Author: TheAcsMan

There comes a time in all of our lives when we’ve behaved in one of those really annoying Holier than Thou” kind of ways.

People who do so on a regular basis, and I include myself in that category, come in various shapes, sizes and flavors. The world of faith, that of politics and certainly the world of finance have all seen their fair share of characters espousing the kinds of attitudes that have most people praying for someone to be taken down a notch or two.

Jerry Fallwell, John Edwards and Bernie Madoff come to mind very quickly.

There are so many more of the one time high flying, but then fallen angels, than I could possibly ever fit into the pages of this blog.

But in America our fallen stars can recover and become rehabilitated so quickly. Probably no  nation in the world practices the concept of foregiveness as well as we do in America.

Either that, or our collective short term memory has taken a really big hit from way too many ganja hits over the years. 

How else do you explain the phenomenon of Newt Gingrich?

Along with the late Henry Hyde (R – Illinois), no two were more vocal and critical of Bill Clinton when his literal and figurative peccaddillloes came to light.

Hyde trumped them all by having a ‘baby momma” hidden from the public’s views for all those years, although Gingrich wasn’t far behind.

Gandhi was reported to have said “I like your Christ, but I do not like your Christians.”

Of course, these days, that quote would be artisitically toyed with a bit by the likes of Jon Stewart to something like “I like Christ, but Christians? Eh, not so much.”

He then would be castigated by someone who shouldn’t be throwing stones from inside a glass broadcast booth (On FOX).

But I stray.

As always, this is about me.

I feel a need to testify as I’ve been moved by the spirit.

At least the spirit in the profits I may have left on the table this past week.

Admittedly, last week didn’t turn out that badly for me. While the S&P 500 was up by 7.4%, I lagged by only 0.2%, having had a good day on Friday, when the market gave all 150 points back.

But it was more of a case of what could have been.

Over the years I’d been fairly immune from making stupid trades. Especially the kind that I describing as picking crumbs, when I try to squeeze out any last bits of option sale related income.

But not this week.

And I feel a need to cleanse myself and confess my sins. By so doing, I also feel a need to testify in the name of profits.

Not prophets.

Profits.

This past week I started by doubting all thouse dismissing Monday’s 300 point run up as nothing more than a “dead cat bounce.” The chorus was too uniform to be true. The devil’s cacophony always overwhelms the sweetly melodius hymns of the angels in the battle for our souls.

As it turns out, I was right about that, but not right about which way to go when the chorus changed its tune.

By mid-week the chorus was calling for a melt-up in stock prices.

Having no faith in the powers of the voices that be, my sinful self opted to go counter to the wave and sold calls on whatever I could that would be expiring on Friday.

Just an example of my personal greed trying to take advantage of the leveraged greed of call option buyers.

By Wednesday I’d sold calls on Green Mountain Coffee Roasters, Caterpillar, Hallliburton and Freeport McMoRan.

For sake of brevity, I’ll leave out those sales for which I have no regrets.

Actually, if I really wanted to be brief I would have done it the other way around, but the backspace button is such an onerous chore.

Of course, those shares that I mentioned just rode the wave and then some.

As the market decided to go with the good employment numbers on Friday and the market took off, I just knew that the wave would ebb.

I also just knew that the meteoric rise in Silver prices would reverse.

So with the confidence that only a “holier than though” trader could muster, I also sold calls on JP Morgan in the firm knowledge that my own brand of faith, that of the wisdom of TheAcsMan, would prevail.

To top it off, I also bought back all of my calls in the ProShares UltraShort Silver ETF, limiting options premium related profits in the supreme confidence that there were even more and bigger premiums in the world to come in a day or so.

But in a blast of truly divine contra-intervention, JP Morgan shares just took off, while the rest of the market began the fade that I so smugly knew would be happening.

Silver?

Oh yeah. It went up some more and in my case, up is bad.

When it was all said and done for the week and the last day of the trading week, I’d won one the battle, but lost the war. Although I had more right decisions and trades than not, it was the one that was not that sent me into reflection.

JP Morgan Chase.

Now, I’m no Gandhi. Lord knows the extra 2 inches necessary in that pair of pants will testify to that, but at least I could reflect.

Holier than thou? Richer than thou? Richer than the me that could have been?

No, maybe and no.

Among the things that I discuss in Option to Profit are the need to dismiss human emotilons of greed and fear. Since then, I’ve also added the need to banish the fear of mssing out.

The sale of last minute calls hoping to capture some extra crumbs worth of premiums is consistent with not being worried about missing out on the kind of totally unexpected gains that could materialize in just a second.

That’s exactly what happened with JP Morgan.

Earlier in the week itr had also happened with Caterpillar, as it went up more than 7% on a day that the Dow went up by just a bit less than 5%.

Now some in the chorus will chant that Caterpillar was unnecssarily beaten fdown in the days before that 490 point gain and that observation would be correct, but it’s certainly not a reason. It’s just an observation, as there were many stocks that were beaten down, but did not bounce back disproportionately.

Jesus wasn’t the only one crucified.

So I lament the loss of Caterpillar, as well, as the heretics exercise their right to take my shares.

But just as Henry Hyde, Tammy Faye Baker and others, the mighty all seem to fall. So too will Caterpillar.

Remember Ozymandias?

Of course you don’t. He never really existed, but Shelley used the mythical Ozymandias to make a point.

Actually, the reason you don’t remember is that no one reads Shelley and Ozymandias was actually another name for the historical Pharoah, Ramses.

But again, that damn backspace. So much easier to go forward than to linger in the past and try to correct those mistakes.

But just as some whose stars fade and never return, Caterpillar will do so and I’ll be there to welcome it back into the stable.

Of course, what would have been much easier and certainly more satisfying would be to use life’s backspace button and “Give me One More Chance.”

In all likelihood, using that backspace option would do nothing, because I wouldn’t have taken profits in my JP Morgan shares, anyway.

Like most investors, it’s easy to say that you need to banish “Greed.” but to do so is really pretty hard.

Ultimately, that’s what really seperates us from the animals. Our inability to learn from our mitakes is distinctive, as usually our mistakes don’t kill us.

We all seem to share the human tendency of not recognizing when it’s time to sell. Instead of selling JP Morgan shares at their peak, most of us will just watch it go back down as it retraces its ascent downward and will then watch it ascend again.

