Author Archive for ilene

Where have all the cowboys gone?

 

Where have all the cowboys gone?

Courtesy of Joshua M. Brown

Flipping out over how awesome this new post at Michael Batnick’s blog is, which presents the career arc of history’s most important investors of all time. He takes their dates of birth, advances them 22 years for a typical career starting point, and then overlays them with the future cumulative performance of the Dow Jones Industrial Average to give you a sense of how much wind they had at their backs.

Looks like this (click to embiggen!):

best investors

You can get the full list of the names / birth dates here.

Mike points out that “there’s a football field of white space” after David Einhorn’s and Ken Griffin’s start in the 1990’s (they were both born in ’68). The question is, where are the new giants of the investing industry? There are only five people here who were born post-1960.

Possible answers:

  1. The new giants are too young and new in the industry to have attained the sort of provenance that the pre-1968 born investors have.
  2. Software and quant-driven funds that have been hugely successful do not have such publicly prominent people running them.
  3. The lost decade for the S&P 500 between 2000-2009 upended the normal progression of star-making.
  4. The money management field has gotten too crowded to create new superstars at the same rate.
  5. Alpha has disappeared and, with it, the potential to notably excel on a relative basis.
  6.  They went into technology and real estate instead.

I’m open to other answers to this puzzle. What do you think?

Source:

The Most Important Investors Of All Time (Irrelevant Investor) 





Germany Calls IMF’s Bluff and Wins: Greece Screwed Again

Courtesy of Mish.

In a “breakthrough” agreement to kick the can until after the next German elections, the IMF backed down on its demand for immediate debt relief for Greece now.

According to the agreement, Greece will have to maintain a primary budget surplus of 3.5% of GDP, a condition the IMF argued as impossible, just a few days ago.

Please consider Greece Reaches Debt Relief Breakthrough with Creditors.

Creditors have decided on measures to provide short, medium and long-term debt restructuring on Greece’s 180 per cent debt mountain, having been locked in eleven hours of negotiations in Brussels, ending at 2am local time, writes Mehreen Khan in Brussels.

As part of its measures, Greece will gain a short-term re-profiling of its loans, while more expensive debt could be “swapped” with cheaper loans to bring down the country’s overall financing costs.

A statement from finance ministers said:

“The Eurogroup agreed today on a package of debt measures which will be phased in progressively, as necessary to meet the agreed benchmark on gross financing needs and will be subject to the pre-defined conditionality of the ESM programme.”

“We achieved a major breakthrough on Greece which enables us to enter a new phase in the Greek financial assistance programme,” said Mr Dijsselbloem.

[Mish Translation: We called the IMF’s bluff and won. Hooray!]

Greece could also receive around €1.9bn in profits held by the European Central Bank to pay back its loans by mid-2018. Creditors also agreed on a “mechanism” to provide further long-term restructuring to keep the country’s financing costs below 20 per cent of GDP by 2060 – a key threshold demanded by the IMF.

[Mish translation: Well, we had to kick the IMF a bone to make it like like we really did something. Besides, possible debt relief to the tune of €1.9bn in profits on a €300bn debt is very generous of us.]

EU member states did not however relent on their target of a 3.5 per cent primary surplus to be hit by the Greek economy by 2018 – a key issue of contention between EU member states and the IMF, who had called the target “unnecessary” before today’s talks. This target could however be revised after 2018, said Mr Dijsselbloem.

[Mish comment: Unnecessary?! WTF? I point out IMF Calls on Europe to


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Elites vs. Too Much Democracy: Andrew Sullivan’s Afraid of Popular Self-Government

 

Elites vs. Too Much Democracy: Andrew Sullivan’s Afraid of Popular Self-Government

By

This post first appeared on BillMoyers.com.

British expatriate writer Andrew Sullivan recently returned to the public eye with a piece that has aroused considerable comment, some of it reasonably on point, and some bloviatingly incoherent.

What is all the fuss about? Sullivan, in critiquing the Donald Trump phenomenon and the political factors that gave rise to it, makes a few good points, but buries them under a ridiculous premise: The culprit responsible for Trump is too much democracy, and the cure is more elite control of the political process.

Sullivan gets everything backward. It is as if a safety inspector had gone aboard RMS Titanic, minutely examined her watertight hatches, boiler and steam turbine, and then declared her safe because he judged that the lack of lifeboats reduced the chances of capsizing from too much top weight.

