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How to Get Rich Slowly

Do you want to be a Millionaire?  

Sure you do, why not.  $1,000,000 is a nice amount of money – even at 5% interest in retirement, it's enough to drop $50,000 into your bank account each year to supplement whatever else you may have coming in.  So let's agree that it's nice to have a Million Dollars.

Now I'll say something you may not agree with – if you are not on a path to have $1M in the bank by the time you retire – it's probably your own fault.  

Yes, I'm sorry but it's true.  It's really not as hard as you think to save $1M and I'm going to teach you how and, as long as you are under 50, I can show you how to get on the path to turning $50,000 into $1M in 25 years.  If you are under 40 – it's going to be a piece of cake to save $1M by the time you are 65 - as long as you can follow our plan.  

First I need to convince you of the value of SAVING YOUR MONEY – this is not something most people are good at – especially young people.  Unless you accept the VALUE of saving your money, you will not be able to make the wise choices you need to make to get on the path to saving $1M.

This is a compound rate table.  It's a mathematical fact.  If you start with just $10,000, even at 10%, you will have more than $450,000 in 40 years.  I'm 51 now and I can tell you that 30 years ago, I could have bought a cheaper car after college and saved $10,000.  I could have gone to 20 less concerts and saved $2,000 and 20 less fancy dinner dates for $2,000 and taken one less ski trip for $2,000 – you get the idea.  I was young and I was successful but I didn't know at the time that EACH $10,000 I spent in my 30s would cost me $450,000 in my 70s.

That was my excuse then, what's your excuse now?  Now I'm 51 and when I'm 91 I'm sure I'll appreciate having an extra $450,000.  I'll appreciate it so much, in fact, that I'm motivated to put away $50,000, so I'll have $2.25M.  The point is, you need to accept the reality of these numbers and understand that EACH $5 cup of coffee you buy at Starbucks is costing your future self $225.  Flying first class for $1,500 instead of coach for $300 is costing your future self $54,000 – are you really that rich?

Now, keep in mind that we're using the conservative 10% rate.  At Philstockworld, we have 4 virtual portfolios for our Members that are averaging over 20% this year.  At 20%, each dollar you save compounds into $237 in just 30 years.  While we can't ALWAYS have huge winning years, we only need to AVERAGE better than 10% returns and we will be in fantastic shape – if we begin by deciding to save our money.  

Using our "Be the House – Not the Gambler" strategy, which we have discussed in our previous videos like "How To Buy a Stock for a 15-20% Discount" and "The Secret to Consistent 20-40% Annual Returns" we can put ourselves on a path to growing our savings at rates we desire to build a great retirement account.  This is what we teach our Members every day at Philstockworld.

But it all has to start with you.  YOU need to decide to forgo that $5 cup of coffee, that $500 day at the ballgame, that $1,000 weekend trip because you fell stressed – think how much less stressed you will feel in 40 years when that $1,000 is an extra $45,000!  Then there are the big decisions you make along the way to retirement:  Do you need that new car?  Do you NEED that big wedding?  Do you need a house that big?  

It's ironic that people don't realize that NOT spending $500 a month on their house and instead SAVING that money each month at a compounded 10% a year for the same 30 years ($180,000) nets you back $1.1M.  Not only that, but NOT spending $500 a month on your mortgage for the same 30 years, even at 5%, SAVES YOU $172,000 in payments.  That's how much you save with each $100,000 you choose NOT to borrow for a mortgage!

Growing your wealth isn't just about making money in the markets.  In 2015, Philstockworld will focus on wealth-building techniques which, combined with our winning investing strategies, can help put you on the path to a life of financial independence – LEARN MORE HERE.    


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  1. Here’s How Cyber-Warfare Started And Where It’s Going
    http://www.businessinsider.com/future-of-cyber-warfare-2014-12


  2. “This $550 Billion Mania Ends Badly,” Energy Companies Are “Shut Out Of The Credit Market”
    http://www.zerohedge.com/news/2014-12-12/550-billion-mania-ends-badly-energy-companies-are-shut-out-credit-market


  3. We Spoke To The First Owner Of Tesla’s New Car — Here’s What He Had To Say
    http://www.businessinsider.com/we-spoke-to-the-first-owner-of-teslas-new-car--heres-what-he-had-to-say-2014-12




  4. Phil – BTU question for you. This is for a 401k account, in which I can sell cash secured puts, and covered calls, but no spreads (I know, ridiculous, but the company matches 50% of whatever I put in so I do participate).

    In any case I sold Dec $15 puts for $1.25, for a net 13.75 entry. I am debating the merits of rolling 2x to the 2016 puts, vs just buying another round for an average of 10.56 and to start selling calls. Your thoughts?

