Author Archive for ilene

Deutsche Bank Shares Plunge to Record Low: Who Got the Trade Correct?

Courtesy of Mish.

We are still waiting for the fat lady to sing on whether or not Deutsche Bank shares are totally worthless, but meanwhile, hardly anyone was on the right side of the trade.

ZeroHedge reported Deutsche Bank Stock Plunges To All Time Low After Merkel Rules Out State Bailout; Default Risk Surges.

That’s not surprising in the least. But what caught my eyes was this tidbit that ZH reported: “Bearish bets rose to 3% of shares outstanding on Sept. 22 from almost a three-month low of 1.7% on Sept. 16, according to data compiled by Markit Ltd.

Deutsche Bank Shorts

db-shorts

On September 16, 1.7% were short Deutsche Bank. 3% are short now.

Congratulations if you were shot this Turkey. I wasn’t. But I certainly was not long.

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The Wedge That’s Driving Facebook’s Stock

Courtesy of Dana Lyons

The stock of Facebook has been in a rising wedge pattern for most of its lifetime – and the pattern is nearing a resolution.

Today’s Chart Of The Day takes a rare detour into single stock territory. As we do not trade individual equities for our clients, it is typically not a focus of ours. But with Facebook (FB) in the news today (along with a dearth of exciting charts) we take a look at a chart pattern relevant to FB throughout most of its history – and in particular, right now.

A “rising wedge” pattern involves a series of higher highs and higher lows on a price chart – with the lows demonstrating a steeper ascent. Given the sharper rise in the lows, the trendline connecting the highs and the trendline connecting the lows will necessarily intersect at some point, which we call the “apex”. That is where one can expect resolution to the pattern, if the wedge has not already been broken. Despite the higher highs and lows, the pattern is generally considered to be a bearish one. That is, prices more often than not resolve, or break out of, the wedge to the downside. 

In the case of Facebook, one can consider nearly its entire history as one big rising wedge. After its IPO in 2012, FB began its launch higher in earnest in June 2013. Since that point, it has demonstrated a long-term series of higher highs and higher lows. However, the lows have been rising faster than the highs, resulting in the rising wedge seen on its chart here.

image

If this interpretation is correct, the apex is fast approaching. The upper and lower bounds of the wedge will intersect before the end of the year, with the exact time dependent upon where one draws the lines. We drew them on a weekly chart and the intersection should come by the end of November. That means we should have resolution of this wedge by that time. Absent a breakout before then, the range in FB trade should continue to squeeze tighter and tighter.

Should FB break the wedge to the downside, significant support (at this time) may lie just north of 100, then just south of 90. Those


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Anyone Believe This? : Three-Quarters of UK’s CEOs Consider Moving Due to Brexit

Courtesy of Mish.

Color me totally totally skeptical on this Bloomberg report: Brexit Leads Three-Quarters of Britain’s CEOs to Consider Moving.

The U.K.’s vote to leave the European Union has left more than three-quarters of chief executive officers saying they would consider moving their headquarters or operations outside Britain, according to a survey of 100 business leaders by the accountancy firm KPMG.

Some 72 percent of the CEOs surveyed said they voted “Remain” in the June 23 Brexit referendum , KPMG said on Monday in an e-mailed statement. While 69 percent said they’re confident Britain’s economy will continue to grow over the next year, and 73 percent expressed confidence their companies will grow, 76 percent are mulling some form of relocation.

“CEOs are reacting to the prevailing uncertainty with contingency planning,” KPMG U.K. Chairman Simon Collins said in a statement. “Over half believe the U.K.’s ability to do business will be disrupted once we Brexit and therefore, for many CEOs, it is important that they plan different scenarios to hedge against future disruption.”

The survey suggests Prime Minister Theresa May has work to do to retain businesses and jobs as the U.K. seeks a deal with the EU that curbs immigration while retaining the closest trading ties possible with the bloc’s 27 other members. Before the referendum, the then-Chancellor of the Exchequer George Osborne said a vote to leave would endanger as many as 820,000 jobs.

Blatant Fearmongering Again

Talk of leaving is nothing more than blatant fearmongering.

The instant recession idea died immediately, so now CEOs are hoping to influence UK prime minister Theresa May into scrapping the vote.

However, it it pretty obvious Theresa May has every intention of letting Brexit happen. Thus, this renewed fearmongering is totally counterproductive.