How sad that we keep making the same mistakes. But at least we live to see another day.

That’s what America is about.

Where else can you make the same mistakes, yet rise again, Newt? (Although I do consider him to be an animal.)

As with every Monday, there’s yet another chance to “Do it One More Time” and see whether the deathbed conversion will actually hold.

I’ve seen my personal Profit and Loss statement and I’ve felt the need to cleanse, but damn it, this is America and I get another shot for redemption, as well as another chance to fall and rise and fall again.

Linday Lohan and all of those who ever sang “Give Me One More Chance” would all be envious.

 

Views: 7

Happy Birthday to J. Bartholomew Pick

I’m a fairly boring guy. I don’t think I’ve ever initiated a social interaction in my life. Which works out well with my sedentary lifestyle that has me tethered to the La-Z-Boy, only occasionally reaching out for my keyboard and mouse.

The fact that La-Z-Boy stock surged today didn’t do much for me as I’ve never owned the stock, only the lifestyle.

Yet, despite immensely enjoying my sedentary lifestyle, today I learned that there are consequences. Seeing a family of field mice escape from my stomach folds while I was being measured by a tailor for pant alterations was embarrasing, but it’s not as if I’ll ever see that tailor again.

At least, not if Immigration and Naturalization arrives before next Tuesday, 5 PM.

The very idea that my elastic banded Jorts weren’t going to fit me for life hasn’t really caused my to rethink the physical aspect of sedentary life, just as long as that cognitive part keeps on moving.

However, that comfort and solitude promises to be disrupted as I’ve received my first ever notice to be called for jury duty.

Since I went to a high school that was focused on math and the sciences, that didn’t leave too much time for civics lessons. My guess is that a class mate of mine, David Viniar who has served as CFO of Goldman Sachs did find the time to take Civics classes in secret, because I’ve heard no one impugn his name or reputation over the past few difficult years over at Goldman.

But yeah, I know that it’s my responsibility. Yeah, yeah, I’ve heard it before.

Here’s the thing.

Not that I’m complaining, but the county that I live in has almost no meaningful crime.

Sure, if its your mailbox that’s been knocked over it’s pretty major. But if I’m going to do anything, whether it’s social or civic duty related, I want it to be exciting.

The one potentially exciting and seedy case that our local newspaper reports will be starting next week is one that I would have to recuse myself from, as the defendant used to attend cub scout meetings in our basement a dozen years ago. Sugar Momma was a Den Mother and my youngest son was in the troop.

Glad I have that excuse and won’t have to pull out any of the other excuses I’d prepared nor display any of the tics that I’ve been working on.

But that’s exactly why this week has been sort of maddening. We’ve had alternating days of real excitement in the markets punctuated by real snoozers. I want excitement all the time, unless it’s the one way excitement of falling off a metaphorical cliff.

Thursday was one of the snoozers, other than for the field mice discovery. I didn’t make a single trade and never even came close.

My hoped for drop in Silver prices never materialized, nor did falls in Visa or Green Mountain Coffee Roasters occur in response to my wishes.

Small drops in Halliburton and Caterpillar were only symbolic and won’t do anything to stave off those who are there to exercise their options.

In Green Mountain’s case, despite all of the controversy, I may end up doing something unusual tomorrow.

Controversy? It’s not even a Chinese company.

I’m on the hook to have my shares assigned at $52.50. For that particular lot of shares, that would represent a loss of $17 per share. That figure doesn’t take into account the additional lot that I bought after the big earnings related price plunge and subsequently had assigned to me with a small capital gain and a nice options premium.

More importantly, that loss doesn’t include $12.66 per share in cumulative option premiums since the position was opened 5 weeks ago. If you add the capital gain from the other lot and the $1.56/share options premium from using the Having a Child, Save a Life strategy the loss isn’t terribly onerous.

Although I can justify taking the loss on the underlying shares by taking advantage of the tax loss, the speculative side of me is saying that despite the bad press and accounting overhang, Green Mountain still has upside. To allow the shares to be exercised would eliminate the tax deduction in the event that I repurchsaed the shares with the terms of the wash sales rule.

Instead, I may end up closing out the options position by buying back the calls.

The upside? A tax loss on the options trade and the opportunity to continue holding shares for either capital gains or more option premiums.

The downside? A capital loss on the options trade and the potential for the bottom to fall out from underneath the shares.

See? That’s exciting

Sedentary, yes. But exciting.

In general, Monday tends to be a busy trading day for me as I add new positions to replace assigned shares and try to sell as many call options as possible.

Then Thursdays tend to be busy as well, as I look for any opportunities to squeeze pennies out of whatever positions remain unhedged. Those weekly options are just great for that kind of activity.

But not today and I don’t see much happening tomorrow, either. You would have been reasonable to think that China’s report of a decreased PMI, as a measure of industrial activity, for the first time since their hosting of the Olympics would have been a little reason to take profits.

Instead, we’ll just have to await official employment numbers tomorrow.

I hate to be curmudgeonly, and I certainly want to see people being able to find employment, but despite calls for a good number, I’m hoping that the market reacts negatively.

Or positively.

First of all, the numbers are always in arrears and are always subject to revision. Those revisions are consistent and sometimes significant.

Lately, there’s been much anectdotal evidence that “things are getting better.” That may be more meaningful than tomorrow’s report.

While the reporting of aged employment statistics may yield bad news, it’s sepia compared to 16 million colors, as far as snapshots go.

From my perspective, I usually like up Fridays if my sold options are out of the money and down Fridays if they’re in the money.

Tomorrow, I’m equally split.

On most Mondays that I’ve had lots of calls exercised I like to see a big downwrd move so that I can repurchase shares at less than the price at which they were assigned.

Again, I’m equally split.

I feel like a little kid having a tantrum, not really knowing what he wants.

Although my body does well with a paucity of activity, other than the insidiously developing midriff bulge, my brain begins to smoke when being torn in opposite directions.

Whereas the comparison of sepia to 16 million colors clearly favors the accuracy of the details contained in colors, my mind prefers black or white conditions.

Guilty or innocent?

Hmmm. Maybe this jury thing won’t be such a bad idea after all.

I wonder what model La-Z-Boys that have in the jury box?

 

 

Views: 16

I was up for no really good reason at about 4 AM, particularly since I don’t consider Laszlo the Dog’s barking at a phantom menace to be a good reason.

