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About a month ago, in honor of what would have been Buddy Holly’s 75th birthday a small tribute was paid in his honor in “What Buddy Holly Teaches Us“.

But Buddy Holly wasn’t alone on that fateful stormy night.

Some other time, we’ll get to RIchie Valens, once I get the translation module to function. But for now, I remember The Big Bopper and that great lead in line to his hit, Chantilly Lace”.

You don’t need Viagra to know what you like, but it does help you to remember why you liked it.

Obviously, I liked the 300 point gain.

I liked it less when 200 points of it evaporated in the last minutes of trading.

But still, 3 days in a row of gains is very likable and definitely reinforces for me why I like these big upward spikes in the morning.

More on that, later.

Since these days we’re all about rumor or absence of rumors, the late day drop came as the Financial Times reported that there was some discord among the EU members.

Yeah, I know. Hard to believe. But even more difficult to believe was the the discord all centered around which country’s Rosh Hashonah services the ECB commisioners should attend. There was not much support for Greece on that one.

Can’t say I blame them. The thought of feta based matzoh balls is repugnant to me.

We’ll see how that unforeseen little bump in the road works out. Sometimes being in a union means spending time with your partner’s loved ones.

When will Europe learn?

Since I’m not a very social person it’s not difficult to explain why I was such a late adopter of anything resembling Social Media.

I was so far removed from the scene, that I didn’t even know what Friendster was and couldn’t even bring myself to feign laughter at the jokes directed toward its status of being far removed from the scene.

But I like social media, even though my Google + circle is determined by just a single point.

Take that inviolable laws of Geometry.

I’m still not very social, but I like the egalitarian nature of the network with which you can participate.

You can even choose not to have Nigerian Princes be part of your network.

Me? I would never turn a follower down.

Today I posted a query on StockTwits and Twitter regarding what I saw as a disconnect between Monday’s silver price action and the price of the UltraShort Silver ETF. Just a follow-up to the semi-rant in yesterday’s blog.

Bottom line, I spent more time in bilateral conversation with “Kid Dynamite” via 140 spaces at a time than I have with my Sugar Momma this past week.

The fact that she was on a fun filled trip to Chicago with her friend in birthday celebratory mode is not relevant.

I spend more time with the Kid. I p[icture him as being stooped over and quite elderly.

It was a combination of educational, philosophical, agreement, disagreement, interpretation and a mutually deep seated hatred of 16thy century colonialism.

At least that’s how I interpreted it, still upset with Europe’s role in unseating long established tribal governance, thereby resulting in a flood of poor and unemployed Nigerian Princes.

Regardless, it did introduce me to a new blog. I tend to like those written by people with an authoritative grasp on a topic, yet that write in a breezy and humorous fashion.

In my case, one out of three may even be a stretch.

Today though, despite the final 15 minutes, made it 3 out of 3.

By Meatloaf’s standards, that’s damn good.

Even though there’s still almost 4 weeks left in this option cycle and lots of opportunity for more upside, I took advantage of todays jump out of the box.

I was able to sell weekly calls on British Petroleum, JP Morgan Chase and PowerShares QQQ. I also sold some monthlies on Textron and Dow Chemical.

I was also trying to re-sell some Halliburton, Transocean and DuPont calls, but never got my prices. Too bad, because Transocean hit a rough patch late in the session when it got bitch slapped by the EPA.

I just love it when I can sell calls on my unholy troika of BP, Transocean and Halliburton. Maybe tomorrow.

As Kid Dynamite and I were exchanging Tweets and he was trying to school me, I bought back about 30% of my call options on ProShares UltraShort Silver, locking in a very nice 2 day profit, as silver recouped some of its losses.

Assuming that everything Kid Dynamite tried to transmit to my knowledge base was false, you’d be left wondering why the UltraShort ETF was down by 18%, whereas the SIlver ETF (SLV) was up by just 4.3%

2 to 1 correlation, my ass. At least they got the directions right today.

But for some bizarre reason I have a driving desire to know what time it is in London.

Apparently, it’s because I now know that the UltraShort Silver ETF share price is pegged to the morning “London Fix”

I miss the days when “London Fix” referred to what killed a punk rock drummer..

I still remember back about 30 years when the morning business report always started with the London Gold FIx. Back then I was young and foolish and thought that I would conquer the world one gold contract at a time.

Amazing how not much has changed.

In what can only be called an incredible coincidence, about a month ago, I mentioned the London Gold Market Fixing Ltd. Committee in “Did I Not get that Memo? ” and the blog entry also featured Eddie Murphy.

In case you’re wondering, I’m neither a transvestite, nor do I currently have a restraining order out against me.

Whatever, it’s still an issue of those colonizing bastards.

Financial Times. London Fix. They’re all wagging our tails, but then again, maybe that’s the Viagra.

 

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I’m not really sure what exacty happened on Monday, but I’m not about to complain. Not when the Dow goes up 275 points.

Here’s to anarchy. Sometimes it’s just pointless to try and figure out what it all means. Just go with. Remember the courtroom scene in Animal House? “Don’t stop him. He’s on a roll.”

The general theme today was one of disconnects. Sometimes my lack of understanding and sophisitcation is the source of perceived disconnects.

Not today.

The day started with the futures pointing toward a 100 point climb at the opening bell, probably based on the absence of a European meltdown over the weekend and an orderly start to their Monday morning markets.

So far, so good.

When the bell rang the S&P 500 just jack-rabbited out of the gate. But in the meantime, the Dow was barely up a single point. Not to overly simplify, but everything else being equal, there’s generally an 8 to 1 ratio between S&P 500 moves and the Dow. Obviously on days when a Dow component, such as Hewlett Packard crashes, that ratio is off, or if trading in a specific stock is delayed, the ratio may be temporarily imbalanced.

But today, there was no great standout in either direction. Just a 90 to 1 ratio.

You could tell that Jim Cramer and Melissa Lee, on the NYSE floor at the time were perplexed, but it took a while before anyone said anything about the seeming discrepancy. No one likes to look stupid or not in command of what’s going on around them.

Finally Cramer, who’s not terribly shy about opining, correctly ventured that something was wrong with the price reporting going into the calculation of the index.

Disconnect #1. But that was resolved within 15 minutes and before you knew it, the Dow Jones was up 90 points, putting it right in line with the S&P 500, which was about 11 points at the time.

Before trading, the morning started out with what I like to refer to as the “You’re paying me alot of money to give you good information based on solid research, so here’s the bad information” Disconnect.

Research firm, Sanford C.Bernstein, based on its in-depth and proprietary research, analysis and information came out and lowered its price target on poor Goldman Sachs to $185, down from about $230.

That’s a huge drop.

But still, it’s about double Goldman’s current price.

I should mention that in it’s own humble opinion the Sanford C. Bernstein Research firm, referring to itself in the third person, claims that “Sanford C. Bernstein is widely recognized as Wall Street’s premier sell-side research firm.”

If they can help me sell Goldman Sachs for $185 right now, they’re really everything they say they are.

That’s what I call sell side.

The next disconnect is an everyday kind of occurrence, the kind that is often referred to as the “What you talking about, Willis?” Disconnect.

That occurs when seemingly intelligent people look at the same information and come up with wildly different interpretations.

Today it was the announcement that the world’s greatest value investor, Warren Buffett, seems to believe that his own Berkshire Hathaway shares are inappropriately priced.

