stock market

All posts tagged stock market

I haven't time to comment much on the economy recently, thanks to Super Smash Bros. Brawl and… oh who am I kidding… I didn't even do a portfolio postmortem for last year. We are clearly in a recession right now, something I predicted in 2005 after much research, and my wishes go out to everyone in the American workforce… except those in the game industry! We don't need it! We are recession-proof! Hah!

Well, predicted sounds arrogant… I didn't predict a recession, I just tried to point out the mountain of evidence that it would happen. It's no surprise to me that games are recession-proof, though. Entertainment in general follows different fundamentals than other industries. Games often get compared to film, but there are two key differences that have made us an industry that has begun to intimidate Hollywood in size. …

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Wow, disgusting. Sure, this tribute is an honest, sincere, touching expression for their dear friend Gerstmann, but c'mon… this is an unprofessional, weepy-feely, nerd funeral in the worst way. They should grow up and get used to the real, ad-capitalized world that keeps them employed doing a throw-away job. These people seriously think they are on the vanguard of a brave new era, contributing. Per my last post, I believe that is bullshit. Gamespot's own statement about the situation makes perfect sense to all but the kids on game forums who continue to rave over their late reviewer, screaming "fuck you" to the proverbial "man."

Incidentally, talking to our studio head recently, he told me an interesting anecdote about an independent reviewer contracted to cover a major sport title for Gamespot or IGN (he forgets which review site). Anyways, the guy wrote a decent write-up of the game, gave it something like an 8.0 or so, and one of the lead developers wrote to him to say thanks for the fair review, thanks for actually playing the damn game (unlike most reviewers), and offered to send him him an alpha of the next version for him to check out early.

The guy emailed back to say that he probably shouldn't be talking to him. The independent reviewer, turns out, had actually wanted to score the game much higher, at around a 9.0, but was told that was an inappropriate score for a games of its ilk made by big, hated corporations like Sony and EA. He hadn't met their scoring "guidelines." He concluded by saying that his game reviewer stint promptly came to an end, and he decided to give up game journalism and move far away.

So I'm glad Gerstmann was made an example of. In a way, game reviewers are very much like Wall Street analysts, treading a fine line between reporting and currying favor with either the executives or the greedy market. Often, it devolves into a popularity contest with few threads of meritocracy holding the whole system together. Either way, you should take them all with a grain of salt, however much they may seem like the "little guy."

I've been reading Use the News by money honey Maria Bartiromo, and while her book is gossipy and light on practical information, that's what Wall Street is, and her perspective is a great read, especially about those analysts. You can see exactly how she got in trouble over the Bernanke slip, as her personality comes through strongly, but it's an excellent slice of street-think to pore over. If you watch financial news on TV at all, it's certainly worth a read, and will hopefully help you get a handle on your own trading emotions.

Tony Hawk 9: Proving Grounds for the PS2 has passed first submission! Hooray! Yeah yeah Halo 3 blah blah… Meanwhiles, I've been moved onto the next unannounced project, and was brought on full-time. Finally, I get a chance to be in game design from pre-production, and there's a heck of a lot of work to be wrassled.

While I did get a small breather, I realize that game designers are essentially busiest at the beginning and the end of the development cycle. First to make the stack of rules and concepts that will be made… then later on to corral the shards leftover by artists and engineers into a seemly, playable, lump of broken dreams. I'm just kidding, but you get the idea. In fact, it's extremely exciting to wrangle ideas to appeal both to our client, who's given us their IP, their baby, and our internal machinations for such games as go-for-broke developers. Learning exec speak, crafting proposals that we won't hate ourselves for later, "prototyping" UI ideas, and just trying to capture the essence of an IP I don't fully understand, these are the challenges I'm learning from everyday.

Meanwhiles in the rest of the world, you've probably seen the froth in the stock market when the Fed announced an interest rate cut of half a point. I was careful to avoid trying to jump in recklessly when I saw how that day rose on such weak volume, and since the rally it seems like the traders have lost much steam. Chances are, we'll see another rate cut by the end of the year. Helicopter Ben's strategy will be to pre-empt recessionary talk with offensive injections of liquidity. Stock markets will rally until the weight of a collapsing housing market pulls it down. I will try to profit from it all.

