Spread Arbitrage: Chipotle Mexican Grill

May 8, 2009

On the heels of a few trading publications we saw the opportunity to take advantage of the spread differential between the Chipotle Mexican Grill (CMG) B Shares and the Chipotle Mexican Grill A shares. The A & B shares are fairly identical with the B shares carrying more voting rights but also contain less liquidity. Institutional players have shied away from the B shares due to this liquidity problem and the fear of moving the market dramatically. Thus, the B shares have typically lagged the A shares when the stock has made extreme movements.

Read more

3 Ways to Make Money in a Downturn

February 20, 2009

Here is some of the ideas that I discussed in a recent video series for MSN Money. Also, Friday is the last chance to download my book for FREE!

The link to the FREE download is HERE

I’ve always thought that investors can find a way to make money even in the worst imaginable market. For the past few months, we’ve been in just such a market — and I’ve done it.

So while many investors have been brainwashed into believing it’s possible to make money only when stocks move higher, don’t believe it. It’s not true.

Over the past six months, I’ve turned a profit both in real life and with a model portfolio on MSN Money in the Strategy Lab stock-picking game. During a brutal bear market, my Strategy Read more

Cage Match: The President vs. The CEOs

January 27, 2009

1-27-2009-12-08-07-amFrom my latest MSN Strategy Lab Journal:

Market manipulators won’t go down without a fight against President Obama’s reform plans for Wall Street.

It appears that we could be heading for a showdown. In one corner: the Masters of Disasters, the Thrashers of Crashers, a.k.a. the Lending Loonies (theatrical pause) . . . Bank CEOs and Financial Company CEOs and Upper Management! In the other corner, the Cool of Rule, the Pope of Hope, the Arranger and Changer … President Barak Obama. (crowd roars).

It is no joke. The likes of Goldman Sachs (GS) Morgan Stanley (MS) and JP Morgan (JPM) have a lot to worry about. No one argues that there is a new sheriff in town and he is aiming to clean up the street. So far, he has not given the “you are out of this town by high noon tomorrow” speech, but who knows how far you can push a man on a mission.

For too long, the markets have been run and even at times manipulated by those that will do anything to make a buck. Just this summer, we were astonished to learn that a little known legal loophole was left open after the Enron debacle. Now known as the Enron Loophole, it was one of the main reasons that the price of oil was headed to $200 per barrel. Only until the Commodity Futures Trading Commission intervened and ultimately changed the definition of who was considered a speculator did the price of oil begin to fall.

Yet, all the time, Goldman Sachs analyst “Arjun “where is he now?” Murti was projecting that we should see oil at $150-$200 within a year. Here is something to think about: What firms made a killing trading oil during 2007-2008?

Read the entire journal entry HERE

Strategy Lab: UPDATE – Horowitz Up 13.5%

January 23, 2009

This week’s summary from MSN Strategy Lab:MS Money Logo

Banks are still in big trouble, the job market is worsening and Wall Street is a minefield for investors. Yet one of our players has managed a double-digit gain since August.

Disciplined Investor Andrew Horowitz, meanwhile, went even further on the frustration scale in his journal “Why invest in this market anyway?” He rejects the notion stocks are cheap and takes on folks like Warren Buffett and Vanguard’s John Bogle.

“This is not a popular commentary. I know that many investors would prefer to hear all about opportunities to make money on the ‘upside,'” he writes. “But until there is one shred of good news, I refuse to throw my hard-earned money into a bonfire just to watch it be incinerated.” Read more

Strategy Lab: Why invest in this market anyway?

January 21, 2009

stratlabOver the past few months, there have been many voices shouting out about the need for investors to get into the market, as pricing is now considered “cheap.” Warren Buffett spoke up about it in October — Berkshire Hathaway  is down 10% more in 2009 — as did a few other astute pundits. I would not want to take anything away from them, as they are much wiser and wealthier than I. But how about a dose of reality and a touch less self-serving blather?

Just Tuesday morning, I was watching Vanguard’s John Bogle discuss the need for a transaction tax on investments. Now doesn’t that seem to be a commenter who is hoping to move more people into a buy-and-hold (aka, till-death-do-us-part) strategy? That’s the same strategy that has pummeled the average investor over the past 12 months. Why would Bogle even consider something so radical?

Oh, that’s right, he runs a company that earns it keep by providing low-cost index funds with low turnover. Of course, low turnover would provide protection against a trading tax and hurt those pesky advisors who attempt to get out of the way of a speeding truck, also known as a market correction.

Where do we go from here?

Read the entire journal HERE

Next Page »