Health Capital Solutions
Capital Management Hedge Fund
Posted in Uncategorized on February 18, 2011
You can spot bad advice really easily. I found this blog a few minutes ago while putzing around on the internet on my lunch break.
These days there are many blogs that cater to new people wanting to make fast cash in the world of investing. There’s no such thing as making fast money in the Capital Markets. Even the best investors like Soros & Buffet know this. If you go into investing wanting to make fast money, you’re going to end up being reckless. The main problem I have with this article is that it doesn’t address the risk, and the call option example they use is not accurate. Wall Street will always have more information about companies than main street. They have analyst working 24-7, so they will know of any new product releases. So it’s going to already be priced in the stock by the time the news announces it to the world.
Think of an option as a bet that has a time requirement. For example, let’s say the Lakers are down in a the finals, and there is 30 minutes left in the game. The score is 55 – 85.. You place a bet that cost you $2,000 that their score will go up within the next 5 minutes. You could also make more on your money if you bet that they will score 10 points in the next 5 minutes. There are a few things going against you. One is time. Each tick of the clock eats away at your $2k investment. Each tick of the clock as it gets closer to 5minutes accelerates the rate at which it eats away at your money. If the Lakers don’t make some points fast in the next 5 minutes you lose all of your investment. The price of an option that you purchase has a time value placed into it. Let’s use the apple example from the article, but use apple’s current price. Let’s say you want to buy a three month call on apple. A share of AAPL at this moment is $351.69. To buy the May $350 option calls at this moment, you’re gonna have to put down $2,185.00 large. That’s the price to put down one bet that AAPL will go up from this price of $350.69. A mathematical model is used to determine this price. It’s complicated. The important thing to know is that $2,185.00 has the 3 month time value factored into it. This is called THETA or Time Decay. If you want more time for your option, such as a 6 month option it will cost you more. You’re giving yourself more room for error and the probability becomes higher that AAPL will move in your favor. Essentially, you’re making a bet on AAPL’s price, direction and the time that it will move. So in three months Apple has to go up for you to make money. If you’re thinking at this moment that “oh it definitely will”. You’re getting owned by hindsight.
If AAPL just sits around and moves sideways at $350.00 for the next three months you will lose money on your investment, b/c of Theta or time decay. Yes, this isn’t like a stock. Options lose value every day b/c their price is made up of time. Each passing day they lose value to where they eventually expire worthless. Also, time decay of an option has an acceleration value which increases each day. So each day time decay is eating away at your $2k investment faster. Kinda like life…ha! Options are like life. That’s so deep! ok, I’ll stop the lameness. So ya, Theta/Time Decay is like the acceleration of gravity 9.86 meters/second squared. Each second acceleration increases 9.86 meters. That’s the same w/ time decay but at a different value of course which is determined by mathematical models. So, if AAPL decides to go down or move sideways from the price you purchased it for the next three months, you will lose all of the $2,000 at options expiration. See not that easy right. You gotta be right on the price and the time of the stock. It’s possible to make money in options. I mean there’s a reason why you see the same poker players in the finals all the time. ~Frank Slaughtery 2.0
Posted in Uncategorized on February 17, 2011
“ Weight Watchers’ ($64.23, +$19.31, +42.99%) fourth-quarter profit more than doubled as revenue rose at its North American and Internet businesses; the results beat analysts’ estimates. Fellow weight-management products provider Nutrisystem Inc.’s (NTRI, $20.48, +$0.94, +4.81%) shares also rose.”
So what’s the, *ahem*, Big picure here? Well we know food prices have been going up, and that’s a big concern. However, people are spending on food, and eating more than what is required for a standard healthy diet. WTW, said that “Gross margin rose to 52.9% from 41.9%. Marketing expense jumped 26%.” And, yet they still generated huge on earnings, blowing out the streets expectations. With all this dieting, are people working out in the gym? Let’s look at Lifte Time Fitness $LTM. I expect that most of the people who spend money on Weight Watchers will spend the money to work-out at Life Time Fitness. The desperate house cougars have to exercise at a place where they can be seen. Come on now! Ya I’m stereotyping…but it’s true.
Gonzo! Life Time recently made all time highs. Today it reported earnings. I like LTM as long as investors see it as a good value at or above $40.00. It’s kinda fun seeing where the social trends are in our world isn’t it? Of course this is a small glimpse to an even larger picture that is part of a much much bigger picture. Where does it end? Well everything is connected. I’ll write more on this. I believe Al Pachino has something to say about this.
