The Daily Dose: Hangin' Tough and Tweeting

 | Sep 04, 2013 | 12:00 PM EDT
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"Oh, oh, oh, oh, oh. Oh, oh, oh, oh, oh.
Oh, oh, oh, oh, oh. Oh, oh, oh, oh, oh.
Get loose everybody 'cause we're gonna do our thing.
'Cause you know it ain't over 'till the fat lady sings.
Hangin' tough, hangin' tough, hangin' tough."
New Kids on the Block

Hangin tough so far this week? I sure hope so because the fun has only just begun. I was working over the holiday weekend (shocker, right?). I had to live up to the self-constructed quote on my whiteboard: "the market never sleeps."

While things were somewhat quiet in Twittersphere/news land, I opted to hold a couple meetings with potential partners and clients. Here are a couple things I learned:

Have to be kidding: Individual investors have returned to the equities markets completely absent an attack plan, and wildly enamored with stock options and futures (thanks to the Federal Reserve). Their portfolios mirror all sorts of hot strategies of the moment, such as that sexy stock pumped by some clown wearing a wireless headset at an "investing" seminar.

As a result of this severely-poor preparation, there remains this distrust in the process of investing. That's because the investments that are being made reflect moods of the moment, not moods/trends likely to surface well into the future. I assure you that if you are now being pitched a "hot stock" off an internally-approved list, the name fits one of two qualifications: (1) it's +25% on the year; (2) it has outperformed the benchmark indices year to date. In both cases, the stock is designed to underperform, given the shift in the risk-reward ratio.

Twitter as investing tool: I love the verbal freedom provided by Twitter. I love my morning idea-sharing sessions with fellow peeps in financial services at 4 a.m. EST. I am "all in" on live tweeting major financial events, providing actionable information with a creative twist to the individuals that could profit from the relative analysis (or who want trustworthy opinions).

But unfortunately, people are becoming enamored with buying stocks straight off Twitter, no questions asked or research done. I am receiving firsthand accounts of stocks being purchased simply because they are names that are being favorably mentioned on Twitter by assorted feeds. Twitter is approaching modern day boiler room status. While I love y'all traders out there, I beg you to at least do 30 minutes of research on a company being targeted for your portfolio, whatever the expected holding period. There are devious folks with sophisticated systems and models that are laughing at the inexperienced person buying into XYZ at the peak in the hype being spewed on Twitter. You had better believe this to be true.

That is the old man in me sending words of wisdom to all of you trying to make sense of the overwhelming process that is investing. Let's move on to more fun matters.

Picture Analysis

I tend to see the universe around me in Twitter cashtags (i.e. "$CAT"). On Saturday morning, I fired off the below tweet following me looking up at a door while leaving a mall undergoing a complete renovation. Why would I look up? Good question. I wanted to lay eyes on a "Stanley" sign. The company, through a series of acquisitions over the years, has become leader in security products for the commercial construction market. It noted very positive comments on this high- margin segment's backlogs on its second quarter earnings call -- a sharp sequential shift in commentary. Lo and behold, the sign was there, sneakily comforting (since I was probably the only person at the mall seeking stock symbols on security doors) that even though interest rate creep has hit the residential housing market, the later cycle commercial market recovery is in fact intact and perhaps still investable.



 On the Market

Admittedly, the twists and turns regarding Syria are short-circuiting my market handicapping ability. Grr. Names that have been winners for my clients (for example, Best Buy (BBY) long and Aeropostale (ARO) short) continue to act in line to plan -- in other words, the market is stock-picker friendly.

For the first time in a while, the market is finally willing to accept the resurfacing of positive U.S. data surprises that trigger a move higher in the 10-year.

In view of the market trying to stabilize into the Fed meeting as I had thought, I bekueve you could be slightly constructive on stocks here -- with an understanding to not get married to positions given the impending volume of data that could easily be spun negatively.

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volatility is quite low here, and we could see some downsides here in the short term. ...



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