By Jonah Lehrer

It’s been a tough few years for Wall Street. Traders got big bonuses for taking foolish risks, while taxpayers got stuck with the bill. But without the financial industry’s machinations, Facebook couldn’t go public, your neighbor couldn’t get a mortgage and we’d all be stuck buying cars with cash.

This raises the obvious question: How can we ensure that Wall Street doesn’t get carried away as it did before the 2008 meltdown? That traders aren’t seduced by foolish risks in the near future?

One approach has been increased governmental regulation, such as the Dodd-Frank Act of 2010, which attempts to reign in the excesses of the financial industry with new rules and restrictions. Only time will tell if this strategy works.

A different approach to reducing the irrationality of Wall Street can be found in new research led by Steve Sapra and Paul Zak, neuroeconomists at Claremont Graduate University. Dr. Zak got the idea for the paper after spending time with leading analysts and traders at a conference. “These guys are a pretty weird bunch,” he says. “They’re very rational and very competitive.”

Dr. Zak wanted to see if he could find the genetic signature of this personality type. Did certain genes correlate with investment success? What’s the difference between the prudent decisions of somebody like Warren Buffett—he’s famously unwilling to invest in bubbles—and the reckless bets that cause so many other traders to lose vast sums of money?

There was reason to think that such a link might exist. Previous research had shown, for instance, that 29% of the variation in whether or not people invest in stocks depends on their DNA. Studies of professional traders had demonstrated that approximately 25% of individual variation in portfolio risk is due to genetics. Other scientists had found correlations between testosterone levels and risk-taking—more hormone equals more risk—and shown that, at least among London traders, men with higher hormone levels in the morning generate larger profits.

Drs. Sapra and Zak began by analyzing the genes of 60 professional traders working in five major Wall Street firms. (They collected the DNA samples in 2008—only three of the firms are still in business.) The scientists focused on a short list of genes that are known to affect the activity of dopamine, a neurotransmitter in the brain.

In recent years, it’s become clear that dopamine helps to regulate decisions involving risk and reward, allowing us to experience both the thrill of getting what we want and the pain of losing it all.

Read the rest here.

Posted by Derek on February 4th, 2012

Everyone knows the following:

1) Stocks are in a raging uptrend showing no signs of letup

2) They’ve travelled a long way in a short time and are entitled to a break

As traders, we constantly walk a tightrope between identifying an emerging opportunity and recognizing when it’s too obvious. I’ve learned through many mistakes that obvious doesn’t mean sell(or cover); for me, it just means find something else to buy or short. Is there a way outside of the fuzzy sentiment polls to measure “obviousness”?

Keep in mind that the market is made up of intraday, swing, and position traders, and also covers the spectrum from mean reverters to trend followers. The successful traders I’ve seen lean heavily to one side or the other but acknowledge that the other side has the power to steamroll their best idea at any moment. Having relied on “gut feel” for years, I needed ways to quantify “obviousness” to prevent me from giving myself(or the other side) too much credit. I read the polls but more for entertainment than anything; the best real-time sentiment indicator is price itself.

One such measure I apply across my universe is “Change in ATR over X periods”, which I track on a 6-8 day basis, 5-7 week basis, and 5-7 month basis as I find that’s the time needed to turn doubters into believers in their respective timeframes. As I’m plowing through charts looking for trends, this is a simple and objective way for me to make sure I’m not chasing someone’s expiring idea. I’ll highlight the weekly one today because it’s the one that just went “obvious” on Friday. Take a look at the following chart of $SPX:

Read the rest and see the graph here.

via Bespoke

There are now 24 stocks in the S&P 500 that are trading more than 20% above their 50-day moving averages.  That’s a high number.  As shown below, Netflix (NFLX) is the farthest above its 50-day at 50.96%.  Genworth Financial (GNW) is the second most overbought at 34.67% above its 50-day, followed by Whirlpool (WHR), Eastman Chemical (EMN), Bank of America (BAC), and Textron (TXT).

Long investors have done extremely well over the last month or so.  Rest assured, however, that there will one day be a pullback again!  The problem with waiting for a pullback to buy is that the market can go a lot higher before that pullback occurs, just as the market can go a lot lower while waiting for a bounce to sell.

See the list here.

Source

Bill Maher turned his ire toward the “Occupy” protests that took place across the country in the fall and continue in some locations today. Maher says he find himself “almost in agreement with Newt Gingrich” and tells them to “get a job.”

Maher said they initially did a good job, but now the “movement” is “just a bunch of douchebags who think throwing a chair through the Starbucks window is going to bring on the revolution.” Read what he said below.

“Similar to Afghanistan, when you occupy anything for too long people do get pissed off,” Bill Maher said about the “Occupy” protests on his HBO program “Real Time.”

