Mr. Market Says No Mas

There is essentially no past-time more sacred to anyone who has ever actually traded anything for an institutional hedge fund than mocking the talking heads on CNBC.  Part of this emanates from our jealously at the fact that most of them have staggeringly market-applicable collegiate backgrounds in things like British literature or Frisbee golf.  The other part comes from a more legitimate objection that they just about always get things dead wrong.  I mean that in the most dramatic sense of the concept of being wrong, if we devolve into sports analogies, they aren't simply not in the same ballpark, they're often attempting a hail-Mary pass in a tennis match, at the special Olympics.  The implied causation in 99.9% of their "news coverage" is just usually flat-out fictional. 

The evolution of this CNBC-hatred follows a very strict exponential path:

1) One morning you'll wake up and hear one of the CNBC parrots squawking about some analyst changing their buy/sell/hold rating.  This will not be because it is a slow market news day but instead because Joe CFA level I candidate from XYZ research in Baton Rouge, LA really knows what he's talking about.  You take this in stride and explain calmly to your PM that Billy-Joe shouldn't influence the way he runs money (not to mention the fact that you spent two months refining your investment thesis).  He agrees with you and the world keeps on spinning.

2) One afternoon shortly after the closing bell Erin Burnett's hair will interview an old white guy wtih billions of dollars who will mention a company that you are short.  Post-interview Erin Burnett's hair will read deeply between the lines of the interview and insinuate that the company referenced might be an acquisition target for old white guy.  She will be wrong.  It won't matter as exactly three retail traders who are waiting around for Jim Cramer's show to start will bid your short up 10% in the after-market on a total of 156 shares that they traded for their 401K, each of them paying $25 to execute said trade.  This 10% mark-to-after-market loss will equal hundreds of thousands of dollars to your fund.  You explain to your PM that Erin Burnett's hair isn't the one who is a Rhodes Scholar, that's the other girl who's not as pretty.  He sticks with your short and Mr. Market sweeps away that retail money by noon the next day.  You move on.

3) Finally, the last straw approaches while you're sitting on the trading desk at 7PM on a Thursday evening trying to get your fucking VLOOKUP function to ignore non-alpha-numeric characters so you don't have to re-scrub your data set by hand (dorkville, population: me).  That's when your ears will pick up a discernible sound from the high-pitched whining that is emanating from the TV hanging over your head.  You will look up to see one of the tickers that you are positioned in prominently floating under Jim Cramer's beer gut as he throws stuffed animals at the camera.  You will cringe.  You reach up and turn up the volume to find out that Jim "have I mentioned I went to Harvard in the last three seconds" Cramer doesn't like your favorite long position because their employee uniforms are blue and he heard from a soccer mom that she's going to be shopping at a different place for back-to-school supplies this year.  This is serious fare from a guy who consistently throws around the phrase "ran a hedge fund" when he really means "blew up a hedge fund... twice".  He will throw around terms like cash-flow and earnings growth but the crux of his call will be from the aforementioned soccer mom, also that the CEO's wife's dog walker recently sold their 500 share position and that the CFO's name starts with the letter L.  At least from what you can tell before he starts juggling knives on air.  You will plead with your PM, as the stock drops 15% in the after-market on the massive 0.0001% of average daily volume that all of Jim's retail minions can muster.  Some quant algorithm will pick up on the action and gap the bid/ask 5% on the market open the next morning.  Your PM will panic, say something about not wanting to hold the risk over the weekend and blow the position out.  You will put up a meager protest but agree.

Three weeks later the stock will be up 15% from your cost basis and Jim Cramer will be recommending it as a long position while humping a plastic cow.  You will cry on the inside.

No, seriously, ask around, that's how it goes.  What brought this up you might ask?  Well, this morning I turned on my television as I made my way to the shower and was horrified to find a Dog The Bounty Hunter episode destroying my early morning sense of calm (almost as bad as real-houswives of DC... though that hasn't happened since I had a certain house-guest).  I didn't recall leaving the television on A&E when I went to sleep but there was no time for logical deductions in this matter, I grabbed the remote and pushed in the one channel number I know by heart; CNBC.

I was greeted with this absolute gem:

"Come on now... I know the trade is your friend and you have to be invested at all times, that's your business but give me the odds of a pull back"

That little excerpt was uttered by that short British bald guy who sometimes gets lost in Erin Burnett's hair.  I have already gotten worked-up enough about this so I will keep this short.  The market cliche is "the trend is your friend" not the trade (the former of which at least has a logical progression, a "trade" isn't inherently directional so I have no idea how I could know if it is my "friend" or "enemy"?).  Also, this particular cliche refers to a chartist's approach to investing, who is almost always delta zero overnight (meaning, unlike say a mutual fund manager, they are almost never "invested at all times").

My advice to you short unfortunate-looking British guy (redundant), when you can't even get the cliches right, just pack it up and go home.  I mean now, you are cut off.

buy, I mean sell, I mean hold, I mean overweight, I mean underweight, I mean market perform, I mean market outperform, I mean beta-adjusted equal perform in odd numbered years after a presidential cycle in Kenya.

-I Heart Palindromes