December 14, 2012 Update

DJIA:13,170 NASDAQ:2,992 10-YR TRS: 9/32, yield 1.728% Oil:$85.89 EURO:$1.3077 YEN:83.65 

Micro

• SPZ:  trading up as investors are hopeful about the consumer prices and industrial production data having faith that results will be as upbeat as China’s, but still wear about the fiscal cliff.  
• Dividends: M.D.C. Holdings (NYSE:MDC) plans on paying a FY2013 dividend in Q4 of 2012 for $1.00 per share payable 12/28
• Alcatel-Lucent (NYSE:ALU) secured $1.62B from Goldman Sachs and Credit Suisse for new financing, causing the equity to rally 10% in Paris- could have rippling effect in US markets. 
• In the Shanghai Apple (NASDAQ:AAPL) store, only one person stood outside for the release of the iPhone 5 (which went on sale today) which is believed to be from China Mobile (NYSE:CHL) refusing to make a deal. Nonetheless, the loss of irrational excitement should be noted. 
• Gold prices steady after sellout under $1,700, triggered by Fed’s decision.

Macro

• Asian Markets: better than expected Chinese manufacturing data caused over a 4% rally in Shanghai equities while Japan markets trade on a tight spread after a worse-than-expected survey propagating attitude toward big manufactures. 
• European Markets: steady as data released portrayed an ease in economic downturn for December. 
• HSBC’s China manufacturing index for December soared to over the year’s high to 50.9.
• Consumer prices will be released at 8:30am, forecast to 0.2% for November largely due to bullish energy prices. “Core prices,” excluding food and energy, are forecast to also rise by 0.2%.
• November’s industrial production data will be released at 9:15pm, which is expected to show a 0.2% rise- a key indicator of identifying effects of Hurricane Sandy on economy. 
• The Richmond Federal Reserve President, Jeffrey Lacker, will explain the reasoning behind the Fed’s decision to purchase Treasuries and link interest rates with unemployment and inflation at 7:30am. 

Yesterday’s Notable Winners

• Best Buy (NYSE:BBY) +15.93% (+$1.94) to $14.12 from rumors that the founder, Richard Schulze, will make a big this week. 
• CVS Caremark (NYSE:CVS) +2.02% (+$0.96) to $48.50 from announcement company expects profits to increase around anticipation level.
• Boston Beer (NYSE:SAM) +15.5% (+$17.17) to $131.94 after company raised 2012 annual earnings target based on stronger shipments. 

Yesterday’s Notable Losers

• Restoration Hardware Holdings. (NYSE:RH) +4.88% (+$1.79) to $34.90 resulting from increase in sales and weaker gross margins. 
• Harbinger Group (NYSE:HRG) +26.61% (+$2.72) to $7.50 after confirmation that Harbinger Capital Partners are selling their stock. 
• AstraZeneca (NYSE:AZN) +2.94% (+$1.44) to $47.46 because of their treatment failing to improve effects of rheumatoid arthritis. 

The Trader vs. The Gambler

Many people unfamiliar with the art of trading are quick to associate the profession with gambling.  Any small mind can easily identify the similarities- high risk, the all or nothing mentality, uncertain turn outs, unpredictable rewards...etc. Rational minds, on the other hand, are able to understand that trading and gambling are not one of the same, but rather two different passions using contrasting rationales. The Gambler’s Paradox illustrates the problem of induction for many risk takers. The theory states that because gamblers fail to recognize each game as an individual event, they use emotion to guide their decisions. In other words, when gamblers are loosing they are more likely to keep playing under the logic that next time will be different, failing to understand that the previous game has no correlation in terms of probability to effect the likely hood of winning or loosing for the next game played. When dealing with risk, emotions are the amnesia of reality. Gamblers use optimistic emotions to numb the pain of defeat, which is why they have trouble cutting their losses. Traders, on the other hand, understand the risk associated with each execution. The professionals are able to identify risk and cut their losses accordingly, using logic and reason to make decisions instead of basing them on emotion. Most regulations passed treat traders as though they’re gamblers assuming that the professionals do not know when to cut their losses. While some traders may let their emotions get in the way, it is unfair to ruin the industry based on the irrational choices of the unprofessional gamblers.