The CNBC Advertising Machine.

By | August 20, 2019

Trading is a zero sum game.  Money does not come from vacuum.  For every winning trade, there is a loosing trade. If you understand that, then you should know that “massive trading”, i.e. a trade where everyone does the same thing, will not make anyone money.  The players and casino cannot both make money.

CNBC have plenty of the trading self appointed, and CNBC promoted, gurus that are on all the time tooting this trade or the other.  But by design this can never work.  The biggest of these clowns is Jim Cramer.  I followed him several times on his recommendation and the vast majority of the time he is wrong.  This is not new.  He has made some catastrophic calls including recommending the tech companies before 1999 crash and Lehman Brothers couple of days before it went bankrupt.  Yet CNBC present him as a national hero and the the universal “authority” on stocks.

The rest of the crew of CNBC does not have much better record either.  The Najarian brothers, are also presented as the wizards of option trading. I follow their work every now and then.  Recently, early August, they came with this “unusual activities” and recommended buying COF August 92.50 call, MMM August $180 call, SKX August $37 call, all in the same show.  Take a look at that chart and make your own call.  For honesty, on the same show they also recommended a fourth stock.  But I did not catch the name of it. So that trade could have made money, but I doubt it.  Again, do they have some good calls, sure but hardly based on their expertise but rather following the big money.

If you ever decided to follow option money, make sure you understand what is going on.  In many cases options are taken as a hedge for the real trade.  So if you see a large volume of calls, it might just be that someone is super short that stock and just want to cover the other side of the trade.  Do not get sucked in half stories.

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