My Outrage

So I'm up, can't really sleep... I'm operating on Asia time more these days. I was flipping through the TV and I saw back to back infomercials that just makes me sick. The first was for Investools and the second was for Optionetics. I think what was interesting enough for me to blog about was that this occupied back to back 30-minute slots on ABC from 2:00am to 3:00am.

I knew these ads have always been out there. Honestly, I don't know what to say to you if you truly believe that you can pay $2,000 or $3,000 and they'll tell you everything you need to know to trade equities or options successful in a 2-day 2-hour seminar or some variation of that format. You're just a little too gullible or maybe your mom didn't raise you right. You gotta take everything they say in the ad w/ some salt right? That was my first thought.

Second thought: interesting they would pitch these ads at this time! Does this signal the American people's appetite for risk? My impression is that you tend to see these ads during bull markets, when the market is white hot. Who could blame them? We have been in a pretty bullish run here. Now the big question is: is this a contrarian indicator? You probably have noticed the more and more frequent ads for gold like Cash 4 Gold. For crying out loud they ran one during the SUPER BOWL! I consider these things to be contrarian indicators. Gold was very bullish during that brief time frame, yes. But after it made a "sort of" double top late February where it didn't break the previous high made last March and started making lower highs you knew the gig was up.

There was another case and this one had to deal w/ real estate. Yup, you've seen the ads about how to make money from foreclosure and what not. Well, I thought it was a little ridiculous when a company took ads out on THE RADIO. I thought we'd find, if nothing else, at least a temporary bottom in housing.

So, does this mean that stocks are overbought? Maybe a little. I've been out of the game a little... more research is needed on this.

Final thought: I was disgusted at these ads, especially the 2nd one on options. The main reason was that they played up so much the leverage factor in options, like how a stock going in your direction can make you 5 times the earning while taking on only limited risk. This is true, I won't debate that. My belief is that most novice had no idea the true risk they're taking on or even what to do if their options get exercised (even though percentage wise most options positions are closed out before expiration). Anybody that tells me he can teach somebody in 2 or 4 hours how to trade confidently and profitably is a liar. And yes, I will tell him that straight to his face. Right after I kick him in the nads. Leveraging was the exact reason how we not just shot ourselves in the foot but in the face or whatever vital organs you deem fit in this analogy. And now you're encouraging individual investors to go out and leverage the hell out of this. Hey, take out yet another mortgage if necessary right?

This is just dumber than the kid you will have with your cousin from Oklahoma.