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Archive for 2011

Epic Failure: The Supercommittee Was A Super Joke

Courtesy of Michael Snyder of Economic Collapse 

Does anyone need any additional evidence that our political system is completely broken?  The bipartisan congressional supercommittee that was given two months to come up with at least $1.2 trillion in deficit cuts over the next decade has failed to reach an agreement.  It is an epic failure and a national embarrassment.  The truth is that they never even came close to an agreement.  In fact, as you will read below, the two sides on the panel have been barely even talking to each other.  In the end, the supercommittee was a super joke. Meanwhile, the U.S. national debt has passed the 15 trillion dollar mark and we are facing trillion dollar deficits as far as the eye can see.  We are heading directly for a national financial disaster, and our "leaders" seem powerless to do anything about it.

According to the supercommittee’s rules, any plan would have had to have been submitted to the Congressional Budget Office by Monday in order to give the CBO 48 hours to analyze how much the plan would reduce budget deficits over the coming decade.

When the supercommittee was announced, it made headlines all over the world, but now it is ending with a whimper.

The supercommittee was never a good idea in the first place, but you would have thought that they could have come up with something over the course of two months.

But instead all they are giving us are a whole bunch of excuses and a whole lot of hot air.

What a joke.

Is it really that difficult to come up with $1.2 trillion in cuts over a decade?

It isn’t as if they would even be cutting very deeply.  $1.2 trillion in cuts would not even cut the budget by $150 billion a year.  We would still be talking about trillion dollar deficits way into the future.

But instead of agreeing to some token cuts, they have chosen to do nothing and to blame each other.

So now $1.2 trillion in "automatic budget cuts" will go into effect starting in 2013.  But even that $1.2 trillion figure contains a lot of "fuzzy math".  For example, it includes $169 billion in "projected savings" from "reduced interest costs" on the national debt.

I would love to see how they came up with that figure.

In any event, the truth is…
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Precious Metals Charts Point to Higher Prices – Part II

Courtesy of Chris, the Gold and Oil Guy

Precious Metals Charts Point to Higher Prices – Part II

Over the recent couple months the precious metals charts have made some sizable moves. Most investors and traders were caught off guard by the sharp avalanche type selloff and lost a lot of hard earned capital in just a few trading sessions. Gold dropped over 20% and silver a whopping 40%.

The crazy thing about all this is that these types of moves in precious metals can be avoided and even taken advantage of in certain situations. There is no reason for anyone to continue holding on to those positions after they pullback 6% of more because of the type of price and volume action both gold and silver had been displaying in the past few sessions.

I warned investors on Aug 31st that precious metals were about to top any day and that protective stops should be tightened or taking profits was also a smart move. It was only 2 trading sessions later that precious metals topped and went into a free fall. You can get my detailed analysis if you read my report “Dollar’s On the Verge of a Relief Rally Look Out!”.

A couple weeks later once precious metals has found support and the uneducated investor’s were licking their wounds wondering what the heck just happened to their trading accounts… I put out another report but this time with a bullish outlook. Silver was currently trading at $29.96 and I had a $35-$36 price target over the next two months. Gold was trading down at $1611 and I saw it heading back up to $1750-$1775 area before finding resistance and pulling back. Both these forecasts were reached over the next two months. You can quickly review the report called “Precious Metals Charts Point to higher Prices” for more info.

With all that said, what exactly are the charts saying right now?

Current Precious Metals Charts Summary:

The past 6 weeks we have been watching both gold and silver struggle to hold up but they have managed to grind their way to my price targets. After reaching those targets a couple weeks ago sellers have stepped back into the precious metals market and put pressure these metals.

Last week gold and silver started to pullback in a big…
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The Coming European Superstate That Germany Plans To Cram Down The Throats Of The Rest Of Europe

Courtesy of Michael Snyder of Economic Collapse 

A lot of people were puzzled about what German Chancellor Angela Merkel meant when she recently stated that the ultimate solution to the financial crisis in the EU would "mean more Europe, not less Europe".  Well, now we are finding out.  A leaked internal German government memo entitled "The Future of the EU: Required Integration Policy Improvements for the Creation of a Stability Union" actually proposes the creation of a "European Monetary Fund" which would be given the power to run the economies of troubled European nations.  This "stability union" would be quickly followed by the creation of a full-fledged "political union".

