Posted by Mark on January 13, 2015 at 06:21 | Last modified: May 6, 2015 08:34
Last time, I presented three reports on Google’s 2013 Q4 earnings announcement. Today I will discuss them.
First question: was this a good or bad earnings report?
Headline for Report #1: “Google misses, shares up.” That sounds like a bad report but a good outcome. On the other hand, if shares are up then maybe it’s a good report. “Misses” has a negative connotation though.
Right out of the gate, I’m confused.
Report #2 says “Google earnings top expectations.” This seems contradictory to Report #1, which said Google “missed.” Topping expectations is more consistent with the stock moving higher but then is Report #1 wrong about the miss? Maybe the judgment call refers to different measures (e.g. revenue, earnings, margins). Is the writing sloppy because the antecedent was not specified? Report #2 later clarifies by saying “Google’s earnings figures were pretty hot,” which tells us that earnings, at least, were good.
Report #3 says “strong revenue growth,” which suggests that revenue was good. Earnings and revenue were good, then, so what “missed” according to Report #1? Actually, Report #3 says revenue growth was strong but it says nothing about estimates. Maybe Google still missed its revenue estimates despite revenue being strong?
Report #3 goes on to say: “the search giant missed earnings expectations by a wide margin but wasn’t punished by traders.” Report #2 said earnings topped expectations. Which is it: did they top or did they miss by a wide margin? There’s no fuzziness with this comparison: they are in stark contrast with one another!
I will take a closer look at the numbers in the next post.
Categories: optionScam.com | | Permalink
Posted by Mark on January 8, 2015 at 06:54 | Last modified: May 5, 2015 14:19
Earnings just don’t make sense to me with regard to stock price movement.
While I have seen many anecdotal instances to support this hypothesis, I will use one example to keep this blog series short: Google 2013 Q4 results, which were reported on January 31, 2014. I will present three reports on the earnings announcement.
In no particular order, here is Report #1 from Zacks:
> Google Misses, Shares Up Regardless
>
> Google Inc (GOOG) reported fourth-quarter earnings of $9.93,
> missing the Zacks Consensus Estimate by 41 cents, or 4.1%…
> shares jumped 4.1% after-hours, after rallying 2.6% during
> the day. Google’s gross revenue came in at $16.86 billion…
Here is Report #2 from The Motley Fool:
> Google and Amazon Earnings
>
> Google earnings top expectations. Google this: Shares of
> the search engine that you probably used two minutes ago
> jumped more than 4% in after-hours trading Thursday, after
> Google (NASDAQ: GOOG ) reported a projection-beating
> $16.9 billion in revenues last quarter.
>
> The takeaway is that Google’s earnings figures were
> pretty hot…
Here is Report #3 from The Verge:
> Google Q4 2013: strong revenue growth driven by Play
> Store and hardware sales
>
> The search giant missed earnings expectations by a
> wide margin but wasn’t punished by traders.
>
> It seems like Google can do no wrong with the markets
> these days. The consensus estimate on Wall Street was
> that Google would deliver $16.75 billion in revenue
> and earnings of $12.26 a share. It hit the top of that
> line, with $16.86 billion in revenue, but missed on
> the bottom with earnings of $12.01 a share. Still,
> the stock was up slightly in after-hours trading.
> Google made $14.4 billion in revenue and earned
> $8.62 a share for this same period a year ago. Last
> quarter Google brought in $14.8 billion and earned
> $10.47 a share.
I will compare and contrast Report #1, Report #2, and Report #3 in the next post.
Categories: optionScam.com | | Permalink
Posted by Mark on January 5, 2015 at 07:06 | Last modified: May 5, 2015 09:32
Disclaimer: except for the title, this post has nothing to do with the last one.
About one year ago, I saw this in a trading forum:
> Hey guys,
>
> We’re giving away 5 free subscriptions to Born To Sell’s
> covered call screener on Feb 22. One of them will be
> based on skill and the other 4 are random drawings.
>
> To win the skill-based contest, you have to guess the
> closing value of the DJIA on Feb’s option expiration
> day (Feb 21). The other 4 prizes will be chosen at
> random from among the submissions.
>
> Enter on or before Feb 1 here…
This post captured my eye because of its flawed differentiation between “random drawings” and “based on skill.” How could we possibly tell if guessing the DJIA on a particular date was a matter of skill or a matter of random luck? Based on one instance we absolutely could never do so.