Plato’s Retread

In a nutshell, Sullivan attributes Trump’s nomination for the presidency by one of our two major parties to the rise of what he calls “hyperdemocracy.” Accompanying this alleged excess of democracy is a mania for equality that leads to all manner of pointless leveling of social classes along with an undermining of authority. As chief witness for the prosecution, he calls to the stand no less than Plato, who argued that the ripening of democracy births manifold horrors like gender equality, the treatment of foreigners as equals, an abatement of cruelty to animals, and the rich mingling freely with the poor.

One wonders if Sullivan could have cited a more relevant critic of the contemporary political system of a continent-sized nation with 320 million people than a metaphysician dwelling in a tiny city-state more than 2,400 years ago. And a rather implausible critic at that: the bedrock of Plato’s philosophy was his belief that physical objects and events are mere shadows of their ideal forms, which exist only insofar as they crudely simulate the perfect idealizations of themselves.

This kind of patently silly epistemology may make for a great debate topic at the Oxford Union,…
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Why China Is Being Flooded With Oil: Billions In Underwater OPEC Loans Repayable In Crude

Courtesy of ZeroHedge. View original post here.

According to Reuters, this is precisely what happened in the years preceding the great 2014-2015 oil bust: "poorer oil-producing countries which took out loans to be repaid in oil when the price was higher are having to send three times as much to respect repayment schedules now prices have fallen."

As a result, the finances of countries such as Angola, Venezuela, Nigeria and Iraq have been crippled, in the process creating further division within the Organization of the Petroleum Exporting Countries.

But while these already poor and corrupt OPEC nations were the biggest losers, one country was a huge winner, the country that provided the billions in virtually risk-free, oil-collateralized loans to any country that requested them. China. The same China which has once again proven smart enough to not demand repayment in fiat but in physical commodities, be they oil, copper or gold.

Take Angola for example: Africa's largest oil producer has borrowed as much as $25 billion from China since 2010, including about $5 billion last December, which according to Reuters forced its state oil firm to channel almost its entire oil output toward debt repayments this year. 

Oil pumps are seen in Lake Maracaibo, in Venezuela

Or Venezuela: ever since 2007, China, which has become Venezuela's top financier via an oil-for-loans program, has funneled an amazing $50 billion into the Chavez first and then Maduro regimes, in exchange for repayment in crude and fuel, including a $5 billion deal last September.  While details of the loans have not been made public, analysts from Barclays estimate Caracas owes $7 billion to Beijing this year and needs nearly 800,000 bpd to meet payments, up from 230,000 bpd when oil traded at $100 per barrel.

Ecuador, one of OPEC's smallest member countries, borrowed up to $8 billion from Chinese and Thai firms, repayable with oil, between 2009 and 2015, according to the national oil company

Many other countries have borrowed money from China (and others such as producers Exxon, Shell and Lukoil, as well as traders Vitol and Trafigura) and promised to repay in oil included Nigeria, Iraq, Venezuela and others.

Fast forward to today when Angola, Nigeria, Iraq,
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Warning Signs Everywhere

Courtesy of Lance Roberts of RealInvestmentAdvice.com

Over the last several weeks, I have discussed the market's entrance into the “Seasonally Weak” period of the year and the breakout of the market above the downtrend line that began last year.

The rally from the February lows, driven by a tremendous amount of short covering, once again ignited “bullish optimism.” 

“Canaccord Genuity’s Tony Dwyer estimates the equity benchmark will end 2017 at 2,340, an increase of 15 percent from Wednesday’s closing level of 2,047.63, with half of the gains coming this year.”

But it is not just Tony that is buying into the “optimistic” story, but investors also as the number of stocks on “bullish buy signals” has exploded since the February lows.

SP500-BullishPercent-052416

While the “bulls” are quick to point out the current rebound much resembles that of 2011, I have made notes of the differences between 2011 and 2008. The reality is the current market set up is more closely aligned with the early stages of a bear market reversal.

It is the last point that I want to follow up with this week.

There is little argument that the bulls are clearly in charge of the market currently as the rally from the recent lows has been quite astonishing. However, as I noted recently, the current rally looks extremely similar to that seen following last summer’s swoon.

