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Archive for the ‘Phil’s Favorites’ Category

Really, Greece Again?

Courtesy of John Rubino.

The Greek financial/political crisis is becoming an annual event. For a sense of just how long this unfortunate little country has been struggling to survive under the relative sound money regime of the eurozone, here’s a Greek Crisis Timeline that CNN published in 2011. Even back then the pattern of near-collapse followed by temporary respite had been repeating for seven years.

The most recent lull seemed longer than usual, so long in fact that many people probably assumed that Greece had been “fixed” and was now a more-or-less fully-functioning member of the eurozone, ready to settle back into its enviable lifestyle of hosting tourists, drinking ouzo and avoiding taxes.

But no. Nothing has really changed. Youth unemployment remains around 50% — which is even more astounding when you consider that tourism is generally a pretty good sector for young people looking for entry-level service work. And the government is still running deficits, piling new debt atop its already unmanageable 175% of GDP.

As a result, anti-euro political parties are still gaining adherents and now seem to have enough clout to start dictating terms. This month a series of elections are being held that, if I’m understanding correctly, have to go the government’s way to avoid regime change in which the far left takes over and begins a process of pulling Greece out of the eurozone. The first round in this voting trilogy didn’t go the government’s way, making the next two highly problematic. And last week the situation got even more complex:

Greek lawmaker alleges bribery attempt in presidential vote

ATHENS, Greece (AP) — A lawmaker from a small right-wing party claimed Friday he had been offered a bribe worth up to 3 million euros ($3.68 million) to vote in favor of electing Greece’s new president, in the latest twist in the bailed-out country’s fraught presidential vote.

Greece faces early general elections if its 300-member parliament fails to elect a president by the third round of voting on Dec. 29. In Wednesday’s first round, the sole candidate and government nominee garnered 160 votes; 180 are needed for election.

Actor Pavlos Haikalis of the Independent Greeks claimed during a phone-in to a live television program that he was offered about 700,000 euros in cash, a loan repayment and advertising contracts, with the alleged bribe’s total value amounting to about 2-3 million euros ($2.4-$3.7


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Europe in Wonderland

Courtesy of Mish.

If you don’t have the money, spend it anyway, says the Ukrainian government.

Of course, that’s no different than the philosophy of any other country, including the US.

In this case, however, Ukraine’s borders on default.

Please consider Ukraine Can’t Scrimp on Military Spending as S&P Rating Cut.

Ukraine’s president, speaking a day after the nation’s junk credit rating was cut further, said next year’s budget mustn’t cut corners on military spending and should account for the possibility of an invasion.

The war made us stronger, but has crushed the economy,” Poroshenko said. “There’s one article of spending that we won’t save on and that’s security.

Ukraine is finalizing next year’s fiscal plan amid a new cease-fire in the conflict that’s ravaged its industrial heartland near Russia’s border. As its economy shrinks and reserves languish at a more than 10-year low, it’s also racing to secure more international aid to top up a $17 billion rescue. Standard & Poor’s said Dec. 19 that a default may become inevitable, downgrading Ukraine’s credit score one step to CCC-.

With official forecasts putting this year’s contraction at 7 percent, the government needs $15 billion on top of its bailout to stay afloat, according to the European Union.

The European Union and the U.S. are discussing $12 billion to $15 billion in aid to Ukraine and “there needs to be a Russian contribution to the package,” Pierre Moscovici, the 28-nation bloc’s economy commissioner, said at a Bloomberg Government event this week in Washington. A decision is needed in January, he said.

War Has Made Us Stronger

Ukraine president says “War has made us stronger“.

That lie is so stupid my dead grandmother knows it from the grave. The evidence is a CCC- debt rating, a step or so above above default, with default imminent.

The story gets even stranger. …



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Evolution of YouTube: Will it Supplant Mainstream TV, Vanish, Evolve, or Languish?

Courtesy of Mish.

What will become of YouTube?

It started from nowhere about 10 years ago as an idea with no revenue and no content, then pretty quickly lots of content coupled with a plethora of copyright infringement lawsuits.

Today, YouTube gets 300 million hours of watching every day. Top content producers have millions of followers and make millions of dollars.

But where to from here?

New Play Button

The New York Times tackles that question in a fascinating story YouTube’s Chief, Hitting a New ‘Play’ Button.