He proposed a large buyback of his Class A and B shares.

I owned the Baby Berkshire shares when the first appeared a couple of years ago. Held them through a couple of options cycles and picked up some decent premiums, but never found the reason to repurchase shares once they were assigned from me. That’s not typical for the way I manage my holdings. I like buying shares back, albeit at lower prices.

The controversy comes as one school of thought chimes in that Berkshire must be a roaring buy now that Buffett has put out the buyback plan and demonstrates confidence in his company, which itself is just a mirror of our own economy.

The other school thinks that this is a really bad sign, since it means that the famed value investor isn’t seeing any other good values out there.

Initially ignored were the two caveats. Shares would not be purchased at a price greater than 10% of Berkshire’s book value and no repurchases would take place if cash on hand fell below $20 billion.

Also overlooked was that the last time Buffett announced a buyback about 11 years ago, there was no buyback.

He did get shares to move up nicely today, though.

Corollary disconnect? Sure, some people can nuance the truth and not be called on the carpet for misleading others.

On the international scene much ado was made of the fact that the royal Housee of Saud, the ruling family of Saudi Arabia announced that women will be given the right to vote and run for elective office.

What they didn’t say was that there was still no way for them to get to the polling place, unless their husbands provided appoval and transportation.

Also, women can’t run for King.

Disconnect between expectations and reality. Have you seen that one before.

For me, the biggest disconnect was a very pragmatic one and has me as perplexed as those on the floor of the NYSE were at the opening bell.

For yet another day, gold and silver were brutalized. Gold had another of those $100 round trips today.

Remember when gold and silver were so easy to understand? Remember when they obeyed that inviolate 35 to 1 ratio?

No more. They more in opposte directions all the time and that ratio is a thing of the very distant past.

If you’ve been reading the blog, you know that I hold shares of the ProShares UltaShort Silver ETF (ZSL). The one that moves inversely to the price of silver and is leveraged to boot, at about 2 to 1.

A month ago, I started to wonder if the price of silver were to soar would the relationship between the Silver tracking ETF (SLV), which actually holds silver bullion,  and the UltraShort breakdown. Afterall, the price can’t get less than zero for the UltraShort, while the metal can keep soaring forever.

Funny thing. That didn’t happen.

Instead today, as silver fell, a reasonable personwould have expected ZSL to move in the opposte direction and by twice the amount.

Instead, there was a little  disconnect between SLV & ZSL pricing. By little, I mean big. SLV went down 0.7%, and ZSL went down 5.1%.

Wait that must be a typo. I must have meant that ZSL went up by 1.4%

If only it was that easy. Whatever happened to perfect pricing?

I posed the question on Twitter and one responded that it was related to the hike in margin requirements that was announced this past Friday.

Sounded good, until I check back to May 2011, the last time the margin requirement was increased. On that day the moves were big, but perfectly in line with the script. Silver fell big and ZSL climbed even bigger.

But the day’s trading had even more examples.

Eddy Elfenbein, of Crossing Wall Street, pointed out that at one point in the trading day the VIX, a measure of volatility that rises as the market falls, was rising, even as the S&P 500 was soaring.I don’t recall the precise text, but his usual tone is one of humor and fact, a nice, but rare combination.

Also known as a disconnect.

Of course you can have Disconnect #3 applied to that disconnect. All you need is to find an analyst who recognized the incongruity between a rising VIX and rising S&P and state that he believes that the VIX is a more reliable measure.

And you know, that wasn’t hard to do, because people will say anything to get air time, especally knowing that no on remembers anything said more than a fruit flies half-life ago.

“I’ll go with the VIX’, after which point the S&P nearly doubled and the VIX decided it was the mixed up one and finally corrected its course to close down nearly 5%.

Helping to restore my faith in correlation was the market’s action upon hearing news that the EU and ECB were diligently working on the European debt crisis.

Upon release of that news, the market showed the VIX who was Queen for a Day.

Of course, the market’s reaction to that news would indicate that the fact that they were working diligently on a solution, was in itself a surprise.

So what does this all mean?

To me it means that the individual investor is just as likely to read the market correctly as the guys from Bernstein. The difference is that the individual investor cares more and is more tentative in making decsions and taking actions, because for them, it’s not play money. It’s the real thing and it’s theirs.

Today I just took the opportunity to pick up more shares of Freeport McMoran and Halliburton. I also sold call contracts on some of my Freeport, Textron and Sallie Mae shares.

Then I used the premiums to pick up more Sallie Mae shares and promptly sold calls on those, as well.

That’s the real meaning of all of this, making Einstein’s observation that the greatest miracle in life is that of compounding.

Amidst the confusion and the lack of rational thought, some things are just universally true.

 

 

 

 

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I’m not really certain which Tweet it was, but I got my first website hit from Nepal, as a result of Twitter on Sunday.

For no meaningful reason I check my various sites analytic reports to see where visitors are coming from, how long they stay and whether they return to the site.

I don’t have great aspirations for selling tons of Option to Profit copies in Nepal, but I love seeing the website visits, especially when people linger and come back

Seeing the Nepalese flag icon appear on the analytic report was very inspiring to me. In fact, in my completely incapable of detecting similarities in shapes portion of my mind, one of the Nepalese flag symbols looks just like the TweetDeck icon.

It’s that kind of difficulty in interpretaion of visual cues that excuses Eddie Murphy’s solicitation of LA transvestites.

Honest mistake.

Also explains the difficulty I have with those on-line IQ tests.

Back when I ran the original iteration of the Szelhamos Rules blog in 2007-8, I had a daily dedicated reader from Vietnam.

The very idea always amazed me. What was it that the reader could possibly find interesting enough to come back day after day. I felt a very tiny pang of guilt when on the first anniversary of the blog, I ceased its publication.

But not too big of a pang. My final blog re-directed readers to a new site called “Csokolj meg a seggem,” which was a Hungarian expression that was one of Szelhamos’ favorites. If you’re too lazy to try a translation program, you can visit the “Rebus Puzzle” page.

Now, in its second iteration, that Vietnamese reader hasn’t returned.

Is he still alive? Has his life changed? Maybe for the better? I’ll never know.

But now, in the second iteration, I also hold you, the dear reader in higher esteem.

Not high, just higher.

I also don’t know if the Nepalese reader will be back, but I’ll try to make the blog more Nepalese centric. More and more each day would be my aim, but don’t worry, I’m used to failed expectations.

It’s also amazing where inspiration can come from. Ultimately, if your eyes are open widely enough and you suspend rational thought processes, inspiration can come from anywhere.

Coming off a horrible week in the markets, with the worst weekly loss since late in 2008, I received inspiration from an unlikely source.

Silver.

Back in 1978 or so, a friend had convinced me to buy a silver bar, just prior to what would become an incredible rise in price that eventually bought an ounce up to $50, back when the Hunt Brothers tried to corner the market.

That bar sits somewhere in the basement, I suppose, unseen for the past 30 years.

Following a brief time playing with commodity futures in the very early 80’s, I’ve completely ignored metals, not wishing to repeat some costly mistakes.

But for some reason, probably because I remembered the hysteria of 30 years ago, I was in disbelief of gold and silver prices. But that disbelief just kept getting discredited.