“As I watch them on the news now, I find myself almost in agreement with Newt Gingrich, like, ‘You know what, get a job.’ Only because the people who originally started it, I think they went home. Now it’s just these anarchists stragglers. And this is the problem when your movement involves sleeping over in the park. You wind up attracting the people who were sleeping over in the park anyway. And I think this is where we are with the ‘Occupy movement'” Maher said on this week’s broadcast.

Read the rest and watch the video here.

via WattsUpWithThat

Guest post by David Archibald

The background to this is that, in 2009, evil environmentalists in the New South Wales Government made a regulation that councils in that state would have to base their building permits on an expected sea level rise of 900 mm by 2100. This had the effect of wiping billions of dollars off the value of coastal properties, as well as ruining peoples’ lives etc. By comparison, sea level rose 200 mm in the 20^th Century.

The NSW Govt. regulation was gleefully enforced by Lake Macquarie Council to the detriment of its residents. Lake Macquarie is 140 km north of Sydney. In response, a local property developer, Mr Jeff McCloy, organised a public meeting at which Professor Ian Plimer, Professor Bob Carter and myself spoke. 400 people attended on four days’ notice. The subject of the public meeting was sea level rise.

Before we go on to the oceans, let’s start with a smaller body of water first – Lake Victoria in East Africa. It was known back in the 1920s that the level of Lake Victoria went up and down with the solar cycle. This is the data on the level of Lake Victoria from 1896 to 2005:

The relationship with solar activity broke down in the 1930’s and resumed in the 1970’s. There was also a very rapid rise in the 1960’s. Taking out the period of the solar relationship breakdown and detrending the data from 1968, this is what the relationship looks like (data courtesy of Dr Peter Mason):

Read the rest here.

Here were Friday’s high hybrid/volume movers, click here for charts.

Eli Manning is America’s quarterback — among the Twitter-using public at least.

IBM analyzed more than one million Super Bowl-related tweets to determine how people feel about Manning andNew England Patriots quarterback Tom Brady — and the New York Giants quarterback was the winner.

Manning earned 66-percent positive sentiment compared to Brady’s 61 percent, according to the report.

IBM called this a “digital upset” because “many would assume that Brady should be far ahead given his lofty status as an elite quarterback for many years and three championship rings,” Business Insider reported.

The company’s scientists attributed Manning’s positive sentiment to two factors.

First, New York fans are confident in their team and loyal to Big Blue. Second, there’s a backlash against the Colts’ treatment of Eli’s big brother Peyton.

The analysis also found that coach Tom Coughlin has more of a positive sentiment than Patriots coach Bill Belichick, 76 to 68.

NEWSCORE

Once known as “TheFacebook” when it launched on Feb. 4, 2004, the site will turn eight years old on Saturday. It’s expected to celebrate its birthday week with the filing of an initial public offering, which could value the company at around $100 billion.

The move would make the social network about four times the value of Google at the time it went public in 2004 with a valuation at $23 billion the day after.

The site has come a long way since it launched in Mark Zuckerberg’s dorm room. First limited to just Harvard University undergrads, the site later opened up to other schools and raked in about 5 million members in just two years. Now, it boasts more than 800 million users worldwide — or 40% of all Internet users — and is on track to reach 1 billion members by August. Behind Google, it’s the number one most-visited site worldwide.

Facebook caught the attention of investors since its beginnings, but declined bids from various companies from NBC and the Washington Post Group to MySpace and Viacom. In 2008, Zuckerberg was reportedly in talks with Yahoo for a potential sale, but he turned down an offer for $1.6 billion, saying the bid was too low.

Four years later, the company could be worth nearly 100 times that number.

Where do you think Facebook will be in the next 10 years? Do you think it has more long-term staying power? Let us know your thoughts in the comments.

[Mashable]

Labor groups are teaming up with the Occupy movement for a series of high-profile protests in Indianapolis, where Super Bowl XLVI will take place this Sunday. The demonstrations are centered on Indiana’s new right-to-work law, which critics say will hamstring unions and leave the state’s workers in a vulnerable position.

The Indiana chapter of the AFL-CIO, one of the largest union federations in the country, will be passing out literature at and around Lucas Oil Stadium, the site of Sunday’s game, according to ThinkProgress. The hotel workers’ union UNITE HERE will stage a demonstration on Friday, and local Occupy activists are said to be planning a protest of their own — an extension of the rabble-rousing that took place this past weekend, when union members and Occupy demonstrators joined forces for several marches and rallies around Indianapolis.

