What it feels like to lose a family court relocation case

“I was forced to raise my kids in Texas for 14 years” (NY Post) is an interesting piece regarding how it feels to come out of a garden-variety U.S. family court lawsuit.

The husband and wife both want to get rid of each other, but are trying to be strategic about it (and certainly neither of them seems to care about the kids!). The wife is unwise enough to agree to move to Texas where divorce is not a terrifying prospect for the loser parent. Child support is capped and, by statute, the loser parent can take care of the kids up to 43 percent time, including a 30-day summer vacation. Alimony is capped and generally disfavored. The husband figures this out and sues her in Texas before they end up in some jurisdiction that is less favorable to the “breadwinner parent”.

The mom/author becomes the winner parent, but experiences the win as a loss because the husband won’t agree to let her move with her winnings (the kids) to New York or Boston (the author doesn’t mention it, but if she had moved and the husband ever moved out of Texas, she might have been able to collect 5-10X as much in child support cash; see “Relocation and Venue Litigation”).

The author forgives herself for her role in breaking up the kids’ home:

I was afraid to tell my daughters about the divorce, and I delayed the conversation. Finally, one day when they were playing catch, I told them that sometimes parents live in two different houses and that is what we would be doing and everything else would be the same. They said OK and asked if they could go back to playing catch. I realized at that moment that if I could, in fact, keep everything else the same, or close to it, their lives would be as good as any other kid’s.

This perspective is not supported by the research psychology literature, but Americans have convinced themselves of it. (some references) The “single parent” believes that she will be a role model for the girls:

In Texas, I raised my children and myself, I like to say. Being stuck first in a bad lonely marriage and then held by law in a bad lonely place turned me to steel. For 14 years, I believed that I could withstand any assault and resist weakness of any kind. I could do anything, say anything, fight for anything. I was independence personified, a show of strength that my daughters could rely upon and emulate.

This is true, statistically and anecdotally. The researchers say that children of single parents are more likely to become single parents. The lawyers say that daughters of moms who collect child support are more likely to become child support plaintiffs.

The kids’ inheritance and college funds are diverted to the lawyers:

Although our divorce was finalized in 2003, for a stretch of years after that, there were additional lawsuits over custody and visitation rights, one after another.

Not having read the Nurture Assumption, she believes that her 14 years of litigation and living where she didn’t want to live have influenced how the kids turned out:

[the now-adult daughters] are remarkable people, something I knew from the start and fought to preserve. I am proud of the fight.

Maybe this article will inspire married folks to talk to a divorce litigator at the proposed destination before they move to a new state?

Related:

Philip Greenspun’s Weblog

Fed Rate Hikes, Fiscal vs. Monetary Policy and Why Again the Case for Gold?

I’ve been thinking about the current Fed Funds rate hike cycle, which is logically gaining forward momentum now that the Fed can stand down from its 8-year, ultra-lenient monetary policy cycle.  That is because the Obama administration’s goals required a compliant Federal Reserve to continually re-liquefy the economy as its fiscal policies drained it. With […]
Slope of Hope

A building case for Biotech

Written By: DragonFly Capital

biotech_image1

Biotech has been a crazy hot and volatile sector of the stock market in 2015. It has made millionaires and it has cost people millions. The stories change with each stock and the results of each clinical trial. So without real deep fundamental knowledge the best way to participate in this sector may be through ETF’s. One of the most liquid ETF’s in this space is the iShares Nasdaq Biotechnology ETF ($ IBB).

The chart for IBB is below. It had the strong pullback in August and then a second strong leg lower in September on Hillary Clinton’s comments on drug prices. But since that September bottom it has been building a series of higher lows. These have come against resistance at 342, where it sits going into the last day of the year. This creates an ascending triangle. A break above this triangle target a move to 396, awfully close to the July high at 400.

ibb

The prospects for this ETF look good into 2016. It has bullish momentum with the RSI rising and in the bullish zone. The MACD is also rising and bullish. And the Bollinger Bands® are opening for a move higher. The lone dark spot is the flat 200 day SMA overhead at 348. A break of the triangle will signal strength in the biotech space and above 348 a confirmed move higher with a solid stop at the 342 triangle level. So much easier than trying to figure which companies will win and which will not.

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The Case For Yahoo

Written By: DragonFly Capital

Investorplace.com asked me to join their Best Stocks of 2015 Contest at the end of last year. For the contest I choose Yahoo! I still think it is a great long term prospect and maybe even better than it was in December. I just sent them this update….

It might sound silly or desperate or insane coming from the guy that is losing the Best Stocks of 2015 Contest , but I like my pick even better now than I did in December.

Back then I choose Yahoo! ($ YHOO). The stock had survived the Alibaba IPO and was on the edge of a long term break out. As I was waiting for year end to come the stock had already started higher. This was the one problem with the pick. There was some downside risk in the short term that it would come back and retest the break out area.

yhoo

The chart above updates the original from late December. And sure enough you can see that the stock has pulled back to the break out zone, and I am in dead last place. With the leader up 84% at this point perhaps a win at the end of 2015 is not in the cards. But maybe if I can get them to extend the contest as the Best Stock until 2018? I can ask right?

The technical set up is still very strong. And as I stated above, maybe even better now as it has retested the breakout zone. While it moved lower notice that there were not sellers. The accumulation stalled, but did not reverse. Outside of the contest rules of buy and hold, I would look to put a stop at about 42 on a personal position if I were to enter here. The potential is still up towards the range between the 61.8% Fibonacci level at 78.80 and the ascending triangle break out target at 81.25. Less than $ 2 of downside risk for a possible $ 35 move higher? Sign me up again.

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What do readers in Silicon Valley make of the Ellen Pao case against Kleiner Perkins?

Silicon Valley friends: What do you make of the lawsuit by Ellen Pao against Kleiner Perkins? (USA Today) The standard employment discrimination case, to my mind, starts with the principal-agent problem. It is another way for managers to cheat shareholder-owners, the same way that they might by moving the company headquarters to a different suburb in order to shorten their commute. The managers indulge their personal preference for hiring buddies, people that they think will be fun to work with, etc., regardless of the fact that more qualified workers are available at a lower price. But the Kleiner Perkins partners are compensated strictly according to their funds’ performance. (Perhaps still the standard “2 and 20″ structure where they get 2 percent of the fund every year just for showing up and then 20 percent of any profits, even if the profits are driven by inflation and the fund underperforms the S&P 500.) So if Pao’s allegations are true, i.e., that she was doing a great job and producing profits, the greedy venture capitalists stand accused of intentionally making themselves poorer simply so that they would not have to look at an additional woman in the office (25 percent of Kleiner Perkins partners are female, according to Wikipedia, but it is unclear what the percentage would be for the entire office). Econ 101 would predict that those partners would have been happy to have a green Martian in the office if he/she were making money for them.

I haven’t set foot inside Kleiner Perkins for about a decade so I don’t feel qualified to comment on the likely merits of the case. What do Silicon Valley readers think?

Sidenote: Pao is married to Buddy Fletcher, a former hedge fund manager who was a successful plaintiff against Kidder Peabody, initially alleging race discrimination. Wikipedia says that prior to his marriage he was “in a same-sex relationship with Hobart V. ‘Bo’ Fowlkes Jr. for over 10 years” so presumably his lawyers had to choose between alleging that Kidder Peabody discriminated against him because of his skin color or his sexual orientation (at the time).

Related:

Philip Greenspun’s Weblog

The Harmonic Case For Regional Banks in 2014

Written By: DragonFly Capital

The regional banking ETF, $ KRE, had quite a run through 2013. The monthly chart below shows a 46% rise from November 2012 until the present. But the bigger picture suggests it is warming up for yet another move higher in 2014. The Harmonic Bat has been in play since the beginning of 2013 and has a Potential Reversal Zone (PRZ) at about 47. The Bat could also morph into a Crab and extend further to 74. But that is really getting ahead of ourselves. It also suggests

kre

that a 3 Drives pattern could conclude with another thrust higher to about the same area. Look at that as the equivalent of a Measured Move higher from the last move started out of consolidation at 26 to the 38 area repeated out of the current consolidation around 35. Two different measures to the same target is something that starts to excite me. How about you?

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Hewlett Packard HPQ and the Curious Case of the Bearish Rising Wedge Pattern

For traders new to trading chart patterns, a textbook example of the Bearish Rising Wedge pattern developed in textbook fashion which can serve as an excellent real-world example for you.

Let’s take a moment to identify the Bearish Rising Wedge Pattern and how it played out perfectly in HPQ shares.

Here’s the bigger picture on the Daily Chart:

HPQ Hewlett Packard Bearish Rising Wedge Trend Reversal Price Pattern

When identifying stocks in bullish trends, one needs to be aware of hidden reversal signals or price patterns such as lengthy divergences and the ominous “Bearish Rising Wedge” price compression pattern (link for a detailed description from the Education Page).

Assuming we don’t know the breakdown outcome, as late as August 13 we would see a strong stock rising in a lengthy uptrend into the $ 27.00 per share level.

Scratch beneath the surface and we see a lengthy negative momentum divergence that has been developing since the early June 2013 gap-up event.

We can see a similar, though less lengthy (one month) divergence developing then playing out into the April retracement.

Beyond the lengthy or “Multi-Swing Momentum Divergence,” savvy traders could also identify a trendline compression pattern where the lower support trendline was rising at a steeper rate than the upper resistance trendline (that’s key to identifying this pattern).

For reference, the point at which the trendlines cross is called the “Apex” and the same logic holds for classic Triangle Price Patterns.

The combination of the lengthy negative divergence with the compressing trendlines flashed a powerful “Caution” signal and suggested that traders look elsewhere for bullish plays.

It signaled opportunity for very aggressive traders who enjoy playing breakout or reversal outcomes.

Note the large downside sell-day of August 15 which officially triggered a potential “Breakout” trading signal.

The break under the rising trendline should trigger stop-losses from the buyers/bulls; in the same token, it signals entry for bears/short-sellers.  This is the supply/demand dynamic that helps propel the rest of the move which sets up the trade.

For bearish traders, the trigger occurs on a close under the trendline such as the move to $ 26.00 per share.  The stop is naturally placed above the upper rising trendline or prior price which was intersecting $ 27.50 per share.

The outcome – or the target – for any type of reversal or breakout event is a large play or sudden impulse move.

Let’s step inside the Hourly Chart for a clearer perspective of the Pattern Development and Outcome:

HPQ Hewlett Packard Technical Analysis Hourly Chart Intraday Trading Tactics Bearish Rising Wedge Breakdown Trend Reversal

We can see the entirety of the Price Pattern from April to August and the initial stages of the breakdown from the Bearish Rising Wedge Pattern and trading opportunity (for aggressive traders).

On a breakdown, downside targets would include any of the 38.2%, 50.0%, 61.8% Fibonacci Levels or any prior price low including the June swing low into $ 23.00 per share.

Fortunately for short-sellers, price continued to trade lower away from the breakout trendline ($ 26.50) then collapsed violently in a gap event on August 22nd.

Price then traded toward the $ 22.00 per share level and the mini-reference level from April and May (see green highlight).

At this point with the breakdown trade in a $ 4.00 swing trading profit, traders can determine whether to take full or partial profits at this initial level – expecting a potential bounce up – or else hold or re-enter for a possible new breakdown event under $ 22.00 per share… but that’s another story.

Continue studying the Bearish Rising Wedge Pattern – the logic is flipped for a Bullish Falling Wedge reversal pattern – and use the recent example in HPQ as a great textbook case.

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Corey Rosenbloom, CMT
Afraid to Trade.com

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Corey’s new book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


Afraid to Trade.com Blog

Why You Wait for Confirmation: Spanish Case Study

Written By: DragonFly Capital

The Spanish market ($ IBEX, $ EWP) had a hard week last week. After making a new higher high on Monday it sold off the rest of the week, ending with a Spinning Top Doji (blue circle). Either a Spinning Top or a Doji or the combination are often quoted as reversal candles. This is because after a large move in one direction, in this case lower, the price action continued lower and then rebounded, to an equilibrium of buyers and sellers. That thinking is only partly correct. In fact these candles can be reversals, but they can also be continuation candles. A better interpretation is that

ibex

the balance between buyers and sellers signals indecision about the next direction and that confirmation is needed to determine continuation or reversal. Clearly in this case it was just a pause before continuing lower with a strong Marubozu candle. That is a candle that shows meaning. Starting at the high of the day and finishing at the low, there is no mistaking who was in charge in the Spanish market Monday.

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Plea Bargaining and Torture in light of the Aaron Swartz case

An interview with Aaron Swartz‘s defense attorney reveals that, though the government was threatening Aaron with between 30 and 50 years in prison if he went to trial and was convicted, a prison sentence of as little as six months was being discussed as part of a plea bargain (Wall Street Journal; Boston Globe). This reminded me of the classic “Torture and Plea Bargaining” by John H. Langbein (University of Chicago Law Review 1978). Back around 1995 I wrote a summary of Langbein’s paper:

The Catholic Church decided in the Middle Ages that too many people were getting convicted of crimes that they hadn’t committed. They instituted a rule that said nobody could be convicted without either two eyewitnesses or a confession. Convictions became difficult to obtain. Since it was not possible to obtain extra witnesses, the Church decided to torture defendants until they confessed.

Today we have a legal system with many safeguards for defendants’ rights. However, in our heart of hearts, we don’t believe that we could convict enough defendants if we actually gave all of them all of their rights. Consequently, we set nominal penalties for crimes at absurdly high levels, e.g., “life plus 100 years.” The actual penalty received by 95% of the people who commit such crimes is in fact 12-15 years. This is what they get if they agree to a plea bargain. However, if they choose to exercise their right to trial, they face the nominal penalty of life plus 100.

Having these really high penalties is more subtle than physical torture, but the basic idea is the same and probably a fair number of sensible people are pleading guilty to crimes they didn’t commit.

See also: A 2003 look at plea bargaining by the Cato Institute.

 

Philip Greenspun’s Weblog

Massachusetts Home Seizures Threatened in Loan Case: Mortgages

Yves at Naked Capitalism  comments on this Bloomberg article about the Eaton v. Federal National Mortgage Association case before the MA Supreme Court in the article  Massachusetts Home Seizures Threatened in Loan Case: Mortgages:

This is super important The highly respected Massachusetts Supreme Judicial Court is going to rule on whether the mortgage (the lien) can be separated from the note (the borrower IOU). Since the US Supreme Court over 100 years ago said the lien was a mere accessory to the mortgage, the odds are high they will say no. That means they might invalidate the foreclosure at issue, putting many other FCs under a cloud (but even if they rule for the borrower, I’d expect them to award damages rather than undo the FC; there is a lot of other law that treats sales out of bankruptcies and foreclosures as final). But a ruling in favor of the borrower would also deliver a fatal blow to MERS.


Angry Bear

Innovation and Market Constraints: The Case for Artificial Selection

Bruce Wilder had an excellent comment recently in the Crooked Timber thread on markets, economic rents, and the constraints on economic actors, excerpted by Dan here, and more with comments by Jazzbumpah here. (If you like the thinking there, run don’t walk to read this windyanabasis post and comments.)

The emphasis on constraints prompts me to revisit a post I made a few years back, pointing out that constraints, not innovation, are the shaping forces of economies:

Lane Kenworthy’s Big Idea

Attributing the robust state of modern economies to the “free” market is like saying that Arabian stallions, champion Rottweilers, and freshly-picked sweet corn are the result of mutation.

Would you and your family rather live with a wolf, or Good Dog Carl?

That’s the thought I come away with after reading Lane Kenworthy’s chapter on “The Efficiency of Constraints” in his book In Search of National Economic Success: Balancing Competition and Cooperation (1995).

After quoting Smith’s seminal “invisible hand” passage, Kenworthy says (emphasis mine):

The reason actors engage in economically beneficial behavior, according to the [neoclassical] theory, is not that they have unlimited freedom of choice, but that they must choose within a particular set of constraints – the constraints imposed by market competition. … It is this constraint, rather than freedom of choice, that is the crucial efficiency-generating mechanism in a capitalist economy.

In other words, extolling the “free” part of free markets is like getting all drippy about mutation without selection. More Kenworthy:

The issue is not free choice versus constraints, but what type of constraints produce economically productive activity.

Natural selection — in this case the constraints imposed by the natural and human environment and by other free-market agents — is a powerful force. But Kenworthy asks, quite reasonably, whether it is always more efficiency-producing than artificial selection (a.k.a. human-directed selection, a.k.a….breeding). In many cases, the visible hand of government creates more efficient markets.

Free-market advocates tend to ignore the reality that market-generated constraints often act directly against the formation of efficient markets. To choose what is perhaps the most obvious example: competition creates huge incentives for market participants to make sure that all information is not known. Disclosure regulations address that inefficiency, and result in the kind of robust open markets we see today in prosperous countries. Kenworthy gives three more (detailed and well-analyzed) examples in his chapter.

Even Adam Smith doesn’t assert that market constraints have some a priori claim to superiority. Says Kenworthy, quoting Smith,

…an individual who “intends only his own gain” is “led by an invsible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.”

“Nor is it always.” “Frequently.” Cherry-picked, at least, it verges on a mealy-mouthed endorsement. Smith, in his wisdom, is not nearly so categorical as his latter-day disciples.

Kenworthy’s attention to constraints — market-imposed and otherwise — strikes me as a profound insight, cutting straight to the heart of the laissez faire philosophy of neoclassical economics. But the idea — at least in this form — has not been taken up much by mainstream economists. A notable exception is Kenworthy’s colleague Wolfgang Streeck (who Kenworthy credits with inspiring his chapter in the first place).*

Not surprisingly, Kenworthy has a lot more than one good idea. National Economic Success has a boatload. Ditto his latest, Egalitarian Capitalism: Jobs, Income and Growth in Affluent Countries (2007). This post is already altogether too long, so I’ll leave it to other posts — and other posters — to delve into those ideas.

* “Beneficial Constraints: On the Economic Limits of Rational Voluntarism.” In Contemporary capitalism: the embeddedness of institutions, ed. von J. Rogers Hollingsworth.

Cross-posted at Asymptosis.


Angry Bear