The CEOs would be better served by getting behind the movement to get the best deal they can. Talk of leaving plays into the EU’s hands.

Regardless, where the hell are the businesses going? France? Somewhere else in the EU with inane corporate taxes and countless nannycrat rules? Please be serious.

Mike “Mish” Shedlock

(Originally published here)





Mish Monthly Macro With Gordon Long: The Non-Hike, Bank of Japan, Europe

Courtesy of Mish.

Every month I get together with Gordon T. Long to discuss the global macroeconomic picture and recent news. In the most recent edition we discuss the Fed non-hike, actions by the Bank of Japan, Dave Stockman’s recent book Trumped!, and other items of interest.

Several readers noticed audio clipping on Long’s end. This will be fixed in the next take.

Mike “Mish” Shedlock


Original article here.





Vital Signs: Lowe makes the case for ‘good’ government debt

 

Vital Signs: Lowe makes the case for 'good' government debt

By Richard Holden, UNSW Australia

Vital Signs is a weekly economic wrap from UNSW economics professor and Harvard PhD Richard Holden (@profholden). Vital Signs aims to contextualise weekly economic events and cut through the noise of the data impacting global economies.

This week: The new RBA Governor reminds the government of its role in keeping the economy on track, and Janet Yellen holds steady on US interest rates.


This week was all about interest rates – even though nothing really happened. For now.

In the United States, the Federal Reserve Board’s Open Market Committee (FOMC) left interest rates in the 0.25-0.5% band that they have been in since December last year.

This came as no surprise to markets. The last set of employment numbers had somewhat weaker growth than in previous months, and inflation remains subdued – below the Fed’s target of 2%.

At her press conference after the two-day meeting, Fed Chair Janet Yellen observed:

“We judged that the case for an increase had strengthened but decided for the time being to wait for continued progress toward our objectives.”

If you think that language sounds kind of “hedgy”, then you are right. Three of the regional Fed presidents (from Kansas City, Boston and Cleveland) dissented from the FOMC decision, preferring to raise rates immediately, but getting outvoted.

That relatively rare level of dissent (normally it is only perpetual outlier and inflation hawk Esther L. George from the Kansas City Fed who dissents) highlights the tension that Yellen faces in plotting the path of interest rate rises that are all but certain over the coming two to three years.

US Federal Reserve Chair Janet Yellen has some dissenters on her board. Jim Lo Scalzo/EPA/AAP

Even though unemployment has steadily declined, there is little evidence of wage pressure on inflation. There are also asymmetric risks to a hike. The December movement from 0-0.25% to 0.25%-0.5% was followed by weaker-than-expected economic numbers which caused several commentators to question the Fed’s strategy. To the extent that rise was a mistake, they don’t want to do it again.…
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Explainer: why the Japanese economy is stuck in a holding pattern

 

Explainer: why the Japanese economy is stuck in a holding pattern

By Shino Takayama, The University of Queensland

The Bank of Japan is pulling yet another new monetary policy out of its bag of tricks in a bid to combat deflation, this time it’s “yield-curve control”. This is the latest in a history of unusual monetary policy, such as negative interest rates, that the bank maintains have been effective in improving Japan’s economy.

As part of the new policy the central bank will keep its 10-year government bond yield at zero. Usually central banks only control short-term interest rates, but the bank wants to steepen the yield curve, increasing the difference between the yields of short-term bonds (negative in Japan) and long-term bonds.

This is designed to free up more money in commercial banks in Japan for investment. In addition to this, the Bank of Japan will continue to buy about 80 trillion yen in Japanese government bonds annually.

The question is how effective the new scheme is going to be, particularly because the announced target rate of the 10-year bond is around its current market rate, so the current situation is unlikely to change.

However monetary policy hasn’t been able to control deflation and Japan’s national debt remains high. The bank is limited in what policies it can implement. Without a boost to other economic activities, such as an increase in employment, the effects of policies won’t last long.

What’s needed is some synergy between the bank’s monetary policy measures and the government’s fiscal policies. This means the government of Japan will have to step up with some consistent stimulus policies to cheer up the economy as soon as possible.

The Bank of Japan has been trying different methods of stimulating the economy, in the hope that things are getting better. Kimimasa Mayama/AAP

What Japan has tried so far

The Japanese economy has been stuck for a very long time. From 1995 to 2005, Japan’s GDP dropped from nearly US$5.3 trillion to US$4.5 trillion, at the same time the country also experienced deflation.