Essentially, this leaked memo proposes the creation of a "European Superstate" which will be crammed down the throats of the rest of Europe whether they like it or not.  National sovereignty would be a thing of the past and European bureaucrats would run everything.  Of course this will never be accepted by the people of Europe until they feel the bitter pain of the coming financial collapse, but we are starting to see that there is already a clear plan for what the Germans wish to implement in the aftermath of the coming crisis.

A lot of people have just assumed that if there is a massive financial collapse in Europe and the euro crashes that it will mean that end of the euro and potentially the breakup of the EU.  But that is not what the Germans have planned at all.

An article in the Telegraph has posted details about the leaked internal German government memo mentioned above.  It really is startling to see that a full-fledged "political union" in Europe is being discussed at the highest levels of the German government….

The six-page memo, by the German foreign office, argues that Europe’s economic powerhouses should be able to intervene in how beleaguered eurozone countries are run.

The confidential blueprint sets out Germany’s plan to tackle the eurozone debt crisis by creating a “stability union” that will be “immediately followed by moves “on the way towards a political union”.

It will prompt fears that Germany’s euro crisis plans could result in a European super-state with spending and tax plans set in Brussels.

Can you imagine what Europe would look like under such a plan?

National sovereignty would be a thing of the


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Japan’s Kokusai Liquidates Remainder Of Euro Sovereign Exposure, Just As European Primary Issuance Supply Surges

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

When we discussed the specifics of the ongoing European bank run, we cited from the NYT which noted the actions of a core Japanese mutual fund with European sovereign exposure, namely that “earlier this month, Kokusai Asset Management in Japan unloaded nearly $1 billion in Italian debt.” The Nikkei has just reported that this was merely the beginning: “Kokusai Asset Management Co. has sold all Spanish and Belgian government bonds that were part of its flagship fund, Global Sovereign Open, The Nikkei learned Monday. As of Nov. 10, Spanish and Belgian bonds accounted for 1.8% and 3.1% of the fund, respectively. The share of the bonds in the fund’s portfolio fell to zero as of Thursday.” Just what prompted this drastic move and very loud slap in the face of the European confidence building exercise? “A Kokusai Asset Management official said the company sold off the bonds, amid widespread concerns about the outlook for Europe’s sovereign debt crisis to avoid hurting the value of the fund, given volatile prices of the bonds. The mutual fund operator had already divested the fund of all its French government bonds in October and all Italian bonds in early November.” It is safe to say that where one core asset managers has been (and no longer is), everyone else will shortly follow. For the simple reason that it is now if not cool to not have European exposure, it is certainly required by one’s LPs to cut down on all European bonds. Kokusai is merely the canary: expect everyone else to go ahead and dump the €741 billion in non-domestically held Italian (and then all other European sovereigns) bonds. Good luck ECB buying these in the secondary market. And one market where the ECB can do nothing by charter, is the primary issuance one, where as the following update from Morgan Stanley shows, things are getting from from bad to worse.

Issuance between now and year-end

 

A near-term silver lining for many countries is that their 2011 bond issuance programmes are drawing to a close in many cases (see Exhibit 4). France, Netherlands and Portugal have all completed their bond issuance programmes. However, Germany, Italy and Spain still have a fair way to go. In 2012, of


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Vix to 40+

Courtesy of ZeroHedge. View original post here.

Submitted by South of Wall Street.

SocGen’s news flow index suggests the VIX is headed between 40 and 50.  They arrive at this by counting “the number of newspaper articles highlighting themes related to economic strength…
Historically they have proven highly sensitive to financial assets pricing, and
often lead trends by a few months.”

 

 

With the VIX holding 30 (twice the level we started the year mind you) on every ‘confidence’
rally, I won’t be surprised the day she blows.  Whether it is China, Germany leaving the EU, or Israel lobbing one at Iran … we are in a very fragile environment, and I’m convinced that risk assets will not be able to handle any type of shock. 
This is for a variety of reasons: confidence, liquidity, regulation,
solvency, etc. 

The composition of this index from SocGen is not as important as the message that
we are in an extremely volatile environment – and volatility is
lagging.  Be prepared.

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Expect A Global Recession No Matters What Happens In The Euro Zone

Courtesy of www.econmatters.com.