    -TIA


  5. BTW Phil, great article above, which I have made required reading for my kids. Well done!






  6. This Week Was A Stark Reminder Of How Fast Good Stock Markets Can Turn Bad
    http://www.businessinsider.com/stock-market-crash-2014-12


  7. Wall St expectations for 2015: stocks will rise 5-10% and Treasuries will be destroyed; yields will rise 70-140 bp
    http://twitter.com/ukarlewitz/status/543775001522876417/photo/1



  8. Senate Set for Rare Saturday Session in Struggle to Pass $1.1 Trillion in Spending
    http://www.nytimes.com/2014/12/14/us/spending-bill-senate.html


  9. Electric Cars: A Review Of 2014
    http://www.forbes.com/sites/jackperkowski/2014/12/12/electric-cars-a-review-of-2014/?linkId122882&utm_channel=Business


  10. Russian Gas – QuickTake – Bloomberg
    http://www.bloombergview.com/quicktake/russian-gas


  11. This Magnificent GIF Illustrates How The US Population Will Grow And Evolve Through 2060
    http://www.businessinsider.com/us-population-pyramid-2060-2014-12







  12. Jeffrey Sommers and Michael Hudson: The Koch Brothers’ Governors
    http://www.nakedcapitalism.com/2014/12/jeffrey-sommers-michael-hudson-koch-brothers-governors.html


  13. A Shocking Number Of College Students Don’t Even Realize They Have Loan Debt
    http://www.businessinsider.com/a-shocking-number-of-college-students-dont-even-realize-they-have-loan-debt-2014-12


  14. Best Days to Book Flights are Tuesdays, 50-100 Days Before Travel, Expedia Study Concludes
    http://www.forbes.com/sites/grantmartin/2014/12/09/best-days-to-book-flights-are-tuesdays-50-100-days-before-travel-expedia-study-concludes/?linkId061480&utm_channel=Business


  15. How Successful People Squash Stress
    http://www.forbes.com/sites/travisbradberry/2014/12/09/how-successful-people-handle-stress/?linkId121398&utm_channel=Leadership



  16. ivanhoff shared a chart on StockTwits
    http://stocktwits.com/message/30092882



  17. World’s Highest-Paid Musicians 2014
    http://www.forbes.com/pictures/eeel45fdddi/16-pink-52-million/?linkId090774&utm_channel=Business



  18. Catholic Bishops From Every Continent Call For ‘An End To The Fossil Fuel Era’
    http://thinkprogress.org/climate/2014/12/11/3602596/bishops-end-fossil-fuels/


  19. 10% return is conservative?


  20. Phil/AAPL, When would you roll down the calls on BCS's? I am in 2016 90/105's and 90/115. Also 2017 90/120's. All show a profit but decreasing daily. Also sold 2017 90 puts, underwater now – take the loss on those as no rolls, roll down to 85's, 80's, or just take a loss now as eating into my margin. I have been selling Jan calls against them but not enough it seems. Thanks


  21. Anybody else having an issue when trying to access the "Top Trades" link at the top? it directs me to a page that says "The page you are looking for isnt here" whenever i try to enter one of the individual top trade articles?


  22. crs10

    Top trades works fine and you can see the trades for every day I think if you wish to enter the actual day it was recommended you need to go back to the actual day and not try to enter the relevant day from top trade. 


  23. Looking at my ports after the cold shower of Friday, it looks to me like the October repetition. Asking myself the question how am I placed in this down draft. As we all play much in options, I could look at the following situation. I am holding 55% in cash, 31% in stock at Friday's value and 12.1% in option plays, incorporating long and short calls and mostly short put. Long put would have looked better today. However the 12.1% of options do still show a credit to the option plays, meaning if I close all option I would still walk a way with still 12.1 % in cash. I personally feel it always pays to have a certain amount of possible good stock ( the once which should recuperate after a storm) as you only will lose if you would sell during a down draft. I had once the bade experience with a broker, mangling his fund with the customers funds, resulting Security and Exchange Comm. closed the operation and we could not trade the account for over one year. During the year the bottom fell out of the stock market. Fortunately I did have no options in this account. My friend trading with the same broker did have options and lost over 1,5 mil. as most of his short puts were called for and the long calls lost it's value. Here I learned a valuable lesson, some of my stocks fell more than 60%, like BAC, C , HOV, etc. but most recovered and even increased in value. That was the time I joint PSW. Specially with the above three mentioned stocks, Phil set up some for me hair-raising option trades, which ran with HOV over some 250 options, Today I show a credit of 25k with HOV. So take in to consideration, even that option trading might be a very lucrative income under normal circumstances, cash and stock are your safest back bone in big dips. Naturally today we have learned to hedge our positions and I must say I mostly show a loss with TZA and others but than you should, as this is like a car insurance, you hope you never need it and write it off from your winners. Have a nice Sunday, hope the sun will shine again tomorrow.


