How Don Johnson took $6 million from Atlantic City

Posted April 2, 2012 at 1:11 am

Don Johnson won nearly $6 million playing blackjack in one night, single-handedly decimating the monthly revenue of Atlantic City’s Tropicana casino. Not long before that, he’d taken the Borgata for $5 million and Caesars for $4 million. Here’s how he did it.

by Mark Bowden

Don Johnson finds it hard to remember the exact cards. Who could? At the height of his 12-hour blitz of the Tropicana casino in Atlantic City, New Jersey, last April, he was playing a hand of blackjack nearly every minute.

Dozens of spectators pressed against the glass of the high-roller pit. Inside, playing at a green-felt table opposite a black-vested dealer, a burly middle-aged man in a red cap and black Oregon State hoodie was wagering $100,000 a hand.

Word spreads when the betting is that big. Johnson was on an amazing streak. The towers of chips stacked in front of him formed a colorful miniature skyline. His winning run had been picked up by the casino’s watchful overhead cameras and drawn the close scrutiny of the pit bosses. In just one hand, he remembers, he won $800,000. In a three-hand sequence, he took $1.2 million.

The basics of blackjack are simple. Almost everyone knows them. You play against the house. Two cards are placed faceup before the player, and two more cards, one down, one up, before the dealer. A card’s suit doesn’t matter, only its numerical value—each face card is worth 10, and an ace can be either a one or an 11. The goal is to get to 21, or as close to it as possible without going over.

Scanning the cards on the table before him, the player can either stand or keep taking cards in an effort to approach 21. Since the house’s hand has one card facedown, the player can’t know exactly what the hand is, which is what makes this a game.

As Johnson remembers it, the $800,000 hand started with him betting $100,000 and being dealt [continue]…

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The top 15 pessimistic prognosticators

Posted February 14, 2012 at 3:40 am

by Ben Steverman

Only the gloomiest of Wall Street’s prognosticators got it right in 2008 and 2009. Since then, their pessimism has been infectious.

On almost any investing topic — from emerging markets to U.S. stocks, from commodities to sovereign debt — there are respected experts predicting the worst.

So far, apocalypse hasn’t arrived. The U.S. economy shows signs of life. Europe is muddling through its debt concerns. The economies of China and India have slowed but not stalled.

If these commentators, who range from short-seller Jim Chanos to GMO’s Jeremy Grantham, prove prescient — and Bloomberg.com will check in later this year to see if they are — the biggest surprise in 2012 would be some truly good news. [Continue to slideshow]…

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Editor’s Note: For the WV’s take on self-styled prophets-of-peril, read our posts about prognosticating, starting with:

The Crowd Gravitates To End of America Bloggers

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Lloyd’s wall of worry

Posted February 8, 2012 at 2:55 am

by Lloyd Khaner

Welcome to my at-a-glance guide to the issues facing investors this week  — a unique tool for traders and money managers.

Typically the term “wall of worry,” refers to the entire body of concerns influencing stock market action. When the wall is high, meaning the market is nervous, stocks tend to get cheaper.

This wall of worry is even more specific. Every week I list the exact concerns in the marketplace and use the list to help me make buying and selling decisions.

As I like to say, “Buy fear, sell cheer.” Scroll over each “worry” for additional comments.

Go to this week’s wall here…

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The facebook players club for IPO insiders

Posted February 6, 2012 at 3:50 am

by Joel Arbaje

They were doing just fine before, but Facebook’s biggest minority owners are about to be catapulted into a far more elite bracket.

As we ponder what they’ll do with with new millions (or billions in some cases), here’s a look at what got them where they are today.

David Choe -

For the colorful and creative David Choe, he was offered cash or stock options as a so-called “adviser” for payment in 2005, Choe chose stock–likely gaining between 0.1% and 0.25% of the company’s stock at that point. At IPO this could convert to a value of $200 million. [More on David here...]

Sean Parker -

We’re looking at an expected $5 billion IPO. So Parker’s 4% stake in a post-IPO company, freshly valued around $85 billion, will convert to $3.4 billion. [More on Sean here...]