The article is about Susan Wojcicki, the chief executive of YouTube, how she got her start, and in turn how Google got its start. Wojcicki was Google’s 16th employee, and she is still with Google.

The Times notes Smosh, a pair of 20-something lip-syncing comedians, have roughly 30 million subscribers to their various YouTube channels. PewDiePie, a 24-year-old Swede who provides humorous commentary while he plays video games, has a following of similar size.

Every day, one billion people around the world watch more than 300 million hours of videos on YouTube. In November, 83 percent of Internet users in the United States watched a video on YouTube, according to comScore. In contrast successful network television shows like ‘NCIS: New Orleans’ or ‘The Big Bang Theory’ average a little more than half that in weekly viewership.

I’m at the other end of the extreme. I watch very little TV. In fact, I have never even heard of ‘NCIS’ or ‘Big Bang’

It’s a fascinating success story for 46-year old Ms. Wojcicki, one of the most powerful media executives in the world.



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Russia Not Selling Gold, It’s Buying; Reflections on Extremely Sloppy Reporting

Courtesy of Mish.

On December 17, ZeroHedge asked Will Putin’s Next Step Be To Sell Gold?

On December 18, ZeroHedge answered his own question wrongly with Russia Has Begun Selling Its Gold, According To SocGen.

I did not believe that when I saw it yesterday, and I sure don’t today after viewing a few charts from Nick at Gold Charts “R” Us.

Russia Gold Reserves Up 600,000 Ounces for November

In US dollar terms, Russia’s gold reserves are worth about $0.4 billion less.

Russia Gold Reserves in US Dollars

Of course, Russia may have started selling in December, but that’s not precisely what happened either.

Gold Chat Debunks Russia Selling Gold Rumor

Please consider this snip from the December 19 Gold Chat article ZH fail on Soc Gen fail on Russia selling its gold.

As is common in internet land, people pick up stuff by others without doing basic drilling down to the source. The reason you have to do this is because people often misinterpret the source. Other times the source is wrong.



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Phil on Oil, Russia, the Fed, and the Trade of the Year

Must See: Phil visits with Money Talk's Kim Parlee on Business News Network. In this great interview, Phil talks about his target price range for oil and presents an options trade idea that he is calling the "Trade of 2015."    

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Click on the links:

Segment 1 (Oil, Russia, and the Fed) : http://www.bnn.ca/Shows/Money-Talk.aspx?vid=515921

Segment 2 (Trade of the Year 2015) : http://www.bnn.ca/Shows/Money-Talk.aspx?vid=516607

In segment 2, Phil introduces the trade of the year for 2015 and discusses the strategy of "being the house." (See also "Be the House – Not the Gambler.")  

 





5 Things To Ponder: Variegated Contemplations

Courtesy of Lance Roberts of STA Wealth Management

"Twas the week before Christmas, when all through markets

Not a trader was stirring, because they already left for the Hamptons.

Which left  the "inmates running the asylum" with very little care

As everyone hoped a 'Santa Claus Rally' would soon be there."

Yes, it is that magical week leading up to Christmas and the subsequent low volume push into the new year. For individuals, it is "magic time" as hopes are high that "Santa Claus" will come to WallStreet.

Of course, as mutual funds window dress portfolios for the end of year reporting, it tends to elevate the most popular stocks in the markets. However, investors should also be wary of the rotation of the calendar as those same managers then sell positions for tax purposes in the New Year.

This weekend's reading list is a smattering of articles that cover a wide range of topics from investing to oil. As always, I try to provide opposing points of view to give readers a complete picture of the topic. As a portfolio manager, it is important to remember that our fundamental beliefs can lead us into making poor investment decisions. Therefore, it is crucial for long-term investment success that we eliminate the emotional biases that affect our decision-making processes. 

With that said, here are the things I will be reading this weekend.


1) Be A Good Loser by Mebane Faber via Meb Faber Research

"One of the biggest challenges of investing is long periods of underperformance, or outright negative performance and losses. Cliff Asness has a fun piece out on his blog where he talks about 5 year periods in stocks, bonds, and commodities and basically how anything can happen.

So if you’re going to be an investor, get used to being a loser!"