Probably more out of instinct than anything else I pulled up the Bloomberg Mobile app on my phone while waiting for Laszlo to protect us from the blowing leaves and saw that the US Futures Market was reasonably flat and the Asian markets were doing nothing special.

I went back to bed neither excited nor dreading the open, expecting yet another quiet day. Maybe the kind of day that I could find the time to complete my furniture repositioning tasks left over from the past two days.

Well, for the very same reasons that it’s hard to justify sneaking away to attend to personal hygiene needs, a lot can happen on the international scene.

China decided to loosen up its banks’ reserve requirements.

That apparently is a good thing as far as liquidity goes. Although Chinese companies may not like to abide by standard accounting principles, it does seem that basic economic laws apply, even in the People’s Republic.

As if that wouldn’t have been enough, the European Central Bank and our own Federal Reserve decided to coordinate action to allow foreign banks to access US dollars at lower cost.

What those ECB guys didn’t realize was that those American Airline Frequent Flier miles that were thrown in to clinch the deal were going to be close to worthless.

Score another one for “The Bernank.”

It was hard, though, to hear all of the cheering from the trading pits, what with the sound of Bernanke led chainsaws felling forests worth of lumber destined for the Treasury’s printing presses.

I like Bernanke and think that his calm guidance likely rescued us from the kind of economic travesty that our generation could not possibly endure.

Besides, tell me that Bernanke doesn’t look like a highly stylized and mythical lumberjack.

As it would turn out this would be one of those rare market days when there was no real attempt to sell into strength. The green just kept getting more green.

To my shock, I never once heard anyone refer to the nearly 500 point gain as resulting from “shorts covering their positions,” although with two minutes left to go until the final bell, Bob Pisani of CNBC commented on the light volume.

Of course that’s come to be expected, but what was a bit different was that Maria Bartiromo who made precisely the same observation on Monday, chided Pisani for his Grinch-like assessment.

Ha Ha.

As great as today was, after all what’s not to like about a bonus 500 points? But it was wasted on me, much like a box of fine wine.

I’m still a Manischewitz kind of guy.

Things being wasted on me has been a theme the past couple of days, although it hasn’t always proven to be accurate.

This past Thursday, for example, my kids had 3 tickets to the Ravens and 49ers football game. Since I’m not a huge football fan, I asked my kids if they didn’t want to take one of their friends instead, since my level of appreciation was likely low when compared to your usual football louts.

I really thought that those tickets were wasted on me.

But hearing what every parent would love to hear, they said they wanted to go with me to the game. The fact that it was unseasonably warm for a Thanksgiving evening gave me no real out, but as it turned out, not one bit of it was wasted.

We had a great time and it was a wonderful game and evening, although I still can’t remember why I have some biker chick’s name tattooed on my neck. The kids said I did it as a dare after downing a bottle of whipped cream Vodka.

Whatever. So I guess they’ll just have to bury me in the thieves and unholy section of the Jewish Cemetery.

Well rested and prepared for a nice trading day on Monday, I was noticing a steady stream of Tweets directed to me from a number of different people, each of whom had more followers than the typical spammer.

What made these Tweets interesting was that they believed that I had any clue of wnat they were talking about:

I may make about 1500 trades a year, but I have absolutely no ability or desire to engage in “Chart speak.” I see colors and occasionally dead people and have never hidden that fact.

Look, I’ve owned shares of Riverbed Technology for the better part of 4 years and still have no idea what they actually do.

Don’t really care.

“$GOOG Bullish Tri Star Candlestick Pattern…” I know Google, but the rest?

What the hell does that mean?

$SLM CCI is bullish” Again. Sallie Mae and I? Old friends, but what’s that you say?

Again, no clue.

And there were more from where those come from.

There’s also a very nice person who follows me on Twitter who is extremely polite and thoughtful. If I retweet one of his tweets or a link to his page, he sends me a “Thank You” direct message. Not the Anthony Weiner kind, but one that sincere and grateful. He also very graciously retweeted one of mine yesterday alerting readers of the migration of Szelhamos.com to its new home at TheAcsMan.com

Very nice. Right?

I’ve looked at his blog site, Chartsmarts, and he is clearly far more serious, organized, analytical and capable than am I.

If we went back about 10 years or so, I might be able to understand, or at least have the interest in understanding his passion and output.

I was never a very good one to actually pay attention and never really did well by listening or reading as a proxy for learning. I tended to be the sort that had to deconstruct things to be able to learn them. On rare occasion I’d actually successfully reconstruct what I’d demolished in the name of knowledge.

I still do that, but the problem is that I’m no longer able to retain what I’ve learned in my short term memory banks, so I do lots of deconstructing, but then lose interest in the reconstruction phase of the process.

A few years ago, realizing that to be the case and really wanting to learn PHP and MySQL (don’t ask me to explain), I actually bought one of the “…..for Idiots” books.

After a couple of chapters I threw in the towel.

I wish I had Chartsmarts’ skill, drive and good will. I follow very few people on Twitter. He’s one. Even though it’s wasted on me, there’s no reason for it to be wasted on you, so follow Douglas Busch

Now, what was really wasted on me was the last 500 points.

To some degree, that’s an exaggeration, but my holdings have underperformed the markets through these last 800 Dow points. 

While the S&P 500 has gone up 7.6% this week, I’m only up 6.6%. That still leaves me in the 1% group, so you needn’t worry.

Most of that, actually all of it and then some, is due to the marked underperformance of the ProShares UltraSilver the past 5 trading sessions or so, as silver has kept rising. In fact, today I was able to buy back all of the call positions that I’d sold this month in anticipation of another drop in silver prices and a rise in the leveraged short ETF.

Some of those marked the second such closing trade, so I’m not moaning about the past few trading sessions’ performance.

But as this 500 point surge came out of nowhere, I’ve been caught a little flat footed, having hedged about half of my existing positions and either already at prices close to their strikes or now comfortably in the money.

Did you foresee a $7 rise in Caterpillar today?

Me neither. My risk/reward on this most recent round of call writing on Caterpillar is nothing to write home about, but still, profit is profit.

Although Caterpillar has been very nice to me, especially due to having sold weekly options on a regular basis, today’s rise puts it will above my $92.50 strike at which shares will be assigned. Green Mountain Coffee Roasters, Visa and Halliburton may share the same fate after today’s surge.

