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Fear Of “Surge In Debt Defaults, Business Failures And Job Losses” Means Many More Chinese Rate Cuts

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

If admitting you have a problem is the first step toward recovery, then China is making progress. The question is progress to what, because the generic answer, “another debt-fueled boom” is no longer applicable. Recall that as we noted here initially in the summer of 2013, the very reason why China finds itself in a reformist quandary is that the traditional method of Chinese “growth” – issuing a little under $4 trillion in aggregate system debt per year – no longer works as the bad debt portion of the Ponzi scheme is rising at a faster pace than the total notional of debt itself.

Which means the PBOC, which cut rates for the first time in two years on Friday, will have its work cut out for it. And in the worst tradition of “developed world” banks, Beijing will now have no choice but to double down on the very same bad policies that got it into its current unstable equilibrium, and proceeds with a full-blown policy flip-flop, leading to a full easing cycle that reignites the bad-debt surge once more.

And sure enough, today Reuters reports citing “unnamed sources involved in policy-making” (supposedly different sources than the unnamed sources Reuters uses to float trial balloons used by the ECB and the BOJ), that “China’s leadership and central bank are ready to cut interest rates again and also loosen lending restrictions” due to concerns deflation “could trigger a surge in debt defaults, business failures and job losses, said sources involved in policy-making.” In other words, China has once again looked into the abyss once… and decided to dig a little more.

The story is well-known: “Economic growth has slowed to 7.3 percent in the third quarter and policymakers feared it was on the verge of dipping below 7 percent – a rate not seen since the global financial crisis. Producer prices, charged at the factory gate, have been falling for almost three years, piling pressure on manufacturers, and consumer inflation is also weak.”

Of course, in modern economics, deflation simply means deleveraging, which as we showed last weekend, is precisely what is happening to China’s shadow banking sector every month in the prior quarter.

 

And so, since deleveraging in China, which at least on goalseeked paper…
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The Real Reason Why The Netherlands Repatriated Its Gold

Courtesy of ZeroHedge. View original post here.

Submitted by Sprout Money.

Dutch Flag

In what could definitely be called a stunning move, the Netherlands has announced it has repatriated in excess of 120 tonnes of gold from the vaults of the Federal Reserve in New York to the Dutch Central Bank in Amsterdam. Officially a move made to rebalance the locations where the gold is being stored, one cannot ignore the fact that the Netherlands only repatriated a large part of the gold which was stored in New York and it did not touch the gold stored in Canada and London.

Gold Vault

Additionally, it’s not just ‘some’ gold being brought back home, no, the total amount is 122.47 tonnes or almost 4 million ounces with a market value of $5B. This will reduce the exposure of the Dutch Central Bank to the US financial system as now just 31% of its gold is being stored in the vault of the Fed, coming down from 51%. We have the impression this won’t be the last repatriation as the Dutch Central Bank is keeping its shipping route secret ‘in case more gold needs to be repatriated’.

So what was the main reason why the Netherlands brought the shiny precious metal back home? The central bank wants you to believe it’s just an ordinary decision, but believe it or not, the only reason for this move was to restore the confidence of the public in the Central Bank. By publishing this statement, the Dutch Central Bank basically admits that holding gold increases the public trust in the central bank as an institution, and that’s an statement which should not and cannot be underestimated as it basically means that only physical gold can be trusted and that the gold should be stored inside the country. ‘He who owns the gold makes the rules’ once again seems to be up-and-coming again.

The best place to store your gold is obviously in your own back yard, and it looks like the Netherlands aren’t agreeing with the Germans which also wanted to repatriate most of its gold which was stored in the vaults of the Federal Reserve. However, after bringing just a fraction of its gold back to Berlin, Germany publicly stated it would not repatriate any more gold as it ‘fully trusts the Federal Reserve as an institution’ and ‘the Americans…
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Grand Jury Decision Unlikely This Weekend As Private Security Move “Guns & Gold” Out Of Ferguson

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Sporadic confrontations and violence between protesters and police continued to occur overnight in Ferguson as multiple news agencies report grand jury considering whether to indict the Ferguson police officer who shot and killed teenager Michael Brown is unlikely to meet and render a decision this weekend. The fear, as we have previously noted, is a major uprising as one sign protested, "if the killer cop walks, AmeriKKKa Halts," and as Fox reports, Brown family attorney is managing expectations, "99% of the time the police officer is not held accountable for killing a young black boy," Crump said. "The police officer gets all the consideration." There is, however, another potential reason for delaying the decision's reporting, as VICE reports, business owners in the St. Louis, Missouri area have hired private military contractors to transport guns and gold, fearing their shops will be targeted by looters if a grand jury does not indict.