In fact, my oldest son took my advice and sold 3 of his five gold coins that he received as his collegfe graduation gift. The advice was a bit premature at about $1500 an ounce, but it’s hard to let a 70% profit ride on irrational pricing. Still, there was that pang of guilt again.

My disbelief finally manifested in buying those leveraged silver short ETF’s.

The first iteration of those were at about $17 and had 12% options premiums. I was assigned when silver went down to about $35 and the ETF went to $20 back in May or June.

Since then, as silver started its bizarre and unwarranted climb back, I’ve been slowly re-assembling the ETF holding. So much so, that very quietly it became nearly 10% of my portfolio. Given that I typically own about 20 stocks, a 10% share is a little out of proportion, especially since this one is more than a bit speculative.

And I don’t like to speculate.

Normally, I buy and sell shares of stocks with conviction and arrogance.

All at once.

That’s often not a good idea, but I like spending my money and limiting the number of different holdings to about 20.

But the short silver ETF was different. Everytime I got some extra options income, I just plowed it into more shares of the ETF. When I got some more Option to Profit royalties? Same thing, more ETF shares, as silver just kept rising.

So after this week, as the market and metals both plummeted, I am still breathing, thanks to the metals that I swore to eschew years ago. Although I didn’t take profits, instead selling enriched call options, it was like getting a big royalty payment.

I guess that being short, and leveraging to boot, is consistent with the earlier stance.

Come Monday, instead of being shell shocked, I’m ready to do battle, thanks to the anti-silver, almost like Kryptonite, except that anti-silver stopped evil.

Instead of writer’s block, I have inspiration from an unknown reader in Nepal.

Well, that’s all fine and good for yesterday, but we’ll just have to see what will bring inspiration in time for tomorrow’s blog.

Like an addict needing more and more to get the same effect, I may need something a lot more exotic than Nepal.

Maybe something like getting Paul Kedrosky or Jane Wells to follow me on Twitter, or even write a guest blog when I’m away.

But then what?

And that’s exactly the problem. That’s the human condition. Maybe if I went to Nepal and hiked up some lofty mountain to seek spiritual meaning, I might find some. I might find that inspiration comes from within and that we don’t need to enslave our souls by seeking inspiration outside of our souls.

Spirituality sounds great.

Nah.

My guess is that upon meeting my spiritual mentor wannabe and being proposed the deeper benefits of meditation, I’ll be pleased to find that my specially chosen mantric phrase is “Csokolj meg a seggem”

Thank you Twitter.

 

 

 

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Following Wednesday’s Moodys downgrades of Wells Fargo and Bank of America, fresh off the heels of a downgrade of Italian debt on Monday, it was not going to be a good day. The only hope was that maybe our Bernanke led Federal Reserve would pull an incredible rabbit out of its hat and just turn things around.

But for the most part, everyone was just waiting for the anticipated “Operation Twist” and its details before commiting one way or another.

Once those details came from the FOMC, which was uncharacteristically following Obama time for release of its statement, the market didn’t like the description of our current economic state. Maybe it just couldn’t deal with the fact that there were three dissenting votes

In a couple of blinks we went from being up 14 points to down 283.

Just another day at the office, dear. Just a little bit of dissent in the ranks.

Surprisingly, I don’t feel like talking about stocks today, as I took another, largely unhedged pummeling, getting only two call sales made, both on beaten down RIverbed Technolgy, which was probably riding Hewlett Packard’s coat-tails up this afternoon, as Leo Apotheker, its CEO of almost 12 months was rumored to bedismembered by coyotes.

Instead, I need to come clean and this is a good time as any.

It’s not easy saying this, but at some point the truth needs to come out.

No, I’m not a virgin. A game of Twister, years ago, took care of that. And if I was, I don’t think that I would admit it.

But as I sit and really think about it, the criminal life is great. The problem is that I’m not a criminal, but there’s still time to re-invent myself. In a society where so many occupations are disappearing, there will always be criminality. Some things can’t be entirely shipped offshore, even if the Nigerian princes are more authentic 10,000 miles away.

So then there’s the whole credibility issue.

I suppose that everyone is a criminal by some definition. Depends on your society and your own personal values and especially how those values may be at odds with others, especially those with power. The guy who “pied” Rupert Murdoch during the Parliamentary hearings is a criminal, although most people watching the proceedings were probably equally criminal, at least in intent.

Years ago, when Jimmy Carter was running for the Presidency, during a Playboy interview he admitted to having “lusted in his heart”. Nothing really criminal about that, but had he said that 20 years earlier he would have been condemned as a godless pariah and cast to the bottom of the heap with the other low lives.

Even Mother Teresa had her detractors, so much so that some theologians, perhaps of dubious merit themselves, believe that she is consigned to eternal imprisonment in Hell.

As I’ve grown accustomed to sitting on my La-Z-Boy, watching TV and trying to trade stocks and options, I’ve started to wonder whether I’d squandered the first 30 years of my professional life by toeing the line. Working day and and out, not only paying bills on time, but actually paying and other things that now seem so arbitrary.

Growing up in The Bronx, I now realize that the old neighborhood was populated by Mob families. The fathers were always home, were always around to play stickball with their kids and even had their own little coffee shop with blackened windows. The shirts weren’t called “wife-beaters” back then, but I suppose they were.

Plus, the streets were always plowed and they had the best fireworks.

Can anyone say “Winning”?

My Sugar Momma and I have religiously watched COPS for about the last 20 years. Even though neither of us know more than the first line of the theme song, some things have become fairly obvious, besides the fact that some people can garner respect in a wife-beater, while others just can’t and never will.

But what we really learned is that there’s good criminal life and there’s bad criminal life. COPS always portrays the bad criminal life.

Stupid people drinking, fighting, stealing and lying. That’s bad criminal life. They seem to live in pretty squalid kinds of surroundings, have home-made tattoos and wear their pants down to their knees. They’re often very unattractive as well.

Smart people probably stick to just the stealing and lying part although you do catch glimpses of the smart kind that think that they’re smarter than those charged with keeping society safe, if you’re in the habit of  watching Dateline.

Those often commit the bad kind of crime sometimes while in pursuit of the spoils of the good kind of crime.

That’s a bad admixture. You can’t do good by doing bad.

But I now realize that there are lots of good reasons to lead a certain kind of criminal life.

 

1. You make people feel better about themselves

People are so often much too hard on themselves and often suffer from inferiority complexes. Some have the whole thing figured out and just hang out with even more pathetic people to look good by comparison.

Being subjected to the bad kind of criminal activity let’s those with a sense of inferiority know that there is someone even less deserving than they for our world’s limited resources. Unfortunately, that kind of activity is often associated with very unpleasant things.

Like violence.

But being subjected to the good kind of criminal activity spurs aspirations, the need and desire to improve their own lots in life by seeing that there is another way to break the chains. There’s nothing like a good example to spur people on to bigger and better things.

Seeing a hacker profiled on 60 Minutes makes most people believe in themselves.

If that moron could do it, so can I. And I won’t get caught, either.

Not only do you feel better about yourself, but you inject your entire defeatist personna with an air of much needed confidence.

Beyond that, if asked to “forgive” a criminal who has wronged them, what greater feeling can anyone have than the magnanimity to provide grace to those that have fallen?

 

2. There’s no time clock

The only thing you need to keep an eye on is your bank balance. That becomes your internal clock. Don’t feel like playing criminal with your buddies today? No problem, take the day off. Want to sleep in this morning? Guess what? No problem.