What wasn’t lost on me was comparing the chorus cries of Monday’s “Dead Cat Bounce” to the same talking heads warning of a melt upward going forward.

Once again, as the chorus cries get louder, just this time in a different direction, it’s time to look back to the other and original direction.

The history of government intervention is often measured in days, as reflected by the equity markets, so I can’t get too excited about what it will bring us tomorrow or the day after.

Although I don’t see the melt up quite yet, hopefully today’s bold moves won’t be wasted, at least not on my account.

Maybe then, once we get all of these banking disaster stories out of the way, we can get back to our old habit of bouncing from one fundamentals report to the next and then conveniently forgetting yesterday’s earth shattering report to make way for today’s Andy Warhol like data release.

It’s been a shame wasting those.

I miss the old days.

 

Views: 6

 

Maybe its the fact that we just came off a 300 point climb.

Maybe it’s because its been nothing but rainy and dreary all day long, but despite what was looking like nearly a 100 point run up on Tuesday, I just wasn’t feeling it and couldn’t really get in the game today.

Maybe it was because Silver wasn’t exhibiting its recent paroxysmal and alternating direction behavior.

More than likely, though, my lack of enthusiasm today was probably strongly related to the fact that my portfolio under-performed the market all through the day.

That was thanks to Amazon, Netflix and Green Mountain Coffee Roasters, which, wouldn’t you know it, led the portfolios to out-perform the markets on Monday.

You can have Yin or you can have Yang, but not both, unless their conjoined twins, in which case they might be more appropriately referred to as “Siamese.”

Whatever the root cause, I was antsy.

Not only was I not feeling it, but it may have been contagious.

The news that the parent of American Airlines was going into bankruptcy wasn’t terribly interesting, either. The only thought that occured to me was that at its closing stock price, it would take about 25 shares of AMR to purchase an in-flight alcoholic beverage.

Even in boredom I amuse myself, but no such luck with AMR shareholders. I suppose they just weren’t feeling it.

I rarely venture from my perch on the La-Z-Boy during the course of the day, but today was different.

Yesterday, despite having only made about 8 trades, I remained transfixed. So much so that despite the fact that our home was in a shambles from having the first phase of new carpet placement done during the day, I let the mess wait until after the closing bell.

Today, I had just two tasks assigned by Sugar Momma. My usual approach and strategy whenever I’ve been given chores is to work like a whirling dervish once the closing bell occurs. That typically gives me 90 minutes to get everything done.

The tasks today ranged from standard to complex. I had to start restoring order by returning furiture to their rightful spots in time for Christmas holiday guests. That was standard and required only brawn, of which despite being in short supply, can be accomplished by using simple laws of mechanics.

I also had to make some sense of our mismatched collection of Rubbermaid and Ziploc containers and lids.

I have every bit as difficult time doing the latter task as I do trying to match socks.That task fell into the “complex” category as it required a combination of visual identification and pattern matching.

Ever since I went to the all Crocs all the time wardrobe, socks haven’t been part of the equation. I wondered why the same couldn’t be done with plastic containers.

Damn, how many different subtlleties in shape can a quart container take? And why don’t they emboss both the container and the lid with useful information?

With my sights set on the 4 PM bell the market quietude led to boredom setting in.

I made a single trade trying to take advantage of some intraday strength in Halliburton by selling calls expiring this Friday.

If Sugar Momma knew that was the extent of my trading activity today she wpould probably exhort me to find a real job, but I feel comfortable knowing that all readers of the blog had to sign non-disclosure agreements.

Crazy? Like a fox.

Although it’s a very small liability, the only thing that really kept my interest during the trading day was the continuing story regarding the CHinese company, Focus Media.

Following a scathing report, by who else but Muddy Waters, their stock had taken a significant hit. As I noted on Monday, I took that as a cue to sell puts on teh shares. My only equivocation was that unlike Harbin Energy and Spreadtrum Communications that had likewise been excoriated, Focus Media wasn’t listing weekly options contracts.

But then I realized that my life expectancy probably didn’t warrant tooking 3 weeks into the future, so I bit.

Carson Block, the head guy at Muddy Waters was the scheduled guest on CNBC’s Street Signs. Admittedly, I’d expected that given the deserved bad reputation Chinese companies have had with regard to accounting and business practices that the hosts were going to ask questions that would simply reaffirm the basic hypothesis that there was something amiss.

But no.

Block was hit by probing questions from the hosting crew of Brian Sullivan, Mandy Drury and Herb Greenberg.

Block faltered. He was tentative in his answers, perhaps using the same law firm that’s representing Jerry Sandusky of Penn State.

He wasn’t feeling it.

In less time than it took for Green Mountain to shed 20 points a couple of weeks ago, Focus Media, trading at about $16 following a $1 intra-day loss, erased all of that during the course of the segment and closed the day higher.

Well, at least that was interesting, but from my perspective, as far as my portfolio went, wasn’t very substantive.

And so I started with my chores while the market was still in full swing.

Uncharacteristically, I felt  no longing today. There just wasn’t anything around to incite interest.

Not even that new retail metric unveiled by Dana Telsey, the ubiquitous retail analyst.

Last year we were blown away by the concept of aerial monitoring of parking lot capacity as well as the ensuing debate as to whether or not access to that kind of information constituted unfair advantage.

And yes, we’ve all heard about the store watchers looking at the size of shopping bags as a proxy for shoping activity.

But this one? Pure inspired genius. The Mall Toilet Paper Index.

Imagine having spotters continually monitoring the volume and quantity of toilet paper used as a measure of jhow long consumers are spending at the mall and how long they are commited to remaining there.

Personally, I would hire DIck Bove, Bank analyst for Rochdale Securities to camp out in the mall restrooms, although that may offend the flies.

Following his response the other day that Bank of America would be his buy recommendation in that sector, BofA stood poised to break the wrong side of $5.

Thus far, no one from Bank of America has returned my call regarding my strategy to help them deal with the financial morass and recent bad publicity.

I advised that they institute a new monthly fee on their basic checking acount, charging customers a single share of Bank of America stock each month. In all likelihood that will be somewhere south of $5.

Win – Win.

Maybe the fine people at Bank of America weren’t feeling it, either.

