Losing your investing virginity on Wall Street

Your first time? Maybe abstinence would be better today. UPDATED.

WASHINGTON, October 26, 2012 – If you’re new to the stock market or contemplating investing for the first time, you might remember your pastor’s advice about pre-marital sex: practice abstinence.

The way stocks are getting whipsawed these days in our pre-election run-up, even practicing safe Wall Street sex might be hazardous to your mental and fiscal health. So maybe the idea is just to avoid relations with the stock market entirely until you’re really “sure.”

This real-world analogy occurred to us last night as we viewed—with wide-eyed amazement—the following Obama campaign video.

In this appalling bit of electioneering sleaze, a young woman named Lena Dunham—whom, we are told, is the creative force behind HBO’s “Girls”—compares voting for OB to that magical time when a pure-as-the-driven-snow young maiden takes a slug of Love Potion No. 9 and joins her one-and-only Prince Charming for a close encounter between the satin sheets.

If this is an example of the Democrats’ latest election strategery (hat tip to GW Bush), we are viewing a campaign and a candidacy that’s in its death throes. (If ads are enabled on your browser, scroll down past all the white space.):

 

(Note: We’ve recently updated our video code. The Obama campaign may be trying to erase this code from the net, but there are always ways to dive in and bypass the censorship. Not the least of which is the fact that it’s gone viral and is available nearly everywhere. Functional video now appears below.)

Is this smarmy, or what? Ee-eww! (Did we pronounce that right, Valley Girls?) Who was the PR genius behind this kind of soft-porn electioneering sleaze anyway? (Give me a minute. I have to go wash.)

Okay, back again.

Sadly, you can witness sleaze nearly equal to this on Wall Street today. The market is enduring another sloppy-seconds kind of session, wandering bewitched, bothered, and bewildered in a bi-polar dimensional plane somewhere between confusion and incredulity.

We keep trying to game this market a bit on the side, most recently via Apple options, banking on at least a dead-cat bounce to get us out on the plus side after the company’s weird quarterly report, which was dropped right after yesterday’s close. Instead, after throwing our metaphorical dead options cat out a 10th story window, its still-warm carcass landed instead on a couple of pikes projecting from the iron fence below. Not a pretty site. (Neither is our mixed metaphor.)

But those Apple options (January 600s) look even worse than the cat as we write this column around noon today as the stock decided to break support here. Fortunately, we have until the third Friday in January before the options become invisible, so they may yet pull a Lazarus. (They’d better, or we’ll have to explain this to Mrs. Maven.) We’ll keep you posted.

Not yet eligible for a dead cat bounce, this kitty is contemplating instead the odds of suffering a sudden and involuntary death.

As a counter-program to our Apple disaster, we tried to get a few hundred shares of the MXLP IPO on this morning’s offer. But, as often happens with the good ones, our discount brokerage house didn’t get any, at least for the Maven, and we watched in dismay as the new issue gained a quick 4 points above the offer price ($22) when trading commenced this morning. We won’t chase it, but if it comes back a bit, we’ll consider.

MXLP is one of an increasing number of Master Limited Partnerships (MLPs) that major oil companies and refiners have been spinning off lately for various reasons. This one, based in Findlay, Ohio, was spun off Marathon Petroleum (MPC), a major refiner that itself was spun off from Marathon Oil (MRO) about a year ago. Follow? We made good money—several times—on MPC after its spinoff from MRO. Now MXLP—with an estimated yield of 8% or so for starters—looks to be a good play in a market that’s almost literally strewn with very dead cats.

One caution on these puppies, however. You can stash them in your 401(k) or IRA, but…due to a weird quirk in tax law—the kind that works against you and moi—if you get any more than a total of $1,000 of actual cash yield out of all the MLFs you own in a tax-sheltered account, you will actually have to pay tax on some of it. That’s why some advisers tell you to buy MLPs only in taxable accounts. So you’ve been warned.

This sincerely dead cat strongly resembles the current status of our Apple January calls. Careful examination reveals that the corpse is still warm, as the obligatory Xs have not yet replaced the eyes. Like our Apple options, this cat does possess at least some potential for re-animation, but only under the diligent care of a qualified mad scientist. Evidence strewn about will doubtless lead CSIs on the scene to list the cause of death as acute nicotine poisoning. (Click image to enlarge.)

That said, the only way you can draw even with this wacky market is to go for yield, even though market gurus are telling you that these kinds of stocks will crash, too. Their real reason for this advice, we suspect, is that high-yielding stocks are generally not very tradable which is what a lot of advisers are all about. We say the heck with them. Particularly after we get dinged by the lousy action in high-beta stocks like Apple.

BTW, the appearance of this column could be a little spotty next week. The DC area is supposed to get something close to a direct hit from Hurricane Sandy sometime between Sunday afternoon and Tuesday morning. When the power lines go down, our computers and Verizon FiOS account go down with ‘em. We’ll see what happens. The way things have gone on Wall Street this week, maybe it’s just as well if our keyboards don’t work for a few days.

Have a good weekend, and we’ll be back with more cheerfulness, God willing, on Monday.

Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate. He continues to own a position in IAU and Apple (AAPL) January 600 calls, although he regrets the latter position bitterly.

Positions mentioned above describe this author’s own investment decisions and should not be construed as either buy or sell recommendations. The current market is highly treacherous and all investors travel at their own risk, so caution should be exercised at all times.

Illustrations, charts, commentary, and analysis are only the author’s view of current or historical market activity and don’t constitute a recommendation to buy or sell any security or contract. Views, indications, and analysis aren’t necessarily predictive of any future market or government action. Rather they indicate the author’s opinion as to a range of possibilities that may occur going forward.

References to other reporters, analysts, pundits, or commentators are illustrative only and do not necessarily represent an endorsement of such individuals’ points of view. If specific investment vehicles are mentioned in any article under this column heading, the author will always fully disclose any active or contemplated investments in said vehicles.

Read more of Terry’s news and reviews at Curtain Up! in the Entertain Us neighborhood of the Washington Times Communities. For Terry’s investing and political insights, visit his Communities columns, The Prudent Man and Morning Market Maven, in Business.

Follow Terry on Twitter @terryp17

 

 


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Terry Ponick

Now writing on investing, politics, music, movies and theater for the Washington Times Communities, Terry was formerly the longtime music and culture critic for the Washington Times print edition (1994-2009) before moving online with Communities in 2010.  

 

 

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