Raining outside? Hetl, I’m not getting my new Crocs wet if I don’t have to.

Shower? I don’t need no stinking shower.

Get the idea.

 

3. Society loves a successful white collar criminal

It’s true. They really do, unless they were directly effected. Most people admire the fact that people that can enrich themselves without really breaking a sweat.

The “Why didn’t I think of that” mentality is common to our species. Best of all, seeing just how easily it can be done leads others toward developing even better techniques to separate people from their assets.

That is the basis for how we advance aqs a society. Unfortunately, the Chinese seem to be outdoing us at the moment, especially when it comes to the integrity of the companies that they take public.

But then consider who you admire more? The person that inherited their wealth, the person that made others toil to an awful extreme and under terrible conditions on behalf of their bottom line, or one that just siphons off other people’s money?

Would you rather be America’s next successful white collar crime czar or a tele-marketer? Seriously, which one really belongs in jail?

Wouldn’t you rather see Bernie Madoff putting his skills to good use outside of jail and perhaps just cram 20 telemarketers into his cell instead?

 

4. You feel better about yourself

Not only can you check off “Other” or “Consultant” on those forms that ask about your job industry, but you can also choose any professional degree you like, any annual income and any net worth figure when completing surveys or polls.

Want to feel better than you did yesterday? Forget the Zoloft. No problem, just fill out a new form, maybe get yourself a nice new glitzy business card.

Watching your neighbor leave early in the morning for work and then getting home 12 hours later just reinforces that good feeling. That and the ability to hack into his unprotected wireless network while he’s gone.

 

5. Stronger Family Relationships

Study after study shows that the more time parents can spend with their children during formative years, the better the outcome.

Kids that are able to routinely eat dinner with their parents have been consistently shown to be less likely to abuse drugs or alcohol.

The kids that I grew up with, whose fathers were always at home? No doubt they went into the family business and are passing the lessons learned to their loved ones over a nice plate of pasta and mussels.

 

6. Expanded personal horizons

There’s nothing like a taste of success to move you toward seeking even more success. This is not your typical same old, same old 9 to 5. In the good kind of criminal life there’s incentive to do well and to reach for even greater rewards. As you do so and as your enterprises thrive, along with your professional credibility comes social responsibility.

Patron of the arts, supporter of worthwhile charitable causes and other activities that support society, particularly as government support dwindles, are all part of the successful navigation of a career in good crime.

During the process you also learn things that you never learned in school, including evolving talents to meet the needs of the moment. In no profession does necessity translate into invention quite as efficiently as in a life of crime.

 

7. Improved strategic planning

If you look at the data on retirement planning, it’s clear that we as Americans have no clue how to plan for the future.

Choose a life of crime and strategic planning becomes your middle name. Escape routes, alibis, Plan B, and so many more considerations before executing a plan. In essence, everything you do is lived out as if a three dimensional spreadsheet.

Those unprepared to deal with strategic planning are doomed to failure and may as well just work for a living.

 

These 7 reasons alone are compelling enough to get most people to start on their road toward change.

I haven’t even mentioned the popular trickle down theory and how all of society benefits from your creation of personal wealth. Money and the time to enjoy spending it benefits all of us. Restaurants, department stores, pasta and mussels delivery boy. Everyone gets their piece.

Beyond the obvious reasons to consider re-inventing yourself are purely financial incentives that are more than just icing on the cake.

Anyone that’s had a workplace 401k knows just how bad those are and how limited the investment choices can be. Together with contribution limitations, there’s no denying that the self-employment tax deferred plans are so much more favorable.

Of course the ability to itemize your business related tax deductions are only limited by your imagination.

Need well manicured nails to stay at the top of your safecracker game? Simply take you deduction on the clippers and file. Panty hose over your head? Deductible.

Where do I sign up?

Since this blog is required reading in many elementary school classrooms, I want to be certain that it’s clear that I’m not exhorting anyone to a life of “bad crime”, but serious thought should be given to being the best you can be at the “good” kind of crime.

It’s never too early to begin plotting your life of future plotting.

Now if only there was a way to have all of these benefits without the liability of prison.

How great would that be?

Wishful thinking.

By the way, what’s your PIN, again?.

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The Federal Reserve is said to be ready to announce the implementation of “Operation Twist” some time on Wednesday.

Fueling speculation that something big was brewing, former Federal Reserve Chairman Greenspan was seen entering the building, albeit with Elvis. AS it turns out, he was there for a haircut and sometimes a haircut is just a haircut.

Ultimately, by exchanging its short term portfolio of holdings for longer range debt instruments “Operation Twist” is hoped to bend the yield curve.

Although I’ve seen the visuals many times over the years and can probably understand the concept behind “inverted yield curves”, it’s like “contango”. I know what it means, or at least am capable, but due to my disinterest in the topic, I choose to not clutter my mind with the meanings of those terms and phrases. I can’t begin to tell you how many times I’ve actually looked up the definition of “contango”, yet it still has never taken root. It’s almost as if the my future memory bank is more highly respected than its current state would give it the right to be.

Contango. The word itself brings giggles to mind. I just can’t remember why. 

In an earlier blog, I admitted that “I don’t understand currencies“. I can just as easily say the same thing about debt instruments and bonds. I’ve never really tried to understand this very important aspect of investing. Sometimes its hard to know whether my disinterest in bonds and currencies comes from lack of intellect or just true lack of interest, as I perceive them as intangible and somewhat boring. I don’t worship at the feet of the PIMCO altar and I don’t find stamp collecting all that exciting.

I know that they are anything but, yet I can’t find anything persuassive about them to garner even faint interest. But there is probably hope, because last night I watched the premier episode of the new “Two and a Half Men”, never having been interested in the original version.

This “Operation Twister” though, has caught my interest.

During Jim Cramer’s interview of Treasury Secretary Tim Giethner last week, Cramer asked why such a strategy wasn’t being pursued. taking advanytage of historically low interest rates. At that point, the clever name hadn’t been publicly applied. It was just another conceptual approach to managing debt and markets and really meant nothing to me.

Cramer then seemed genuinely surprised and for a brief second seemed to be speechless as Geithner indicated that such a strategy might actually find its way into the arsenal.

You neither see that, nor the resultant silence from Cramer on very many occasions. It’s true when they say that silence speaks volumes.

The concept does seem to make sense, as long as there are buyers for the long term notes, but yet, it’s an untested strategy, at a time when the Federal Reserve seems to be running out of things in its quiver.

The problem with most ideas, whether they are economic issues or otherwise, is the occurence of unexpected consequences.

No one really knows what will happen if the yield curve is drastically altered. Certainly, no one buying a 30 or 40 year note has any clue as to what the rate environment will be at that time, much less next year. Hell, you don’t even know who the lead in Two and a Half Men is going to be.

I know that I wouldn’t be investing in a 30 year note during a period of all-time low interest rates.

Now flip the scene, and make believe that it’s 1979 and interest rates are 17%, then I might have a different opinion on locking into those kind of rates.

My attraction to Operation Twister may be solely related to its namesake, the game “Twister”, which made its debut during my childhood.

Talk about unintended consequences.

I think my first sexual encounter may have been on a spin of blue, but it’s difficult to say who exactly the reciprocal party was.