Faber-Drawdown-121814

Read Also: What To Expect When Your Expecting by Michael Batnick via The Irrelevant Investor

 

2) An Unconventional Way Of Looking At Valuations by GaveKal Research

"An unconventional way of looking at valuations is to place companies into different "buckets" based on their absolutely valuation…
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Spain to Abolish Rent Controls; 20,000 Small Businesses May Close; Good Thing or Not?

Courtesy of Mish.

Abolition of rent controls in Spain this month have prompted some landlords to increase fees by tens of thousands of euros. The Guardian claims Spanish rent changes ‘could close 20,000 small businesses’.

Is this a good thing? Ponder that question for a moment, but also consider a few snips from the article.

Up to 20,000 small Spanish businesses could be forced to close when rent controls are abolished at the end of this month, according to the self-employed workers union. Many of the closures will be emblematic shops that shape the urban landscape in cities such as Madrid, Granada and Barcelona.

The Camisería Hernando has been in business since 1857 and has occupied the same shop on Madrid’s Gran Vía for 50 years but is closing after the rent shot up from €3,000 to €30,000 a month.

Barcelona has already lost a toy shop and a secondhand bookstore that have been a feature of the old part of the city for more than a century. Both premises have been occupied by retail clothing chains. Other gems such as the modernista Monge stamp shop and the Quiles grocery are also under threat as the city succumbs to an influx of chain stores.

Local government officials have refused to intervene to preserve the city’s heritage but local artists and intellectuals are taking the case of Monge to court. While some landlords have been prepared to negotiate affordable rent hikes, many shops are in buildings owned by banks and funds that simply notify the shopkeepers of the impending rise.

“About 60% of the 200,000 affected businesses have been able to negotiate a rise of around 35%,” César García, of the self-employed workers union, said. “But most of the rest have received a letter telling them the rent is going up by thousands of euros and that it’s not negotiable.”

“We’re closing after 72 years,” said Susana Esnarriega, owner of Así, a doll shop on Madrid’s Gran Via. “The landlord is giving us till Epiphany to get out but he hasn’t even made us an offer.”

Good Thing or Not?

Is this a good thing? It's a somewhat misleading question because I was not specific.

Did I mean a good thing that


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Central Banks Are Now Uncorking The Delirium Phase

Courtesy of David Stockman via Contra Corner

Virtually every day there is an eruption of lunacy from one central bank or another somewhere in the world. Today it was the Swiss central bank’s turn, and it didn’t pull any punches with regard to Russian billionaires seeking a safe haven from the ruble-rubble in Moscow or investors from all around its borders fleeing Mario Draghi’s impending euro-trashing campaign. The essence of its action was that your money is not welcome in Switzerland; and if you do bring it, we will extract a rental payment from your deposits.

For the time being, that levy amounts to a negative 25 bps on deposits with the Swiss Central bank—-a maneuver that is designed to drive Swiss Libor into the realm of negative interest rates as well. But the more significant implication is that the Swiss are prepared to print endless amounts of their own currency to enforce this utterly unnatural edict on savers and depositors within its borders.

Yes, the once and former pillar of monetary rectitude, the SNB, has gone all-in for money printing. Indeed, it now aims to become the BOJ on steroids—-a monetary Godzilla.

So its current plunge into the netherworld of negative interest rates is nothing new. It’s just the next step in its long-standing campaign to put a floor under the Swiss Franc at 120. That means effectively that it stands ready to print enough francs to purchase any and all euros (and other currencies) on offer without limit.

And print it has. During the last 80 months, the SNB’s balance sheet has soared from 100B CHF to 530B CHF——a 5X explosion that would make even Bernanke envious. Better still, a balance sheet which stood at 20% of Swiss GDP in early 2008—-now towers at a world record 80% of the alpine nation’s total output. Kuroda-san, with a balance sheet at 50% of Japan’s GDP, can only pine for the efficiency of the SNB’s printing presses.

Historical Data Chart

As per the usual Keynesian folly, this is all being done in the name of protecting Switzerland’s fabled export industries.

Let’s see. During the most recent year, Switzerland did export $265 billion of goods, representing an impressive 41% of GDP. But then again, it also imported $250 billion of stuff. Accordingly, for every dollar of watches, ball point pens, (Logitech) mouses, top-end pharmaceuticals and state of the art high…
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Competitive Theories: “Deflation Warning” vs. “Inflation is Nearly Everywhere”

Courtesy of Mish.

