By Jim Papke
Like everyone with a vested interest, I have anxiously followed the ups and downs of the stock market. I noticed something peculiar regarding the market index profiles.
All those Dow Jones, NASDAQ and S&P 500, Reds and Greens have more instantaneous fluctuations than a traffic signal on drugs, but, interestingly, they are all on the same rollercoaster track, at exactly the same moments in time.
Random Engineers like me prefer the term "cause and effect, vs. random action."
Some people, the proverbial "they," who are capable of speed-dialing their brokers, seem to have some advantageous perspective, and, it looks as if the market was not responding randomly at all to this so-called virus crisis.
No, I'm not distracted by flashing colors, and my BAL is .000. It's simply a rhetorical way of saying that it appeared as though the stock market was being manipulated, though we all know, that's so unethical.
I get the Wall Street Journal, and, over the last several weeks, I have seen an exponential rise (more engineering-speak) in "gloom-and-doom" feature stories, on more than ten pages per issue, with full page color photos.
Not since Sept, 11, 2001, or for that matter, Dec. 7, 1941, have newspapers been so graphic. That, supposedly top-of-line, credible, financial news source, has sunk to the level of tabloid journalism.
Your initial reaction to what I'm saying might be that I'm jumping to a conclusion. To be more precise, the exact psychological term for such a knee-jerk reaction is, "Inference Observation Confusion."
However, for the sake of argument, I'll toss a few more backstory details into the mix before it solidifies.
Reuters News Service reported, "Short sellers ... logged same-week paper profit of $104.77 billion in the last week of February ... $3.25 billion in paper profits in the prior week" (Paper Profit: unrealized capital gain in investment - in other words, it's not cash, yet, but it's a heck of a profit). So, what is a Stock Short Sale? Very simply, you "borrow" something you don't own, sell it at high price, prices drop, you buy it back at a low price, return what you borrowed, and walk away with a nice profit. Its a bit like "Margin Buying" (does 1929 ring a bell?).
This is a highly speculative way of playing the stock market. There's usually a lot more to lose than there is to gain, unless you have a reasonable degree of certainty your efforts will pay off.
Most people, with modest investment portfolios, simply buy, hang in there for the long haul, and, hopefully, have a reasonable return on their 401 or IRA.
Some people prefer to take the risk of continually buying low and selling high. It's my belief that these "Day Traders" contribute to the typical random fluctuation in the index profiles.
Now, getting back to what I said about some people with an advantages perspective, there are several, very interesting, breaking news items about U.S. Senators Dianne Feinstein, Richard Burr and Kelly Loeffer.
They all sold significant portions of their investment portfolios, in a very timely manner, between January and February. Incidentally, nobody sells stock and pockets cash; there are hedge fund investments (which had been reacting inversely to the market drop), gold, silver or other beneficial hedge funds.
Well, here's the big "what" of that question. To keep it brief, I'll focus on Sen. Loeffer. She was in a "closed-door meeting" with the Senate Health Committee, discussing the coronavirus, on Jan 24. That same day, she and her husband "sold stock worth a total between $1.2 million and $3.1 million" (Sen. Burr's sale was only $1.72 million, on Feb. 13).
They also reinvested in Citrix (one of those beneficial hedge funds), a teleworking software company that markets product for people working out their homes, such as those who are now stuck at home due to the coronavirus.
That stock has increased in value since the virus outbreak. There is one more, little, detail to this saga that I find particularly interesting. Sen. Loeffer's husband is Jeffery C. Sprecher. Mr. Sprecher is the founder, chairman and CEO of Intercontinental Exchange, and chairman of the New York Stock Exchange.
I'm about to flip a coin right now. Should I develop a vaccine for "Inference Observation Confusion?" That could potentially be a very good investment. Or, should I just cancel my subscription to the Wall Street Journal.
That's a tough one; I might have another, urgent need for the paper.