As Tokyo Game Show raged into the land of the rising yen, I tried to skim off of the abundant Dualshock 3's rumble rumors by buying Immersion Corp. (NYSE:IMMR) stock. It didn't pan out. I got in and got out with a 4% gain, never looked back. These kinds of speculative plays, while fun, are dangerous even for people who think they know everything in their own industry. Caveat investor.

I wanted to share a huge missed opportunity in my trades that happened recently. I've been trading ACH in and out, and making very good profits, but when the huge pullback the two weeks ago happened, I backed away. For the last few days, I was following ACH again, watching the rounded top chart pattern forming. Something told me that this was not a bearish signal as it usually is, and I thought about putting a limit buy at $35, at the where the last resistance formed mid-May.

As you can see in the chart, the stock exploded after it hit $35, hitting a high of $50 in less time than I could react to. It had a one day gain of +15%. I was crushed that I didn't seize the opportunity.

My mistake is obvious to me now. The rounded top happens on the chart from mid-June to mid-August. Rounded tops indicate that buying pressure dissipates as the price climbs, then people lose confidence and get out as it crosses the peak and starts falling. The volume on a real rounded top is the shape of the top but inverted, meaning that the volume is lowest at the high point of the price.

Look at the chart. The volume was rising. The drop in price was probably due to other factors, such as the global pullback. The moment I should have known was August 6th when the price fell but the volume kept trending up. People wanted ACH, they had interest, they were fighting the price. And then it happened: on August 16th, the price hit a low but closed above the last high on May 14th. A reversal was coming. The price had hit a previous top at $35, where the price exploded afterwards into the beginning of the rounded top, but it closed above at $37! What was I thinking!

Even more damning was the fact that when it hit that $35 resistance, it crossed below the lower Bollinger Band (red lines). Normally, I consider this to be a moderately bullish signal that the price is at a statistical low, but what made this one special was how the top BB band did not rise. Usually, BB bands diverge (top band rises, low band falls) when volatility increases. This wasn't it.

Anyways, looking at it even closer the yesterday, I realized that from Aprl to June there was a rising double top kinda thing that I should have realized was a sign that this stock had a lot of dedicated, inspired buyers (like myself, silly!). With aluminum being one of the worst performing sectors anyways, ACH was something I should have stuck with, not just traded. Profit is sometimes found in the faith.

So with what looks like a slow, struggling recovery, I may be wrong about the stock market's resilience. It wouldn't be the first time. To be honest, fancying myself a technical trader, I've never been very good at the buy-and-hold game. Accumulators probably had a ball with this dip. I took it as an oppotunity to accumulate high dividend stocks. I am no baller in this arena, and I will not play the rebound on a court I don't know. I'll remain cautious, and more importantly, I will not regret gains I might miss out on. That's my style, I'm stickin' to it.

After Nintendo's amazing financial statement came out, Sony follows up with equal aplomb… in the form of pompous bullshit. It's shocking that Sony CFO Kobuyuki Oneda said:

"Actually, because the number of units [of PS3] sold was not as high as we hoped, the loss was better than our original expectation,"

Ignoring the massive costs of R&D, support, and over-manufacturing, let's just think about the sheer illogicity of this spin. If I were the worlds ugliest hooker and had my legs spread on the street next to a bedpan with "five bucks a fuck" scratched into the rim, I'm less of a slut than the rest since no one would be taking me up on the offer.

Get real.

Meanwhile, I am trying very hard to find an Xbox 360 to buy, probably an elite. I've already pre-ordered Bioshock, and I'm just waiting to see if the system price drops on August 12th. This coming gaming season is going to be unmissable, and the raving reviews of the 300 HD-DVD makes my wallet suicidal.

I've been flinching since last month but the blow didn't come til this week. The stock market took a beating this past week, and I was fortunate to have put myself in a safe place before it happened. Well, relatively safe. My 5-year cyclical safety portfolio has been losing half of what the S&P 500 has been losing, which is comforting considering it still has some dividend help, but I made a bad decision on keeping some real estate. Overall, I've lost the majority of my gain since two months ago, but it wasn't much to begin with. The bulk should still come from dividends and long-term growth.