Although “Don’t Ask, Don’t Tell” has officially gone into the sunset, I might be inclined to invoke it for that long ago game of Twister.

Since I don’t really understand the world of interest rates, I have no idea what the unexpected consequences might be, but drawing from the game, collapse is the end game.

Collapse is exactly what seemed to happen today and turned a 150 point gain into one 140 points less.

Instead of selling lots of call contracts as I had envisioned, I only sold a few and added to my shares of the ProShares UltraShort Silver ETF and Riverbed Technology.

From my perspective, there never was a 150 point gain, as I had one of the worst days ever, compared to the indices. It didn’t help that I was now more heavily reliant on the likes of Freeport McMoran and Mosaic than ever before.

The source of the collapse was said to be “The Troika” and its inability to come to some agreement that would have released the $8 billion traunche that Greece needed to help it further into the hole as it prepares for its inevitable default.

You know, the one that everyone seems to be happily ignoring because that can is maybe as far as 3 months down the road.

The so called “Troika” consists of the IMF, the EU and the European Central Bank. They hold the cards, but apparently can’t decide whether to deal in a clockwise or countere-clockwise direction.

As Operation Twister comes into play, some Troika members may regret treating Treasury Secretary Geithner so shabbily during his vist to their recent meeting in Poland. They could have listened to his wise and sagely advice and could have switched over to a spinner and let the cards fall where they may, as they could then watch the arrow determine Greek’s destiny.

Ultimately, it doesn’t matter whether you spin the wheel clockwise or counter-clockwise, so certain areas of dissent are immediately resolved.

The goundrules could be very simple and definitions readily agreed to.

Blue for no more government hiring

Red for increased retirement age and so on. They may even want to throw in that taxes should not just be levied, but they should be collected, as well.

But no matter what, every game of Twister does end the same. I don’t remember whether there was a “winning” scenario. Surely Twister was first popular long before Charlie Sheen, but even then the concept of “winning” must have existed.

Instead, every game ended with the inevitable collapse accompanied with lots of laughs and the feigning of embarrassment by some.

Some actually reached their peak maturity level in the pile.

In this case, I don’t think there’ll be any laughing. I doubt that there’ll be any embarrassment either, as certain egos, particularly those associated with politically appointed positions, don’t allow public displays of embarrassment.

They do allow for finger pointing, though.

No matter what, those fingers will probably point in our direction, as undoubtedly our banking crisis just greased the pole for southern Europe and Iceland, Ireland and others, as well.

Ultimately, only a winner take all game of Twister will be able to sort it out at the highest levels.

A repeat of the Berlusconi – Hillary Clinton match would be interesting. It’s just so unfortunate that Dominique Strauss-Kahn can no longer suit up (or down) in preparation for game match. You could probably get enough people to pay good money to see him in a good healthy game of full contact Twister to make a dent in the EU economic mess.

Happy to help.

 

 

Views: 10

In polite company, you never refer to behavior as “dumb”. Instead, it’s simply inappropriate or unexplainable. Just like really wealthy people are never crazy. They’re eccentric.

There are lots of reasons for unexplainable behavior, that’s why they’re really not “unexplainable”. They’re just dumb.

If you watch shows like “Dateline” often enough, you’ve seen every bizarre act and the reasoning behind the act. You’ve also learned that there’s never a shortage of unexplainable behavior.

Television ratings seem to do particularly well when the reason behind the action is passion. When it comes to motives, greed is also a big favorite in the  gawker community.

We like hearing stories that have greed as an underlying factor.

Murder for insurance money is very popular, especially if unrequited passion was also involved. How great is it to watch an episode about a wife that allegedly killed her husband for the insurance money so that she and the cabana boy could retire to the Dominican Republic?

Greed is also a big factor in investing. People do really stupid things because of greed. But greed is nothing more than great passion for money or other items of value.

Everybody’s heard the axiom that “bulls and bears both make money, but pigs get slaughtered”, but when it comes to battling with human nature, axioms don’t stand a chance. It’s a lot easier to spout them than to heed them.

Another investing axiom, although not encased in such a short memorable saying, is that you don’t stay long going into the weekend if there’s uncertainty in the mix.

This past weekend was one of those that you would have expected smart investors to have been on the sidelines.

After all, the previous week saw gains every day, even though some of those came in the very last hour of trading. The rally was fueled by speculation that the European Union was closing in on at least a short term solution to averting a Greek default.

Stocks climbed and precious metals took big dives.

But on this Friday, one of those quadruple witching Fridays, even in the face of unsettling news on the EU front, th e market still went higher.

In the last hour of trading on Friday I posted on Twitter questioning my intelligence, as I would have expected a sell-off heading into the weekend. Least of all, the bad news that went counter to the rumors and hope should have put a damper on things. Add to that the 5 straight days of gains and it would seem that profit taking would be in the cards.

Sure, maybe the smart guys took their profits on Friday, but I sort of doubt it. Who then was behind what happened on Monday? Definitely not the little guys like me.

Of course, I had a vested interest in seeing some profit taking, as I stood to lose nearly 50% of my holdings to assignment unless the market reversed course.

It didn’t.

As I wondered why it didn’t do the obvious, I learned of a new psychiatric disorder called FOMO – Fear of Missing Out.

It actually refers to the need to be constantly plugged into social media. It helps to explain why people would risk their lives to text a meaningless message while driving. It also explains why I kept breaking into a cold sweat on Monday as it was again one of those infrequent days that I had to work outside of the house.

Bad enough that I was cut off from CNBC, but Twitter was nowhere near as ubiquitous as its become in my normal life. The need to responsibly attend to work saw to that.

All I knew was that the market opened down around 250 points.

From my perspective that was what I’d been hoping for. It gave me a chance to buy back shares of British Petroleum, Textron, Dow Chemical, DuPont and Triple Q’s at less than they had been assigned to me.

But why did the market go up on Friday when it seemed so obvious that it should have done just the opposite?

FOMO.

Fear of missing out on more irrational upward price movements. Given that most of last weeks’ price increases were based on rumor and hope, what reason would anyone have had to actually go against the flow? History and common sense were no match for unexplained price action. Axioms were meaningless when there was still the prospect of more inappropriate price climbs.

In this context FOMO is greed.

Otherwise smart people fall prey to FOMO all the time. I suppose that it’s really a normal reaction. I feel it every time I sell shares or every time I decide to buy shares in one company and not another.I definitely felt it Monday morning as I went on a wild shopping spree in the first 30 minutes of trading and then wondered whether I missed out on even better bargains because I didn’t wait longer to blow through the money.

It’s hard to imagine yourself being the only one with nothing to party about, so yougive in to the FOMO.

This morning I’m back at my usual perch and will be so for another month.

Twitter and CNBC will be fully engaged. I won’t miss out on a single opportunity to say something irrelevant in 140 spaces or less.

In the meantime, as the market reversed much of its downward trend in the last hour of trading on Monday I decided not to sell any call options.

Yet.

But I have no FOMO.

There’ll be plenty more opportunities to miss out on and there’ll never be a shortage of them, either.

Tweets and texts come and go but FOMO is here to stay.

 

 

 

 

Views: 11

Here it is, Sunday afternoon.

Watching football, having already gotten my week’s fill of cholesterol in just one night and feeling pretty good.