By EconMatters

After MF Global went bust, most people believe it was an extreme "spectacular recklessness" under Jon Corzine, and that the U.S. banks should have only "moderate" European Exposure.  However, banking stocks have been under pressure with increasing investors worries.

Jefferies Group, for example, eventually disclosed detail position it held on European debt earlier this month after its shares plunged more than 20%.  But other banks have not followed suit as Bloomberg notes that since it is not required by the U.S. regulation,

"Firms including Goldman Sachs and JPMorgan don’t provide a full picture of potential losses and gains in the event of a European default, giving only net numbers or excluding some derivatives altogether." 

U.S. stocks took a beating after Fitch Ratings said on Wed. Nov. 16 that Europe’s debt crisis may pose a “serious risk” to U.S. banks, driving investors to safer bets such as U.S. Treasurys.  Fitch also notes that although U.S. banks have been reducing their direct exposure for well over a year, but they haven’t clearly disclosed the extent of their holdings of European sovereign debt or their trading positions with European counterparties.

There are clues to somewhat quantify the potential exposure on a global basis and of the U.S. banks.

Reuters cited a report by the IIF that European banks hold some $3.5 trillion of euro-zone sovereign bonds and U.S. banks have significant direct exposure to their European peers.  U.S. banks had about $180.9 billion of debt from GIIPS on their books at the end of June.  Guarantees and credit derivatives added another $586.6 billion, bringing the total to $767.5 billion based on Bank for International Settlements data.  But the exposure does not stop there,

" There is a secondary level of exposure that is potentially more worrying — through international banks lending to each other. Here the greatest risk stems from Italy and France. International bank claims on Italy total $939 billion, and French banks account for well over one-third of that, BIS data show… If Italian debt slumps even further, causing deeper losses for French banks, international banks could stop lending to France. The losses would ripple through the whole global financial system."

 

Chart Source: NYT, Oct. 23, 2011

These…
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Jim O’Neill Describes Europe’s Surreal Times, Asks If Germany And The Euro Area Even Want The Monetary Union Any Longer

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Among the traditionally meandering permabullish ramblings of a man who continues to ignore the disconnect between reality and his view of the world, tonight’s note by GSAM loss leader Jim O’Neill “Surreal Times” has a very ominous rhetorical question inbetween all the bullish propaganda: “The ECB doesn’t seem to regard 10-year Italian bonds as a bargain and, of course, it is rather tricky as they need to be sure that Monti will deliver. In turn, this means that what is really important is that Mario gets support from those in the background and, ultimately, the Italian voters. And then there is Spain. And still, of course, the troubling Greek situation. And ultimately, the complex world of Berlin and Frankfurt. As many European newspapers are asking in recent days, does Germany actually really still want the EMU? And, as I shall now provocatively ask, does the Euro Area? All very surreal.” No Jim, all very logical, because for the first time in decades, Europe is finally starting to do the math and realizes it is failing miserably. It is those stuck in a world in which combined total exports are greater than total imports by over $300 blilion: a mathematical lunacy, who think that what is happening is “very surreal.” To everyone else, the right phrase is “very much expected.”

From Goldman’s Jim O’Neill

Surreal Times.

Another fascinating week passes with the European mess understandably dominating the minds of everyone around the world. It is quite surreal. There are no signs of any real collective central leadership, many key players are hardening their positions, other regions of the world are increasingly worrying about it, and markets ended the week with a sort of eerie silence.

As I often have said since the European troubles escalated in August, there is life outside of Europe. That remains the case. But virtually wherever and whoever I talk to or with, people are so focused on the European issues. In the week ahead, I will be participating in a board meeting of BRUEGEL, the European think tank, which will be most interesting. Anyhow, more of this topic and others below.

Good Lord – Gaylord!

My last week started with a brief 2-day trip to Maryland and back. I thought I was going to Washington DC, but, in fact, it was…
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Occupy LA Teach In William K Black

Occupy LA Teach In William K Black

(H/tip Jesse)





China’s Vice Premier Sees “Chronic Global Recession”; Why this Astonishing Admission?

Courtesy of Mish

It’s not often we hear candid talk from global leaders about the economic realities that lay ahead. This is one of those rare times.

Please consider China vice premier sees chronic global recession 

A long-term global recession is certain to happen and China must focus on domestic problems, Chinese Vice Premier Wang Qishan has said.