When Shinzo Abe was elected as Prime Minister of Japan,…
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This Week in Political Money: Nevada House Races Draw Huge Sums

 

This Week in Political Money: Nevada House Races Draw Huge Sums

By  

This post first appeared on BillMoyers.com.

We’ll be posting this roundup each week leading up to Election Day. Share your thoughts about these must-read stories and always feel free to suggest your own in the comments section.

THIS WEEK'S TOP STORY

Nevada has only four seats in Congress, and the races to fill two of them are attracting some of the largest quantities of "outside money" seen anywhere in the country.

Since the beginning of June, the month when the state selected its congressional candidates, the Federal Elections Commission has logged $1.7 million from "outside groups," such as super PACs and dark money nonprofits, in Nevada's 4th district, which stretches north from Las Vegas. Nonpartisan political handicappers Charlie Cook and Stu Rothenberg both think Democrat Ruben Kihuen has a better-than-even chance of ousting incumbent Cresent Hardy.

To the south of Las Vegas, Republican Danny Tarkanian and Democrat Jacky Rosen are vying for a seat that Republican Rep. Joe Heck is vacating to run for US Senate, as longtime Democratic incumbent Harry Reid prepares to retire. It's a battle of titans by proxy: Rosen, a local synagogue president, is Reid's hand-picked candidate; Tarkanian is the son of legendary University of Nevada basketball coach Jerry Tarkanian. But the younger Tarkanian has a spotty financial record that has hurt his efforts to win elective office in the past. Both parties see the possibility that Democrats may pick up these seats, putting three of the state's four congressional districts in Democratic hands. Since June 1, the FEC has logged a whopping $3.7 million in spending from outside groups in the race.

The primaries in these districts were also expensive and saw millions pour in from, among other players, the Ending Spending Action Fund, financed by billionaire Joe Ricketts. More recently, outside money is coming almost exclusively from party-affiliated groups. The National Republican Congressional Committee has spent nearly $2 million across the two districts, and its Democratic counterpart, the Democratic Congressional Campaign Committee, has spent nearly $1.3 million. The advertising purchased by these two groups has largely been negative. The …
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Housing Inflation- A Simple Case of Supply and Demand Exacerbated By Low Rates

Courtesy of Lee Adler of the Wall Street Examiner

Housing demand growth is slowing, so why is housing inflation continuing at a steady pace more than twice the rate of the CPI? The answer is simple- tight supply and a mortgage rate subsidy that reduces the effective cost of a house to the buyer, thereby increasing the purchase price that buyers can pay.

The initial effective cost of a house purchase is the monthly payment. If you own a home or are considering buying one and if, like most homeowners, you have a mortgage, your first concern is not the price of the house. First you determine what you can afford to pay. This is based on the ratio of the monthly payment, what those in the industry call “PITI,” to your household income. Under the standard qualifying ratio, the monthly PITI should not exceed 28% of gross household income. Buyers look at the cost of a purchase as being limited to that amount. Loan underwriting gets a little fuzzy around the edges, but there’s a market wide qualifying ratio limit somewhere just above that level. Once the preponderance of buyers in the market has hit that level, they can’t and won’t pay more for home purchases than that line in the sand. When that limit is reached, sales volume begins to recede and inventory increases. Sale prices then fall.

PITI really is a pity for us suckers who have mortgages. With insurance and taxes, in the end we pay a total of roughly 2.5 times the initial purchase price of the house to pay off the loan with interest, plus the taxes and insurance. That doesn’t even begin to account for the lifetime cost of maintaining the property. Houses depreciate physically if not maintained. More importantly they depreciate economically as market tastes change. If you haven’t remodeled your house to current standards at least once near the end of your 30 year holding period, it becomes a classic “fixer upper”. As we all know from the vast real estate expertise we gather from watching HGTV, fixer uppers are deeply discounted.

If we hold the property for 30 years, leverage and inflation could bail us out from our initial stupidity. But there are no guarantees. When all the long term costs of homeownership are added up, in most markets you’d be lucky to break even.

While many


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Dilbert Creator Switches Endorsement From Hillary to Trump

Courtesy of Mish.

Scott Adam’s creator of the comic strip Dilbert, switched his endorsement from Clinton to Trump today.

His primary reason for the switch has to do confiscation of property via estate taxes.