Whenever I hear that phrase. “Feeling good”, I always think of that great Eddie Murphy – Dan Aykroyd film, “Trading Places.”

I can just hear the lines: “Looking Good, Biily Ray!” and in response,  “”Feeling good, Louis”.

And what’s not to feel good about? After all, Eddie Murphy is trading frequenting transvestite hookers for hosting the Academy Awards.

Life really is good.

And it’s especially looking good for the United States, at least as far as our emotionally beaten down egos are concerned.

After a few years of the world thumbing its nose at us and deriding us for our dysfunctional political system and profligacy, it now seems that we’ve traded places with Europe.

On top of that word has just come out that Dominique Strauss-Kahn has admitted a “moral failing” with regard to his tryst with the hotel maid. As a result we may not need to feel terribly badly about an injustice being done to the ex-IMF leader and may be shielded from some overseas criticism of our justice system jumping to conclusions.

Imagine, it’s been a few hundred years and they still can’t cope with the little squirt of a brother growing up.

Not that I had felt terribly badly, anyway and not that things are running along entirely smootlhy on this side of the Atlantic. With the exception of baby kidnappings and other trampling of human rights, things still seem to be better with our Chinese “friends”, who gve us a market lifting gift just by being part of the rumor that they might purchase Italian debt instruments.

I hope the Italians do better with the Chinese than they do with me.

I just received 5 mailings regarding traffic violations from a trip to Italy 3 years ago.

That was the same trip that the car rental agency tried to hit me with a $2,500 charge for damages.

Oh those whacky Italians. Wouldn’t trade the experiences for anything.

But watching economic events in Europe unfold is the true definition of “schadenfreude.” It’s one thing to have the twp predominant political parties in the US act in a dysfunctional manner, buut when you have the EU’s 27 member states trying to figure out how to divide the bill and who deserves how much vacation, you’re talking some real dysfunction.

At least they’re all agreed on retirement age and loan collateral.

It was funny hearing Treaury Secretary Geithner characterize his trip to Poland for the EU Finance Ministers meeting to be on the basis of an invitation, particularly since all news outlets reported that his “hosts” greeted him rather cooly.

European Finance Ministers apparently don’t like to be told how to run their economies by a guy sipping directly from a box of red wine while dining on trout meuniere in his ripped boxers.

That may be a bit of an exaggeration, but so far I haven’t seen or heard anything to contradict that characterization of events, so I’ll stick with it. Given what could have happened on Geithner’s watch and what didn’t happen, maybe they should try the red wine instead of the Kool-Aid.

So with all of that as a backdrop, last week was a great week. Stocks traded places with precious metals. I own stocks and am short precious metals, so iy was a great week.

Surprisingly, perhaps surprisingly only for me, Friday was yet another up day in the markets given that there really wasn’t any encouraging news coming out of Europe. In fact, if anything, even though the news raised prospects of a breakdown in the agreements necessary to temporarily rescue Greece, our markets shrugged it off.

Gold and silver on the other hand reacted precisely the way you would have expected in the face of uncertainty and the potential for a Greek default heightened. Earlier in the week, they also reacted according to script and had dramatic moves downward as an agreement appeared to be in the works.

No matter, so what if people felt confident going into the weekend holding large positions?

But I was happy.

Most of all and best of all, for me, a devoted call contract seller, Monday starts the October options cycle.

In that regard, September was nothing to remember. It was the second worst option premium month this year, fresh on the heels of the second best options month I’d ever had. Still, using my patented 1964 Color TV metric, I needed to find room for 39 new TV’s.

But as a good sign, despite the feeble option income stream for the Septmber cycle,  I’ll have plenty of opportunity to redeploy funds form assignments. Almost half of my holdings will be turned over, with most of them closing Friday within 1% of their strike prices.

When that happens, I love to see a down open on the first Monday of the cycle. There’s nothing better than getting those same shares back at less than their previous strike prices. But beyond that, there’s nothing like selling call options during a market peak. Grab those higher premiums, then close the lopp and start again.

I lost portions of my Bank of New York, Textron, Dow Chemical, DuPont, Williams Sonoma, British Petroeum, Deere, Home Depot and Transocean shares

If the past is any indicator, I’ll probably end up getting some of those shares back.while I also look at opportunities in Sallie Mae, Mosaic, SPDR 500 and adding to poisitions in JP Morgan and Chesapeake Energy.

With that much to spend, I’ll try to control my investing equivalent of premature ejaculation, but that’s always been difficult.

I was going to say “but that hasn’t always been hard,” but then it would have been unclear whether I was referring to investing behavior or the metaphoric equivalent.

On a sad note, I’ll be working tomorrow.

But that sadness is quickly replaced with the knowledge that I have only 2 more work days scheduled in 2011.

The work thing tomorrow does potentially interfere with the trading thing, but I’ve never let responsibility get in the way before, so I don’t really think I’ll be starting tomorrow. It may, however, help control the need to spend by keeping me otherwise occupied.

But still, that possibility is tempered by the fact that if I had to work, it couldn’t be for a better cause. I’ll be trading places with my friend tomorrow, who is on a golfing trip with his father.

I’d love to have the chance to have one of those trips with Szelhamos, but then I’m reminded that the most athletic thing I’d ever see him do was to bpwl one time.

As an 8 or 9 year old, I don’t think I’d ever seen anyone roll the ball as fast and ghard as he did and barely ever hit a pin.

Still wouldn’t trade that memory for all of the perfect 300 games on China.

 

 

 

Invest like TheAcsMan

Option to Profit is available as either an eBook or 300+ paperback. Take a humorous look at a serious topic and learn how to make your portfolio finally go to work for you in bull and bear market environments.

See a sneak preview of Chapter 1.  hoco blogs

More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.

Find  OTP Book at Amazon, B&N or now you can also Order direct  from publisher. Use 10% Discount Code P4S2ZD8H

 

  

Views: 10

 

In the real world, we marvel at how salmon swim upstream, back to their own birthplace, in order to perpetuate their species’ life cycle

Then they die.

As opposed to a long ago blog article about Michael Dell, but just as easily could have been about Jerry Yang, Ted Waite and some others, it’s really hard to go back home, unless you’re Howard Schultz or Steve Jobs.

In general, it’s always easiest to go with the flow and become one of the crowd, unless you’re a lemming.

They take exactly the opposite approach of the salmon. They go with gravity and are disciples of Thomas Malthus, thinking that their species would have its best chance of survival without them taxing the limited resources available to the next generation.

I saw Meatloaf in concert a couple of years ago, in a relatively small venue. Bat out of Hell, arguably one of the greatest rock albums ever, dared to ask the querstion “What’s it going to be boy? Yes or No? Yes or No?”

And that was the question for me on Thursday. Be a lemming or be a salmon.

The problem with that analogy is that either way you die and they both depend on some strange fascination with herd mentality.

The real question then becomes: “Go with the flow or fight the tape.”

In general, those are the two basic categories in society. Are you a Goth or a preppy?

There’s no question that the tape has been decidedly up the past few days, even if a few of those were limited to only the closing hour. But ever since that boring 300 point Dow down day on the day that the NYSE commemorated the 10th anniversary of 9-11, there have been only good feelings.

Market Kumbaya with everything being carried upstream as there’s an expectation for less than horrific news coming out of the European Union has been the rule. That was definitely the case with Thursday’s trading as the market nicely bounced back from an early day retreat of gains and went on to close at highs.

