Thursday, December 16, 2010

How 2009 spawned hopeful traders

The only thing 2009 did was spawn a cult of buy only traders who now think that they can trade for a living. There has never been a time on the internet where more people than ever have created their own websites charging subscription fees for their trading advice. This is the biggest joke of an industry that has ever come alive. What the majority of people don't realize when signing up to these people's sites is that their performance was due to an overall recovery that has never been seen before in the markets.

After the 2008 debacle, every stock was liquidated due to the financial deleveraging of money. With Lehman Brothers, Bear Sterns, and Wachovia all going bankrupt, a lot of money left the markets, causing a world wide collapse in equities. But when the crooked Federal Reserve came in and printed money and promised to provide any money needed to any financial institutions and bail outs for the "too big to fail" companies like AIG, the market pressure was relieved. Everyone had felt like the worst was over and Superman promised to save everyone no matter what, when, where and why. (Essentially the reason these selected corporations were bailed out was because the politicians making the decisions were tied to these companies and had lots and lots of their own money in these companies.)

Individuals blindly threw money at companies they didn't think were going to go bankrupt. The irony in the situation was that, these same individuals had no idea what was happening. They just threw money at companies like lottery tickets and saw some of their gains go up 10 fold. That is when the light bulb clicked. They thought themselves geniuses and most likely quit their day jobs to trade. A blind, long only trading monkey could have made money buying stocks in 2009. So what happened to these same traders in 2010. Well lets see 1 of them for example. This guy brags and brags of his performance last year but when you go through his archive and watch some videos on his website right before April 2010's flash crash, one can't help but to think how much money he and many others must have given back, almost making their stellar 2009 year nothing but a wash. He bragged about how good each one of his stocks would be in the beginning month of April and when you look at those same stocks a month after the flash crash most of them were down over 50%. I also predict that in 2011 he will lose even more of his money and all of his subscribers with it. Watch in this video how both of these guys don't think that a macro event like Greece needing to be bailed out can affect their stocks. Didn't they learn anything? They are completely immature in their history of stock market movements.

Video Link

I also can't help but notice this guy Todd Sullivan that promotes as one of their premium subscription sites. Try to go to his track record for the year and it won't allow you to access it anymore. He must of gotten clobbered after the flash crash. The fact is, these guys are not aware of the macro picture and don't know much about how stocks move. These same guys probably quit their day jobs after their 2009 performance but its not a question in my mind that they've already started losing their money in 2010 and 2011 will only get worse.

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