SP500-DailyChart-052416

Well, here we are once again entering into the “seasonally weak” period of the year. Will the bullish hopes prevail? Maybe. But.

Warning Signs Everywhere

Many have pointed to the recent correction as a repeat of the 2011 “debt ceiling default” crisis. Of course, the real issue in 2011 was the economic impact of the Japanese tsunami/earthquake/meltdown trifecta, combined with the absence of liquidity support following the end of QE-2, which led to a sharp drop in economic activity. While many might suggest that the current environment is similar, there is a marked difference.

The fall/winter of 2011 was fueled by comments, and actions, of accommodative policies by the Federal Reserve as they instituted “operation twist” and a continuation of the “zero interest rate policy” (ZIRP). Furthermore, the economy was boosted in the third…
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UPS Fears $3.8 Billion Liability Over Bankrupt Central States Pension Plan

Courtesy of Mish.

In 2007, UPS dumped its pensioners into the Central States Pension Fund, a fund now destined for bankruptcy.

As part of the collective bargaining agreement, UPS agreed to pick up future payments if benefits are cut.

That provision may cost UPS $3.8 billion or more.

Let’s backtrack and fill in some details.

In December, the Central States Pension Fund informed the US Treasury department that the fund would run out of money in 10 years at the current rate of $3.46 in pension benefits for every $1 it receives from employers.

The plan proposed pension cuts of up to 60%.

Also in December, UPS Called For Denial of the Rescue Plan.

UPS got it wish.


Continue reading here…





The Third Way: Share-the-Gains Capitalism

 

The Third Way: Share-the-Gains Capitalism

Courtesy of Robert Reich

Marissa Mayer tells us a lot about why Americans are so angry, and why anti-establishment fury has become the biggest single force in American politics today.

Mayer is CEO of Yahoo. Yahoo’s stock lost about a third of its value last year, as the company went from making $7.5 billion in 2014 to losing $4.4 billion in 2015. Yet Mayer raked in $36 million in compensation. [See also PRGO, VRX and the Papa of "Strong Shareholder Orientation" for another example of a failed CEO collecting bigs bucks as he bails on the company.]

Even if Yahoo’s board fires her, her contract stipulates she gets $54.9 million in severance. The severance package was disclosed in a regulatory filing last Friday with the Securities and Exchange Commission.

In other words, Mayer can’t lose. 

It’s another example of no-lose socialism for the rich – winning big regardless of what you do.

Why do Yahoo’s shareholders put up with it? Mostly because they don’t know about it.

Most of their shares are held by big pension funds, mutual funds, and insurance funds whose managers don’t want to rock the boat because they skim the cream regardless of what happens to Yahoo.

In other words, more no-lose socialism for the rich.

I don’t want to pick on Ms. Mayer or the managers of the funds that invest in Yahoo. They’re typical of the no-lose system in which America’s corporate and financial elite now operate.  

But the rest of America works in a different system.

Theirs is cutthroat hyper-capitalism – in which wages are shrinking, median household income continues to drop, workers are fired without warning, two-thirds are living paycheck to paycheck, and employees are being classified as “independent contractors” without any labor protections at all.

Why is there no-lose socialism for the rich and cutthroat hyper-capitalism for everyone else?

Because the rules of the game – including labor laws, pension laws, corporate laws, and tax laws – have been crafted by those at the top, and the lawyers and lobbyists who work for them.

Does that mean we have to await Bernie Sanders’s…
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Household Debt Still Below 2008 Peak

Courtesy of Mish.

Household Debt Summary

  • Household debt for the first quarter of 2016 is up $136 billion.
  • Mortgage debt, up $120 billion, accounts for most of the gain.
  • Student loan debt, up $29 billion, accounts for most the rest.
  • Total household debt still below 2008 peak

The Federal Reserve of New York reports Household Debt Steps Up, Delinquencies Drop.

Household indebtedness continued to advance during the first three months of 2016 according to the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit, which was released today. Repayment trends also generally improved across the board, driven primarily by continuing improvements in mortgage delinquency rates. The report is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data.

“Delinquency rates and the overall quality of outstanding debt continue to improve,” said Wilbert van der Klaauw, senior vice president at the New York Fed. “The proportion of overall debt that becomes newly delinquent has been on a steady downward trend and is at its lowest level since our series began in 1999. This improvement is in large part driven by mortgages.”