  24. Ted Cruz – Too cute by a half and made look like an idiot by Reid:

    http://www.motherjones.com/kevin-drum/2014/12/ted-cruz-shoots-self-foot-declares-victory

    So now everyone has to spin their wheels on the Senate floor over the weekend instead of seeing their families or watching the Army-Navy game. By itself, that might deserve only the world's tiniest violin. But as long they're there and have some extra time, Harry Reid decided to start the process of approving a whole bunch of Obama nominations that otherwise might have dropped off the calendar later in the week as senators began pressing to start the holiday recess. That meant Obama's nominees would have had to face a Republican Senate in January, but now, thanks to Cruz and Lee, they'll all be safely in office by then.

    I'm sure the NRA is thrilled. Ditto for all the Republicans who were apoplectic over the nomination of Tony Blinken as deputy secretary of state. And megadittoes—with a megadose of irony—for Cruz, Lee, and all their tea party buddies who objected to confirming Sarah Saldaña to head Immigration and Customs Enforcement. Their objection, of course, was meant as a protest against Obama's executive order on immigration. Now, thanks to a dumb little stunt that was pathetic even as an empty protest against Obama's immigration plan, they're going to lose an actual, substantive protest against an Obama immigration nominee. Nice work, guys.

    But I guess it's a nice big platter of red meat that plays well with the rubes. With Cruz, that's all that counts.


  25. Austerity has worked well in Europe:

    1 hyperlink


  26. Good chart:

    http://alphanow.thomsonreuters.com/2014/12/will-double-top-bring-winter-woes-sp-500/

    The index formed its first top after Thanksgiving and the second top the first week of December. The average distance between the two tops and the highest low is small, so the target of this possible double top formation is only the 2,027 area.

    The decline will remain under scrutiny, as this is the first move below the 21-day exponential moving average since late October. The reticence of the market to capitalize on this break means that the longer-term long positions are not yet disturbed.

    In fact, the S&P 500 is consolidating above the 14.6% Fibonacci retracement level at 2,042. It would take a close below the 23.6% Fibonacci retracement level at 2,018 to accelerate the decline and raise the heat on long positions.

    Conversely, a climb back above the 21-day exponential moving average at around 2,056 would wipe the double top formation off the chartists’ maps.


  27. http://www.ft.com/intl/cms/s/0/f003a000-814f-11e4-b956-00144feabdc0.html#axzz3LtPcxWPm

     

    December 14, 2014 5:21 am

    Warnings of a potential bloodbath in bonds

     

    "There is a big disconnect between the US Federal Reserve and the international bond markets. It is a disconnect that could lead to one of the biggest sell-offs in bonds for a long time. Some fund managers even say 2015 might be like 1994 all over again, when the government bond markets crashed as the Fed aggressively raised interest rates."


  28. If so, what's the option trade?


  29. I had not posted to my blog in a long time, but the discussion about oil proxies last week had me do some research about some ETF. You can read the results at:

    http://lemoyne-mappingthemarket.blogspot.com/2014/12/oil-trade-proxies.html

    Next articles (on a weekly schedule as this is time consuming) will look at gold and ags with ETF proxies as well.


  30. Zero – For medium term moves, you can look at leveraged ETFs as well for bonds. Look at a period when bonds went down:

    TMV (3x) – Blue
    SBND (3x) – Green
    TBT (2x) – Pink
    TLT – Red, the baseline 20-year bonds

    Some like TBT have options, I didn't check for the others. But if you are looking long term, they suffer from decay and long term members probably remember the TBT disasters of 4 years ago! Deep ITM TLT puts might work better. But Phil should probably chime in.


  31. Energy insiders buy most shares since 2012
    http://seekingalpha.com/currents/post/2166635

    •With valuations at a decade low, oil execs such as Chesapeake Energy’s (NYSE:CHK) Archie Dunham and Ring Energy's (NYSEMKT:REI) Tim Rochford are driving the sector's biggest wave of insider buying since 2012, according to Bloomberg data.
    •Rochford and two other board members bought a total of more than 30K REI shares over the past month; the CEO says the company can stay profitable even should oil slip to $50/bbl.
    •“Most of these execs that are buying have been in the industry as long as I have, so they know how supply and demand works and they’re buying quality stocks,” says Dunham, who recently bought 500K CHK shares in his biggest purchase since joining the company’s board in 2012.
    •Loews Corp. (NYSE:L), which owns about half of Diamond Offshore (NYSE:DO), bought 1.18M DO shares in November and bought another ~410K shares last week.
    •Halcon Resources (NYSE:HK) and Goodrich Petroleum (NYSE:GDP) are among companies operating in the costliest U.S. shale-producing regions, but execs from those companies are buyers as well.

    I'll also note that HK says they are mostly (80% of 2015 production) hedged around $88/bbl.  They should be ok.