Statistically speaking, in order to demonstrate “skill” that is significantly better than chance (randomness) we would need a sufficiently large sample size of correct predictions. The winner may certainly make claims about his/her prowess based on one prediction but these claims would be premature. To truly be a skill, the requisite sample of correct predictions must not be retrospective and must not make use of hindsight. Predictions made in advance must be verifiable, too. To be sure, con artists have historically used any and all of these means to dupe unsuspecting customers.
I make no claims about the reliability or accuracy of the “Born to Sell” service because I know nothing about it. I do not, in any way, shape, or form, endorse the product. I only mean to provide a brief commentary on “skill” vs. “luck/randomness:” two concepts that are often confused, sometimes deliberately, for the sake of advertising and marketing.
Be on guard for optionScam.com!
Categories: optionScam.com | | Permalink
Posted by Mark on January 2, 2015 at 06:45 | Last modified: May 5, 2015 09:04
I have recently been catching up with blog ideas that, at one point or another, struck me as particularly noteworthy. Today’s installment is but a snippet that offers some relevant material for us hopeful traders. Today’s post was inspired by some writing from January 2014:
> Quite often I have read technically-based
> trading strategies that advertise quite well.
> Do they really work, though? Certainly we’re
> brainwashed to think they work (technical
> analysis books, educational seminars, etc.),
> but in trading many things work just by
> random luck alone (like 95% of all cash
> secured puts over the last two years).
>
> Ultimately, I believe the only way to
> determine if a trading idea has merit
> is to put it through the exhaustive steps
> of trading system development. Most people
> don’t know a thing about this so they feel
> comfortable trading in a discretionary
> manner until they experience a catastrophic
> loss that knocks them out of the game or
> leaves them walking quietly into the night
> with tail between their legs.
>
> Admittedly, some things are difficult/impossible
> to backtest. As an example, perhaps I might
> look at S&P 500 stocks in the upper half of
> their Bollinger Bands vs. those in the lower
> half and look at the distribution of price
> changes over the following days to see if
> there’s a difference. If I can’t make a
> statistical determination then I may wonder
> “am I confident trading this idea even though
> I have no more reason to think it works than
> randomness alone?”
>
> If I am then great! If not then I won’t.
>
> Bottom line: I should be honest with myself
> when trading an idea that I have no more
> reason to believe works than randomness alone.
> I think many traders are deluded into thinking
> they know something works based on definitive
> principle when they actually have no good
> reason to believe it at all.
Categories: System Development | | Permalink
Posted by Mark on December 29, 2014 at 05:47 | Last modified: May 4, 2015 09:13
This blog mini-series presents discussion on the sudden 2013 cease and desist exhibited by Callwriter.com.
I categorized this mini-seires under optionScam.com because I have often found a close association between trader education or trading system products and internet marketing. In the context of trading, “internet marketing” is synonymous with ripoff. Developing profitable trading systems is a laborious project involving hundreds to thousands of hours. Disproving a system can be equally difficult for those without the theoretical understanding to do so. Suckers looking to make a quick [thousand] buck[s] trading stocks, futures, or options are therefore prey to the internet marketers who float attractive products.
In the world of trading/investing, the free lunch is simply never to be had. Many nefarious entrepreneurs/companies advertise and market to make people believe otherwise.
Another thread about the mysterious disappearance of Callwriter.com is seen on The Option Guru website. We can even find a video on that site where we hear (not see) Mr. John Brasher himself! Maybe The Option Guru is a believer…
Some further searching turns up this page. Wait… that’s also The Option Guru! The content here is from 2009, though, so maybe he didn’t know enough about options to be a guru just yet. Under the “About Me” section I can see his name is Jeff. When I see the same people on different websites then I start to get suspicious.
Look closely back to that first website from two paragraphs above and you can see another product being advertised: “Trading Pro System.” I did an Internet search trying to determine if this was fraudulent and I found this website. When I see the same product being sold by multiple people (e.g. “Eric Holmlund,” “David Vallieres,” “The Option Guru), then I start thinking optionScam.com. It’s more like these are affiliates all cashing in on an internet marketing scheme just like many distributors sell Mary Kay cosmetics (except the latter is a real product with substantiated value).
Ultimately, the business theme always seems to be the same: who cares if the product can really make anybody money as long as it has marketable reason to exist and sustainable demand.
optionScam.com, folks! Sometimes it’s hard to nail down precisely but if it’s too good to be true…
If it walks like a duck and quacks like a duck…
If there’s reasonable doubt then come about!
