by phil - December 13th, 2014 7:53 am
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.
by phil - December 12th, 2014 7:50 am
Wheeeeeee – what fun!
I know, you thought I was going to be wrong, didn't you? Yesterday morning we said: "we're expecting to see 0.5 to 1% bounce before we head lower again" and, in our Live Member Chat Room (because we ran out of free picks for the week) we set our official strong bounce targets at:
- Dow – 17,659
- S&P – 2,044
- Nasdaq – 4,730
- NYSE – 10,735
- Russell – 1,174
It seemed like we were going to break higher as the Dow topped out at 17,758 heading into noon with the S&P 2,055, Nasdaq 4,759, NYSE 10,786 and Russell 1,180 but, fortunately, we were keeping our eye on the volume and, at 9:54, while the S&P was rocketing higher, I commented to our Members:
So, as usual, the RUT is in the lead with the Nas right behind and those are our manipulated indexes so we want to see volume to confirm the move. Yesterday, we had strong down volume (152M on SPY) with decliners outpacing advancers by about 5:1. Today, so far, just 12M on this "rally" – which is just nonsense that can be erased in minutes by a single fund hitting the sell button (average share is $50 so $600M selling would wipe this gain out).
We don't just make picks at PSW, we teach our Members HOW the markets work so they can better understand the intra-day as well as the long-term moves which then helps them to make much better trading decisions. Fortunately, our trading decision, at 11:54, was to stick to our guns and short the Futures across the board:
At this moment, in the Futures, I'm watching 17,750, 2,055, 4,300 and 1,180 and playing short the laggard. RUT bounced me out but up $370 was worth doing and I really like /NQ not to make 4,300 as a bet at the moment (4,293.50) and, of course /YM 17,750 as my key shorts (unless /TF tests 1,180 again).
by phil - December 11th, 2014 8:11 am
I'm sorry but I will brag about this.
What other newsletter gives you a trade idea Wednesday morning that makes you $1,500 by the end of the day? It's not a rhetorical question – if there is one, I'd love to feature them here at Philstockworld, along with our other fantastic authors. I'm not talking about some vague, Jim Cramer BUYBUYBUY, SELLSELLSELL kind of trade either – I'm talkiing about a specific trade idea that makes you bags of money instantly.
In yesterday's morning post (7:40 am), my trade idea was:
If you need a fresh horse, /ES (S&P Futures) are testing 2,050 and it would not be good for them if they break and, of course, we still like /NKD (Nikkei) Futures short at 17,600 with a 17,300 goal (goes with the EWJ puts).
The result of the /NKD (Nikkei Futures) trade is above and, actually, we overshot our goal and got past 17,200, which is actually a $2,000 gain on each contract. By the way, for those of you who are not Members (and shame on you as you can join here) and don't attend our Live Futures Trading Workshops, a Futures contract is not much different than an option contract – it's just a bet on the direction of an index or commodity with a lower friction cost.
In fact, the margin requirement for each /NKD contract is $4,400 and similar for the other indexes – that's what's required to make these trades. The S&P contracts (/ES) paid $50 for each point and that index fell to 2,025 for a lovely $1,250 per contract gain as well.
Today, we're expecting a 0.5 to 1% bounce before we head lower again, but we're not making an official call because we're not sure. As I often tell our Members during our futures trading seminars – they key to making money on the Futures is NOT playing them 90% of the time – tempting though it may be.
by phil - December 10th, 2014 7:40 am
Wheeeee, what a ride!
As you can see from the chart, we got a nice round-trip on the Russell in the last two sessions but it smelled a little like BS to us so we shorted into the close and picked up a nice winner (back to 1,182 for a $300 per contract gain) already this morning (see our Live, Pre-Market Member Chat Room) – and the Egg McMuffins are paid for.
We also got a near round-trip on the Shanghai, with the Chinese index popping back 3% this morning but, fortunately, we made the call to take 1/2 of our FXI puts off the table yesterday at $1.60 – up 80% from our Monday pick. If you don't like making 80% in 24-hours, DO NOT SUBSCRIBE HERE! How's that for reverse psychology?
If you are futures-challenged and looking for a good hedge, TZA is the ultra-short ETF that tracks the Russell and our logic on this trade idea would be that the Russell is unlikely to pop over 1,200 without pulling back and, if they do, it's an easy place to stop out with a small loss. That means you can take a position with the Jan $12/14 bull call spread at 0.70 and sell the Jan $12 puts for 0.45 for net 0.25 on the $2 spread that's 0.85 in the money at $12.85 this morning.
That trade gives you a 700% upside on cash if the Russell even flinches lower and your worst-case if the Russell goes higher is you end up owning TZA at net $12.25, still 0.60 lower than it is this morning. That's how easy it is to take a hedged position. And you don't have to sell TZA – that's aggressive. You could instead sell puts on a stock you REALLY want to own if it gets cheaper, like FCX Jan $25 puts at $1.30, selling 5 of those for $650 lets you buy 10 of the spreads for $700 and gives you $4,900 of downside protection – not bad, right?