  32. WTI down another 1.5 as the markets open, Brent close to giving up 60.


  33. Also, some interesting research on the VIX that I will eventually write about.


  34. Indeed Burrben – below $57 now! How low can we go?


  35. Anyone brave enough to go long /NKD….now that Abe owns the space?


  36. From Bloomberg, Dec 14, 2014, 6:34:58 PM

    A group of people has been taken hostage in a cafe in Sydney’s Martin Place, where a black flag with Arabic writing was placed in a window, Australian television channels reported.

    To read the entire article, go to http://bloom.bg/1zmePOk

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  37. From Bloomberg, Dec 14, 2014, 6:22:09 PM

    Sony Pictures Entertainment (SNE)’s lawyers sent letters asking news organizations to stop writing articles based on stolen documents released by hackers seeking to interrupt the release of the comedy “The Interview.”

    To read the entire article, go to http://bloom.bg/13oa0cN

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  38. From Bloomberg, Dec 14, 2014, 1:00:00 PM


    Japan’s Prime Minister Shinzo Abe, gestures during an election campaign rally in Saitama City, on Friday, Dec. 12. The 60-year-old premier focused his campaign on the need to continue with economic policies to end deflation, known as Abenomics, rather than more unpopular plans such as nuclear restarts and strengthening the nation’s military. Photographer: Kiyoshi Ota/Bloomberg

    Prime Minister Shinzo Abe’s gamble on early elections paid off with a sweeping victory that also puts pressure on the premier to reverse a recession and overcome resistance to his plans to boost Japan‘s defense.

    To read the entire article, go to http://bloom.bg/1GDvKgO

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  39. From Bloomberg, Dec 14, 2014, 6:57:25 PM

     Dec. 12 (Bloomberg) — Timothy Moe, chief Asia Pacific strategist at Goldman Sachs Group Inc., talks about Japan’s lower-house election, economy and stocks. Moe also discusses oil prices and the global economy. He speaks in Hong Kong with Rishaad Salamat on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    Crude oil slid, extending declines from a five-year low amid concern over waning global demand for the commodity. Australian stocks dropped and Japanese index futures slipped while the yen gained after a national election.

    To read the entire article, go to http://bloom.bg/1IQx3Nr

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  40. From Bloomberg, Dec 14, 2014, 3:57:46 PM

     Former U.S. President George W. Bush speaks during an event celebrating the successes of dissidents and activists from around the world, at the George W. Bush Presidential Center in Washington, D.C., on May 15, 2012. Photographer: Saul Loeb/AFP via Getty Images

    Former Vice President Dick Cheney said President George W. Bush was fully briefed on interrogation tactics used by the Central Intelligence Agency in the aftermath of the Sept. 11 attacks, disputing a conclusion reached by Senate Democrats in a report last week.

    To read the entire article, go to http://bloom.bg/12PfDjj

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  41. From Bloomberg, Dec 14, 2014, 1:10:44 PM


    Residents exercising amid heavy smog on the Bund in Shanghai as local meteorological department issued a yellow alert for smog on Nov. 12, 2014. Photographer: AFP Via Getty Images

    Two weeks of debate on how to limit carbon pollution across the globe ended with a deal that failed to resolve the toughest debate: how to narrow the divide between industrialized countries and poor ones that believe they need fossil fuels to help expand their economies.

    To read the entire article, go to http://bloom.bg/1GDwhiJ

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  42. From Bloomberg, Dec 14, 2014, 6:51:32 PM


    Cats for adoption sit in cages at a PetSmart Inc. store in New York. Same-store sales at the pet-supply company were flat last quarter after falling in the previous three months for the first time in at least a decade, as competition from Amazon.com Inc. and other retailers intensified. Photographer: Victor J. Blue/Bloomberg

    PetSmart Inc. (PETM) agreed to be bought by a group led by BC Partners Inc. for about $8.3 billion in the largest leveraged deal for a U.S. company this year.

    To read the entire article, go to http://bloom.bg/1yRhpOL

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  43. From Bloomberg, Dec 13, 2014, 11:32:38 PM

     Dec. 14 (Bloomberg) — The Senate passed a $1.1 trillion bill to fund most of the U.S. government through September and avert a shutdown after defeating an effort by Ted Cruz that previewed a potential 2015 Republican fight over immigration. The 56-40 vote during an uncommon Saturday session follows House passage of the spending bill on Dec. 11 and sends the measure to President Barack Obama for his signature. (Source: Bloomberg)

    The Senate passed a $1.1 trillion bill to fund most of the U.S. government through September and avert a shutdown after defeating an effort by Ted Cruz that previewed a potential 2015 Republican fight over immigration.