"The one thing that we can be certain of, among all the uncertainties, is that the global economic recession caused by the international financial crisis will be chronic," Wang was quoted by the official Xinhua news agency as saying at the weekend.

Wang’s comments were the most bearish forecast ever by a top Chinese decision-maker about the world economy, and Beijing’s worry about a worsening global environment could translate into an impetus for pro-growth policies at home.

Why this Astonishing Admission?

Regular Mish readers will not find that forecast surprising in the least. What is surprising is the high-ranking official who makes that forecast.

In a world of global economic denial about the Euro, about deficits in the US, about housing bubbles in Australia, China, and Canada, and in general denial about every economic woe the world faces, one might ask "why this astonishing admission?"

I have a 3-part answer

  1. As China shifts from an untenable infrastructure model to a consumption model, as Europe faces a Eurozone breakup and harsh recession, as the US faces a deficit crisis (albeit halfheartedly at best), much global pain is in order.
  2. By framing the problem as a global problem, the vice-premier gets to blame the world economy for the internal strife in China.
  3. This is an indication that China is falling apart right here, right now, much faster than the Western world believes.

The admission by the vice-premier simply reflects the demise of China’s export model in the face of a rapidly slowing global economy accompanied by a regime change in China that will be forced to shift its internal priorities.

These thoughts echo comments I have made previously in …

Europe Undeniably in Recession; Germany Manufacturing PMI Contracts for First Time in Two Years, New Orders Collapse


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Presenting Russell Napier’s Greatest Hits

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Two weeks ago, courtesy of Gresham’s Law, we brought to our readers Jim Grant’s greatest hits: a compilation of the most memorable TV appearances by the famous newsletter writer. Today, we are happy to present another controversial luminary – Russell Napier: the renowned financial historian and consultant for CLSA, as well as author of the engrossing Anatomy of the Bear, who only together with Albert Edwards, has predicted that the S&P would eventually drop to 400. Napier has articulated some fantastic insights on the generational cycle, bear market bottoms and currencies in recent years. His insights, unlike those of TV pundits whose soundbites are only there to fill the gap between two ad segments, are always something to look forward to.





 
 
 

Zero Hedge

Gold Slammed To Fresh 10-Week Lows Below Key Technical Level

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

What else should you do as Russian and Ukraine forces begin a serious un-de-escalation... sell precious metals with both hands and feet of course. The strength in stocks (whether channel-stuffed or not) is enough to make investors believe that we don't need no stinking Fed and that economy must be doing great all on its own. Gold is back below $1275, which SocGen warns could lead to $1233.

 

 

A close below 1275 will mean the extension of the correction to 1263/60 and possibly even 1233.

...



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Insider Scoop

Zogenix Announces Sale of SUMAVEL DosePro Migraine Therapy to Endo International for $85M, Up to $20M Milestone Payments

Courtesy of Benzinga.

Related ZGNX Zogenix Responds to Governor's Action Singling Out Zohydro ER in Massachusetts Zogenix Shares Soar on Massachusetts Developments - Analyst Blog

Zogenix, Inc. (Nasdaq: ZGNX), a pharmaceutical company developing and commercializing products for the treatment of pain-related and central nervous system (CNS) disorders, announced today that it has entered a definitive agreement to sell its SUMAVEL® DoseP...



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Phil's Favorites

Groupthink Or Black Swan Rising? Not A Single 'Economist' Expects An Economic Downturn

Courtesy of Pater Tenebrarum of Acting-Man

A 100% Consensus

This doesn't happen very often. Marketwatch reports that Jim Bianco points out in a recent market comment that the 67 economists taking part in a regular Bloomberg survey have a unanimous forecast regarding treasury bond yields: they will be higher 6 months from now. This is a truly striking result, and given the well-known propensity of mainstream economists to guess wrong (their forecasts largely consist of extrapolating the most recent short term trend), it may provide us with a few insights.

In fact, considering that there have been only a handful of instances since 2009 when a majority of the economists surveyed predicted a decline in yields, we can already state that their forecasts regarding tre...



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Chart School

STTG Market Recap April 23, 2014

Courtesy of Blain.

Indexes took a little rest today, which as we said yesterday was probably needed.   There was actually some bad economic news in housing and the market didn't react much at all which is something bulls will like.  After the close was a surprise stock split by Apple (AAPL) which will help the indexes tomorrow as the stock is up strongly in after hours.  The S&p 500 fell 0.22% and the NASDAQ 0.83%.  The Commerce Department reported new home sales fell 14.5 percent in March, the worst sales month since July.  Again it is not the news that matters to markets, but the reaction to the news and the market didn't really care.