Posted in Uncategorized on February 10, 2011
“Click on charts to enlarge and view in full”
Chipotle Mexcan Grill (CMG) rocketed up 25 points in less than 3 minutes, b/c everyday people stand in line for the most amazing burrito in the world. Analyst predict that their burritos will get even tastier, and see revenues growing at an exponential rate. A recent survey done in China discovered that 99.9 percent of the population in China prefer Chipotle over General Tso’s chicken. Traditional Chinese restaurants have taken a big hit in profits. Say “goodbye” P.F. Chang’s China Bistro (PFCB)! The Chinese have spoken, and they want overly sized burritos to replace their egg rolls. Chipotle was smart in their strategy. China has a the largest working middle class in the world that is projected to grow higher. They knew a big burrito would feed more. China’s population is also switching over to a protein diet, which means a greater demand for beef. That leads to a higher demand for corn and grains to feed the cattles. That then leads to higher hourly rates for massage therapist, who massage the cattle that are used to produce Kobe Beef, b/c massage therapist have to pay higher prices for beef to feed themselves as every meal, and can afford Kobe beef from their increased hourly earnings. It’s no coincidence that commodity prices are at an all time high. But, I digress. Analyst have recorded a massive decrease in iphone calls, texting and sales while consumers go to their local Chipotles to eat. This decline in usage and sales only included those that sat down to eat. There was no change for consumers that ordered take-out. However, analyst noted an immediate increase in iphone usage for carry-out customers that were females in their teens or of Asian decent. Now this decline iphone usage & sales is due to the wonderful taste of Chipotle’s large diameter burritos that consumers lose focus on their surroundings. Analyst say, it is not because it requires two hands to eat a chipotle burrito, and is very messy right when you get to the stub. Who wants to touch their $200 dollar iphone w/ gauc all over their hands? So is the tech obsession in the United States losing steam? Yes, is the answer and here’s the reason.
While Chipotle was driving to new levels, APPLE took a massive dive from $360 to $348 in a blink of the eye. The market didn’t like something. Read the article below. People aren’t interested in the iphone anymore. They are interested in burritos! The article asks why people aren’t in line for the new verizon iphone. Well they are in line at Chipotle. Good burrios equals an increase to Chipotle’s revenues and a decline in iphone purchases and usuage , which then leads to a decline in Apple’s revenues. The shift and social consumerism is reflected in their stock price action. ~Frank Slaughtery @ http://healthcapitalsolutions.wordpress.com/
Few customers lining up for Verizon’s iPhone
- Relatively few stand in line to buy Verizon Wireless iPhone 4, anecdotal reports say
- Apple stores, Verizon stores and Best Buy are selling the new phones
- Since 2007, iPhone users have dreamed of having more than one carrier
(CNN) — After years of anticipation, relatively few people waited in line Thursday morning to buy the new Verizon Wireless iPhone 4, according to anecdotal reports.
Fifteen minutes before the phone went on sale, eight people were in line at Apple’s flagship store in New York, according to CNNMoney. Down the street, about a dozen people waited in line at a Verizon Wireless store.
And in Atlanta, Georgia, slightly more than a dozen stood in line outside a Verizon store to get the new phone. One of them, Lena Hill, 22, brought food and blankets at 6:15 a.m., expecting to have to camp out in a line to get the device. There wasn’t a line, so Hill just waited in her car.
“It’s an iPhone. There’s so much hype about it,” she said. “You just have to get it.”
In San Francisco, there were no shoppers lined up early Thursday at an Apple store downtown, and only a small line at a nearby Verizon store.
By contrast, thousands have lined up for the release of previous Apple products, including the initial launch of the iPhone 4 in June. In the past, many shoppers have even slept outside all night to ensure being among the first to get a new Apple gadget.
Explain it to me: iPhone’s new home
The Verizon iPhone’s hardware is similar to the existing iPhone — the big difference being that it works on Verizon’s network instead of AT&T, which has had exclusive rights as the iPhone’s wireless carrier since 2007.
The new iPhone went on sale at 7 a.m. Thursday at Verizon and Apple stores, at Best Buy and on the retailer’s websites. With a two-year contract, it retails for $199 for the 16GB model and $299 for the 32GB model.
Customers were able to pre-order the Verizon iPhone last week, and analysts estimate between 250,000 and 1 million of the phones were sold on pre-order, making it among the biggest phone debuts on the Verizon network.
Pre-orders for the phone sold out within a day, according to Mashable. The phone became available again available for internet purchase Wednesday.
Customers have been calling for Apple to offer the iPhone on networks other than AT&T for years, in part because that network is known for dropped calls.
Consumer Reports surveys consistently rank AT&T below competitors in terms of customer satisfaction. Larger cities, such as New York and San Francisco, have experienced particular problems with dropped calls and a lack of mobile broadband service on AT&T, to a certain degree because so many data-heavy iPhone users contributed to jamming the network.