    To read the entire article, go to http://bloom.bg/1A6grLH

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  44. From Bloomberg, Dec 14, 2014, 4:00:00 PM

     Oil tankers are anchored near the Port of Long Beach, California. Photographer: Tim Rue/Bloomberg

    OPEC will stand by its decision not to cut output even if oil prices fall as low as $40 a barrel and will wait at least three months before considering an emergency meeting, the United Arab Emirates’ energy minister said.

    To read the entire article, go to http://bloom.bg/1BKaXtW

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  45. From Bloomberg, Dec 12, 2014, 5:24:12 PM

     Warren Buffett, chief executive officer of Berkshire Hathaway Inc.. Photographer: Jeff Kowalsky/Bloomberg

    Berkshire Hathaway Inc. (BRK/A) agreed to buy Charter Brokerage from Arsenal Capital Partners as Chairman Warren Buffett extends bets in energy as oil prices tumble.

    To read the entire article, go to http://bloom.bg/1IKCjC5

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  46. From Bloomberg, Dec 12, 2014, 4:38:22 PM

     Ian Taylor, president and chief executive officer of Vitol Group, said Low oil prices may slow U.S. shale production. Photographer: Goh Seng Chong/Bloomberg

    Benchmark U.S. oil prices are poised to test $55 a barrel after a six-month rout pushed crude to the lowest in five years.

    To read the entire article, go to http://bloom.bg/1yHCKF2

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  47. From Bloomberg, Dec 14, 2014, 8:35:52 AM

    Shares in Qatar plunged, becoming the fifth gauge in the oil-rich Gulf Cooperation Council to enter a bear market, as crude prices dropped to the lowest level since July 2009. Dubai’s gauge wiped out this year’s advances.

    To read the entire article, go to http://bloom.bg/1BJQ6a8

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  48. From Bloomberg, Dec 12, 2014, 12:00:01 AM


    A gas station attendant fills a vehicle in Luanda, Angola, on Nov. 6, 2013. Photographer: Simon Dawson/Bloomberg

    Big Oil and King Coal are in it for the little guy.

    To read the entire article, go to http://bloom.bg/1IHFbQm

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  49. From Bloomberg, Dec 14, 2014, 7:03:38 PM

    Confidence of Japan’s large manufacturers declined in the fourth quarter as a recession offset a boost from a weaker yen, underlining the economic challenges facing Prime Minister Shinzo Abe after his election win.

    To read the entire article, go to http://bloom.bg/1qOUYH0

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  50. From Bloomberg, Dec 14, 2014, 2:49:50 PM

     Nov. 24 (Bloomberg) — BHP Billiton Ltd. Chief Executive Officer Andrew Mackenzie says the company has stopped investing in iron ore. Paul Allen reports on Bloomberg Television’s “On the Move” with Rishaad Salamat. (Source: Bloomberg)

    Australia estimates iron ore will trade at about $60 a metric ton as the biggest slump in the nation’s terms of trade since records began more than 50 years ago deepens the budget deficit.

    To read the entire article, go to http://bloom.bg/1zOGl8s

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  51. From Bloomberg, Dec 14, 2014, 4:00:00 PM

    Hedge funds are the most bullish on gold since August, defying Goldman Sachs Group Inc.’s prediction that the rally in prices will fade.

    To read the entire article, go to http://bloom.bg/1yOIGwg

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  52. From Bloomberg, Dec 14, 2014, 11:01:00 AM

     Dec. 12 (Bloomberg) — David Mann, head of Asia research at Standard Chartered Bank, talks about the global economy, financial markets and Federal Reserve policy. He speaks from Singapore with Yvonne Man on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    With the stroke of a pen, China may meet its 2014 economic growth target after all.

    To read the entire article, go to http://bloom.bg/1GDrdeq

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  53. From Bloomberg, Dec 14, 2014, 4:52:45 PM


    US currency: pile of various denomination banknotes, full frame

    If money is the life blood of politics, things in Washington are about to get livelier. Thanks to a provision in the new spending bill, an individual donor will soon be able to make political donations of $1.5 million over a two-year period. 

    To read the entire article, go to http://www.bloomberg.com/politics/articles/2014-12-14/congress-passes-deal-to-drastically-raise-amount-individuals-can-donate-to-politicians

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  54. From Bloomberg, Dec 13, 2014, 11:35:53 AM

    Dick Cheney is making a rare appearance Sunday on NBC’s Meet the Press to discuss the Senate Intelligence Committee’s CIA torture report.  It’s an unnecessary one, really. The former vice president slipped into media chairs to trash the investigation’s findings even before the first public reports emerged on its shocking details. So here are five things you need to know as you watch:

    To read the entire article, go to http://www.bloomberg.com/politics/articles/2014-12-13/a-viewers-guide-to-dick-cheney

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  55. From Bloomberg, Dec 12, 2014, 1:01:36 PM

     House Minority Leader Nancy Pelosi, center, speaks with Representative George Miller, while walking through the Capitol Visitors Center after a House Democratic caucus meeting at the U.S. Capitol in Washington, D.C., U.S., on Dec. 11, 2014. Photographer: Andrew Harrer/Bloomberg

    Wall Street is re-emerging as a force in Washington as it closes in on one of its biggest wins against regulation since the financial crisis.