FCX was a new Top Trade Alert Yesterday. We reviewed our first few Top Trades …
by phil - December 9th, 2014 7:54 am
Well that didn't take long, did it?
Our Nikkei and EWJ short positions continue to rake in the cash as that index drops another 122 points overnight but, more to the point, we nailed the switch to the fresh horse of China for our readers, as FXI topped out right at our $42 target, almost to the penny, before dropping back into the close and this morning the Shanghai Composite dropped 5.43% from above the 3,000 line – all the way back to 2,856.
Now, I can only tell you what's going to happen and how to make money betting it – the rest is up to you. For our Members (and you can get this kind of money-making information every day by joining us HERE), our trade idea for shorting FXI with options was the Jan $40 puts at 0.88, and we picked up 20 of them in our Short-Term Portfolio for $1,760 – and those should do very nicely for us this morning.
Our whole Short-Term Portfolio performed well yesterday, gaining $5,000 (5%) as the market dropped, which is what it's designed to do as a counter-balance to our bullish Long-Term Portfolio, both of which we reviewed extensively over the weekend (sorry, Members only).
There are just 13 position in our STP and they are, of course, generally bearish. Very bearish, actually as they gained 5% on a day the S&P only dropped 0.71% – today should be interesing indeed (and we have a Live Trading Webinar for our Members at 1pm).
We titled yesterday morning's post "Monday Melt-Down" and I sent out an Alert to our Members and for FREE to our FaceBook Followers regarding the dreaded "Hindenburg Omen" as well as actual news I found disturbing over the weekend. As I mentioned, we already had a substantial short position in our Short-Term Portfolio and, frankly, we thought the drop would begin last week. In our $25,000 Portfolio Review, we elected to pick up the DXD (ultra-short Dow ETF) Jan $22 calls at 0.70, and those should be doing well this morning as the Dow Futures are pointing to another 100-point drop today.
by phil - December 8th, 2014 8:00 am
Now things will get interesting.
As you know, we've been making a very public call to short the Nikkei through EWJ (short at $12, using Jan $12 puts at 0.55 as well as /NKD Futures short at 18,100) and today you've officially missed your chance as the Nikkei plunged back to 17,900, down 200 points from the open on a downward-revised 2nd quarter GDP report that clearly puts the World's 3rd-largest economy in a rapidly deepening recession.
Since Japan is an EXPORT economy, that means that other people are not buying their stuff – despite the fact that the Yen is down 36% in the past 24 months and down 15% since just the end of August. That makes Japanese goods cheaper abroad and increases the amount of Yen taken in by the exporters when they sell goods in foreign currency and it's STILL not enough to pick up the sagging GDP of Japan.
That should scare people yet, strangely, it doesn't. In fact, investors have never been LESS scared – as measured by runaway Bull/Bear Ratios and a ridiculously low Volatility Index (VIX) that is somehow indicating that a Dow that has climbed 1,500 points in 60 days is NOT volatile.
I suppose, if you take the very narrow definition of volatile to be "liable to change rapidly and unpredictably, especially for the worse" then no, the market is not very volatile as it only goes up. HOWEVER, the primary definition of volatile is the one I'm worried about (probaly because my step-father was a chemist) and that one says "easily evaporated at normal temperatures." THAT is my concern about this "rally" – it could easily all vanish in a puff of smoke.
Outside of the US, the rest of the World sucks and the Global markets (see chart above) are reflecting that with a fairly flat performance for the year. Hell, the S&P would be in the same boat had not we magically been saved in October and we're still not quite sure what exactly happpend to turn our particular local markets so gung-ho bullish – outside of the generally conspiratorial theme of…
by phil - December 6th, 2014 7:29 am
Just a quick post to summarize our four Member Portfolios.
As noted on Wendesday, we are well-balanced and very, very Cashy in our portfolios as we head into the end of the year. We've made great profits and we're not sure which way the market will end up so, essentially, we're taking a defensive stance to lock in our virtual gains and, as you can see from Dave Fry's Russell Chart – we're certainly not missing anything as the broad-based indexes (NYSE as well) have been flatlining since October.
As noted on Thursday, our main portfolios, the Long-Term Portfolio, which is hedged with the Short-Term Portfolio began the year with a combined $600,000 ($500/100) and have been holding the $760,000-$785,000 range since November, when we parked our positions in neutral (balanced between bullish and bearish) into the holidays. The two portfolios are up $179,000 for the year (29.8%) so of course we want to protect those gains!
Short-Term Portfolio Review (STP): Back to $165,000 (up 65%) after a scare on Tuesday as the SQQQs got priced really low, for no particular reason. We'll have to consider if we are too bearish here, or perhaps simply not bullish enough in the LTP. Remember, this portfolio isn't SUPPOSED to make money – it's here to protect the LTP – this is just a happy accident…
- DXD – Why do we have so many of those? We'll leave them this weekend but no point in rolling them since we have TZA for Jan protection.