 

As Fox reports, a grand jury decision this weekend is unlikely,

The grand jury considering whether to indict the Ferguson police officer who shot and killed teenager Michael Brown is unlikely to meet and render a decision this weekend, sources told Fox News on Saturday.

 

Those same sources say it is likely the grand jury will wait until Monday to reconvene.

 

The 12-member grand jury has been considering whether charges are warranted against Officer Darren Wilson, who shot and killed the 18-year-old Brown on Aug. 9 during a confrontation on a street in Ferguson. Wilson is white and Brown, who was unarmed, is black.

 

 

On Saturday, the authorities set up barricades around the Buzz Westfall Justice Center in Clayton, which is where the grand jury has been meeting.

 

Barricades also went up in the shopping center parking lot on West Florissant Avenue in Ferguson, which was where police set up a makeshift command center in the immediate aftermath of Brown's death.

 

 

"I just hope it stays peaceful," Freeman said of protests that will follow the grand jury decision. "We all have human emotions, bit there's a way to do things, and violence, you can't get peace from violence."

 

Crump, the Brown family attorney, seemed doubtful that Wilson would be charged, saying the grand jury process is


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Pity the Sub-Genius

Courtesy of ZeroHedge. View original post here.

Submitted by Tim Knight from Slope of Hope.

From the Slope of Hope: They say be careful what you wish for. And, as is often the case, "they" are right.

As a kid, I wished the world favored the smart. I was a smart kid, and it seemed like the world – at least my world – was dominated by bullies and airheads. Might made right, just like in the times of old. My high IQ and love of learning were no match for popular dolts, so a portion of my childhood was wasted just trying to disappear into the background.

Unknown to me at the time, much of the adult world operated the same way. It didn't take a 1123-sublot of intellect to have a respectable, enjoyable middle class existence in the world of the 1970s. The willingness to put in a full day's work (or, if protected by a union, a portion of a day's work) was enough to trump the potential impediment of a double-digit IQ. As I've mentioned before, my own uncle had a nice house, an even larger vacation home, and plenty of leisure time, and he worked inside the stink of a Louisiana paper mill.

The world did change, however, exactly as I hoped. My first indication was a cover story of California magazine titled "Revenge of the Nerds" with Steve Wozniak's smiling face and Apple-logo eyeglasses. It turns out the grey matter languishing in my head started to have value. At 15 years of age, I began writing articles for nationally-distributed computer magazines. At 16 years old, I wrote my first published book, which was followed by a couple dozen others. I was earning enough money to buy a Porsche in high school. It was suddenly cool – and profitable – to be smart.

The Simple World

This post isn't about my misspent youth, however. I simply use that as a point of reference, because the gap between the fates and fortunes of the "smart" and "not as smart" has become grotesquely large. So much so, I'm starting to yearn for the days when the cavemen among us had some say-so.

It wasn't that long ago that the world was relatively easy to comprehend. Take the world political scene,…
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Why Tony Robbins Is Asking The Wrong Questions

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Mark St.Cyr,

First off let me make this statement plain and simple before one reads any further. This is not a hit piece, nor an effort to take swipes at Tony Robbins or worse, some feeble attempt at click-baiting.

I have been a true fan since he first hit the motivational stage decades ago. However, just as I am what many would call an Apple™ “fan-boy” (which I am) it doesn’t stop me from pointing out issues where I see a compelling reason to do so.

As I’ve stated before, I mean it in a manner the same way one would criticize a family member when they are either doing something that doesn’t make sense, or something other. Nothing more, nothing less.