His rationale on “persuasion” is much more interesting.

Please consider Why I Switched My Endorsement from Clinton to Trump.

As most of you know, I had been endorsing Hillary Clinton for president, for my personal safety, because I live in California. It isn’t safe to be a Trump supporter where I live. And it’s bad for business too. But recently I switched my endorsement to Trump, and I owe you an explanation. So here it goes.

1. Things I Don’t Know: There are many things I don’t know. For example, I don’t know the best way to defeat ISIS. Neither do you. I don’t know the best way to negotiate trade policies. Neither do you. I don’t know the best tax policy to lift all boats. Neither do you. My opinion on abortion is that men should follow the lead of women on that topic because doing so produces the most credible laws. So on most political topics, I don’t know enough to make a decision. Neither do you, but you probably think you do.

Given the uncertainty about each candidate – at least in my own mind – I have been saying I am not smart enough to know who would be the best president. That neutrality changed when Clinton proposed raising estate taxes. I understand that issue and I view it as robbery by government.

I’ll say more about that, plus some other issues I do understand, below.

2. Confiscation of Property: Clinton proposed a new top Estate Tax of 65% on people with net worth over $500 million. Her website goes to great length to obscure the actual policy details, including the fact that taxes would increase on lower value estates as well. See the total lack of transparency here, where the text simply refers to going back to 2009 rates. It is clear that the intent of the page is to mislead, not inform.

So don’t fall for the claim that Clinton has plenty of policy details on her website. She does, but it is organized to mislead, not to inform. That’s far worse than having no details.

The


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The Natural Gas War Burning Under Syria

Courtesy of James Durso via OilPrice.com

Qatar always wanted to punch above its weight. In Syria, it got the chance.

In 2009, Qatar, a leading natural gas producer, approached Syria about routing its planned 1,500 mile pipeline to the gas markets of Europe through Syria’s Aleppo province. Qatar wanted a pipeline straight to Europe as its current gas transport modes were limited to Liquefied Natural Gas (LNG) tanker, mostly to Asia with limited spot shipments to Europe or the Dolphin pipeline to the United Arab Emirates and Oman. The pipeline would head north and end in Turkey after crossing Saudi Arabia, Jordan, and Syria. Syria declined Qatar’s offer, which would have cut the European market share of its partner, Russia, and instead agreed to participate in the “Friendship Pipeline” between Iran and Iraq that was considered a “Shia Pipeline” to some and a target for the Sunni monarchies of the Gulf. Not understood, or ignored, was Syria’s longstanding support of the Iranian regime, especially during the 1980-1988 Iran-Iraq War, and its long relationship with Russia, dating from 1944, which should have been a warning of who might appear if things hotted up.

In 2010, Israel and Syria held back-channel talks that reportedly included Israel’s return of the Golan Heights to Syria in exchange for security guarantees. The talks lagged due to mutual suspicions about the other side’s ability to deliver and, by early 2011, the Arab Spring had erupted across the region and leaders’ attentions turned to more immediate concerns. At this point, America had the opportunity to strike a blow against the Islamic Republic’s ally, the Assad regime. In 2011, Turkey provided a home for the opposition Syrian National Council and, in August 2011, the U.S., its allies, and the UN were calling on Bashar Assad to step down.

In 2011, Syria, Iran, and Iraq agreed to build a pipeline to connect Iran’s South Pars gas field to Europe. The pipeline would run from Assalouyeh, Iran to Europe via Iraq, Syria, and Lebanon, with Syria as the center of assembly and production.

What remains unclear is why, when Syria turned down its original pipeline proposal, it didn’t pursue its second option for the


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OpTrader

Swing trading portfolio - week of September 26th, 2016

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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Zero Hedge

US Slams Russian "Barbarism" In Syria; Moscow Responds Peace "Almost Impossible Now"

Courtesy of ZeroHedge. View original post here.

Just three weeks after yet another "landmark" Syria peace deal was signed, the agreement is not only in tatters but the war drums are beating louder than ever before after the US slammed Russia's action in Syria as "barbarism," not counter-terrorism, while Moscow's U.N. envoy said ending the war "is almost an impossible task now" as Syrian government forces, backed by Moscow, bombed the city of Aleppo.

As Reuters reported overnigh...



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ValueWalk

Addicted to oil: US gasoline consumption is higher than ever

By The Conversation. Originally published at ValueWalk.