Categories: optionScam.com | | Permalink
Posted by Mark on December 26, 2014 at 07:37 | Last modified: May 4, 2015 09:03
I’ve been reviewing the Twilight Zone-ish annals of a premium trading service that suddenly ceased to exist. Here is the reply to my response shown earlier:
> Mark:
>
> I have no disagreement with your post and comments
> regarding the “landscape” of snake oil salesmen
> etc. I myself am still owed quite a bit of money
> from the untimely and criminally negligent demise
> of MF Global.
>
> I have no problem with group members voicing
> (especially when asked) their opinions of various
> advisory services, trading rooms etc. There are
> certainly more than a fair amount of less than
> honorable folks out there who will willingly take
> your money and not bother to provide anything of
> value in exchange.
>
> Alex’s post seemed to be written by someone having
> no actual knowledge of what happened to Mr.
> Brasher. Regardless, he basically wished him dead.
> I thought that was WAYYYY over the top. I made no
> personal attack on Alex, nor did I in any way
> excuse what happened (or may have happened) with
> Mr. Brasher and his Callwriter service.
>
> Alex’s follow-up post in response to yours, which
> included personal attacks on me and insinuated
> that I (with Mr. Brasher as my leader) was somehow
> complicit in the demise of Callwriter, simply
> demonstrates that my original post responding to
> Alex’s was spot-on.
>
> I guess when one has no facts to support their
> position, or are actually called out to explain
> why they have chosen to wish death upon someone
> when they actually don’t know anything about the
> reasons for the unfortunate closure of Callwriter,
> they resort to personal attacks unfortunately.
>
> Best Regards.
I will wrap up this business drama in the next post.
Categories: optionScam.com | | Permalink
Posted by Mark on December 23, 2014 at 06:30 | Last modified: May 4, 2015 08:58
A smattering of subscribers seemed to be out money when Callwriter.com went offline. I continue with a forum thread addressing this occurrence that took place in March 2013.
In response to one trader who commented how unfair/mean it was to be angry with the service for disappearing without advanced notice, I chimed in:
> Given that the landscape of investing and trading
> is littered with so much in the way of snake oil,
> con-artistry, and other shenanigans, a person who
> walks away from paying customers with nary a word
> nor a refund deserves all the hatred, anger,
> disrespect, and prison time that s/he may get. I
> see no reason to be politically correct on
> something like this; Callwriter subscribers got
> had, plain and simple, and I don’t blame
> them for being angry about it. “Common decency”
> and “callous disrespect for others” have no place
> in this context.
>
> If you don’t believe the financial industry to
> be a hostile landscape then I suggest you start
> watching American Greed on CNBC. One way
> to lose money is by being scammed; increased
> awareness in this area can only make us better
> traders.
>
> Mark
> As one of the subscribers who got s……d, I
> think I can speak with a little authority. I
> actually met John. While he owes me a few
> months of subscription, I don’t think he owed
> me anything else. He seemed like a nice man.
> His wife was a nice lady. They had a family.
> It’s too bad. Life goes on. One man’s
> reputation is ruined.
>
> In a perfect world, I would have liked a
> refund, but that wasn’t forthcoming. This is
> opinion only, but I think he must have been
> in some serious financial distress. He was
> an attorney by profession. He had enough
> sense to not post on the website acknowledging
> problems. Not honorable, but it’s what a good
> attorney would have advised him to do.
>
> For his subscribers, the site was simply an
> information source. It crunched numbers and
> provided lists of candidates. Selection for
> trades was entirely up to the subscriber. The
> results were mine and not John’s. I miss the
> tool.
>
> Mark’s right, people are out to screw you.
> That’s why I choose to be a self-directed
> trader and investor. If this is the biggest
> loss I experience from the financial
> community, I will be well ahead of the pack.
Categories: optionScam.com | | Permalink
Posted by Mark on December 18, 2014 at 08:14 | Last modified: May 4, 2015 08:50
My last post introduced a forum thread discussing the sudden, unannounced 2013 closure of Callwriter.com. I generally think the financial landscape is littered with snake oil and I find it interesting when questionable/unethical things like this occur. I continue:
> Who would care for a trader who can NOT make a
> living on his own calls: let him RIP.
> Since you seem to be certain of the reason for
> his decision to close down his website, and go
> AWOL, perhaps you can clue us in as to how
> bad his calls were so the rest of us can
> potentially avoid making the same investing
> mistakes that caused him to RIP.