I don’t know Mr. Robbins personally, but for this discussion please excuse the liberty I take with using “Tony.” It just makes the writing easier.

Like many I was intrigued to see Tony has a new book. His first in over 20 years. When I read the title, “MONEY Master the Game: 7 Simple Steps to Financial Freedom,” (2014 Simon & Shuster) I was both intrigued as well as apprehensive. Why?

It’s basically this: I’m also in the same field (e.g. entrepreneur, motivational speaker, coach, et al) as Tony. And my writings and thoughts on money or markets sometimes appear in some of the same arenas. e.g., Business Insider™, MarketWatch™, et al. Which is precisely where I read his thoughts as well as a few questions he was asking some of today’s Wall Street titans. e.g., Warren Buffet, Paul Tudor Jones, Carl Icahn and others.

In an article written by Tony on Business Insider, “Tony Robbins Shatters The 9 Most Common Investing Myths” As I read I and was left shaking my head.

The article goes on to discuss that there are nine “myths.” And you can read them for yourself rather than me list or counter each. However, to demonstrate in a real example of what I’m trying to get across, I’ll use the first in that series.

“Myth 1″ starts with quoting Warren Buffett and sums the premise in this paragraph.

“So instead of buying all the stocks individually, or trying to pick the next high-flying hotshot


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Student Debt By Major: What Not To Study To Avoid A Lifetime Of Debt Slavery

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

As recently reported by the Project On Student Debt, 7 in 10 seniors who graduated from public and nonprofit colleges in 2013 had student loans, with an average debt load of $28,400 per borrower. This represents a two percent increase from the average debt of 2012 public and nonprofit graduates. It is also a new record high.

Those curious about the geographic breakdown of the student debt burden by state, can do so at the following interactive map:

 

It goes without saying that while student debt is bad, record student debt – which at the Federal level amounts to over $1.2 trillion and rising exponentially – is worse.

In fact, as shown previously, the unprecedented debt burden on the Millennial generation has been used to explain why the largest generational cohort in US history is unable to carry the weight of the economy on its shoulders, why the Millennials are perhaps the most financially disenfranchised generation, and why the labor force participation rate has collapsed in the past five years, as older workers rush back into the work force (thanks to ZIRP crushing the value of their savings) while young Americans chose to remain in university (where they can take remedial high school classes among other things) and out of the labor force in hopes of holding out a better job market (for the 6th year in a row).

However, since all college educations are most certainly not created equal, one outstanding item has been the debt breakdown by field of study, or major.

This is where the latest project and research paper from the Hamilton Project, which comes in handy. It examined earnings for approximately 80 different majors and as the NYT summarizes, allows people to look up typical debt burdens by major, over the first decade after college – which is when people tend to repay their loans.

The project authors note that for the graduate with typical debt level and earnings, payments under the standard 10-year repayment plan take up 14.1% of earnings in the first year, but gradually fall to only 6.5% of earnings in the tenth and final year. This repayment strategy, however, can place a particularly…
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Hugh Hendry Live 3: “To Bet Against China Is To Best Against Central Bank Omnipotence”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

In the final part of Hugh Hendry's 3-part (part 1 and part 2 here) interview with MoneyWeek's Merryn Somerset Webb the sanguine Scot, perhaps surprisingly to some given his previous negativity – though fitting with his world view of fiat currency destruction – believes "to bet against China or Chinese equities, or the Chinese currency is to bet against the omnipotence of central banks. One day that will be the right trade, just not ready or sure that that is the right trade today."

 

 

Full Transcript:

Merryn Somerset Webb: That brings us, I guess, to China. You were one of the first to point out the native problems in China. Your rather amazing video wandering around empty housing estates, etc, which I think was pretty well watched. What’s your view now?

Hugh Hendry: I think my view would surprise you. Before I surprise you, I would like to seek legitimacy of my view by telling you that I have made money. It’s been my most successful profit centre in the year to date, and we’ve made over 5% trading in China-related macro themes. In terms of surprising you, I am more sanguine about China. Actually I’ve been rather impressed by their policy responses over the last two years.