The only other bit of news today it capture much of my interest either, but it ran counter to my general theme of the day.

Rumors swirled that Herman Cain was reconsidering his bid for the GOP Presidential nomination.

Following accusations made by a seemingly credible woman regarding an alleged 13 year affair, it seems that Cain may have been feeling it.

I can’t even get away with occasionally pumping super unleaded gas and this guy gets away with 13 years of pumping….

Never mind.

But wuth this day now behind us, I have every confidence that tomorrow will be different.

I can just feel it.

 

Views: 12

There’s a saying that if you put 2 Jewish people together in a room you’ll get 3 different opinions.

I’m allowed to say that. Sometimes you get a free pass.

The same has probably been said for other ethnicities, cultures and religions, but other than Hungarian, I’d be ill at ease to use that saying for any other group. Years ago, when I was still in grade school, there was a funny joke book called “Race Riots.” It was a collection of ethnic and religious jokes and was really pretty funny.

So funny and so popular, that there was even a Race Riots II, focusing on the lesser known and under-stereotyped groups, such as Angolans.

I didn’t mind telling those jokes and others didn’t mind laughing, although subconsciously I may have tailored the joke set for the audience, just like when Jeff Foxworthy performs for the Johns Hopkins Applied Physics Laboratory.

Race Riots actually even had a chapter on Hungarians that wasn’t very funny. At least that was my informed opinion. I also knew lots of Hungarians and they didn’t see the humor in those jokes either, but they loved the Polish jokes.

So true. So true.

These days I still think that those kind of jokes are funny, but I would never admit to that, because when it comes to that area of discourse, opinions don’t really matter.

About 5 years ago there was a great piece on Jon Stewart’s “The Daily Show” that highlighted the last two known remaining Jews in Afghanistan.

They lived together under the same roof in an old synagogue, but hated one another. They couldn’t find agreement on any topic, although my guess is that there weren’t too many different topics out there for discussion. By all accounts, though, they were each very opinionated.

There must be a joke in there somewhere, but you’re not likely to get anyone to write one when there are only 2 people in the whole world to poke fun at. By the same token, however, I was the only Jewish kid in my neighborhood and was routinely beaten up by the only 2 Chinese kids in the neighborhood.

In my opinion they should not have beaten me up on a regular basis, but in their humble opinion the black kids shouln’t have been beating up the only two Chinese kids in the neighborhood.

There’s was just an early form of “paying it forward.”

In hindsight that’s funny.

There was certainly no shortage of talking heads today putting their two cents in about what today’s 300 point gain really meant.

I like opinions, after all, that’s the essence of a free society. But what I don’t like are “humble opinions” or especially those who preface their humble opinions with the words “in my”. Don’t get me started with the “IMHO” group of people.

Of course mixed in with the opinions was the obligatory “light volume” comment, although that’s more observational than opinion and is often just an excuse to explain why their clients didn’t participate in a meaningless rally.

Since I don’t care whether there’s tons of white powder over my trading profits, I certainly wouldn’t care if they came on light volume.

IMHO.

The prevailing opinion on Monday was that this was some sort of a “dead cat bounce” or a bull rally in a bear market. Again, this is code talk for “I’m not in it to win it, today.”

The talking head that referred to this as a bull rally in a bear market then went on to say that he wasn’t certain that this was a bear market.

To be confused, you actually have to listen. That’s why you have to shake your head when a talking head insists that the market only trades on fundamentals.

In my humble opinion, that guy doesn’t know what he’s talking about. These days the market wouldn’t know a fundamental even if you bit it on its asset.

Then there was divided opinion over what fueled the rally.

You had your Euro-centric school of thought people and you had your “This was the best Black Friday weekend ever” crowd.

The Euro-centric school was elated over the rumor that the EU nations were reportedly closing in on some sort of deal to tackle debt. This, if the past is any indication, would lead to a nearly equal, but opposite movement when that rumor or deal falls short or some other complicating factor arises.

Think Finland.

The retail sales crowd seems to say the same thing every year and then starts to question the meaning of having an overly successful Black Friday through Cyber Monday period.

How many years in a row will we have to watch the give and take of concerns related to cannibalism of sales for the rest of the holiday period, or the stream of data indicating the the remaining sales days between Cyber Monday and Christmas fell short of expectations.

Those thoughts are then typically followed up by revised data that’s released sometime near New Years and those data sets always seem to indicate that sales were actually better than previously reported.

Whew.

The thing about analyst opinions is that they’re subject to interpretation, but that’s understandable.

So too is it understandable that both the written and spoken words could be subject to interpretation, especially when rendered in a foreign language.

But that wasn’t the case on Monday when a piece written by Eric Jackson of Forbes Magazine for the Chinese Wall Street Journal somehow didn’t lose anything in the translation. Instead, it added to the translation, starting a rumor that Muddy Waters, that efficient Chinese stock price disinflation research firm, was planning a report on SINA.

In the past I’ve benefitted from such reports, Harbin Energy, Spreadtrum Communications come to mind. Both taking mighty hits as significant questions were raised about their accounting practices.

Having an opinion on those shares was irrelevant to me. I just waited for the big hits and then sold out of the money puts, much to my delight, as they both recovered from their acute hits.

Jackson said nothing about SINA, but someone just added his humble opinion into the translation.

In the meantime, the concern over another Chinese company, Focus Media was enough to send those shares into another day of tailspins and enough to get me to sell puts.

It’s my evil speculative side that makes me do those things. It’s usually well under control, but just like the craving for crack and hookers, it sometimes is pre-eminent. I have no clue what business Focus Media is engaged in, although I can venture a weak guess.

But again, irrelevant.

At any rate, Jackson’s reporting turned into an opinion, which turned into a rumor, which was then denied.

Sort of the way all of our EU news gets transmitted and with the same results.

I tend to be a very opinionated person. Not Perez Hilton opinionated, but enough so to get me to write daily, albeit without the use of a translator.

My opinions are usually either worthless or very poorly timed.

But having that contrarian tendency I could only believe that today’s 300 point rally would be something other than the quick and uninspired bounce that was the prevailing thought.

Unfortunately, that contrarian side has to deal with my pragmatic side.