    To read the entire article, go to http://bloom.bg/1yGgueT

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  56. From Bloomberg, Dec 14, 2014, 2:34:13 AM

     People’s Bank of China Chief Economist Ma Jun wrote in a working paper dated Dec. 12, “The downward pressure caused by the slowdown in real estate investment” will drag on any gains to growth from an acceleration in exports. Photographer: Brent Lewin/Bloomberg

    China is likely to see economic expansion next year decelerate to 7.1 percent as a slowdown in real estate investment continues.

    To read the entire article, go to http://bloom.bg/1BJQIwt

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  57. From Bloomberg, Dec 14, 2014, 6:00:03 PM


    This is the real world.

    Every year now for more than three decades, the World Bank has published the World Development Report, a survey and synthesis of current thinking on a major theme or debate in development economics.

    To read the entire article, go to http://bv.ms/1qOGoiU

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  58. This evening I had a conversation with a bookstore owner which turned quite at random to the fall in the price of oil, and ended with a rather fantastical conspiracy theory.  For your amusement if nothing else, I submit the following:

    Russia is the key to it.  Putin's invasion of the Ukraine triggered a very serious set of concerns for the "major powers," and oil has become the ground zero of a new type of world war.  In short, the U.S., the EU, China and Japan, with the benign assurances of India, Canada, Australia, perhaps Brazil and other powers, decided to decimate the price of oil in order to trigger regime change in Russia

    The lever is the price of oil, and Putin's coterie of former Russian oligarch supporters, whom he has rewarded with serial wealth stripping, exile and destruction, will provide the fulcrum for getting rid of him.

    The essence of the plan is for the Saudi Arabia to bring down the price of oil below breakeven for three major antagonists of the western alliance — Russia, Iran and Venezuela — in order to force regime change in Russian, bring down Chavez in Venezuela, and bring Iran to the negotiating table with the U.S. [and, indirectly, with Saudi Arabia] in a serious way for the first time in decades.

    Putin, if he didn't realize it before, certainly knows by now -- with the price of oil below Russia's production costs — that his leadership is under serious threat.  He is buzzing Lufthansa airliners, U.S. military planes, Norwegian military planes, intruding into Scandinavian airspace, and nearly collided with a passenger plane over Swedish airspace yesterday [http://news.yahoo.com/russia-denies-military-jet-near-miss-airliner-over-094417521.html].  The Malaysian flight downing was likely effected by Russian rebels in the Ukraine with Russian equipment. 

    In short, Putin is trying to raise the stakes to the point where his antagonists will fold by showing his willingness to push the West to, and beyond, the brink of war.  But the "oil weapon" is eating away at his [admittedly very large] foreign reserves, and the Western Powers must believe that regime change from inside Russia is a very likely event if it appears that Russia would actually start a war with the west, given Putin's withering internal support.

    Given Russia's aforesaid forex reserves, this could mean that the price of oil could go on falling, or at the least stay very low, for six months or more, since there is a political objective to be gained and not much to lose, - leaving aside World War III, it must be said.  The U.S. and Latin America gets rid of Chavez, Saudi Arabia gets regime modification, at the least, in Iran, and the EU and the U.S. get rid of Putin in favor of a coterie of Russian oligarchs more interested in making money than power for its own sake.

    So how far down can oil go?  This "analysis" [fantasy football might be a better description] would indicate that it doesn't have to go down very far from here, if at all — but it does have to stay down here for quite awhile. given Russia's forex reserves, unless his Praetorian guard decides to off him and get it over with prematurely.  More of a "sell the calls above" rather than a "buy the puts below", but I'll leave that part of the analysis to our Maestro.   Respectfully submitted, tongue only slightly in cheek, ZxZ


  59. From Bloomberg, Dec 14, 2014, 11:41:29 PM

     Dec. 9 (Bloomberg) — David Gaud, fund manager at Edmond de Rothschild Group, talks about China’s stocks, economy and government policies. Gaud also discusses the outlook for bonds. He speaks in Hong Kong with Yvonne Man on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    China’s push to insert its stock market into the global financial system is coming too late for investors holding $1.7 trillion of developing-nation assets.

    To read the entire article, go to http://bloom.bg/134QyAO

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  60. From Bloomberg, Dec 14, 2014, 9:57:08 PM


    Kuroda needs to stop enabling Abe.

    As the world watches to see what Prime Minister Shinzo Abe does with his renewed mandate in Japan, my eyes are on Haruhiko Kuroda instead. After all, the Bank of Japan governor probably deserves about 90 percent of the credit for whatever success Abe’s reflation efforts have had thus far — in particular, a more than 70 percent rise in the benchmark Topix index. Whether the prime minister now goes further and implements the real structural reforms Japan needs depends as much on Kuroda as anyone else.