When I look at China, China has got two components. It’s got this manic investment gross capital formation and in something which has been deepening these global deflationary fears, because they kept expanding over capacity industries such as cement and steel and undermining prices in the rest of the world. That in itself lowers these inflation figures below Central Bank targets. It becomes reflexive and then the central bank says “Crikey, I’ve got to be radical here. I’ve got to buy equities”. So there’s been that going on.

On the other hand, there’s been a robbing Peter to pay Paul, and China’s had a decade which has been very, very similar to that of the US in the 1920s. The US,  people forget this, but Liaquat Ahamed – I’ve just destroyed his name, forgive me, but the Lords of Finance author – I reread it recently and I was very taken by the notion of how mean the Fed had been in the 1920s.

Again, I say it to you…
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This Is How Russia Does The (Dry) Ice Bucket Challenge

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

As The West shows its fortitude (and apparent philanthropy) with mere 32-degree Fahrenheit ice-bucket-challenges, Russian chemistry professor Yury Zhdanov goes 290-degrees better…

Nikolay Novosyolov, founder of a science popularization project, poured a bucket of liquid nitrogen, which temperature was minus 322 degrees Fahrenheit (minus 197 Celcuis), as part of the #IceBucketChallenge campaign, taking the world’s social media charity craze to a whole new level.

 

Crazy…





One Of The Most Striking Equity Market Anomalies Explained

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Lauri Vaittinen,

It is surprising how little attention academic literature has devoted to understand equity market returns around the turn of the month, despite the observations of Lakonishok and Smidt (1988) and McConnell and Xu (2008) among others that most of the returns accrue during a four-day period, from the last trading day to the third trading day of the month.

We find that the market returns are abnormally high also on the three days before the turn of the month.

In fact, combining the two observations, we find that since 1926, one could have held the S&P 500 index for only seven business days a month and pocketed almost the entire market return with forty percent lower volatility compared to a buy and hold strategy.

 

Since 1987, all of the positive equity returns have accrued during these seven trading days, and the average returns during the rest of the month have been negative. Odgen (1990) relates the high returns at the beginning of the month to the monthly payment cycle – the fact that large part of investors’ cash receipts are obtained on the last or the first business day of the month. Our findings lend additional support to this hypothesis.

In “Dash for Cash: Month-End Liquidity Needs and the Predictability of Stock Returns” -working paper we explore the turn of the month phenomenon further and discover new, previously unidentified patterns in equity returns.

SSRN-id2528692.pdf





Obama’s Path To ‘Amnesty’ (In 1 Cartoon)

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Tee-daa…..

 

 

As Hans von Spakovsky concluded earlier in the week:

In short, while Reagan and Bush worked closely with Congress to implement the comprehensive legislation that Congress had passed (in the case of Reagan) or would pass shortly thereafter (in the case of Bush), Obama is bypassing Congress entirely. He is unconstitutionally revising existing law and, without congressional approval, imposing new ones  that have been explicitly rejected by Congress time and time again, thereby setting himself up as a kingmaker (or king) on immigration policy.

 

By doing so, the president is establishing a dangerous precedent that violates fundamental principles of separation of powers that serve as a bulwark to protect our liberties and that established a government of laws and not of men.

Source: The Daily Signal’s @GlennFo





 
 
 

Zero Hedge

Fear Of "Surge In Debt Defaults, Business Failures And Job Losses" Means Many More Chinese Rate Cuts

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

If admitting you have a problem is the first step toward recovery, then China is making progress. The question is progress to what, because the generic answer, "another debt-fueled boom" is no longer applicable. Recall that as we noted here initially in the summer of 2013, the very reason why China finds itself in a reformist quandary is that the traditional method of Chinese "growth" - issuing a little under $4 trillion in aggregate system debt per year - no longer works as the bad debt portion of the Ponzi scheme is rising at a faster...



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Chart School

World Markets Weekend Update: The Rally Continues

Courtesy of Doug Short.

The world market rally continued last week with six of the eight indexes on my watch list posting gains. Europe led the pack, with Germany's DAX up 5.18%, France's CAC 40 up 3.44% and the UK up 1.45%. Hong Kong's Hang Seng was the big loser with its -2.70% loss. The other negative performer was Japan's Nikkei 225. It's fractional -0.76% decline snapped not only a four-week string of gains, but also four weeks as the top performer.