In my own personal Afghani synsagogue, despite the belief that today’s move wasn’t a terminal event, I still sold whatever calls I could reasonably get a fair price upon. So I rented out Freeport McMoRan, Caterpillar, Visa, Amazon, Netflix and DuPont. I would have done more, but there were still some sizeable paper losses to overcome before so willingly giving up a share in any future profits.

To my disappointment, despite ProShares UltraShort Silver taking a big hit today, their call options didn’t move enough for me to repurchase them in order to await yet another opportunity to sell them.

As the market was getting to be somewhat boring, I took the opportunity to look at those ProShares UltraShort Silver ETF holdings which have grown to about 10% of my portfolio by slow and steady acquisition since mid-July. I even added on more shares today.

Despite a paper loss of about $5,000 they’ve spun off $30,000 of realized premiums. Had greed not gotten in the way, this would not have been the first time that all of my shares were hedged. I gave up additional option premiums for the fear of missing out on share appreciation.

FOMO. Stupid me.

And that’s a humble opinion we can all agree upon.

 

Views: 9

We’ve always been lead to believe that commitment was a good thing. It often is cited as the only real thing that distinguishes us from animals, although that’s clearly an exaggeration, as most animals are incapable of ever winning two games of checkers in succession.

Curse that capuchin, especially for not agreeing to best out of five.

 

We all marvel when hearing of a couple’s impending 50th wedding anniversary. What a wonderful show of commitment.

In fact, as well all know the commitment is “until death to us part.” Commit or die. Commit and die. It’s all the same.

Using the new Google “Translate” module made for this blog, you can now understand that when I say “marvel,” I really mean “shudder.” and when I say “wonderful,” what’s really meant is “terribly sad and confining.”

“Shudder” of course, is just further code for” violently puke.”

Obviously, Sugar Momma has better things to do than read my drivel.

For many, the end to commitment came when the unwritten social contracts providing lifelong employer-employee relationships in Japan came to an end. If the employer-employee relationship in a land that the overwhelming majority of us will never visit, nor know is no longer sacrosanct, what else could be left for the rest of us?

A good point, for sure, but for me, the end came when new TV shows were no longer given the obligatory 13 episode production commitment. Thanks to the one-time sanctity of that commitment the cable TV archives can be filled with such past unrecognized jewels as “Camp Runamuck” and “I’m Dicken’s, He’s Fenster,” as well as some recognized disasters as “Dundee and the Cullhane.”

As an aside, I also don’t understand how “Dundee and the Cullhane” could have flopped. On the surface, it appears to appeal to every demographic.

With divorce rates now beyond 50%, TV shows getting cancelled after just a single episode and Japanese workers actually being laid off, there is obviously no love lost for commitment. The fact that paul Reiser now works at at Nagashima Datsun assembly plant is reason enough to decry the loss of our sense of commitment.

And then there’s “buy and hold.” A strategy which to me always seemed more commited to a specific stock rather than to profits.

I received some interesting feedback on Twitter today, in response to yesterday’s blog “Achilles and his Heel”  that actually was the impetus for today’s theme. Interestingly, that same Tweeter, Dasan, was responsible for the theme of the previous day, as well.

Follow him. I’ve said so before. He’s funny, insightful and humble. Plus, given his training, he probably knows at least a dozen ways to decapitate or incapacitate you in the event of a perceived need to do so.

The comments were related to the commitment and loyalty people had for Amazon and Jeff Bezos, in part, because they also believed that Amazon was loyal to their customers.

Whereas you can be both loyal and stupid, this is not one of those situations. Despite what may be a near term stumble with its Apple like hyped Kindle Fire, based on early adopter comments, the very idea that the loyalty is perceived to be bi-directional is beyond MasterCard “priceless.”

It’s almost like Japan redux.

I think that I’ve demonstrated commitment in the past.

Forget about the 27 years with Sugar Momma. That’s a walk in the park, especially compared to the 75+ years that her grandparents put in together.

Until they died.

Instead, let’s talk about things that really matter.

Earlier today, Mohammed El-Arian of PIMCO commented that “US economic conditions are terrifying.”

As we both continue to New York Mets fans, you obviously have to excuse El-Arian for his emotions getting the best of him. Continuing to be a Mets fan, even after moving far away and after such a performance drought, has to shed some darkness on your credibility and ability to critically assess circumstances.

But that’s commitment. Not the same level of commitment that he showed to the Harvard Fund, but far greater.

I don’t practice “buy and hold” and don’t have an emotional attachment to any of my shares, but I still think that I have commitment in that area, as well.

I certainly haven’t bailed on Amazon, which although up a bit in Tuesday’s trading, has had a bad recent stretch.

My tendency is to stick with loseres. Now that may be an example of where loyalty and stupidity do intersect, but I’m much more inclined to give up on winners in the name of profits.

A commitment to profits means letting go and giving up on the loyalty to your winners.

How ironic, especially if you take a superficial view of things.

In one regard, I suppose that I’m like Charlie Sheen, in that I don’t lke losing and I especially don’t loke taking losses. Again, not really a commitment to a specific stock, but rather a commitment to avoid losing.

Oh, and I also like hookers and crack.

In the case of Amazon, it currently makes up about 7% of my portfolio. At one recent point it was higher, as its price drop has outpaced the S&P 500. Although offset a bit by options premiums, that bit, in homage to the recently departed Lee Pockriss, is itsy bitsy.

I shop Amazon consistently. I hate going into stores and malls. Sugar Momma hasn’t bought a real book in a couple of years, although she probably buys two new Kindle titles each week. We give Amazon gift cards.

Get the idea?

Best of all, I sell more copies of the Option to Profit book on the Kindle platform than any other.

Did I mention that I like profits?

But all of that spells commitment.

Whatever happens to the Kindle Fire or any of its successors, if any, Amazon, as lead by Jeff Bezos will continue to reward loyalty, whether you’re a shareholder or consumer.

Yet, I look forward to the day that I can let my shares go. And really, I never ask for much. I usually am happy to see my shares go for whatever I paid for them, as long as there were plenty of options premiums in-between.

But when I do, I further make the commitment that I’ll re-purchase shares the very first opportunity that they’ve come down in price.

The nice thing is that there’s really not that much downside to commitment unless it’s stupidity that keeps you in the game.

In a totally unrelated Tweet, yet from the very same muse was the thought that there’s no reason to worry unless the SPX goes to zero.