Alex Ricker, a 28-year-old who bought a Verizon iPhone in Atlanta, said she waited on an upgrade for eight months to get the iPhone on Verizon and never would have considered switching to AT&T to get the phone.
“I looked at all the other smartphones and they just — they were really bulky and quite expensive, and I felt like waiting,” she said.
Bob Nadolski, 45, said his daughter begged him to switch his family’s cell phone plan from Verizon to AT&T so she could get an iPhone.
“I personally have not had great voice service through AT&T” on a work account, he said. “Where we live, Verizon has better coverage, so I would never switch the family plan to AT&T.”
Nadolski bought his daughter the Verizon iPhone on Thursday and said she had been waiting “very patiently” for the phone.
Switching carriers to get an iPhone isn’t easy.
First, owners of a current iPhone can’t simply switch from AT&T to Verizon. They’ll need to buy a new phone. And that’s on top of early-termination fees of up to $325 they’ll have to pay to break their current contract.
Some were still willing to make the leap.
Lauren Asther, 19, told CNNMoney she was switching to Verizon for the iPhone. “I have the AT&T phone, and it kept dropping calls,” she said.
The cold weather may have contributed to smaller-than-usual lines.
“Apple clearly was expecting more of a crowd this morning,” CNET wrote on a live blog from New York. “As I mentioned earlier, the Apple staff way out-numbered actual Verizon iPhone 4 customers. I guess we finally have the answer to the question: What will keep people from standing in line for a new iPhone on launch day? It looks like 20-degree temperatures.”
Posted in Uncategorized on February 6, 2011
For the record, I am not affiliated w/ Nu Skin. I have nothing against Nu Skin, and I haven’t formed an opinion yet. This post is about the common arguments people use to verify the legitimacy of the business model.
What is up with people saying that a company is legit because it is a publicly traded company and listed on the NYSE? It is really retarded to state this fact to support your argument. Par example the piker in the video above. Regardless of whether a company is listed on the New York Stock Exchange, isn’t a tell to the validity of its business model . Let’s not forget Enron or Lehman Brothers that were huge companies, listed on the NYSE and collapsed b/c they cooked their books. Equal measures of scrutiny should be placed on public and private companies. Second, he says to look back into history and you will see that it’s very rare for a scam to last for 25 years. So now he’s a historian! We know he’s put in the time to study every company and their business models that have ever traded on stock exchanges. Riiiiight. Extrapolating past historic event to predict future events is logical fallacy. Later, he states that NYSE stocks have to publicly declare their income and he starts talking w/ his hands. Shouldn’t it be on the wheel! Again… Enron and Lehman Brothers. Having to show your earnings and balance sheets doesn’t make you legit. Talking with your hands while driving do. Ha! NYSE stocks have to publish their earnings b/c they are traded on public exchanges and have outside investors. On the other hand we have private companies that aren’t listed on stock exchanges. They do NOT have to show their balance sheets. So does that mean their business model has a higher chance of being a scam? I don’t think so. Then, Mr. Talk With His Hands says, all of mass media is talking about it…. so it’s hot hot hot! Just like when Mass Media was talking about flipping houses b/c it hot hot hot! Then the market it dropped it like it was hot. Ha! Ok, I know that it was lame to use a line from a popular hip-hop track as a punch line. Anways, I couldn’t watch the entire video and at that point I just turned off my computer and went to 7-11 to down a mega size slurpee.
In the end, I’m not commenting on the company Nu Skin. I am commenting on the ding dong arguments that are being used. I might go into a more in depth analysis of Nu Skin the company later.
Posted in Uncategorized on February 3, 2011
This video is a bit hilarious, but shows that even today we aren’t as evolved as we think. People are are walking down the street, going through their day while their guard is down, and fall into blindly obeying authority. This type of behavior has been shown years ago first documented by Dr. Milgram. Google “The Milgram Experiment” to see more. Or here http://cnr.berkeley.edu/ucce50/ag-labor/7article/article35.htm. To get out of this heard type thinking, and wake up from the Matrix; I had to do a lot of studying and reading. I turned off the TV, facebook and dedicated every waking moment to educating myself. Much of what is taught in school is archaic and not practical theory. Material that is taught in business school is not practical at all. Many of our college interns at my firm are racking up 25% percent gains a month in our clients portfolios, and know more than their economics professors. One college student I know told me that his econ. professor is telling his class that the real estate market is a better investment than the capital markets. Completely absurd. The housing market is below depression levels while interest rates remain flat. Banks still have a ton of foreclosures on their books that they report to release onto the housing market. More supply and less deman equals falling prices. The law of supply and demand. I know they teach that in school, but some professors don’t seem to know how to apply it. But I digress. Anyways, just something to think about.
