As the markets wait for the clouds to lift in Washington, we
continue to see a mixed reaction so far as investors remain
cautious (exhibited by low trading volume).
Earnings will start to whittle down as the month goes along, but
we did have the markets reacting negatively to news from Vail
Mountain Resorts (
MTN
) following
the company's earnings release today
. Also, Darden Restaurants (
DRI
) was nearly 10% lower after the company
announced it would miss next quarter's profit estimates
badly
(a small portion of the miss is being blamed on Hurricane Sandy,
but not as much as the media will mistakenly point to as the
reason).
IACI Interactive (
IACI
) also saw heavy selling following a Wall Street analyst call
downgrading shares to a "sell". Finally, retail shares witnessed a
bit of a divergence as luxury names like Ralph Lauren (
RL
) and VF Corp (
VFC
) lagged today's action, while Wal-Mart Stores (
WMT
) gained ground. The Gap Inc. (
GPS
) also was hit on extremely heavy volume.
Beating the System
Every morning we wake up and come into the office to find the
latest batch of companies "beating" the fiscal cliff tax on
dividends. As a matter of fact, Oracle (
ORCL
) raised the bar of beating Washington's tax grab by
announcing it will be paying 3/4 of its 2013 dividend
payout this month
. Despite how "ahead of the curve" Washington and its policymakers
believe they are, the movers and shakers are ready to react just as
fast as they need to. Consequently, the resolution that eventually
is approved will probably just end up hitting the taxpayer much
more than any other entity. That's the sad reality. But the show
remains the same and the media will continue to paint the effects
with the wrong brush. Bureaucracy wins and taxpayers lose.
Again.
Individual Traders Vs. The Big Boys
Bloomberg ran an
article
talking about how complex the markets have become, but one of the
biggest nuggets in the article was that in 2004, more than 80
percent of market volume was controlled by less than 20 percent of
the participants. Today, high-frequency traders alone control more
than 50 percent of the volume.
So as the business media glamorizes the business of trading
making individual traders believe they can follow the advice of the
gurus paraded up and down, the reality is the odds of making money
in the markets has never been harder - from a trading standpoint
that is. We have said it over and over again, trading requires
resources: time, energy, discipline, focus, and capital that most
individuals can not keep stocked for a long enough duration of
time. I was able to stick to it for numerous years, and even after
having been successful at trading, it still felt like an incomplete
mission in life. The reality is the number of individual traders
continues to diminish as the other players at the table continue to
fortify themselves with every edge possible. Where the edge
disappears is when investors find great income-producing companies
they don't have to trade in and out of every other day. This is
where we all want to be in today's ever-changing market
environment.
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