Flash-panic!

Members Present:

Brian

Bickford x2

Yousef

This week, there was a mini-summit in Tampa at Panera that Brian was unable to attend.

A small discussion went on about high frequency trading related to an article sent out on flash booms and busts at the nano to microsecond level.  It appears that the algorithms that computers that do this trading use have to a degree converged on a few solutions.  This means that they are all trading in similar fashions and at the time frames that they deal with all move the market in the same direction.  Apparently, they are quick to correct this, so we don't see events like the "Flash Crash" very often.

On taxes, we discussed AMT.  This is the Alternative Minimum Tax.  It affects those who make more than $75k with large deductions.  It was set up in the early 70s, but wasn't set up to adjust for inflation like the tax brackets.  This is displayed by the fact that back then, only about 19,00 people paid the tax while now millions do.  Bickford mentioned that newer deduction types can help people avoid the AMT.

Bickford is trying to refinance and so there was some time spent on this as well.  PMI, Primary Mortgage Insurance, should be avoided where possible.  The Harp Loan was another option potentially available to avoid PMI.  It allows someone to borrow up to 125% of their home's value.  In some cases, there is a premium on the interest rates on these loans.  We'll see how Bickford's appraisal goes.  A fun thought:  with a home loan, you own the home, but the home is collateral on the loan.  Hadn't thought of if that way before.

On to the charts!

SPY is at its peak for the year and around its peak in recent history.  We're still curious if this will last past the election.  Improvements on the Greece front may have something to do with this.  The price has been above the 200 DMA for a little over the month, and the 50 DMA crossed the 200 a couple of weeks ago.

EWZ is edging closer and closer to the buy price.  Yousef and Brian still need to see if we've received any divendends on this thing yet.  Note that the stock price has crossed the 200 DMA and the 50 DMA is approaching the 200.  If the trend continues, the 200 should start to plateau again and turn the other direction.  Things are looking a little up for this one.

  

ATT is still quite steady.  Need to check for divedends on this one too.

We're still talking potential strategies for our fourth buy.

• Commodity
• We talked a bit about KOL (the Coal Market Vectors ETF) that Brian is always tempted by, but that everyone views as a bit evil.
• There was also talk about jobs in a silver mine in Idaho paying somewhere in the range of $70-$100k.  Brian mentioned that it made him wonder why he spent so much time in school.  It might have been so that he doesn't have to work in a mine.
• Bickford mentioned a person that he knew that would spend their summers working in a steel mill in the summers around 40 years ago and that job made them a pretty penny.
• This led to talk about specialty manufacturing in America.  You can buy a $100 bike from foreign markets, but if you want that $10k bike, it is going to be hand made and come from here.
• Bottom-up
• A lot of time was spent thinking about companies that we know.  We should try to restrict ourselves to those so that we have some understanding of how the company works and what it will take to improve.
• If Publix went public, then we'd be on top of that.
• Chipotle is way too expensive.  Panera came up and was pretty pricey as well.
• Theme
• Growing middle class in the world.
• Construction in up and coming places.
• Brian wasn't being too creative with these.

For next week:

• More discussion on the new buy.