Posted in Uncategorized on February 2, 2011
Mark Cuban’s recent blog post, *CLICK HERE*, he says that the stock market is for suckers. Implying that it’s gambling and that you are victims to Wall Street’s lies. Mark’s thoughts on the stock market is a bunch of crap and full of lies. I do agree with one point of Mr. Cuban. You are a sucker for blindly following financial advice without doing you’re own due diligence. “The only person that cares more for your financial health is yourself.”
Before I get into the article let’s first lay down a foundation. The majority of people tend to believe anything that a person says if that person holds a degree in that field, or has a butt load of money. They instantly assume what they say is truth and don’t even do any research for themselves. That’s just being lazy. Remember back in the day when stock brokers told you to buy ABC stock b/c it had great fundamentals? The average person still thinks stock brokers are involved with asset management decisions. Remember a few years back when major economists and the federal reserve chairman said “that our economy is doing great b/c the housing market is growing”. At the same time a doctor named Ron Paul said that “It’s going to tank.” The guy who can do your stitches called it, wow! So many will believe something that is said as truth b/c they think, “oh well that person has an economics finance degree, or is gazillionaire … so they are the experts. I should do whatever they tell me to do with my money. This is completely false. The majority of people working on Wall Street have Ph.Ds in Mathematics, Physics or some kind of hard science.
Now let’s think what is Mr. Cuban really up to. If it weren’t for the stock market, Mr. Cuban wouldn’t be a billionaire. So what is his incentive? ah ha! Right? He’s a sneaky little bastard. M.C. started a company called broadcast.com right before the tech bubble. I know so many people, including college students, that became millionaires just buying crappy tech stocks back then. A stock would be 0.25 cents and it rockets to a few dollars a share. That’s bank! The tech bubble was a result of greed and assets becoming overly valued exponentially beyond their book value. Just like what happened to the housing market that was artificially inflated beyond reasonable value. Now if you own one of the largest tech companies at that time and sold it at a price due to artificial inflation of course you’re going to be a billionaire. If Mark’s company was created at a different time he wouldn’t be as rich. He was in the right spot at the right time. Mark is nowhere as innovative as the CEO’s of Google. Mark got rich not by innovative skill. Just like those who bought houses during the peak of the bubble and happen to sell. It’s not like they knew CDO’s and derivatives were going to implode and so timed the market. ha!
Now To his Article:
- Yes, “buy and hold” is a stupid concept pushed by the likes of Warren Buffet. If you have money in a mutual fund or the stock market, then please pay attention to whats going on in the economy and pull it out if the poop starts to hit the fan. So the statement is really incomplete. It should be, “Buy and hold and pay attention to whats going on in the world, your economy, your portfolio and Sell when poop starts to hit the fan.”
- Yes it’s true that stocks are bought and sold in milliseconds. They are done by investment banks, hedge funds and clearing firms. They are acting as market makers and providing liquidity to investors. Trades that happen in milliseconds have no effect to the longer term investor. For example, when you buy a stock through your broker. Like E-trade. E-Trades uses it’s computers to scan all the venues for the best price and then sells it to you. E-Trade makes money on the spread.
- M.C. says Wall Street wants us to invest in things we don’t understand. Well, then don’t do it. Keep things simple.
- M.C says, “to not invest in the stock market and keep your cash.” Ok that is just stupid. That’s worst than “buy and hold”. Cash is an investment position! The value of the U.S. currency is at historic lows and has been on this decline since the 1960′s. It hasn’t gone up since then. The stock market is vital to all expanding growing economies. Foreign governments put their money in the stock market. If you believe in a company then invest in it, but don’t just forget it. Monitor it everyday. We don’t drive cars with our eyes closed do we? Ok maybe some women do in the morning while they are putting on their make up or texting. ha!
Mr. Cuban’s motive:
Is for his own self gain. Let’s think about it. He doesn’t want people to put money into the stock market, and he says to keep cash in the bank. He says this because he doesn’t want other start-up companies to get investments to grow and development. That would create more competition for him. The stock market is needed for new companies to expand. There would be no Apple or Google without the stock market. He says to keep your money in the bank and not invest. He says this b/c the U.S. dollar continues to decline, plus there’s inflation everywhere, and increasing capital gains to add on top of that. All what he says is for his benefit, not yours.
Mark Cuban recently got charged with insider trading. http://www.reuters.com/article/2010/09/21/us-sec-cuban-lawsuit-idUSTRE68K33E20100921
Mark owned shares of a new start-up company. He then started pumping it up, by telling everyone about it on his blog and other media. He knew the company had some news that would negatively effect it’s stock price and he dumped it. Many people lost out while he made 750,000. That’s nice pocket change for selling a bunch of lies.
In conclusion, doing your own due diligence and homework will surely pay off.