Household Debt and Credit

Household Debt 2016Q1A

90-Day Delinquencies

Household Debt 2016Q1B

Note 1: Delinquency rates are computed as the proportion of the total outstanding debt balance that is at least 90 days past due.

Note 2: As explained in a previous report, delinquency rates for student loans are likely to understate effective delinquency rates because about half of these loans are currently in deferment, in grace periods or in forbearance and therefore temporarily not in the repayment cycle. This implies that among loans in the repayment cycle delinquency rates are roughly twice as high.


Continue reading here…





Gold Mining Buy-Out Binge Coming, And That’s A Mixed Blessing

Courtesy of John Rubino.

This is a good news/bad news story.

Say you’re one of the many people who bought junior gold and silver mining stocks a few years ago — and then watched in horror as they fell day after day, week after week, finally settling at pennies on your dollar.

Then, just as they seem to be recovering, you’re notified that some big miner with much less spectacular upside potential is buying one of your little lottery tickets for a premium to the current price — but a fraction of what you paid back in the day. You now own shares of Goldcorp or Agnico Eagle or some other household name, which isn’t bad. But it’s definitely not the 10-bagger you’d been hoping for to redeem your terrible timing.

Well, get ready, because that’s your future. As Casey Research’s Louis James put it in a recent interview:

The uptick is quite visible. Companies were running out of cash, pulling in their horns, operating in lights-on mode. But now they’re raising money and putting it to work. Resevoir’s deal with Nevsun was a real eye-opener, as was Goldcorp’s acquisition of Kaminak. I hear from contacts that the quality exploration companies are getting new CAs [capital advances] signed with juniors as well as majors. The latter have been cleaning up their balance sheets and are thinking of going shopping again.

Some recent news stories bear this out:

China’s Gold Miners Come of Age to Scour Globe for Acquisitions

(Bloomberg) – China’s gold miners plan to extend the biggest buying spree in four years as the nation seeks greater clout in the global bullion industry. The prospect may be helping drive up the price of assets from Australia to the U.S.

Some of the country’s top producers say they want to build on last year’s spree, when the nation spent the most on overseas gold assets since 2011. Overseas deals by companies based in mainland China in 2015 quadrupled from the year before to $483 million according to data compiled by Bloomberg. Bigger groups including Zijin Mining Group Co., Zhaojin Mining Industry Co. and Shandong Gold Group Co. have led a wave of domestic consolidation that’s amounted to $5 billion of takeovers in the past five years.

China is the world’s biggest producer and user of gold and started


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Ackman On The Edge: Herbalife Soars On FTC Settlement Report

Courtesy of ZeroHedge. View original post here.

Update: According to CNBC, there will be no imminent settlement report, which just confirms that as we warned in the original post, the NY Post continues to be mostly a source of disinformation and hedge funds peddling their own positions.

The market may be surging again, but that will hardly comfort Bill Ackman who later today is expected to report later today that his hedge fund remains down roughly 20% YTD, or perhaps even worse following news from the NY Post, that his most hated stock ever, Herbalife, has reached "an agreement in principle with the Federal Trade Commission to settle a years-long probe into whether it was a pyramid scheme", as a result of which the stock is soaring.

This follows the company's announcement earlier this month that it was close to a settlement with the FTC.

As a reminder, the FTC's probe into whether or not HLF is a pyramid scheme is also the basis for Ackman's massive roughly $1 billion short in the name. If the FTC says no, then Ackman may have no choice but to cover.

This is what the Post reported:

An announcement of a deal could come as soon as Tuesday, sources said, although the agreement is not final and could still fall apart. Terms of the settlement — including what could be a sizeable financial penalty — could not be learned.

“I do not believe the FTC is requiring a substantial change in the business model,” a source close to the matter said. Herbalife has, though, agreed to pay a hefty fine, the source said.

The Los Angeles-based company has been operating under a cloud since Dec. 20, 2012, when hedge fund billionaire Bill Ackman announced a $1 billion bet that Herbalife was a fraud and that its shares would go to zero after regulators found it was a pyramid scheme.

The company has strongly denied the accusations.

The FTC subsequently opened a probe into the matter as did some state attorneys general.