In general, I tend to be an optimist as far as the longterm direction of the market goes, but right now my longterm horizon is limited to the end of the options cycle, which happens to be today.

Based on what I’ve done the past couple of days, including the sales of call options on Dow Chemical, Textron, Home Depot, Transocean and more Freeport McMoran during the first phase of Thursday’s rise, it says that I don’t expect follow through for the last day of the cycle.

Now that’s a pretty stupid position to take, trying to predict market movement for a specific day in the absense of any real news and in the face of an obvious trend.

I base that on one thing and one thing only.

Watching Chrisitne Lagarde, the new head of the International Monetary Fund, I realized that she looked just like comedian David Brenner’s older brother.

There’s was just no way I was going to be soothed by economic forecasting from her once I couldn’t get David Brenner’s vision out of my head.

Any of you of my generation understand the difficulty of balancing thought and action when something displeasing is part of the equation. That’s precisley why sex counselors used to advise men suffering from premature ejaculation to think of Willie Mays at critical moments.

With that in mind, I decided to keep swimming downstream into the face of a gusher. At least when it came to stocks.

When it comes to those UltraShort Silver ETF’s, I decided to go with the flow and exercised judgement based on greed. No matter what our stock market does in response to the EU crisis, I expect gold and silver to give up much more of their entirely unwarranted gains. So there was no way I would sell call options on those holdings. The reward of picking up a few more crumbs wouldn’t even remotely cover the costs of missing out on the plunge, thanks to the gift of ETF levereging.

Today may turn out to be the day that might Austria gives its thumbs up to the EU plan to bail out Greece, so there may be even more of an upward bias to come and then the obligatory letdown.

The plan, if approved, gives Greece a few more months before defaulting, by freeing up some $8 Billion Euros to help its banking rescue.

Sounds like a great idea, mostly because I missed hearing the word “traunches” repeated every fifth word.

The problem will become obvious though when the rest of Europe sees that Greece ends up using that first traunch to buy cigarettes and book vacations to Thailand to make up for the vacation time missed while striking.

In the markets the only real news was from Netflix which lost nearly 20% of its value. They showed just how easy it was to swim downstream today. But they had good company in gold and silver, although their density alone made it much easier to work against the upward stream.

Although I neither hold shares, nor use Netflix’s service, I’m beginning to understand the madness behind their model change and increasing dependence on, coincidentally enough, “streaming” media.

Just imagine if you were a Netflix user. You could have been streamed the bad news well ahead of when basic cable investors would have gotten it. Talk about a great advantage.

Obviously JP Morgan gets its news the old fashioned way, as it decreased its price targets after the 20% drop.

You’d think that for whatever advisory fees they’re paid by their clients, they’d at least be streaming Netflix.

After the close, Research in Motion joined Netflix with a 20% drop in the after hours trading once their disappointing earnings were released.

I’m not really certain that you can call anything RIM does these days “disappointing”.

A few short years ago bad news from RIM would have cast a pall over the market. It’s not too likely that will be the case as the market opens on Friday. But at least RIM has been consistent regardless of short term market direction. Since its last earningss report, its been all uni-directional.

On a positive note, the RIM executive officers were certainly able to much more easily and quickly e-mail news of the disappointment, owing to the great Blackberry keyboard. Imagine how much more time it would have taken to disseminate the bad news on, say an iPhone. 

Say what you will, but there’s something refreshing about a technology company basing its fortunes on a mini-keyboard.

The way I see it, RIM has gotten the best of all worlds, as long as those worlds place a heavy emphasis on oblivion.

It’s definitely in a lemming march, yet it’s also trying to swim upstream. No matter how you look at it, that’s a losing combination.

Sort of like the European Union.

 

 

 

 

 

Invest like TheAcsMan

Option to Profit is available as either an eBook or 300+ paperback. Take a humorous look at a serious topic and learn how to make your portfolio finally go to work for you in bull and bear market environments.

See a sneak preview of Chapter 1.  hoco blogs

More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.

Find  OTP Book at Amazon, B&N or now you can also Order direct  from publisher. Use 10% Discount Code P4S2ZD8H

 

  

Views: 8

 

The other night, the NFL record for longest field goal was tied for the second time.

I still remember when Tom Dempsey, the otherwise unheralded kicker for the 1970 New Orleans Saints, beat the Detroit Lions with his 63 yard field goal.

What I remember most about that is Alex Karras, the Detroit Lion defensive tackle, who was a oretty funny guy, appeared on Johnny Carson’s Tonight Show and put a great comedic touch on describing the tragedy of that kick in his team’s eyes. Mind you, his team’s eyes were also seeing the fact that Dempsey, who had a congenitally malformed foot and wore a special kicking shoe, had less than an athletic physique.

Tom Dempsy’s professional life span didn’t last much longer following that kick, but it’s been an inviolate part of football lore for more than 40 years.

The nice thing about have a finite lifespan is that kicking things down the road is a great strategy.

It works for people and governments, too.

My guess is that people that can kick the can down the road without any real guilt probably extend their lifespan by greatly reducing stress. At the point that they realize that the “jig is up” and the end of the road is figuratively approaching, its time to literally approach the end of the road and kick the can.

People that are protected from the overhang of stress usually make better decisions, as well.

Maybe not better decisions when assessed with regard to the longterm, but at least better decisions for them, which in turn leads to even less stress.

Talk about a real win – win situation.

There have been lots of movies made about people returning to earth from the after-life to make amends for the lives they’ve lived.

Although I’m not a cinematic expert by any means, I don’t think that any of those movies have ever examined the guilt associated with taking advantage of passing your financial responsibilities to your unseen great-grandchildren’s grandchildren.

My personal hero is the father of a friend of mine who actually took out school loans in his son’s name, used the money for himself, and then saddled his son with the debt.

How is that not a great strategy?

It’s so good, in fact, that governments and leaders, whether elected or otherwise do exactly the same thing, finding great inspiration from the alternative life form band, Devo.

Dependence on foreign oil? Kick it.

Social Security Trust Fund problems? Kick it good.

Rising deficits and debt? You must kick it.

Chinese own too much of our debt? Issue more, preferably a long Sebastian Janikowski kick on that one.

So when I heard Treasury Secretary Geithner this morning at the Seeking Alpha Conference sponsored by CNBC, emphatically say that the European Union would not see a repeat of Lehman Brothers, it gave me great cause for concern.

He seemed to be saying that the problem wouldn’t get kicked down the road and that tough, but responsible actions would be taken by the world banking community to ensure that  the Lehman debacle wouldn’t repeat itself.

As you look around the European Union that can has been kicked around alot, but it always seemed to end up in Germany’s backyard. But then again, we’ve had some bad experiences when Germany’s ventured out of its backyard in the past, so maybe it’s for the best.

Yet, just when it seems that there will be some way to quench the flames without a great deal of hardship, you get Finland, flexing its influence and introducing such responsible banking concepts as “collateral”.

Actually, if Finland really had any influence, you’d see Nokia phones being used by others than just unemployed elves. As Finland realized it really didn’t have quite the bandwidth it thought, they acquiesced, besides how much feta per capita did they really need, anyway? Given Finland’s location, just about anything can qualify as a much needed chill pill.

