Greed and Fear

Blackberry BB, $7.30.
Some years ago, it was usual to see the image of Obama president using his Blackberry BB smartphone, following the daily events. In times when the first iphone governed sales, the Blackberry with keyboard, web and email included became synonymous with excellence and, above all, security. Research in Motion, the Canadian company that manufactured it was a penny stock, which was trading at $2 in 2003 to reach $150 in 2008, the year of its biggest boom. Everything changed in 2011 when the competition grew (Android, Samsung, Chinese smartphones) and RIM did not know how to renew itself, its technology and keyboard became obsolete, not very attractive for the young sector, which led to an epic fall in its stock and almost extinction of the company.




In those years, another iconic and dear manufacturer of PDAs and smartphones, Palm, had disappeared for the same reasons. Forgotten by Wall Street, RIM seemed to be the next victim, until in 2013 John Chen enters as CEO an…

(Update form July 2017 post)

Blue Apron APRN, $8.27.
Expanding the recent post about the unicorn companies and their future, it does not stop calling attention the terrible performance that the recent IPO of the Unicorn Blue Apron APRN is having, almost 20% below its starting price. Comparisons, in this sense, with Snapchat SNAP, Fitbit FIT or Groupon GRPN are immediate: all very original, very  technological, with many followers, but in a few years have seen their stock sink to negligible levels. And, while it is premature to draw conclusions by similarities, there are already several interpretations of the market: are these technological companies really worth so much? Are they part of a slow and different bubble dot-com 2.0? Is the influence of its new competitor Amazon AMZN, after its purchase of Whole Foods WFM? Was not it more comfortable to continue as a private company?





Already since I wrote about Snapchat I expressed my doubts about these fashion technology companies, and mo…

The VIX and its inverse relationship with the markets.

The VIX, as a contrarian indicator, is an incredible weapon for technical traders to determine extreme conditions of bullish or bearishness of the market, using its inverse relationship: when the market is rallying, the VIX tends to drop; when the market is tanking the VIX tends to rise. Smart and serious investors use it to bet against the crowd when its greed (or fear) levels are high. And mainly, they use it as protection or hedge for their investments.

The VIX, also known as the 'fear gauge', measures the frequency and intensity of changes in the SP500 in the short-term (30 days), through the implied volatility IV of its at-the-money call and put options. A level below 20 generally indicates a bearish or complacent market, while reads above 30 are generally associated with a large amount of volatility, and mean that investor fears are taking place.

Smart traders usually "buy bargains" when volatility is hi…