The stock is already trading as if Ackman will have no choice but to cover, and was up 8% on the report (which however we would urge readers to take with 2 grains of salt, coming from a publication with a known axe to grind either for or against Bill Ackman in the past).





 
 
 

Zero Hedge

The Global Monetary System Has Devalued 47% Over The Last 10 Years

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Authored by Paul Brodsky via Macro-Allocation.com,

We have argued the inevitability of Fed-administered hyperinflation, prompted by a global slowdown and its negative impact on the ability to service and repay systemic debt. One of the most politically expedient avenues policy makers could take would be to inflate the debt away in real terms through coordinated currency devaluations against gold, the only monetize-able asset on most central bank balance sheets. To do so they...



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Phil's Favorites

Where have all the cowboys gone?

 

Where have all the cowboys gone?

Courtesy of Joshua M. Brown

Flipping out over how awesome this new post at Michael Batnick’s blog is, which presents the career arc of history’s most important investors of all time. He takes their dates of birth, advances them 22 years for a typical career starting point, and then overlays them with the future cumulative performance of the Dow Jones Industrial Average to give you a sense of how much wind they had at their backs.

Looks like this (click to embiggen!):

...



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Chart School

Equity Valuations, Recessions and Stock Market Declines

Courtesy of Doug Short's Advisor Perspectives.

Note: In response to an email, I've updated the data in this article through the March month-end numbers and at the launch of the Q1 2016 earnings season.

When I initiated the dshort web page in late 2005, one of my routine topics was equity valuations, initially inspired by Nobel laureate Robert Shiller's book, Irrational Exuberance, the second edition of which was published earlier that year. I gradually expanded my focus from his cyclically adjusted price-to-earnings ratio (CAPE) to include Ed Easterling's Crestmont P/E, Nobel laureate James Tobin's Q Ratio and m...



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ValueWalk

Wilbur Ross discusses Donald Trump's candidacy, and his investing strategy

By Jacob Wolinsky. Originally published at ValueWalk.


Wilbur Ross discusses Donald Trump’s candidacy, and his investing strategy

The post Wilbur Ross discusses Donald Trump’s candidacy, and his investing strategy appeared first on ValueWalk.

Sign up for ValueWalk's free newsletter here.

...

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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Global Stocks Broadly Higher, Reversing Early Losses (Wall Street Journal)

Global stocks climbed Tuesday, while the dollar strengthened against the euro and yen.

Shares, dollar climb as markets play Fed waiting game (Reuters)

European shares were heading for their best day in over a month on Tuesday as the waiting game to see whether the U.S. raises interest rates again next month sent the euro to its lowest since March.

Asian shares had stumbled to near 2-1/2-month lows ove...



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OpTrader

Swing trading portfolio - week of May 23rd, 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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Kimble Charting Solutions

Gold- Two-thirds odds prices fall on a support break

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

Since the peak in 2011, Gold remains in a downtrend, creating a series of lower high and lower lows.

Gold’s rally in 2016 is attempting to break this 5-year falling trend, as it is attempting to break a series of lower highs.

Over the past 6-months, Gold could be creating a rising wedge pattern. This pattern two-thirds of the time, suggests lower prices are ahead.

...

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Digital Currencies

The Biggest Bitcoin Arbitrage Ever?

Courtesy of Chris at CapitalistExploits

Do you remember when you were growing up and all your friends were allowed Atari game consoles but you weren’t?

Well, I do and the things seemed as foreign to me as Venus. Mostly because the little time I managed to spend on the gaming consoles when my friends weren’t hogging them I found it all a bit silly. I never “got” computer games, and to this day still have poor comprehension of things like Angry Birds.

I suspect that many people around the world view Bitcoin in the same way as I view Angry Birds: with mild amusement and a general lack of understanding as to what the hell all the fuss is about.

I was thinking of this since a buddy of mine recently started ...



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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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Biotech

This Is Why Biotech Stocks May Explode Again

Reminder: Pharmboy and Ilene are available to chat with Members.

Here's an interesting article from Investor's Business Daily arguing that biotech stocks are beginning to recover from their recent declines, notwithstanding current weakness.

This Is Why Biotech Stocks May Explode Again

By 

Excerpt:

After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.

...



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Mapping The Market

About that debate last night

Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,

The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now. 

And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now. 

Phil writes back,

I was expecting them to start throwing poop at each other &n...



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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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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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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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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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