Bull Market?

In light of the recent turbulence in the stock market, I thought today I could take a quick look at few key technical levels to be watching in the S&P 500, the Dow Jones Industrial Average, and some of the stocks I hold or have recently discussed.

First, let’s take a look at Apple:


Fort all the doom and gloom in the market lately, Apple has been holding up surprisingly well. For now, it looks to be getting some upward buying pressure every time it starts to approach $97.50. That might be an important level to keep an eye on if the market starts to go south in upcoming days. Continue reading

Wall Street’s Biggest Fear

There’s an old Bob Dylan song about the Cold War that has the chorus “Let me die in my footsteps before I go down under the ground.” Back in those days, many Americans’ biggest fear was nuclear annihilation, and fearful families built underground fallout shelters and lived in a constant state of paranoia about an imminent Soviet attack. But, as we all know, the worst-case scenario, the so-called “mutually assured destruction,” never happened.

I talk many times on Trading Common Sense and in my book about the importance of controlling emotions and maintaining a very stoical view of your stock portfolio. But I believe that fear is the hardest emotion of all to keep pinned down. We have such a deep-rooted, primal craving to stay safe that fear is an extremely gripping sensation. But there’s a particular type of fear that is the absolute worst kind. Continue reading

Recognizing Trends, Patterns, and Reversals in the Stock Market

There are a lot of people that are getting extremely nervous about the stock market lately, especially after the volatility from last week has already carried over to this week. While there’s no sure-fire way to know exactly when the market is making a reversal, there are ways to tell when it is breaking a pattern. But the first step in identifying a break in pattern is knowing how and where to look for a pattern. And yes, there will be charts today. I know how you all love charts.

In my book, Beating Wall Street with Common SenseI devote an entire chapter to market psychology, including a branch of stock market analysis called “technical analysis.” This realm of analysis deals exclusively with making predictions about future stock performance based on past stock performance. One of the most basic elements of technical analysis is finding market trends. From my book: Continue reading

Using S&P 500 Futures to Calculate “Fair Value” and Predict Market Movement

Now that I have written a bit about option contracts and futures contracts, I want to explain something that was a head-scratcher to me when I first started learning about the stock market: how the S&P 500 futures can be used to determine “fair value” and predict  the S&P 500 opening price.

Take a deep breath. I know that was an earful. So let’s break this down. Continue reading