Theory #1: Break-Even Rates Provide “Deflation Warning”

Bloomberg is sounding a Deflation Warning as 2-Year Break-Even Rates Go Negative.

Break-even rates are the difference between treasuries and the same-duration Treasury Inflation-Protected Securities (TIPS). The break-even rate turned negative yesterday for the first time since 2009.

In theory, break-even rates reflect investors’ expectations for inflation over the life of the securities.

When break-even rates are negative, it’s an indication investors expect price deflation for the duration, in this case for two years.

From Bloomberg …

The drop in the break-even rate followed a Labor Department report yesterday that showed consumer prices dropped 0.3 percent in November, the most in almost six years, on tumbling energy prices. Principal and interest payments on Treasury Inflation Protected Securities are indexed to changes in the consumer price index, so a lower than forecast CPI diminishes the value of projected future payments from TIPS.

The break-even rate dropped to negative 0.035 percent yesterday. The difference was 0.024 percent today.

The negative break-even rate represents “an uncertainty premium that maybe oil could fall to $40 a barrel,” said Donald Ellenberger, who oversees about $10 billion as head of multi-sector strategies at Federated Investors in Pittsburgh. “The shortest-term TIPS are very influenced by the direction of the consumer price index. It’s telling you inflation on the short-end could turn negative.”

Fed Chair Janet Yellen downplayed the notion at the press conference after the conclusion of yesterday’s two-day policy meeting. Falling break-even rates may represent a decline in the inflation premium risk or the range of inflation outcomes investors are taking into consideration, she said. One of the justifications for the Fed to raise rates for the first time since 2006 is to keep consumer price increases from getting out of control.

Out of Control Consumer Prices?

Color me extremely skeptical regarding out of control consumer prices. In fact, I side with this headline: Krugman, Fighting Consensus, Says 2015 Fed Rate Increase Is Unlikely.

Paul Krugman, challenging the consensus of economists and the Federal Reserve’s forecasts, said policy makers are unlikely to raise interest rates in 2015 as they struggle to spur inflation amid sluggish global economic growth.



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The Monetary Politbureau and the Markets – A Game of Chicken

The Monetary Politbureau and the Markets – A Game of Chicken

Courtesy of Pater Tenebrarum of Acting Man

December FOMC Decree

Prior to the announcement of the FOMC decision on Wednesday, it was widely expected that the verbiage in the statement would be changed so as to convey an increasingly hawkish stance. Specifically, it was expected that the following phrase, which has been a mainstay of FOMC statements for many moons, would finally be given the boot and no longer appear:

“…it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time”  

It is inter alia this bizarre focus on little turns of phrase in the FOMC statement that has caused us to compare the analysis of the actions of the monetary bureaucracy with the art of “Kremlinology” of yore. The Committee is indeed reminiscent of the Soviet Politbureau in many respects. It is unelected, it is engaged in central planning, and its pronouncements are cloaked in an aura of mysticism, akin to decrees handed down from Olympus.

While it is fairly easy (and in our opinion, absolutely necessary) to make fun of this, it is unfortunately affecting the lives of nearly everyone on the planet. The only exceptions that come to mind are Indian tribes in remote areas of the rain forest, since they don’t use money and possess no capitalistic production structure.

yellen

Fed chair Janet Yellen: “A couple. You know, a pair. What the Russians call “dva”, although I hear the Russians are no longer as familiar with such low numbers as they once used to be. My dictionary says it means “two”. One less than the number one is supposed to count to before throwing the holy hand grenade of Antioch after its pin has been removed. Not one, definitely not five, absolutely not four and not three either. Two.”

Photo credit: Agence France-Presse / Getty Images

So what has happened to the above mentioned phrase? It has indeed been altered. Instead we got this:

“Based on its current assessment, the Committee judges that it can be


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Zero Hedge

Martin Armstrong Asks "Will They Hang Bankers Again On Wall Street?"

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Martin Armstrong via Armstrong Economics,

What took place in Washington over the past two weeks with the repeal of Dodd Frank and then the effective repeal of the Volcker Rule sounds strikingly familiar to at least three previous periods in American History that led to total disaster.

There were of course the Northern “carpetbaggers”, whom many in the South viewed as opportunists looking to exploit and profit from the r...



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Phil's Favorites

Really, