Window into the costs of family court litigation

“Mel Gibson’s ex sued for $ 108K over child support fight” (Page Six) provides an interesting window into just how much Americans spend on transaction costs in family court:

Court documents obtained by The Blast reveal the forensic accounting firm that Grigorieva, 47, hired to investigate baby daddy Mel Gibson’s finances in her child support fight, is suing the singer for $ 108,000 for unpaid fees.

Grigorieva hired White, Zuckerman, Warsavsky, Luna & Hunt following her 2015 bankruptcy filing, and the company claims they aided Grigorieva in getting her child support payments increased to $ 22,500 per month for daughter Lucia.

In their filing, the firm noted that Gibson, 61, paid the bulk of their charges with the exception of the unpaid balance of $ 108,887.24.

I.e., the accounting fees were in excess of $ 218,000 for this child support modification action (Gibson paid at least 50 percent if it was “the bulk of the charges”). Just imagine the legal fees!

Note that, despite the fees, litigation should have been a rational strategy for the plaintiff. Her daughter is now yielding tax-free revenue of $ 270,000 per year. That’s nearly $ 5 million over the 18 years during which a child can yield a profit under California family law. Legal and expert fees might be pretty close to the $ 5 million number, but her defendant will pay most of them.

[The defendant in this case is famous, which is why the lawsuit is in the news, but this scale of fees is consistent with what is spent when ordinary high-income Americans are sued.]

Young readers: Remember that going to accounting school doesn’t mean being stuck filing 1040 returns!

Related:

Philip Greenspun’s Weblog

A Euphoric Rally into Collapse Lesson from Square SQ

Here’s one for the lesson books – Square (SQ) had a euphoric or parabolic rally that gave way to the all-but-inevitable snap-back crash straight into a key support price.

Here’s the Euphoric Rise that gave way to the Stellar Collapse:

Square (SQ) is a new stock that you may not have traded yet but it’s sporting a classic pattern of a euphoric (unsustainable) rally that just gave way to a textbook collapse event.

Despite a strong higher timeframe uptrend, price stabilized (intraday chart) at the $ 32.00 per share level and built a rally toward $ 38.00 per share.

At that point, a clear Ascending Triangle Pattern developed which triggered a bullish breakout entry above $ 38.00 on November 10th.

Price got ahead of itself, surging straight up into a “Parabolic Arc” or “Euphoric Top” pattern that set the stage for the pain of a collapse after the pleasure of the euphoria.

Traders are encouraged to avoid trading INTO the late-stage euphoria (bullishly) due to the risk of a price collapse.

Similarly, bears are discouraged from short-selling a euphoric pattern event like this because price can remain overbought and irrational – and surging higher – beyond your ability to sustain a reasonable risk or stop-loss strategy.

VERY aggressive traders can engage short on the breakdown – in this case a gap – beneath the rising “arc” or adaptive trendline.

We’ve achieved our first target of the initial breakout from the original Symmetrical Triangle.

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Are there less opportunities in this market into the close for traders?

A reader asked:

Hello Mike.

I have been involved in trading for a number of years and follow your youtube channel with interest.

A quick query when you have some time.

Going back a few years, the main ‘focus’ for trading (mainly using the tape) was on the open and the first hour of trading. Then also the last hour before the close.

I’m just wondering if this is still the case in today’s markets.  The open is still obviously important, but with regards to the last hour before the close, is this still a viable time to trade in your view?

I seem to be getting more of a ‘lunch time’ vibe in the final hour, where it seems that the main move has happened early on and now we are in sideways chop with not much in the way of ‘tape signals’ to guide you if you want to trade in the last hour before the close.

Would be interested in your view on this when you have some time.

@MikeBellafiore

I would agree with your observation for tape readers/scalpers.  On the open offers the best opportunity to scalp as there is more volatility.  I do notice our best scalpers profiting midday, trading the stocks most In Play.  I do notice less of this type of trading into close, but still opportunity for the best tape readers.  Overall, there does appear to me to be less opportunity to tape read and scalp into the close than in the past.

There are different strategies that work well into the close that traders gravitate towards.  There are positions to be managed for swing traders.  There is stock movement to be watched for setups for the next trading session.

You make an important observation for your trading.  You do an excellent job seeing the different business plans you might build for the different trading time frames- open, midday, close.

As always, I welcome your questions/feedback- mbellafiore@smbcap.com.

*no relevant positions

 

 


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