- TZA – Speak of the devil. Well, since we're killing the DXDs next week, TZA becomes our primary short-term hedge and I'm good with that with the RUT back at 1,180 and TZA is at $13 so the $13 calls at $1 start making money on an over 5% drop between now and Jan – that's what a hedge is supposed to do. Yes, I know we bought them for $2 (and we lost $10K on the DXDs too) but that's just the cost of our insurance. We need to forget about that and focus on the $5K we have in
by phil - December 5th, 2014 8:23 am
Let's celebrate mediocrity!
It's Non-Farm Payroll day and we're expecting to see the obligatory 250,000 jobs added to the labor force, which seems nice – until you realize that's only 3M per year in a population that grew 3M last year and we are STILL missing, 6 years after the collapse, 5% of the Jobs (7.5M) that we used to have.
What's changed to bring unemployment down from 10% to 5%, despite the flatlining total employment, is the stunning decline in people who are bothering to work in the first place. A matching 7.5M people have simply dropped out of the labor force since 2008 – giving us the illusion of low unemployment without having to actually hire more people.
That's why wages have been able to flatline for 6 years as well, despite 6 years of inflation that has eroded the buying power of those few people who do still work in this country.
Less jobs, less workers and the people who are working are making less (adjusted for inflation) than they have made since the 1930s – how exactly are we supposed to be turning this economy around?
Well, from the Top 1% point of view, we can buy our labor (not to be confused with slavery – where we had to feed, clothe and shelter and train our workers) cheaper than ever. This has led to skyrocketing Corporate Profits – especially if you keep in mind that the profits reflected on this chart are only what they report (not counting what they hide overseas or depreciation or other accounting tricks) net of the losses of other corporations and they are still up 150% in the past 5 years while Labor has taken a 10% hit.
Imagine extrapolating this chart and what it means to your children and grandchildren if you do nothing to change things now. If you are in the Top 1%, of course, not only do you NOT want this chart to change but some of you will do whatever it takes to make sure this trend continues. If, on the other hand, you are one of those lazy…
by phil - December 4th, 2014 8:11 am
Shanghai popped 4.3% today.
That would be like the Dow gaining 800 points in a day. Ho-hum – it's just the kind of thing we've come to expect in what Daniel Stetler refers to as "Ponzi World," saying:
We all are in a Ponzi world right now. Hoping to be bailed out by the next person. The problem is that demographics alone have to tell us, that there are fewer people entering the scheme then leaving. More people get out than in. Which means, by definition, that the scheme is at an end. The Minsky moment is the crash. Like all crashs it is easier to explain it afterwards than to time it before. But I think it is obvious that the endgame is near.
Of course, if this is the "end game," I'm sure China bulls will saying "Thank you sir, may I have another" after this morning's action. We're looking forward to an opportunity to short FXI (now $42) but we're not going to jump in front of the runaway train that is China at the moment. We are, on the other hand, still shorting Japan (see yesterday's post) as we're betting on "peak Abe" into the upcoming elections.
Of course, "peak Draghi" is the big concern of the morning as the ECB did NOT change their policy this morning – and that's coming after Mario promised us that "the ECB must take action without delay" only two weeks ago.
Not taking action on the last meeting of the year seems like a delay to me – but let's hear Draghi's song and dance at 8:30 this morning (we're already shorting the Futures – see my Early Morning Alert to Members on Twitter).
8:30 Update: Let the BS storm commence! As we expected, the markets are tanking on disappointment from the ECB indecision and Draghi's comments are not helping matters. We've got a 5-point ($500 per contract) drop on /TF (Russell Futures) already and 8 points ($400 per contract) on our other selection – the /ES (S&P…
by phil - December 3rd, 2014 8:20 am
Higher and higher we go!
The rest of the World seems a bit tired but the S&P, Dow and Nasdaq are like the energizer bunnies of the Global Indexes as they keep going and going and going…
Earnings don't matter, Fed policy doesn't matter, news doesn't matter – IT just doesn't matter! – and that's something I haven't had to say since the bad old days before the last crash. Still, here we are again, just 6 years after a catastrophic market collapse – ignoring wave after wave of negatives as if they JUST DON'T MATTER.
Well, it's true in a way, nothing really matters – until it does. For example, did you know, on Friday, that our nation's debt passed the $18Tn mark? Even I was surprised by that one as our debt just topped $17Tn last November so adding another Trillion in a year seems kind of quick, don't you think? Don't worry though – there's 150M workers so all we have to do is each come up with $113,333 each and we're all sqare.
If we DON'T all come up with a quick $113,333, then we may have a problem as the interest on $18,000,000,000,000.00 at even just 2% is $360Bn per year, which by itself is $2,400 for each working American. The reason the top 1% tell us not to worry about the debt is because $2,400 isn't very much to people who earn $2M+ per year but, for those of you earning the average $48,000 a year – it's 5% of your salary.
Notice the projection for the next 6 years takes us to $23Tn and let's say interest rates head up to 4% – then, suddenly, the annual interest is about $1Tn per year and that's now $7,500 per working American – just to pay the interest! We could default, but there goes your Social Security as we've already robbed that lock box of close to $3Tn to fund our (so far) $18Tn debt.