Reid Hoffman -

Nearly half a billion dollars for Reid Hoffman. His $40,000 investment seems to have netted him a 0.5% stake. In a possible $85 billion company that would lead to $425 million in value. [More on Reid here...]

Chris Hughes -

What Chris Hughes will do with his new millions? Hughes has a 1% stake, which translates into $850 million of worth in what could eventually be an $85 billion business. [More on Chris here...]

Peter Thiel -

For Peter Thiel at 3% of a possible $85 billion company he’ll be worth $2.55 billion more. That’s a quadriggigillion times return on the investment. A googleplex times…a…well, let’s just say if you had $500,000 to spend, it probably wouldn’t earn you over $2 billion just seven years later. [More on Peter here...]

Jim Breyer -

Early investor Jim Breyer has an assumed 1% stake at an $85 billion IPO would equate to $850 million. [More on Jim here...]

Eduardo Saverin -

For cofounder Eduardo Saverin, his settlement with Facebook resulted in him keeping a 5% share, but he’s said to have sold it down to 2.5%. At an $85 billion company value, that equates to $2.1 billion. [More on Eduardo here...]

Li Ka-shing -

What Li Ka-shing will do with his extra millions? A 0.8% stake in a Facebook worth $85 billion at IPO would equate to $680 million for Ka-shing. [More on Li here...]

Jeff Rothchild -

Jeff Rothschild is believed to have an 0.8% stake, which will be worth $680 million after the IPO. [More on Jeff here...]

Sheryl Sandberg -

Sheryl Sandberg has a 0.1% stake, at a post-IPO $85 billion company that’s worth $85 million. [More on Sheryl here...]

Dustin Moskovitz -

Dustin Moskovitz has a 5% stake in Facebook, which for an $85 billion company would equate to $4.25 billion. That’s around $157 million for every year of his life. [More on Dustin here...]

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What makes a top trader?

Posted February 6, 2012 at 12:10 am

by Jonah Lehrer

It’s been a tough few years for Wall Street. Traders got big bonuses for taking foolish risks, while taxpayers got stuck with the bill. But without the financial industry’s machinations, Facebook couldn’t go public, your neighbor couldn’t get a mortgage and we’d all be stuck buying cars with cash.

This raises the obvious question: How can we ensure that Wall Street doesn’t get carried away as it did before the 2008 meltdown? That traders aren’t seduced by foolish risks in the near future?

One approach has been increased governmental regulation, such as the Dodd-Frank Act of 2010, which attempts to reign in the excesses of the financial industry with new rules and restrictions. Only time will tell if this strategy works.

A different approach to reducing the irrationality of Wall Street can be found in new research led by Steve Sapra and Paul Zak, neuroeconomists at Claremont Graduate University. Dr. Zak got the idea for the paper after spending time with [continue]…

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The 18 most elite ETFs, based on AUM

Posted January 30, 2012 at 2:31 am

by Jared Cummans

It is no secret that the ETF industry is dominated by just a handful of products. The majority of the $1 trillion plus assets are confined to roughly 100 funds, leaving the other 1,300 ETFs in the dust.

But as growth in the industry continues to pick up, more and more funds are entering elite status with hefty assets and trading volumes to go with it.

Investors who are still a bit squeamish about buying into some of the smaller and more hypertargeted products, have a wealth of options available to them. A number of advisors and institutions have [continue]…


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The king of all IPOs for 2012

Posted January 9, 2012 at 12:18 am

via 24/7 Wall St.

An excerpt from The 17 Most Important IPOs To Watch In 2012

Facebook is going to be the king of all IPOs of 2012. The double-question is when exactly will it go public and at what price? Facebook is a monster in social networking that has changed the world and the ways of communication.

The company is supposedly going to release its financials in the second quarter to comply with regulatory standards over its number of shareholders.

With Mark Zuckerberg aiming for a $100 billion valuation at the offering, Facebook could literally be valued at more than all of the top and important IPOs of 2012 combined. It was just over a year ago that many thought that $30 billion and $40 billion valuation was too high and the many private sales have since commanded a much higher valuation.

The underwriting firms and the exchange it will list on are yet unknown, as is the share structure. Will it follow the LinkedIn Corporation (NYSE: LNKD) share structure?  