>
> If on the other hand, you don’t actually know
> the true facts behind his site closing down,
> and his reasons for his being “out of touch,”
> then I would humbly suggest that you are WAY
> past the point of common decency and your
> words and tone show a callous disregard for
> others.
> I was told that prepaid subscription money
> (in some cases, multi-year subscriptions)
> had been used to cover current month’s
> The source mentioned nothing about investing
> losses and I’m sorry if my previous comment
> was misinterpreted. I don’t know anything
> about his investing.
>
> The lack of subscriber growth and renewals
> meant they could no longer keep up with
> current expenses since subscribers’ money
> had already been spent. That’s the risk
> in a prepaid business model if you don’t
> separate cash you have received but not
> yet earned.
>
> I was also told that his health was fine (by
> someone who said he spoke to John a few days
> before the site went down) and that the ISP
> pulled the plug because they hadn’t been paid
> in months.
>
> I know of at least one other creditor that…
> Callwriter… owed money to, because they…
> asked me if I knew where he was. I do not…
> and I have had no contact with him since the
> site went down.
The plot thickens…
Categories: optionScam.com | | Permalink
Posted by Mark on December 15, 2014 at 08:02 | Last modified: May 4, 2015 08:48
Once upon a time, a man named John Brasher ran a service named Callwriter.com. As occasionally happens in the financial industry, the service was here one day and literally gone the next. I intercepted a forum thread back in March 2013 and today I begin presentation of select posts from that thread.
> Does anyone know what happened to Johnny Brasher and
> his site Callwriter.com? It disappeared a while ago now
> very quickly and all trace of him seems to have
> disappeared as well – what happened?
> It seems he had his house up for sale and there was a
> contact number (his wife I believe) for the ad. It was
> abrupt and I believe he left some people with more than
> month-long subscriptions high and dry.
> He left me high and dry. I had about six months left on
> the subscription. Don’t know what happened. It worked
> one day and the next the plug was pulled.
>
> Too bad, it was a really good service
> We spoke with someone close to John a couple of weeks
> after the site went down. We were told he didn’t have
> the money to keep the site up and his ISP pulled the
> plug after he was behind on paying them. We were told
> his health is fine, and we believe the decision to
> abandon the site was a business decision.
>
> In early 2012 we tried reaching John through several
> channels for a couple of months but he never
> responded. As his competitor, we’ve fielded dozens
> of calls from his former subscribers, none of whom
> were able to reach him. To our knowledge, no one got
> refunds on the unused portion of their subscriptions.
>
> [company name withheld]
This company, of course, stands to gain new
subscribers from Callwriter’s disappearance.
I will continue with this thread in the next post.
Categories: optionScam.com | | Permalink
Posted by Mark on December 12, 2014 at 05:48 | Last modified: May 2, 2015 12:56
In 2013, Jeffrey Mishlove, Ph.D. posted some responses to a very interesting survey question: “When is studying scientific research most useful for understanding financial markets?”
My last post detailed some of those responses. Here are two more:
> Have financial markets been consistent enough
> (knowing all the parts of a valid research study
> that must be there in the research), amidst how
> quickly the world has changed in the last 200 years,
> to even get the kind of research that would still
> be valid today?
> One can fiddle till doomsday with quantitative
> analyses of social reality, but since we are dealing
> with human creations and manipulations, I wouldn’t
> be inclined to believe very much in “scientific,
> empirical” research into financial markets.
To me, this question is about trading system development, which is something I consider a “pseudoscience.” I believe we can follow a methodology to do this in a valid way. I don’t believe we can ever get around some level of subjectivity, however, and that is why I use the prefix “pseudo.” What makes an acceptable trading system for one person (e.g. maximum net profits) may not be acceptable for someone else (e.g. maximal ratio of net profits to drawdown).
Legends abound regarding traders and institutions that have used algorithmic trading systems to earn millions and billions of dollars. The veneer of success and profitability is clear. At the very least, this is all good marketing and advertising. How much of those profits were retained, never to be lost, is something we will never know. If they were all lost and the firms went under then that is certainly something which may be discovered on a case-by-case basis. Most of us don’t have a research team available to help us out with that, though. I know I don’t.
One thing I like about option trading is that it gives me a margin of safety. I can start with a trading strategy that I think has potential and have a good chance to make money even if the strategy ends up being lousy. This certainly doesn’t mean I won’t lose, though, and when loss rears its ugly head I better have good risk management at the ready.
Categories: System Development, Wisdom | | Permalink