Short Squeeze

Short interest may be considered an indicator of overall market sentiment regarding a stock, with high short interest being bearish. However, if short sellers rush to cover their positions, a so-called "short squeeze," the price of the stock may increase substantially. This is what recently happened with Pandora stock. See the article here, Pandora.

Media = Contrarian Indicator

The media often focuses on financial stories; however, they tend to be late to the game. Meaning, once they report on an event, the market has likely already digested it. Recently, Bespoke Investment Group found that the number of financial stories posted on the Drudge Report was negatively correlated to the subsequent market performance. See the article here, Yahoo.

Weather Derivatives

Most people are aware of stock options or futures contracts on commodities such as gold and oil. However, the derivatives market is very diverse, including such things as weather derivatives. With hurricane season upon us, you may want to do some research on hurricane futures and options (http://www.cmegroup.com/trading/weather/hurricanes/hurricane.html). Essentially, these contracts allow insurers to transfer risk to other parties, such as hedge funds. See the article here, CME Group.

Plan Now

Almost half of all retirees have $10,000 or less in savings when they die. While social security or pensions may provide adequate income, it illustrates the dependence on these outside sources. Going forward, there will be fewer pension plans (switching to defined contribution plans), and social security is no guarantee. So, plan now. See article here, Market Watch.

Investor's Pain = Government's Gain

In the wake of the Crash of 2008, the government stepped in to bail out multiple institutions, including AIG. Following the economic recovery (albeit a moderate one), the government was able to exit its position, netting a $17.7 billion gain. So, while many people opposed the bailout, it actually served as a transfer from investors (generally considered the wealthy) to the government. See article here, LA Times.

Short Sale Trading Glitch

Following the Crash of 2008, the SEC reinstated the uptick rule, albeit a modified version. The uptick rule kicks in if a stock's price drops 10% in one day. This prevents short selling except on an uptick. However, a trading glitch (which are increasingly common) effectively overlooked the rule. See article here, WSJ.

Facebook IPO Lockup Expiration

When a firm undertakes an IPO, insiders (owners and venture capitalists, among others) agree to retain their shares (i.e., lockup) for a period of time, typically six months. When the lockup period expires, it is customary to see a large block of shares flood the market, having an adverse effect on the stock's price. Facebook just hit its lockup expiration. See article here, NY Times.

High Frequency Trading

With recent events such as the Flash Crash and the trading glitch at Knight Capital, high frequency trading has come under increased scrutiny. So, what exactly is high frequency trading and flash orders? Essentially, these traders attempt to exploit differences in bid/ask prices and capture any spread that exists. Check out this video for an illustrated discussion.

Will Lightening Strike Twice?

Just before the real estate crisis really hit, the Fed said that the issue was "contained." As we know, this was not correct. Recently, Bernanke said that the $1 Trillion in asset backed student loans won't cause a crisis. Hopefully he is right this time. See article here, Kansas City Star.

Target Date Funds

Target date funds (or lifecycle funds) have simplified the investment process for many people. However, they are not without their own potential problems and differences. This article (CNN Money) gives a good overview of the main issues.