That’s precisely why you need to follow him.

On the road to zero, and I have no doubt that day will come, there will be a near infinite number of other melt down situations that will cause many to give up their commitment and forever take it on the chin. That lack of commitment will just lead to a double dose of disappointment as the obligatory upswing is seen only with the eyes of a spectator.

You show your commitment by being a participant, even if that means “buy and hold.” You show your stupidity by “panic and sell.”

Would you like to buy Amazon shares from me?

 

 

 

Views: 8

Whether you favor classic Greek mythology or good old fashioned American superhero fantasy, there’s a heel or a piece of Kryptonite that’s bound to spell doom and spoil all of your hopes for mankind..

Was there ever a single episode or comic book story about Superman that didn’t contain some kind of Kryptonite or at least its metaphorical equivalent? It was so predictable. There was always something to stand in the way of justice reaching its just destination.

For me, the image conjured up by the designation “super-committee” has to be on par with the mythical heroes of generations past and generations lost.

Just imagine. A collection of seemingly normal people, collected together forming their very own band of super-heroes. As if one super-hero wasn’t enough, surely only good things can come when the many are united as one.

This august group of super-patriots assembled to save our way of life from the predatory grip of a growing and deadly deficit.

Surely, we weren’t Greece and we weren’t the Weimer Republic.

The task ahead of this Deficit League was no less than that of Superman faced with saving the world from impending doom as an earthly sized asteroid with our name on it hurtled through the vacuum of space in our direction.

A couple of months ago the expression “kicking the can down the road” got quite hackneyed, but that’s just what the not so super super committee has done. The only question left for our imaginations is how long and winding the road will turn out to be.

There are lots of jokes about committees and their outcome products. A camel has been described as the design work of a committee of experts. Those jokes are the corporate variant of the “How many X does it take to do Y” joke.

Those jokes never get old, but this one did and on top of that, it was never very funny in the first place.

Question: “How many super-committee members does it take to get nothing done?”

Answer: “Twelve.”

See? I told you it wasn’t very funny.

And there was no product, to boot.

Instead there was the hope that there was a possibility that a solution to the deficit issue might be found sometime in the future.

Now that’s funny.

Seems like the super-committee took a lesson from the European Union and the European Central Bank and tantalized us with the possibility that there might be a plan for a plan sometime in the future.

That kind of certainty sure spells “this is the right time to invest in stocks” to me. Where do I throw my money and how much will you take off my hands?

But like all super hero stories, there was a need for drama. No one wants a story where good wins against a trivial challenger.

The super-committe members suffered the effects of their own unique brand of Kryptonite. Their mortal enemy was the very thing that gave them strength,

Their ego and politics itself.

Given the hype and the belief that the super committee would come through with a judiciously arrived deficit reduction package, the market should probably have discounted the high probability of failure.

It doesn’t take much of a leap of faith into contrarian territory to know that there was no way that the super committee could molt out of its own skin.

I mean, just how do you stand up to ego and the politics of the moment?

In a world where Newt Gingrich is the candidate with momentum, at least at the moment, anything should be possible. But whereas there may have been an antidote to the Kryptonite that sucked the life out of Superman, there doesn’t appear to be any antidote to the butt sucking that “Realpolitik” demands.

While some super committee members can’t see a way to extricate themselves from the Norquist “No Tax Pledge” their committee objectives were bound to be unmet.

Yet the market, despite the conventional wisdom, didn’t see this one coming from even a few feet away as the deadline neared.

Despite the big market move to the downside today, I wasn’t overly distressed.

With assignmenrts of some shares of Green Mountain Coffee Roasters and Riverbed Technology and all of my Sallie Mae holdings, today was a good day to pick up bargains.

It’s entirely possible that they’ll be even greater bargains tomorrow, but I couldn’t resist pulling the trigger today.

In fact, I could barely wait a minute after seeing the inital 190 point drop.

Part of my eagerness was because I had a 9:45 AM flight Monday morning on yet another Southwest Airline flight without a Wi-Fi connection. I’ve been on 6 flights in the past 2 weeks, each one teasing me with the rollout of W-Fi to the fleet, yet none had seemed to make it to my air chariot.

So I made quick trades before they closed the cabin doors and I would be shut off from the sweet flow of data for 90 minutes.

As it turned out there were more shoes to drop, but I repurchased my Riverbed Technology shares at a lower price, added to my Freeport McMoRan and Textron holdings and re-established a positions in Visa and Caterpillar, at much lower price than their earlier assignments that I took just recently took.

Not bad for 15 minutes on the less than intuitive E*Trade interface on my Droid telephone.

By the time the plane landed, any angst over the 300 point drop was eased by silver’s fall and the ProShares UltraSilver’s rise.

Huh?

Before my scheduled meeting, at which I thought it might be rude to whip out the smartphone or netbook, I had a chance to sell options on the new Textron shares and about 20% of the ProShares piece.

In the meantime, there was just a bit of angst over Amazon, which was getting whacked yet again.

This time, the Twitter stream was filled with negative comments about the new Kindle Flame, even coming from those that ordinarily spout Bezos messiah-like chants, the kind that used to be reserved for Steve Jobs.

One 140 space story had anectdotal evidence of a USPS employee saying that he never so so many product returns when Apple released a new product.

That sort of thing can’t be good for a stock’s price. That’s the kind of hard data and fundamental analysis that’s so desperately needed.

Whoever thought that Amazon’s heel would turn out to be Apple? But Amazon will recover, it just may need to remind people that its core business is immune to Kryptonite.

The equivalent would have been if someone actually came out and said that Green Mountain Coffee was insipid, if made properly and even worse, if not. If you thought that Starbucks was Green Mountain’s Kryptonite, you’d be on the wrong track on the basis of product competition. No one compares the products. They just wonder what will be left when Starbucks pulls the rug out from under its agreement with Green Mountain.

That one would be hard to recover from.

But the same thing was said after the first round of accounting improprieties was alleged. Green Mountain recovered and then some and lived to see another day and another round of allegations.

Heels heal and Kryptonite, like all radioactive elements has a half life.

The same can’t be said about the egos of our politicians and the need to perpetuate their elections, at all costs. There doesn’t seem to be any resolution and there’s not enough spin to counter the dizziness and disgust.

Maybe we should just let that asteroid do its worst and move on. 