    To read the entire article, go to http://bv.ms/1DyyDDj

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  61. From Bloomberg, Dec 14, 2014, 7:00:01 PM


    Dec. 11 (Bloomberg) — Atul Lele, chief investment officer at Deltec International Group, talks about global stocks and strategy. He speaks with Rishaad Salamat on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    The big money doubted Apple Inc. this year. Oops.

    To read the entire article, go to http://bloom.bg/134FN19

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  62. That there is "not much to lose" in sustaining a low price of oil [other than the possibility of WWIII with Russia] was meant to convey that having low oil prices for the next six months or more will support rather than damage the U.S., EU, Chinese and Japanese economic position, allowing them to stockpile cheap oil, as they appear to be doing, and have the collateral effect of boosting consumer spending power and economic growth which has been a scarce commodity in the current global recession.


  63. Good morning!

    Our Futures are making a nice comeback – up over half a point so far.  Europe has been straight up since the open, up half a point across the board after opening down half a point and Asia was mixed:

    The only real news that's out is Abe, at 1:30 am, said he would raise wages in Japan:

    Japan’s Abe Vows to Increase Wages

    Japanese Prime Minister Shinzo Abe says he will push up wages, making clear his intention to forge ahead with his economic policies the day after his decisive election victory.

    We  were, of course, due for a technical bounce anyway as NYSE, for example, fell 5% and hit the 10,500 line so of course we expect a 1% weak and 2% strong bounce before breaking further down (see Big Chart above).  Dow fell 4% exactly but, aside from 17,280 being the weak bounce line off 17,100 (which we tested in the Futures) it's also the 50 dma – so that should be bouncy too! 

    INDU DAILY

    S&P 50 dma is 2,000.75 and it stopped at 2,002 so of course it's going to be bouncy there.  5% off 2,075 is 1,971 and that's 104 points so 20-point bounces from there we could call 1,990 and 2,010, which is what we'll keep our eye on today to see if there's a real recovery.  

    SPX WEEKLY

    SPY  5  MINUTE

    Nasdaq is down from 4,800 to 4,650 so 150 is just 3%, which is the strong bounce line off 4,560 and, of course 4,600 would be the weak bounce line to watch on the way down.


  64. Futures getting rejected at 17,300, 2,010, 4,225 and 1,155.  


  65. BTU/Deano – Getting a 50% match is great, makes it worth it.  China is slowing considerably and the UN is finally realizing we must stop burning coal so I wouldn't want to put more money into BTU.  The Dec $15 puts are now $7.70 (almost no premium) and the 2017 $8 puts are $2.80 so a 2x roll is $5.60 + $1.25 collected is a net – 0.95 entry on 2x and you can sell a few more to zero it out.  As it stands, you are obligated for 1x at $13.75 so let's say net $13,750 for 1,000 shares.  If you wanted no cost on the roll, you could collect $6,440 for selling 23 of the 2017 $8 puts and that plus the $1,250 you collected is $7,690 so about an even roll  and your obligation is 2,300 at $8 = $18,400.  

    That's kind of a no-brainer because you end up with 1,300 more shares for $4,650 or $3.50(ish) per share.  If you don't want 1,300 more shares of BTU for $3.50 – then why would you even consider being in this position at all anymore?  

    I like that better than buying the stock, though you could buy 1,000 shares for $7.37 ($7,370) and sell 10 of the 2017 $5 calls for $3.60 ($3,600) and 10 of the $10 puts for $4.10 ($4,100) and you will have spent net nothing for the new shares other than the $6,450 you already lost on the short $15s.  So that then becomes your basis and then, if you are called away at $5, it's a small loss and, if not, you are in 2x for the $6,450 you already lost.  Of course you could go with 1,500 longs or whatever if you want to keep profit potential in the trade.  

    While coal use may be in decline, coal is a $500Bn industry and I'm sure that the coal plants and the coal producers will invest in "clean coal" technology to keep it burning for a while longer.   This is just a disruption phase at the moment.  

    Ironically (or just stupidly) this problem was actually caused by the Koch Brothers, who have spent Billions of Dollars FIGHTING against changing to clean coal.  Had they instead invested in being environmentally responsible, demand for coal would be up or at least flat, instead of down.  

    Top Ten Coal Producers (2013e)

    PR China 3561Mt Russia 347Mt
    USA 904Mt South Africa 256Mt
    India 613Mt Germany 191Mt
    Indonesia 489Mt Poland 143Mt
    Australia 459Mt Kazakhstan 120Mt
     

    Coal in Electricity Generation (2012)

    Coal is the major fuel used for generating electricity worldwide. In 2013 coal was used to generate over 40% of the world's electricity.

