The Haiku of Finance for 06/02/25

Wall Street TACO trade

Arbitrage for tariff wars

May taste like chicken

The Haiku of Finance for 05/31/24

Trading day ended

Market makers settle all

See you on Monday

The Limerick of Finance for 03/28/21

Degenerates like to day trade

With Redditors who don't get paid

WallStreetBets is all wrong

Whether they're short or long

Their readers are going to get played

The Haiku of Finance for 01/30/21

Crazy GameStop trades

Reddit gamblers pumped the trend

Wild meme stock frenzy

The Haiku of Finance for 09/30/19

Headline surprises
Drive intra-day traders mad
Ignore the top noise

The Haiku of Finance for 09/12/15

Trading desk routine
Compare quotes and execute
Then drink after work

The Haiku of Finance for 07/15/15

Watching ticker stream
Endless parade of prices
Some may match value

The Haiku of Finance for 05/18/15

Call up trading floor
Ask for spread on position
Laugh at poor flunkie

The Haiku of Finance for 12/17/14

Trading floor action
Wave at others like crazy
High adrenaline

The Limerick of Finance for 12/14/14

Speculators waded into oil
Falling price set their plans up for spoil
Some producers go bust
Wells reverting to dust
OPEC pumping keeps shale in the soil

The Limerick of Finance for 12/07/14

Yahoo Finance shows all the stock quotes
News releases must hit the right notes
Traders don't read reports
While covering shorts
They might as well go herd some goats

The Haiku of Finance for 11/23/14

Betting on a chart
Reversals ruin trading
Trend is not a friend

The Haiku of Finance for 10/09/14

Zero-sum trading
One person came out ahead
Someone lost money

The Haiku of Finance for 09/09/14

Hourly trading
Stupid technical voodoo
No indication

First And Last Hour Trading Is a Stupid Gimmick

Stupid ideas frequently pop up on my radar whenever I troll the depths of the Internet for investment knowledge.  Some ideas just don't belong in the realm of sensible investing.  Trading for advantage in either the first or last hour of an equity market's trading day is one such bad idea.  

Quickly perusing the top articles in a web search of "last hour trading" reveals that the concept relies heavily on folk wisdom, technical analysis, and gut feeling.  None of those forces incorporate any fundamental analysis of a stock's underlying value.  All of them play to emotions that get investors in trouble.  The ETF revolution isn't helping here because day traders just use them as more random playthings.  

Here's an illustration of just how dumb traders can be with hourly trading stats.  The so-called smart money index gained popularity in the 1990s because it supposedly compares morning trades to evening trades.  The index proceeds from a basic construction flaw.  It is impossible to set a normal baseline value for the index because it begins with a previous day's close.  That one flaw is enough to invalidate any claims to validity.  It gets even dumber by assuming evening trades are more rational, as if intraday news doesn't move prices and large institutions with internal crossing networks aren't jamming the close.  Sheesh.  

NASDAQ's Extended Hours Trading data display does the investing public a disservice by feeding traders' appetites for this nonsense.  It formalizes the baseline construction flaw I identified above.  The exchange's Pre-Market Indicator (PMI) and After-Hours Indicator (AHI) offer little proof that they are reliable sentiment estimates.  What's the baseline value for these numbers?  Where's the historical data for each indicator, so we can compare sentiment changes to the NASDAQ's turning points?  What's the date where they start at zero?  This data is absent.  These indicators are just voodoo.  

Advocates of short-term trading in first hours, last hours, after hours, or any other hours bear a burden of proof that their concepts add value.  Day traders should produce an audited portfolio that consistently outperforms market benchmarks over time using these hourly strategies.  Hedge funds running HFT use nanosecond trading strategies and even they can't outperform the market over time, net of fees.  The myth that traders can gain pricing advantages by focusing on hourly trading flows persists with no peer-reviewed data in its favor.  First and last hour traders are losers.  

The Haiku of Finance for 06/04/14

Channel trading stock
Random movement outside band
End of that pattern

The Limerick of Finance for 03/30/14

Day traders are wasting their time
Charting random noise that does not rhyme
Put away all those sticks
Study deep value picks
Stock prices can turn on a dime

The Haiku of Finance for 03/18/14

High-speed trading curb
Move server outside exchange
Connect to dark pool

First Consideration Of World Oil Price Components

I got thinking about the components of the market price for oil after I finished my analysis of the US Navy's renewable energy policies in my latest Third Eye OSINT article.  That article was oriented to military affairs, and this article is for business.  I'll develop the complete breakdown in a longer report to publish at Alfidi Capital, but I'll start here with some basic components.

Production cost.  This varies by wellhead but investment banks covering the oil sector figure some broad averages each year.  The best way to look at production cost (for my purposes anyway) is by country and then by type of oil:  light sweet, heavy, shale, etc.  The EIA has a good breakdown of oil and gas production costs in the US.

Transportation cost.  This includes shipping by ocean carrier, pipeline, and rail.  Oil imports to the US move primarily by ocean carrier and pipeline.  The Association of Oil Pipe Lines (AOPL) has a general breakdown of the traffic but I don't know when that data was published.  Barge movement plays little role for unrefined petroleum but is a major transportation mode for refined petrochemical products.  Platts breaks down oil shipping prices by seaborne routes.  I'm too cheap to pay for Platts' data so I'll have to wing it with open source data I find for free.  FERC's oil pipeline page shows that their indexing methodology for rate changes is tied to the BLS Producer Price Index for Finished Goods (PPI-FG) plus a statistical adjustment.  I find it interesting that the AOPL mentions several alternate methods FERC may use to adjust its approved pipeline rates.  That AOPL link is so intriguing I used it twice in a paragraph.

Security premium.  RFF studied the oil price security premium in 2010.  I mentioned this study in my Third Eye OSINT article (see the link up top).  Platts analyzed a security premium specific to the Middle East in 2011. 

Other factors.  Stanford's Energy Modeling Forum studied oil price determinants in a 2010 workshop.  Their conclusions considered asymmetric information, inventories, and futures market speculation.  I have not yet decided whether insurance cost gets its own special treatment or should be counted as a subset of production and transportation.  I should also account for the US tax code's oil depletion allowance.  The International Energy Agency's (IEA) statistics site has a lot of pricing and volume data but I will dig deeper to see if they have cost data.  Likewise, the Oil and Gas Financial Journal has plenty of current market data but for this project I need to see if they have cost breakdowns buried somewhere.

This analysis is by no means mature.  Like I said above, it's more suitable for a longer report.  These components matter for both the West Texas Intermediate and Brent crude prices.  I'll develop each of the ideas above from the perspective of an energy contract trader who must hedge the price of oil.  I want to understand energy price movements so I may use futures contracts to hedge my own portfolio.  Financial engineering techniques for energy and other hard assets may prove very useful to me during a hyperinflationary period in the US.  

The Haiku of Finance for 06/04/13

Super-jerk trader
Brags about really big gain
Won't mention losses