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What Strange Lessons We Can Learn From Money Monster

by trusted insight posted 5years ago 320 views

Clooney’s character Lee Gates (a spoof on Jim Kramer) tries a form of cumbersome crowd sourced investing to juice a stock higher.

He asks his millions upon millions of viewers to buy a small amount of one company, the collective buying would be enormous and push the stock sky high!

I was intrigued then that given the number of people on social media, done right, this approach could effectively socialize corporations.

That is, let’s say a target is identified by a social media authority (millions of followers). And each of those followers diligently buys $10 or $100 of stock through their online broker.

All of a sudden a company has a million + shareholders. Well why not only service those shareholders at cost + a tiny margin. The revenue volume would be huge which could make up for the loss of margin and control is effectively transferred / socialized amongst millions of shareholders ….… hmmmmm?

Again I won’t go into detail here but as a behavioral finance student I find it interesting that [South] Africa is viewed as corrupt, dangerous yet high tech... I’m not saying it isn’t and it does remind me of a society portrayed in the movie Chappie by Neil Blomkamp.

But I’m a contrarian and if this negativity towards South Africa is surfacing out of mass psychology I would say there may be reason to explore going the other way.

I find it interesting that most professionals consider market timing a worthless exercise. As if it’s best to ignore its very existence, which, to us is like ignoring the tides of the ocean because they don’t always make sense!?

But seasons do exist in the market and if everyone disdains them then a serious market student should pay attention for an edge.

“NASDAQ’s amazing eight-month run from November through June is hard to miss … A $10,000 investment in these eight months since 1971 gains $542,597 versus a loss of $1,655 during the void that is the four-month period July-October”

The MACD indicator is incorporated by looking for a crossover (momentum shifting upwards or downwards) beginning the last month of each period.

It is remarkable to us that it has been 13 months since the major equity averages made their all-time highs and nearly 19th months since the market decelerated from its long move up off the 2009 lows.

CPI, for example, in the US is constantly surprising to the upside as does unemployment numbers (lower).

The Fed (and other central banks) have broken the price transmission mechanism by suppressing interest rates – creating bubbles and impoverishing the middle class – and hence the market may indeed applaud when a normal pricing mechanism reasserts itself.

The corollary is that markets may move lower on lower interest rates in a kind of negative reinforcement loop as it were – which is exactly in synch with what the Stock Trader’s Almanac is predicting!

Thank you for reading my post. I regularly write about private market opportunities and trends. If you would like to read my regular posts feel free to also connect on LinkedIn, Twitter or via Atlanta Capital Group Investment Management.

Greg Silberman is the Chief Investment Officer of Atlanta Capital Group Investment Management [ACGIM]. Atlanta Capital Group specializes in creating custom private market solutions for RIA/Family Office clients.

Nothing in this article should be interpreted as a recommendation to buy any security. Please conduct your own due diligence.  

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