Views: 12

I was always a fan of Game Theory and especially of its derivative game, The Prisoner’s Dilemma, since I’m an avowed believer in Zero Sum kinetics.

 If you don’t know what any of that means, you’ll have to decide whether to admit it, based on what your alter-ego will decide to do, knowing that your reward or punishment will be based on what you both decide, in the seclusion of the recesses of your warped mind(s).

In the event you have more than one alter ego it gets just a bit more complex.

Welcome to my world.

Game theory is much easier when your alter ego is perfectly in sync with your true self. It’s also easier in totalitarian situations, because in such cases people are afraid to go counter to authority.

Assuming that you possess some level of sanity and don’t have to take into consideration the needs of your alter ego, investing decisions, especially buy and sell ones, should be pretty easy.

“Should be” is the operative phrase.

I’ve long known that I’m incapable of selecting a good stock.

When I appeared on Bloomberg Rewind a couple of weeks ago, the guest panelist asked me the worst stock decision that I had made.

My first thought was “why is this a**hole asking me that question?” Besides, how do you trust a guy who’s not trying to grow a mustache during MoVember, as the host, Matt Miller was bravely doing, without going on a 3 week vacation to do so.

It didn’t take me long, though, to dredge up a near quarter century decision to purchase shares of L.F. Rothschild, a one time venerated name in investment banking. That particular year, it had the distinction of being the largest percentage loser of any company on the NYSE.

II may be a lot of things, but no one can accuse me of not learning from my mistakes.

At least the big ones.

Instead, I stick to my list of “Old Reliables” and rarely venture outside that comfort zone.

When I do venture, my timing seems to be highly correlated to short term unwanted price movements.

About a month ago, just as earnings season was getting underway I bought shares in Green Mountain Coffee Roasters, Amazon and Netflix. Of those, I’d never owned Netflix before.

I don’t know what made me purchase those. It was an uncharacteristic move for me to do so.

What that triad had in common was great options premiums in advance of earnings. Maybe a little price momentum, as well. Amazon stood alone in that group by not having any black clouds hovering nearby.

While Green Mountain delayed its earnings report by a couple of weeks, I had the opportunity to get three weeks of great premiums, but then came the news.

Green Mountain was already suffering from more doubts about its financials and Crazy Eddie like inventory issues.

Prior to the live broadcast of Bloomberg Rewind the news came. Green Mountain’s disappointing earnings resulted in a $25 after hours decline.

Of course, I had the lack of good sense to mention that I held shares on the program that evening, but I also mentioned that I didn’t buy into the Bernard Baruch axiom of cutting your losses at the 10% level.

Besides, with a cost basis of about $67, I’d already pocketed about $14 in premiums in that 3 week period. Still, Green Mountain opened at what would have been a 20% loss even when based on the net cost basis. I could feel Bernard rolling in his crypt.

What I said on air was that I was going to stay the course and let emotions revert to the mean, just as prices do. The highs and the lows don’t last, except in the case of L.F. Rothschild and depression leading to suicide.

My less cool and collected alter ego wanted to cut and run.

I still have a hard time reconciling the fact that the investing cautious me, let’s call him “Louie”, is willing to have unprotected sex in a crack house, whereas the “no worry” investor me, “Ricardo”, would never think of doing such a thing.

Then the realization hit.

It was Ricardo that made those uncharacteristic purchases and he now left me with the dilemma of what to do. Louis, on the other hand was smoking crack with the options premium money that Ricardo conjured up.

The dilemma was created by not knowing what ultimate price would be exacted on any decision because there was yet another alter ego in the mix.

 This one was a nasty behemoth called the Stock Exchange.

Great. Now I had to worry about what the macro-economic oriented market would do, as well as what that short sighted micro-economic Louie would want to do. Louis wanted to smoke his crack and have his stock profits, too.

Compound that with the fact that the market was beginning to react in an unprecedented way to rumors, news of possible news and news of real news.

A purely rational person would have discounted the irrational market and made a decision purely on the remaining alter ego, being intimately aware of its thought processes.

The investing cautious Louie would certainly look at the potential tax benefits of taking a strategic loss on Green Mountain shares and then take another long drag on that pipe, while taking care not to set his hair ablaze.

The care free Ricardo would believe that tax consequences were irrelevant. In fact, the more taxes you had to pay, the better. That only meant that you had that much more in capital gains.

“Laissez le bons temp rouler.”

Did I mention that Ricardo actually had a Cajun alter ego, Ricardeux?

Ricardo, for all of his subset personalities understood the concept of authoritarian rule.

Khaddafi was on top of his game as long as he was ruthless. No one dared to question his decisions and he made them with impunity.

Then he decided he had to get into the good graces of the West.

We all know what happened then.

So did Ricardo.

As soon as his plane landed in Phoenix last Monday an additional lot of Green Mountain was purchased at $41.85 and weekly calls on that new lot were written at $42, while the original lot went unhedged. He assumed that Louie would be paralyzed by over analysis of the situation and would make no effort to counterbalance Ricardo.

Louie was apoplectic, because Ricardo was right. And now, it was too late for Louie to do anything or to change his mind. There was no second deal to be made. 

At the very least Louie would have hedged the whole position, but that was now off the table, as well.

In this game you have to be quick and ready to deal.

In the meantime, that nasty Stock Exchange decided to go into a mid-week funk, dropping about 3%.

In the Prisoner Dilemma Game you also have to be ready for the unexpected.

But the real unexpected was that even with walls of support crashing, Green Mountain climbed up to $51.

And so RIcardo and Louie were at odds again.

Ricardo felt good about at least garnering some more options premium on the split holdings, not hedging the remainder and felt no remorse for foregoing paper profits.

Louis was unapologetic.

He argued that the proceeds from selling the Green Mountain shares could have been plowed into the likes of Caterpillar, which was now trading below the $95 price at which shares were recently assigned. Besides the 2% weekly premium, theer were those tax advantages, too.

And so, they were both right, at least for last week. Both had rational thought processes and understood the other’s positions and reasoning.

But come Monday, the whole tug of war starts again.

Both Louis and Ricardo will be aboard yet another plane when the Stock Market opens on Monday. In essence, they’ll be held hostage to the irrational movements of their macro ego.

I wonder what would happen if I actually swallowed these green and white capsules?

Views: 13

Views: 8