Facebook’s estimated $100 billion valuation is expected to come with a $10 billion stock sale. Alexa still ranks Google first in traffic measurement of all global websites, but Facebook is coming on strong in many online measuring metrics.

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Striking gold managing women’s money

Posted December 21, 2011 at 1:47 am

by Kristine Hansen

In a post-Bernie Madoff world where investment advising has made investors wary, Elle Kaplan spotted a gold mine.

Kaplan, who has worked many years in investment banking and private banking, decided she’d create a firm that didn’t charge hidden fees or excessive broker fees like some “fast-talking slick salesmen” on Wall Street.

In October 2010, within one month of starting Lexion Capital Management in Manhattan, Kaplan, 36, achieved $1 million in assets. Former clients at firms where she once worked came on board immediately. “I didn’t expect it to be successful this quickly. It felt gratifying because I had worked hard to create a place that was worthy of them.”

First, she had to overcome suspicions about money managers.

“People, especially in New York, were still reeling, because of the mortgage scandals and the fraud perpetuated by Bernie Madoff,” Kaplan said. “I handled it by putting a slide in our presentation: ‘How do you know we’re not the next Madoff?’ “

Eric Donner, a financial adviser at Rubin Wealth Advisors in South Florida added: “Clients are so uncertain right now. They’ve been placed into products and programs without the advice. ” Donner, who ran his own firm on Wall Street for 25 years, said that investors “desperately need help — but qualified help.”

As a fee-only money manager, clients sign a power-of-attorney agreement that gives Kaplan authority to trade accounts — yet she can’t withdraw any [continue]…

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Trader turns $1 million into $2.2 million – in 5 weeks

Posted December 12, 2011 at 3:55 am

via CNBC.com

A mix of trading ETFs, the Australian dollar and Australian stocks helped Gary Lewis win CNBC’s latest “Million Dollar Portfolio Challenge.”

Lewis, 56, a residential real-estate appraiser from Dieterich, Ill., received $1 million as the grand-prize winner. The second-place winner was Scott Cole, 42, an independent trader from Redwood City, Calif. Cole gets a 2012 Maserati GranTurismo Convertible Sport.

Less than 1 percent in returns separated Cole from the grand-prize winner Lewis, who had a final total return of $2.2 million. The two were the top winners among more than 253,000 contestants and more than 674,700 portfolios. Each player was allowed up to five portfolios.

During the “Challenge,” which ran for five weeks from September 19 to December 2, contestants received a virtual million U.S. dollars to fictionally trade stocks and Exchange-Traded Funds on the New York Stock Exchange, Nasdaq Marketplace, American Stock Exchange, London Stock Exchange and Australia Securities Exchange, as well as currencies in real-time.

Lewis said his investment strategy focused on a basket of ETFs, trading the [continue]…

WV Note: To find managed accounts, where traders like Lewis and Cole above can put your money on auto-pilot with a focused intent to grow it in BIG ways, get a copy of our $7 Auto-Pilot ROI report or become a Wealth Vault member

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The king of index funds, Vanguard, still kicking butt

Posted November 22, 2011 at 1:44 am

by William Samuel Rocco

Vanguard has been the leader in the field of index funds for decades. It launched  Vanguard 500 Index (VFINX), which has $102 billion in assets and is the third-largest stock fund in the United States, back in 1976.

It opened  Vanguard Total Stock Market Index (VTSMX), which has $162 billion in assets and is the largest equity offering in the U.S., nearly 20 years ago. And it has dozens of other index funds that span the asset-class, geographic, and style spectrums as well as lots of funds of funds that hold mixes of its passive offerings.

Meanwhile, Vanguard has done an excellent job of driving down costs, choosing appropriate benchmarks, and replicating the performance of those benchmarks across its index lineup.

(The firm has considerable success using various techniques–such as sampling, employing futures contracts, and lending securities–to track benchmarks efficiently and effectively.)

The firm’s passive roster is packed with topnotch offerings. We have evaluated a good number of its index offerings and passive funds of funds thus far using the new Morningstar Analyst Rating, in fact, and these funds have received impressive ratings overall.

Vanguard has made four important moves in 2011 that should make its passive lineup even more attractive to indexing fans.

Here are the details on each of the moves [continue]…

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