On my trading portfolio, I put myself in a very safe place with international stocks and the Brazillian index, but putting money on gold as a hedge hasn't worked out. The problem is that the market is not falling on inflation data or other economic symptoms. Rather it's a adverse reaction to the end of cheap money, the credit that's been fueling leveraged buy-outs and sub-prime mortgages. In this situation, it's a general aversion to risk and credit, and therefore gold suffers as well.

Other than that, I've been doing very very well this year. However, my inclination is that the stock market is going to get worse before it gets better. The fact that the market pierced its trendline so fiercely without any sign of a let up by Friday is not good. There aren't too many safe spots to stand at the moment.

On my crusade to show a little more effort in reviewing my investments, I decided to do some analysis premptively, state my objectives, and commit myself in writing to my decisions. A golden opportunity came my way, as I recently decided to build a portfolio I didn't have to watch every day like my daily trading one. I trade for fun, not just profit.

Principal: $50,000
Timeline: 5 years
Risk Tolerance: Medium Low
Strategy: Mainly catching long-term cyclical uptrends, with diversified padding.

Here's my plan… …

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The last few days, we saw global markets take a frightening stumble. Beginning with the Shanghai Index (FXI), falling 8.8% by day's end, Japan, Europe, and the Dow took smaller but equally rough spills. Taiwan, on a holiday, didn't see the gut punch until the next day. NYSE computers, unable to keep up, were backed up until a server switch caused the ticker to plummet with backlogged orders, exacerbating the situation and dropping stop levels all around. Welcome to the digital age.

The bright side of the story is that the ticker has recovered about half the loss. But as a lesson in volatility, I hope it was heard. Stories of people in China borrowing against mortgages so that they could "avoid risk" by buying only one stock… well let's just say the market is healthier when homebrew speculators are spooked.

It was also no surprise that the correction came on the heels of Bank of Japan's tightening of interest, and thusly putting the dent on global liquidity. I'm going to set my prediction in solid stone right now. After this correction, markets will continue at the same pace, and any further corrections will be saved by the influx of private equity (read: buyouts from the blue). Once they're involved, volatility will be insane, and they will move in and out of the market at will as the worst hedge funds do. Personal investors beware: I think it is impossible to ignore the technological mechanics of trading anymore. This ain't your daddy's Buffet's exchange, and the horizon for fundamentals to presevere in is longer and choppier than before.

Nothing in gaming to talk about, other than that we (personally) are seeing new prospects I hope to talk about soon. In the meantime, enjoy this very interesting economics article:

Taipei's Magic Ring

If there is one sector I feel comfortable making predictions in, it would be the video game sector, although the majority of it is really just a cluster of a dozen or so companies that publish for a much broader cast behind the curtain. It excites me everytime that this mini-sector is covered by market blogs, and this article is no exception. I like to read about an industry dear to my heart from the perspective of those less intimate with it. What the article says about EA‘s development difficulties with the PS3 and idealogical difficulties with the Wii, while not surprising in themselves, reminded my of how I’ve forgotten that companies are companies. Even in the business of creativity and play, the corporate speak is nothing new to investors.

That comforts me.

The game industry, for some betters and many worsers, has grown up. It’s leaving its roots in the basement of hackers. It is being held to a multi-national standard, ethically and financially. It has, despite its loss of innocence, become recognized.

And I dearly hope that, like books, radio, comics, television, and film before it, it will endure through its current phase, the scapegoat of political campaigns and modern vices, and enter the annals of pleasant anachronism. Only there is it safe to continue to work its influence as the world whirls around another threat. There, it will build better men.

Right now, the old guard thinks it ruins them. What about the teenage gunman who turns out, contrary to preliminary reports, didn’t own a single game? Or what about when the stepmother of a boy recently apprehended for the sport-killing of a homeless man opens herself and her story to Penny Arcade, telling the world that “Video games DID NOT make this kid who he was, and it’s unfortunate that the correlation is there.” Her story is haunting, even moreso if unheard.

As the year of the Golden Pig arrives, I hope that the industry will have great fortune, making it (and me) rich. Feng Shui experts proclaim this also a year of Fire on top of Water, a year of great conflict and volatility. With game legislation in furor, and the industry cycle starting anew under the duress of the console war, this will no doubt be one of the deciding years on the fate of games and their status among other media.