    Mongolia 95% India 71% Germany 44%
    South Africa 93% Australia 69% USA 38%
    Poland 83% Israel 61% UK 39%
    PR China 81% Indonesia 48% Japan 21%

    Thanks Deano.  

    AAPL/Jomp – Like the rabbit says: "Only when it's funny".  Like comedy, there's no set answer for WHEN to roll something – you simply have to pick the best spot based on the information and the opportunity.  As a rule of thumb, I like to pay 0.50 per $1 I roll down but sometimes you get 0.35 so I won't pay 0.50 unless I don't think it can possibly go lower.  With 2016s, I'd rather roll to 2017s anyway.  For instance, the 2016 $90s are $25 and the 2017 $90s are $29.40 so, is it worth $4.40 to buy a year of AAPL growth?  Not if you are going to get called away at $105 or $115 – then you are just wasting $4.40.  

    The problem is your $90/105 spread is too tight and it's net $9 now so you simply have to wait a year to get $15, which is a 66% gain, so worth waiting for.  The $80s are $32.40 so it makes no sense to spend $7.40 to roll down $10 (where you'd make 33% if all goes well) when you could just buy another spread and make 66%, right?  Watching the daily P&L on bull call spreads is a waste of your time.  The spread is either on track or it's not for your 2016 goal and, if you are the kind of trader who would stop out of a spread when it backtracks – you need to know that about yourself and you should have stopped out of these somewhere between $119 and $115, not $109!  

    You say you've been selling Jan calls but not enough but you also say it's eating into your margin.  If you have margin issues, you shouldn't be selling naked calls, of course.  Also, the spreads have no margin requirements on their own 


  66. Futures plays?
    I know Mondays are tough


  67. Oops, submitted by mistake.  

    Continuing – so it's an issue of whether this is where you want to tie up your cash.  So the 2016 $90/15 spread is $9 and pays $15 (+66%) if AAPL holds $105 through Jan 2016.  The 2016 $90/115 spread is $13.25 and pays $25 (88%) if AAPL is over $115 in Jan 2016 and the 2017 $90/120 spread (possibly our trade of the year) is $13.60 (120%) and pays $30 if AAPL is over $120 in 2017.  

    Given those trades, I'd be confident enough in the $90/105 to leave it alone but more comfortable with the 2017 spread than the 2016 $90/115 but my solution (not worrying about margin) would be to roll the 2016 $90s ($25) to 2x the 2017 $90/120 bull call spreads and roll the 1x naked 2016 $115 calls ($11.80) to 1x the short April $110 calls ($7.90) as that would then be covered by 3x the 2017 $90/120 spread and I'd anticipate another couple of sales along the way or, if AAPL goes lower, I can still sell 1x of something else for $5.

    But, if you need money back, you can just kill the 2016 $90/115 spread as it's the weakest of your 3 but you shouldn't have too much money in one stock anyway so think carefully about how you are managing your spending power.  

    Top Trades/Crs – There is some sort of indexing problem, they are working on it.  

    Good point on cash and stocks Yodi.  

    LOL on voting, StJ – right out of "House of Cards".  

    GDP/StJ – Wow, we're only 107% of 2007 after 7 years.  That's nothing to crow about, is it?  That's the kind of macro that makes me wonder how stocks are at new all-time highs.  Like 2007, they are anticipating 7 more years of growth that may never actually happen.  

    Bonds/ZZ – Ticking time bomb.  Tough to trade (other than TLT) as money may or may not flow into the markets as it flows out of bonds.  In the mid 90s, the money flew into the market.  

    And what StJ said.  

    Nice blog post StJ!  

    Oil bottomed out at $56.25 at the open (6pm) and almost made it back to $59 and now $58.35.  When it's whipping around more than 5% in pre-market – it's a very dangerous trade!  

    Conspiracy/ZZ – Wow, it's working already – Chavez is out of power.  Sure he DIED 18 months ago but let's call it a win, right?  wink  My conspiracy theory is they are dropping the price of oil in order to get the seasons to change in the Northern Hemisphere.  I think Jack Frost can keep up this cold for maybe 3-4 more months but, after that, without high oil prices, it will become increasingly difficult for him to keep cooling the Earth and he will lose his grip on the season and be deposed by April.  If those things happen, we'll know it was all planned and executed by the non-skiing nations.  

    Futures/Burr – Nothing that I see other than maybe watching 17,300, 2,000, 4,200 and 1,150 and going long the laggard into the open (right now it's /TF) but, of course, if they break – then you can short the laggard of the group instead. 

    Dollar 88.77, oil $58.27, gold $1,213, silver $16.90, copper $2.93, nat gas $3.89 and gasoline $1.61.  Euro $1.24, Pound $1.566, Yen 118.79 and /NKD 17,185.