Here are longer term charts of the two indexes. The S&P 500 hit the top trendline which connected the lows of summer 2012 yesterday and fell back after a furious week long rally.

...

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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Market Shadows

Soy Numero Uno

Soy Numero Uno

By Paul Price of Market Shadows

Bunge Limited (BG) is the world’s largest processor of soybeans. It is also a major producer of vegetable oils, fertilizer, sugar and bioenergy.

When commodities got hot in 2007-08, Bunge’s EPS shot up and the stock followed, rising 185% in 19 months.

The Great Recession took its toll on operations, dropping EPS to a low of $2.22 in 2009.  Since then profits have recovered.  They ranged from $4.62 - $5.90 in the latest three years. 2014 appears poised for a large increase. Consensus views from multiple sources see BG earning $7.04 - $7.10 this year and then $7.83 - $7.94 in 2015.

...



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Option Review

Casino Stocks LVS, WYNN On The Run Ahead of Earnings

Shares in Las Vegas Sands Corp. (Ticker: LVS) are up sharply today, gaining as much as 5.7% to touch $80.12 and the highest level since April 4th, mirroring gains in shares of resort casino operator Wynn Resorts Ltd. (Ticker: WYNN). The move in Wynn shares appears, at least in part, to follow a big increase in target price from analysts at CLSA who upped their target on the ‘buy’ rated stock to $350 from $250 a share. CLSA also has a ‘buy’ rating on Las Vegas Sands with a $100 price target according to a note from reporter, Janet Freund, on Bloomberg. Both companies are scheduled to report first-quarter earnings after the closing bell on Thursday.

...

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Sabrient

What the Market Wants: Market Poised to Head Higher: 3 Stocks to Consider

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of David Brown, Sabrient Systems and Gradient Analytics

Yesterday, the market continued its winning ways for the fifth consecutive day.  The S&P 500 closed within 1% of its all-time high, and the DJI was even closer to its all-time high.  Healthcare, Energy and Technology led the sectors while Financials, Telecom, and Utilities finished slightly in the red.  All three sectors in the red are typically flight-to-safety stocks, so despite lower than average volume, the market appears poised to make new highs.

Mid-cap Growth led the style/caps last week, up 2.87%, and Small-cap Growth trailed, up 2.22%. This week will bring well over 100 S&P 500 stocks reporting their March quarter earn...



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OpTrader

Swing trading portfolio - Week of April 21st, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly. Click here and sign in with your PSW user name and password, or sign up for a free trial.

...

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Digital Currencies

Facebook Takes Life Seriously and Moves To Create Its Own Virtual Currency, Increases UltraCoin Valuation Significantly

Courtesy of ZeroHedge. View original post here.

Submitted by Reggie Middleton.

The Financial Times reports:

[Facebook] The social network is only weeks away from obtaining regulatory approval in Ireland for a service that would allow its users to store money on Facebook and use it to pay and exchange money with others, according to several people involved in the process. 

The authorisation from Ireland’s central bank to become an “e-money” institution would allow ...



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Promotions

See Live Demo Of This Google-Like Trade Algorithm

I just wanted to be sure you saw this.  There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.

If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.

Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.

Follow this link to register for their training webinar where they’ll demonstrate the tested and proven Algorithm powered by the same technological principles that have made GOOGLE the #1 search engine on the planet!

And get this…had you done nothing b...



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Pharmboy

Here We Go Again - Pharma & Biotechs 2014

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Ladies and Gentlemen, hobos and tramps,
Cross-eyed mosquitoes, and Bow-legged ants,
I come before you, To stand behind you,
To tell you something, I know nothing about.

And so the circus begins in Union Square, San Francisco for this weeks JP Morgan Healthcare Conference.  Will the momentum from 2013, which carried the S&P Spider Biotech ETF to all time highs, carry on in 2014?  The Biotech ETF beat the S&P by better than 3 points.

As I noted in my previous post, Biotechs Galore - IPOs and More, biotechs were rushing to IPOs so that venture capitalists could unwind their holdings (funds are usually 5-7 years), as well as take advantage of the opportune moment...



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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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