China's Shanghai Composite remains the only index on the watch list in bear territory -- the traditional designation for a 20% decline from an interim high. The index is down 28.36% from its August 2009 peak. See the table inset (lower right) in the chart below.

He...



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Stock World Weekly

Stock World Weekly

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

Here's the Happy Thanksgiving Edition of Stock World Weekly!

Click on this link and sign in with your PSW user name and password. 

Picture via Pixabay.

...

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Phil's Favorites

"Eagle Cam": Aerial View of London via Video Camera Attached to an Eagle

Courtesy of Mish.

An eagle got an impressive birds-eye-view of London this week, flying over the city's most iconic landmarks using a Sony HDR-AZ1VR Action Cam attached to its back.



Link if video does not play: Action Cam Footage Shows Eagle Flying Over City of London

The BBC reports Eagle With Camera Flies Over London
An eagle with a camera attached has flown across London and offered a new perspective on some of the capital's best-known landmarks.

The footage was recorded over a week by an Imperial Eagle called Darchan.

The animal has been brought to London from the French Alps by The Freedom Project to mark the 50th anniversary of the International Union for Conservation of ...



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Market Shadows

Official Moves in the Market Shadows' Virtual Portfolio

By Ilene 

I officially bought 250 shares of EZCH at $18.76 and sold 300 shares of IGT at $17.09 in Market Shadows' Virtual Portfolio yesterday (Fri. 11-21).

Click here for Thursday's post where I was thinking about buying EZCH. After further reading, I decided to add it to the virtual portfolio and to sell IGT and several other stocks, which we'll be saying goodbye to next week.

Notes

1. th...



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All About Trends

Mid-Day Update

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

Click here for the full report.




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

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OpTrader

Swing trading portfolio - week of November 17th, 2014

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

 

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

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

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

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



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Sabrient

Sector Detector: Investors make up new rules for their new market paradigm

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

Courtesy of Sabrient Systems and Gradient Analytics

By Scott Martindale

Investors in U.S. equities seem to have embraced a new market paradigm in which upside spikes come more swiftly than the downside selloffs. Remember when it used to be the other way around? When fear was stronger than greed? The market is consolidating its gains off the early-October V-bottom reversal, and no one seems to be in any hurry to unload shares this time around, with the holidays rapidly approaching and all. After all, there are bright blue skies directly overhead giving hope and respite from the early freeze blanketing the country.

In this weekly update, I give my view of the current market environment, offer...



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Digital Currencies

Ukraine Central Bank Bans Bitcoin "To Protect Citizens" From Financing Terrorism

If you would have supposed that Ukraine had enough problems to make banning bitcoins a backburner issue, you'd have been wrong. The rationale, "to protect consumers' rights" makes little to no sense... The other one, "to keep money in the country" makes more sense. 

Ukraine Central Bank Bans Bitcoin "To Protect Citizens" From Financing Terrorism

Courtesy of ZeroHedge. View original post here.

The Hryvnia has collapsed to new record lows near 15/USD this morning. The Central Bank and bankers "agreed to keep UAH at 15-16/USD" but are &qu...



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Option Review

Yamana Gold call options sink

Yamana Gold call options sink

By Andrew Wilkinson at Interactive Brokers

A four-year low for the spot price of gold has had a devastating impact on Yamana Gold (Ticker: AUY), with shares in the name down at the lowest price in six years. Some option traders were especially keen to sell premium and appear to see few signs of a lasting rebound within the next five months. The price of gold suffered again Wednesday as the dollar strengthened and stock prices advanced. The post price of gold fell to $1145 adding further pain to share prices of gold miners. Shares in Yamana Gold tumbled to $3.62 and the lowest price since 2008 as call option sellers used the April expiration contract to write premium at the $5.00 strike. That strike is now 38% above the price of the stock. Premium writers took in around 16-cents per contract o...



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Pharmboy

Biotechs & Bubbles

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

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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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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About Ilene:

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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