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THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION DISCUSSED DURING HAWKTRADE MEETINGS.

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Presentation on theme: "THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION DISCUSSED DURING HAWKTRADE MEETINGS."— Presentation transcript:

1 THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION DISCUSSED DURING HAWKTRADE MEETINGS. Past performance does not guarantee future results. Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost. Investing in any financial instruments does not guarantee that an investor will make money, avoid losing capital, or indicate that the investment is risk-free. There are no absolute guarantees in investing. HAWKTRADE and its members do not bear any responsibility for losses or gains made by members trading on their personal accounts based on analysis from HAWKTRADE meetings.

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3 We meet every Sunday at 6:30PM – 7:30PM at W151 in PBB Membership Dues: $20/semester Food/Drinks every meeting Investment information and education Great trading tips and strategies Investment Competition: $15/semester Best way to gain experience and learn First place wins iPad Gift cards for top performers Fun Discussion atmosphere, member involvement HawkTrade Portfolio from 7:30PM – 8:30PM

4 $15 to enter competition All money goes to prizes so more people = better prizes Must attend 50% of meetings in order to be eligible for prizes Top 8 get prizes (tentatively) Wont allow high frequency trading or anything that is unrealistic

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8 Friday Oct 4 | 11:07 AM EST

9 800,000 non-essential staff sent home National parks shut down Mail still going out

10 No End in Sight Treasury projects a default on borrowing obligations on October 17 th if deal on debt ceiling is not reached Public Sector Economic Releases Not Released: Construction Spending (Monday) Employment Situation (Friday)

11 Friday Oct 4 | 8:30 AM EST

12 Debate is separated into two parts, but sides are entrenched for the same reasons Government Shutdown The shutdown is a failure of the government to authorize spending, so cuts are being made Debt Ceiling The Debt Ceiling is the statutory maximum that the Treasury can borrow. Interest payments need to be made to public debt holders before default

13 Default on Spending Forces the Treasury to rearrange spending priorities with what little cash they have left. Spending priorities still open during the shutdown would be cut out. Entitlement spending and Pell Grants would likely be affected. Default on Obligations Interest Payments on Treasuries would not go out as mandated. This would have a direct effect on US and global economic interests.

14 Public Debt Though the US has used debt to finance federal spending for more than 223 years, the the Treasury has never failed to make an interest payment A complete US economic failure would be a 10- sigma event for the global economy; something so devastating and improbable, it is not possible to hedge against For these reasons, Treasuries are considered risk-free assets

15 Impact of Default on Obligations Credit ratings on US Debt would be slashed Interest rates on public debt would soar, causing lenders to increase their rates alongside treasuries to remain competitive Higher interest rates would cause consumers to spend less on housing and personal expenditures Businesses would have a higher cost of capital, constraining business investment. Lending would slow down in reaction to the unpredictable interest rate environment and liquidity would fall across all investment classes Federal Debt would increase in the long run because of a higher cost of borrowing.

16 US Credit Default Fortunately, both sides are committed to raising the debt ceiling in anticipation, and chances of a default are very low. Speaker Boehner hinted at his intent to raise the debt ceiling in the next two weeks in a bill separate from a deal to reopen the government, if no meaningful compromise can be made

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18 Twitter officially filed papers Friday for IPO Target of $1 Billion to be raised Expected in November Exchange to be traded on not announced, asking for ticker symbol ^TWTR

19 Shares of TWTR, Inc., formerly Tweeter Home Entertainment Group, Inc. (TWTRQ) were up 684.62% Friday Up 2200% at the peak Trading halted at 12:42 p.m.

20 ^FB ~30% sales growth year before IPO 1 billion users at time of IPO Mostly developed Stock dropped 50% in three months after IPO ^TWTR ~50% sales growth 215 million users Still spending heavily on R&D Facebook vs. Twitter

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23 Carl Icahn Activist investor Chairman, Icahn Enterprises Stake in Apple believed to be worth $2 billion Portfolio also includes Netflix (NFLX) and Dell (DELL) Opposed Michael Dell's $25 billion offer to take Dell private

24 The Icahn Effect Monday: Icahn pushes Apple CEO Tim Cook for $150 billion share buyback 10:24 a.m. Tuesday: Icahn discloses on twitter his push for $150 billion share buyback AAPL up 2.35% on Tuesday

25 The Icahn Effect Apple has $147 in cash and securities Expected $50 FCF Buyback – signal to public a stock is undervalued Lower shares outstanding increases EPS Historically low interest rates – great for borrowing money

26 Carl Icahn $8 billion market cap change per tweet

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28 Economists had thought the PMI (Purchasing Managers Index) would drop to 55 Increased to 56.2 from 55.7 last month Above 55 indicates that the sector is expanding Only private reports are released while the government is shut down The BLS was set to release the September jobs report on Friday, but that did not happen

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30 Increasing sales tax from 5% to 8% Bank of Japan buying 7 trillion yen ($71.5 billion) in bonds per year Confidence among manufacturers rose to highest amount since 2007

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32 Alcoa (AA) JP Morgan (JPM) Yum! Brands (YUM)

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35 The average move up or down over the past half century is 0.65% Black Monday was a 21-sigma event, meaning it was 21 standard deviations away from the mean If returns are normal, statisticians expect the S&P 500 to move up or down by 3.5% or more only once every 10,000 years Weve experienced 118 such occurrences since 1950 – 2009, half of them in 2007 - 2009

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37 Oct 19, 1987 = 21 sigma Oct 21, 1987 = 5.4 sigma Oct 21, 1987 = 9 sigma Oct 13, 2008 = 11.5 sigma Oct 15, 2008 = 9.3 sigma Oct 28, 2008 = 11 sigma

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39 Further Reading http://www.forbes.com/2009/10/14/gerstein- fisher-nyu-personal-finance-fat-tails.html http://www.forbes.com/2009/10/14/gerstein- fisher-nyu-personal-finance-fat-tails.html http://arxiv.org/ftp/arxiv/papers/1103/1103.567 2.pdf http://arxiv.org/ftp/arxiv/papers/1103/1103.567 2.pdf The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb


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