The market then tanked earlier today when word came out that the other EU powerhouse, Austria, was against the Greek bailout. It’s no coincidence that chill pill and buzz kill rhyme.

Funny thing about those Austrians and their language. Apparently, it’s hard to understand those Germanic languages, as somehow Austria’s intentions were not reported properly and when clarification was made the market started a voracious climb.

My own experience with that group of languages is that it’s much easier to comprehend when it’s being yelled at you in very close proximity to your face. Even if you don’t quite understand the words, the tone gives the real message.

Austria needs to scream more. Maybe even some hand gestures.How do you say “Nein” in Austrian?

When everyone eventually realized that Austria, in fact, didn’t come out against a bailout, only delaying until Friday some sort of vote, the market did a 400 point turnaround.

With options expiration on Friday I looked for more opportunities to pick up some crumbs and there were plenty as the price trend was going higher.

So I took the opportunity to sell call options in DuPont, British Petroleum and Riverbed Technology.

On top of that, I sold some more January 2012 Sirius-XM Satellite Radio Puts.

Although I’m not likely to get all of my remaining positions hedged, I’m reasonably happy, as my shares have been handily outperforming the S&P 500 during this recent 3 day climb.

I was especially happy to see that my troika of environmentally disasterous stocks, British Petrolueum, Transocean and Halliburton have also fared nicely, especially in the wake of today’s report which scolded all three for last summer’s rig disaster.

As the afternoon started wearing on I began having some doubts about foraging for crumbs, because the market had climbed 270 points and suddenly every talking head was exuberant about the market’s future.

Well, wouldn’t you know it, just as the unbridled enthusiasm got on the air, the market cut its gains in half during the last 30 minutes of trading.

I didn’t mind. For me, the ideal end of an options cycle is having my positions close out right near their exercise prices. For my part, I wish this had been Friday.

I love kicking the same stocks right over into the next options cycle and then selling at the money options on them.

For me, kicking them down the road is a strategy that can never go wrong, regardless of life expectancy.

On the other hand, things may start getting serious in Europe. They may actually address the issues instead of kicking them down the road. That raises the questions as to whether our markets have already discounted that and will drop upon the reality occuring and whether precious metals will reverse their climbs, as fiscal responsibility enters our vocabularly.

Nah, that’s not going to happen. No one ever  got re-elected by making the responsible decision.

The EU should just follow the lead of Americans everywhere in dealing with financial crises.

They need to get a new credit card and take those 0% Cash transfer offers

 

 

 

Invest like TheAcsMan

Option to Profit is available as either an eBook or 300+ paperback. Take a humorous look at a serious topic and learn how to make your portfolio finally go to work for you in bull and bear market environments.

See a sneak preview of Chapter 1.  hoco blogs

More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.

Find  OTP Book at Amazon, B&N or now you can also Order direct  from publisher. Use 10% Discount Code P4S2ZD8H

 

  

Views: 10

 

It’s that time of the month again.

No, I’m not being visited by Aunt Flo, as the euphamism would go, if indeed it were germane.

No, it’s the end of the September options cycle in just a few short days. Time to see if there are any crumbs left out there just waiting to be taken. And you do have to act quickly, because before you know it those crumbs get smaller and smaller, before they disappear entirely.

I suppose that since I now try to find as many weekly options opportunities as possible, that third Friday of each month has lost a bit of its significance. Now its more or less like any other Friday.

I’ve never had a visit from Aunt Flo, but I can’t imagine that her dropping by on a weekly basis would be very good.

In a way, I guess that’s as sad as when you know that Aunt Flo won’t be visiitng anymore. Fortunately, that single long hair on my chin that popped up after Flo disappeared is obscured by my full beard.

By the same token, most people I know no longer deal in euphamisms, anyway. They get right down to brass tacks, no sense beating around the bloody bush.

Hmm, now I’m not certain if the preceding itself was a euphamism for something, but no matter, I just like using uniquely British adjectives.

As I looked back at the monthly statistics for the past few years, I should have been tipped off that this wouldn’t have been the kind of month to e-mail home about.

It seems that the month following what turns out to be my best options premium month of the year is a dog.

And that was this month because that was last month.

Since options premiums keep me afloat, I have a need to trade, but times like these offer the biggest dilemmas.

Holding on to so many positions that are significantly below their purchase prices, it’s hard to justify trying to optimize options premiums by writng near the money contracts when their assignment would result in meanigful capital losses.

Although I always check my spreadsheets to see how much in accumulated premiums each position has captured, I still have a reluctance to take the loss, even when it is mitigated or even fully offset by those premiums.

I’m not beyond rationalizing my actions, though.

On days such as the first two trading days of this final week, you see the clock ticking away on the one hand, but you also see the possibility of that silver lining in depressed stock prices, or at the very least the lack of support in silver prices, as I own unhedged shares of an UltraShort Silver ETF.

Will there be some good news coming out of the European Union sending our markets for a nice climb? I sure wouldn’t want to miss out on recouping some of those paper losses, but those crumbs, those 0.5% options premiums, do I really want to leave those on the table?

The answer to those questions are “who knows” and “not really”

The full answer to the latter question is actually “not really, but I don’t want to feel like a schmuck”.

But you do have to eat, you can’t really let pride get in the way. As small as they may be, those crumbs can add up.

And so, in a measured reaction to a meandering day, I did get the opportunity to sell call options on JP Morgan, Freeport McMoRan, Halliburton, Williams-Sonoma and the Triple Q’s.

Actually, with the exception of Williams-Sonoma, if the others do get assigned, I’ll still be taking capital gains on the underlying stocks, so the risk will be determined by how wildly they may explode upward between today and Friday’s close.

Opportunities potentially lost. That ends up being the performance metric, but since I don’t harbor regrets, I also rarely learn lessons. You can fool me over and over again as long as those premiums add up and losses have some strategic value in reducing tax liability.

When I did add the crumbs up it was worth the risk, given the reward and the need to be able to feed Laszlo the Dog.

It’s either crumbs or go back to work, not to mention the shriveled carcass of a wiener dog.

Hmmm. Weiner dog.

If anyone reading this is old enough to remember Bob Denver’s character, Maynard G. Krebs, you would know my reaction to the very thought of “work”.

Whatever optimism there’s been in the markets during the last hour of each of the two past trading sessions it’s a little frightening to thank what it’s been based upon.

First, the rumor of Chinese intervention to buy Italian debt turned Monday’s market on a dime.

But you know that we’re really in trouble and living a life of deep delusion if we think that Chinese benevolence is going to be the remedy that saves the European Union’s financial systems.

Today’s good news was that there wouldn’t be a Greek default.

At least not today.

The other good news was that somone had interpreted something that Angela Merkel said as being of a positive note, regarding satisfying Finland’s need for Greek collateral.

When I wrote about what was wagging the dog the other day even in my wildest dreams I never would have guessed Finland.

But Finland, too, was just in search of crumbs. Whatever assets Greece actually has rights to, Finland wants it. After all, with its dying Nokia enterprise, what else does it have going for it? And besides, those reindeer need to eat, too.

So I know the feeling.

Wherever you can get those crumbs, get them.

Tomorrow? Who knows what tomorrow brings. New rumors, maybe some actual news, maybe not.

No matter. This week ends in a few days and a whole new world of opportunities comes along.

This time, I’m hoping for the whole loaf and will gladly take the crumbs, too.

 

 

 

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