Addicted to oil: US gasoline consumption is higher than ever

Lucas Davis, University of California, Berkeley

August was the biggest month ever for U.S. gasoline consumption. Americans used a staggering 9.7 million barrels per day. That’s more than a gallon per day for every U.S. man, woman and child.

The new peak comes as a surprise to many. In 2012, energy expert Daniel Yergin ...



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Phil's Favorites

Deutsche Bank Shares Plunge to Record Low: Who Got the Trade Correct?

Courtesy of Mish.

We are still waiting for the fat lady to sing on whether or not Deutsche Bank shares are totally worthless, but meanwhile, hardly anyone was on the right side of the trade.

ZeroHedge reported Deutsche Bank Stock Plunges To All Time Low After Merkel Rules Out State Bailout; Default Risk Surges.

That’s not surprising in the least. But what caught my eyes was this tidbit that ZH reported: “Bearish bets rose to 3% of shares outstanding on Sept. 22 from almost a three-month low of 1.7% on Sept. 16, according to data compiled by Markit Ltd.”

Deutsche Bank Shorts

...



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Chart School

Weekly Market Recap Sep 25, 2016

Courtesy of Blain.

The week that was…

It was all about the Federal Reserve as we noted it would be.  In last week’s recap we said:

From this perch there has been and continues to be zero expectation for a September rate hike as the Fed doesn’t want to be seen as “political” and trying to move the market ahead of November, but the Fed is at least trying to throw some bones out there to make the market a bit less complacent.

…and:

All eyes on the Federal Reserve with a meeting Tue/Wed and a press conference by Yellen Wednesday.   Since we expect nothing to happen Wednesday in terms of raising rates maybe the market will be in “relief” mode.  Unless there is strong language from Yellen hinting at a December rate hike....



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Merkel Rules out Assistance for Deutsche Bank, Focus Reports (Bloomberg)

Chancellor Angela Merkel has ruled out any state assistance for Deutsche Bank AG in the year heading into the national election in September 2017, Focus magazine reported, citing unidentified government officials.

A divided town in Connecticut shows that finance is ruining Ame...



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Kimble Charting Solutions

Crude Oil attempting key breakout, says Joe Friday

Courtesy of Chris Kimble.

Below looks at Crude Oil on a “Monthly Closing” basis, since the early 1980’s.

Crude Oil started tanking in 2014 and its low earlier this year, took place at dual long-term support at (1) below.

CLICK ON CHART TO ENLARGE

Two support lines, that date back over a decade, came into play at (1) and so far have held. Crude remains in a down trend and this down trend is being tested at this time.

Joe ...



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Members' Corner

Market Liquidity and Macroeconomic Bullshit

 

Market Liquidity and Macroeconomic Bullshit

Courtesy of The Nattering Naybob

STJL - "Apparently macroeconomics is all bullshit – ROFL! Paging Naybob now… Famous Economist Paul Romer Says Macroeconomics Is All Bullshit."

The Nattering One muses... Macroeconomics as practiced by academics and those in charge is pure voodoo. Better to chant over goat blood, bird feathers and scattered entrails...

As for reality, overnight CNH HIBOR (...



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Mapping The Market

Here's a Cautionary Tale of Pension Privatization From Chile

Via Jean-Luc:

"When you let the free market take over, the little people get screwed and bankers get rich. Chile tried privatizing retirement plans and surprise, surprise, fund manager ate the profits… Pretty sure the results would be the same here..."  ~ Jean-Luc

Here's a Cautionary Tale of Pension Privatization From Chile

By KEVIN DRUM, Mother Jones

Among free-market fans, Chile's privatized pension plan has long been held up as a model for us to follow. The problem, as the Financial Times notes today, is ...



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Digital Currencies

Gold, Silver and Blockchain - Fintech Solutions To Negative Rates, Bail-ins, Currency Debasement and Cashless

Courtesy of ZeroHedge. View original post here.

By Jan Skoyles

I was so pleased yesterday by the announcement that I have joined the Research team at GoldCore as it meant that I could finally start talking about it and was back in a role that lets me indulge in my passion by researching and geeking out on all things gold, silver and money.

...



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Biotech

Epizyme - A Waiting Game

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

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...



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All About Trends

Mid-Day Update

Reminder: Harlan 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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Promotions

PSW is more than just stock talk!

 

We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



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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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