Indiana’s new law, which makes it impossible for employers to require their workers to join a union or pay membership dues, is only the latest in a string of recent setbacks for American labor. Union membership has fallen off dramatically since the 1980s, and 2009 and 2010 saw especially steep declines in participation. (In what some analysts say is likely not a coincidence, paychecks for most Americans have barely grown since the 1980s.)

Over the past year, conservative politicians from Wisconsin to Arizona have proposed or passed laws that aim to reduce the power of organized labor, and Republicans at the federal level have been voicing steadily louder opposition to the National Labor Relations Board, claiming that the agency advocates for union members in a way that harms the interests of the business community.

Labor advocates say that Indiana’s right-to-work law, which Governor Mitch Daniels signed on Wednesday, will erode the political and financial strength of unions in that state. Supporters of the law say it will attract more companies to Indiana and kick-start job growth. Indiana is the 23rd state with a right-to-work law on the books, and the first in the Rust Belt, the central-northeastern part of the country historically associated with heavy industry.

This weekend’s protests are part of what right-to-work opponents call an ongoing campaign to get the law repealed. They also represent a continuation of the alliance between organized labor and the Occupy movement, groups that share an interest in preserving working- and middle-class power. The visibility of Occupy protesters has dropped somewhat in recent months, with more and more cities taking measures to dispel long-term encampments, though the movement is still conspicuously active in New York, D.C., Miami, Oakland and other places.

SOURCE

Submitted by Tyler Durden

A month ago, we joked when we said that for Obama to get the unemployment rate to negative by election time, all he has to do is to crush the labor force participation rate to about 55%. Looks like the good folks at the BLS heard us: it appears that the people not in the labor force exploded by an unprecedented record 1.2 million. No, that’s not a typo: 1.2 million people dropped out of the labor force in one month! So as the labor force increased from 153.9 million to 154.4 million, the non institutional population increased by 242.3 million meaning, those not in the labor force surged from 86.7 million to 87.9 million. Which means that the civilian labor force tumbled to a fresh 30 year low of 63.7% as the BLS is seriously planning on eliminating nearly half of the available labor pool from the unemployment calculation. As for the quality of jobs, as withholding taxes roll over Year over year, it can only mean that the US is replacing high paying FIRE jobs with low paying construction and manufacturing. So much for the improvement.

Chart below shows it all – that jump is not a fat finger!

Read the rest here.

by CalculatedRisk

Catching up: The January ISM Non-manufacturing index was at 56.8%, up sharply from 53.0% in December. The employment index increased in January to 57.4%, up from 49.8% in December. Note: Above 50 indicates expansion, below 50 contraction.

From the Institute for Supply Management: December 2011 Non-Manufacturing ISM Report On Business®

Read the rest here.

Classic Krull.

Success depends on your point of view.

The more rigid you are, the less you will deviate from what you feel comfortable with….hint hint my conservative haters.

I have been called a bearshitter by many, but as a point in fact i can change like the wind. That is why I’d like to raise a glass to mourn the passing of the bears. Did I tell you your fucking dead ? Well guess what you will now be dug out of your graves and burned for fun. Fuck dancing on graves and shit.

Bearshitters would love to call the last 3-4 months a broken robot, but you must behold the points in fact;

Global PMIs are rising, employment is trending higher for 4 consecutive months, the clam has your back, Europe is getting their shit together no matter how dysfunctional they are, China is no longer looking like a hard landing, sentiment is better, capex spending is rising, small investor pessimism is at all time highs, stocks are hitting insane amounts of new highs compared to new lows, most hard core bears have back peddled on previous assumptions, the dollar has not crashed, there is no hyper-inflation, inflation has eased to such a degree that many countries are easing or considering it, what is left of our manufacturing (auto) is entering a golden era, low pe multiples, lots of revenue beats this quarter, no real homosexual opera trading in burritos or chinese lottery issues yet, foreigners are not shying away from U.S. treasuries, foreigners are not dumping U.S. treasuries, some arguments for a housing bottom or at least stabilization, stock piles of oil and gas bless us, companies like Facebook are creating 1,000 new millionaires during a ‘great recession’, consumers continue to chomp on needless crap, private sector loan default is falling for the last two quarters, and finally the markets simply climb the wall of worry.

That was one long paragraph of positives…..odd no? We are way past mustard seeds and green shoots !

FACE IT MR. DOUCHEBAG YOU ARE FOREVER MERC’D 

Well not forever, but for the time being

So while you call it the slums I call it nice…. [youtube://http://www.youtube.com/watch?v=p9Y-r-rs9W8&feature=related 450 300]

By Ajay Makan in New York

Trading in the most popular US exchange-traded funds fell to multiyear lows in January, threatening to increase transactions costs for retail investors.

ETFs, which track the performance of a basket of securities such as an equity or bond index, have surged in popularity in recent years, reaching $1tn in assets by the end of 2011, according to BlackRock.

A key part of the ETF appeal has been liquidity. High trading volumes have made it cheap and easy to trade in and out of the funds. But, according to data from FactSet, daily volume in the 50 most traded US ETFs in January was at its lowest, excluding the last month of the year, since the end of 2007, when the industry was much smaller.

That has increased trading costs in some smaller funds. For example, the average daily spread – the commission market makers charge investors to trade securities – for the US Natural Gas Fund on NYSE’s Arca exchange, was 0.17 per cent in January. That compared to an average spread of 0.11 per cent in the preceding six months.

“Volumes have to be one of the key considerations for any ETF investor: if liquidity dries up, trading costs could increase,” said Bryce James, chief investment officer at Smart Portfolios, a Seattle-based money manager, which invests exclusively in ETFs. “It’s important to be selective about what products you use.”

The fall in ETF trading volumes has coincided with a decline in volatility and correlations in January, compared to their elevated levels in the second half of 2011. That appears to have made index-based investing strategies, which can benefit if an entire asset class moves in the same direction, less popular.

“As correlations and volatility have come in, some investors are tending towards stockpicking strategies instead [of ETFs],” according to BJ Prager, head of Americas exchange-traded product trading at Barclays Capital.

However, the fall in ETF volumes also appears to be a result of reduced trading by hedge funds, which are among the largest users of ETFs. According to JPMorgan analysts, macro hedge funds in particular have retreated from the market in January.

Read the rest here.

By Susan Roylance

NEW YORK — Outside the United Nations headquarters, hundreds of people were shouting and waving banners Tuesday that read “China and Russia – No Veto.” These people wanted support from the Security Council of the U.N. to oust the President of Syria, Bashar al-Assad.

Inside the U.N., another group of civil society leaders demanded a basic level of social security as they promoted a “social protection floor” at a preparatory forum for the Commission on Social Development, which began Feb. 1.

The focus of the forum was “universal access to basic social protection and social services.”

“No one should live below a certain income level,” stated Milos Koterec, President of the Economic and Social Council of the United Nations. “Everyone should be able to access at least basic health services, primary education, housing, water, sanitation and other essential services.”

These services were presented at the forum as basic human rights equal to the rights of “life, liberty and the pursuit of happiness.”

The money to fund these services may come from a new world tax.

“We will need a modest but long-term way to finance this transformation,” stated Jens Wandel, Deputy Director of the United Nations Development Program. “One idea which we could consider is a minimal financial transaction tax (of .005 percent). This will create $40 billion in revenue.”

“It is absolutely essential to establish controls on capital movements and financial speculation,” said Ambassador Jorge Valero, the current Chairman of the Commission on Social Development. He called for “progressive policies of taxation” that would require “those who earn more to pay more taxes.”

Valero’s speech to the forum focused on capitalism as the source of the world financial problems.

Read the rest here.

No. Ticker 1-week Return
1 VRNG 80.20
2 THLD 79.41
3 SVVC 66.09
4 COCO 57.97
5 BVSN 55.66
6 MOTR 55.56
7 GTXI 55.08
8 ZOLT 52.27
9 STVI.OB 51.70
10 GMXR 49.00
11 ADY 47.77
12 FFN 46.07
13 GIGM 42.57
14 AFFY 40.22
15 AMLN 40.20
16 QTWW 39.47
17 KTCC 39.20
18 PNCL 36.42
19 SGMO 36.06
20 MGAM 35.66
21 ALIM 34.35
22 YMI 33.92
23 MDVN 33.80
24 CNIT 33.80
25 RLD 33.37
26 VRS 33.33
27 TUDO 32.48
28 CEDC 31.82
29 NTWK 28.83
30 IRE 28.80
31 GLUU 28.62
32 HTCH 27.50
33 CERP 27.17
34 RODM 27.03
35 STX 27.03
36 DHT 26.44
37 GMCR 26.13
38 ACRX 26.05
39 ARRY 26.05
40 REE 25.70
41 CVO 25.60
42 WHR 25.57
43 PBY 25.25
44 MVIS 25.16
45 HPOL 24.29
46 MSPD 24.14
47 MTSN 23.71
48 XXIA 23.55
49 TNB 23.19
50 VICR 22.73

Cheers on your weekend

[youtube://http://youtube.com/watch?v=EtF4o-nYVUg 450 300]

Today’s non farm payroll numbers were a major home run for the bulls. We also had good ISM number to boot. But i think we should have rallied much much more. Therefore I feel the bulls have no real swagger. At least the volume was better than average.

DOW up 153

NASDAQ up 45

S&P up 19

[youtube://http://www.youtube.com/watch?v=ws-lfVW7ckg 450 300]