Twitter the New Discount Brokerage?

Scanning the Financial Post as I do most days, I came across this article published last Saturday, February 21, 2009 titled Twitter new source for stock tips, headaches for regulators: http://www.financialpost.com/news/story.html?id=1313295

For those of you who are not familiar with this tool, "Twitter a service for friends, family, and co–workers to communicate and stay connected through the exchange of quick, frequent answers to one simple question: What are you doing?" (twitter.com) Essentially, Twitter is a microblog allowing users to "tweet" up to 140 characters to friends, followers, etc... informing them about their daily events. 

The phenomenon of Twitter is giving rise to users providing services such as stock information. For example, services such as Piqqem and Stocktwits are offering investment expertise to all investors from basic knowledge to sophisticated investors. As investors continue to sit in limbo with their current advisors and portfolio options, more and more of them are turning to unconventional sources to gain information. To emotionally distressed investors, Twitter's ability to provide this information at no-charge comes as a godsend. Twitter is serving as a free means for investors to access advice for equities. 

However, securities regulators believe that there is cause for concern as Andy Poon, spokesman for the British Columbia Securities Commission explains (Financial post,2009) 

Twitter, which encourages users to attach themselves to others and follow their communication with a network of other users, could probe to be a useful tool for investors - or it could be the next new shiny penny [that] enables some of the bad guys to reach a lot more people a lot more quickly and at a lower cost. 

The anonymity of Twitter's users could prove to be a safe haven for 'pump and dump' stock promoters and other scams (Financial post,2009). But  with over 15,000 users using Stocktwits providing more than 3,000 unique tweets/day, Twitter could also prove to be a saviour to investors amidst the present market turmoil.

UBS hires new CEO

Amidst the turmoil of the credit crisis, one bank has hit the headlines more often than not. The United Bank of Switzerland (UBS) is at the center of the financial crisis with over $15B in mortgage backed securities writedowns, a $780M charge and disclosure of some names of Americans that they helped evade taxes, plus much much more. 

 

As the largest wealth management provider in the world, UBS seeks to regain the credibility that was once bestowed upon them. Today, UBS AG announced the hiring of former Credit Suisse executive (Oswald Gruebel) to return the bank to profitability as well as save face.

 

According to Sanford Bernstein & Co Analyst, Dirk Hoffmann-Becking, "Oswald, or Saint Ossi as the Swiss call him, is credited with the turnaround of Credit Suisse after the Winterthur debacle". Gruebel's successes include doubling Credit Suisse's profit between 2004 and 2006, selling off the Winterthur Insurance Co., unit and implementing a "One Bank" strategy similar to that of UBS (bloomberg.com).

Given the current market situation and the troubles that UBS is currently dealing with a change in leadership could prove to be the right move for the future profitability of the bank. 

TSX Tumbles to New Low....

For those of us who have been opening their monthly investment statements be prepared to see a new low for the month of February. As if, the bottom of November 20th wasn't bad enough for the TSX. Today, we have seen a new bottom of 7647.67 basis points. 

This new bottom does not bode well for gains in the future. According to Adrian Mastracci of KCM Wealth Management in Vancouver, 

      Right now, I think there is a higher probability that markets will go down further than there is of them climbing higher because we still do not have a handle on all the problems that are out there. Stocks are driven by two things; confidence and earnings, and we don't have either.

Until investor confidence is restored the volatile ups and downs of the market will linger. 

Check out the Financial Post for more information

As Equities Bottom, Commodities Peak....Or Not?

Historically, there is an inverse relationship between the two types of assets. As equities rise, commodities fall and vis a vis. However, in the current market situation we have seen abnormal trends begin to appear.

As the TSX began to fall from its peak in June 2008 the natural inverse relationship was present with oil spiking @ approx. $140US in July of 2008 but as the market bottomed on Nov. 20th, oil too dropped below $50US.

Why is this? What happened to the predictions made by CIBC World Markets Chief Economist, Jeff Rubin that oil was to continue upward to $200?

There are a myriad of factors that have contributed to the fall in the price of oil that create a more complex relationship. To find out more, I suggest looking at Why are Oil Prices so Low?

But if Oil is so low then why is GOLD nearing its peak of Mar.08? According to Colin Cieszynski, analyst at CMC Markets Canada, "This rally, combined with a retreat in other commodities...suggests that significant fear over the global economy continues to overhang many markets and that precious metals continue to act as a haven for capital" Gold Futures Poke through $1000US an ounce

The current economic situation is giving us the opportunity to re-write the history books. As the financial markets become increasingly complex with the creation of more sophisticated investment tools there is no longer a simple solution to trend analysis.

Check this out....

I know this has nothing to do with finance but everything to do with social media. If anyone is in the Toronto area, I suggest that you check this out.

Podcamptoronto

 

Best of all for those starving students and unemployed graduates, it is FREE!!!!!!

BRANDING...

Reading through the Washington Post today, I came across an article "Phelps acknowledges photo showing him smoking pot". Normally, no one would care that a 23 year old is using illicit drugs but an Olympic Champion with a career total of 14 GOLD Medals is clearly a news story.

As a cultural icon in the American public eye as well as within the niche of the swimming community, Michael Phelps has in himself become a brand.  According to wikipedia.org, "A brand  is a collection of symbols, experiences and associations connected with a product, a service, a person o any other artifact or entity." Michael is easily associated with swimming, Speedo, Visa, and Mazda. 

The article, originally published in the Times displays a photo of Phelps lighting a "bong" to inhale marijuana smoke. Engaging in behaviour that contradicts his Olympic image has the ability to severely damage his brand image. With millions of dollars in endorsements, multinationals have invested heavily in Michael Phelps. Investing in the greatest Olympian of all time is a no-brainer and the ROI should be as safe as a T-Bill. With Michael Phelps aspirations of adding to his medal tally in 2012 looming, Could he be the worst investment of all? 

How Do We Value Art?

What I am writing about today is specific to as Why do we invest in ART? Why or How do we put a value on Art?

Walking through the AGO, I pondered, what is the lure of owning a piece of art? For basic functionality, that is easy. Everyone needs to decorate a space and I agree that art is an excellent tool to do so. But for investing purposes, how do we value something that is essentially priceless?

For example, Jackson Pollock's, No.5 1948. As of 2006, this is the most expensive piece of art ever sold @ $140M. It is easy enough to point to the Laws of Supply and

Demand, But Really?

Look at this image. Does it have any significance to anything/anyone except the artist? We could argue back and forth but ultimately the value is held in the hands of the artist. We are essentially put a price on someone's artistic interpretation.

Is there value in the piece itself? Or does value lie in when the artists intent is incomprehensible to the untrained observer?

When valuing Art or even understanding it, I am at a value of [0,0]. Looking at the piece above, someone like myself would initially only see splatters of paint across a piece of material. I would not be able to value that. However, if I understood what the artist was trying to get at then there is something tangible to value.

Like everything else in the world, we value what we can't have or what we don't understand.