bloggers were all over the market's moves this past week, and this weekend we'd like to share the Best of the Blogs with
readers. As always, these posts represent the best our writers offer each trading day.
This week, take a look at
on the benefits of periodically selling everything you own,
on moves toward a single platform for option and equity trading and
on the next big trade.
Cramer's Blog: AT&T-BellSouth Join Mainly to Fight Cable
Originally published 03/06/2006 at 10:19 a.m.
Bad for cable. Bad for vendors.
Yeah, people are scrambling for takeaways from the
deal. They want to buy
and they want to buy
and they want to see if
makes a bid for
or vice versa -- probably the latter.
They even have a rap on the vendors that will win from this --
-- and the vendors that will lose --
. (It's always Lucent, because Lucent's been talking about the big orders from AT&T, nee SBC, for two years now, and the only thing more frustrating for them is China.)
I look at it very differently. I believe this is, again, about stopping cable. I say that because AT&T is
DSL company, and it thinks of nothing but giving away DSL so that cable gets hurt. I prefer my cable Internet service to DSL, but I am not price-sensitive, which puts me in the rarefied 1% of customers that AT&T could care less about.
Anytime any phone company does something aggressive, it is about cable, because if they don't get aggressive, cable takes their bread and butter away. These Baby Bell companies can't raise price to save their lives, so their business is all about the value added, and AT&T has been much more aggressive with DSL than anybody else.
Oh, and equipment makers: Sure, Alcatel is in bed with AT&T, and sure, AT&T will expand reach. But anyone who remembers the fiasco of vendor orders post-AT&T Wireless, when everything was frozen pending the deal, has to be saying, "A pox on
Too bad, the group was getting mojo. It will still have some, but not enough to do the job.
Rev Shark's Diary: Starting With a Clean Slate
Originally published 03/06/2006 12:09 p.m.
The market is churning and chopping and going nowhere fast. Breadth has slowly improved, and there are some underlying bids holding us up, but not much aggressive accumulation to drive things. I'm just staying patient for the most part at the moment. I've written in the past about how periodically selling all your positions and going completely to cash can be very advantageous emotionally and psychologically for a trader. The sense of freedom and clarity that this can bring is quite liberating. When you have no stake in the market, you can be totally objective. All the worries, hopes and other emotions that impacted your judgment are now washed away.
Recently, I was reading Barton Biggs' very well-written book
and was surprised to see that he also was a proponent of periodically starting fresh. It surprised me because managers with hundreds of millions can't do this that easily. He mentions that both Jesse Livermore and Bernard Baruch, who are regarded as two of the best investors in the first half of the 20th century, would sell all their positions and go on vacation when they felt stale or out of touch with the market.
A couple comments that Biggs makes on this topic are worth some reflection. He writes that "when you are working with an existing portfolio and reshaping it, there are unrecognized, subconscious, emotional hangups that block you from impartial, cold-blooded investment actions like selling. ... It's hard to make yourself give up on a position, especially since you suspect, as soon as you do that the ornery, cussed thing will rally."
Every stock we hold carries some emotional baggage. We are loyal to big winners because they have treated us well, and we hold onto losers because we don't like to admit that we are wrong and are holding out hope. There is no way that we can be totally objective about stocks until we sell them and no longer have to wrestle with our emotional attachment to them.
Steve Smith's Blog: Next Step: Single Platform
Originally published 03/07/2006 10:15 a.m.
posted a quote from an
article in which
Chairman John Thain says, "While equities and derivatives can trade in Europe on the same exchange, they have remained largely separate in the U.S. for historical and regulatory reasons. Cash markets are regulated by the
Securities and Exchange Commission
and derivatives by the Commodity Futures Trading Commission. That regulatory split has kept the markets apart in a way that's not the case in the rest of the world," he said. "Single stock options would be relatively easy to trade on the same platform."
I've talked about how the move to a single platform for equity and options is the next step in the evolution of creating flatter and more efficient trading and had thought the
International Securities Exchange
was the candidate to make it happen. But if the NYSE gets involved with an overseas exchange, it might be better positioned to import the system it has experience operating once the regulatory picture clears up in the U.S.
Related, I am still from the trying to figure out whether the
is a buy or sale. I'm torn between my belief that these exchanges are fully priced and filled with speculative investing, and the idea that the ICE, being all electronic and not having the legacy systems or embedded membership that has conflicts of interest, has a real leg up on stealing market share from the NYMEX in energy trading.
Tony Crescenzi's Blog: The Next Big Trade
Originally published 03/07/2006 2:52 p.m.
Commodity-related trades all around. I mentioned this a week ago, but given the action of the metals stocks and many of the basic materials groups, it is worth repeating.
One key risk is how the concerted rate hikes in Europe, the U.S., and possibly Japan will weigh on commodity prices and hence the unwinding of commodity-related trading strategies.
Lower commodity prices are welcome from an economic perspective, but there are sizable positions held in stocks, bonds, commodities and currencies that are all geared toward rising commodities prices.
Investors are leaning heavily on one side of this trade: long commodity-based equities, long commodity-based currencies, long the fixed-income instruments of countries benefiting from higher commodity prices, and long the commodities outright. It has been an easy trade up until now and we all know how these easy money trades end. Investing isn't normally as easy as it has been in the commodity-related trades that I mentioned. Investors will eventually have to work to make money in the commodity realm.
When will it end? The commodity trade is likely to end after the cumulative effects of rate hikes from the world's central banks takes hold. If not, then inflation will accelerate. The unwind of commodity-related trades therefore represent one of the bigger market moves likely to be seen in the coming quarters.
George Moriarty is managing editor of RealMoney.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He appreciates your feedback;
to send him an email.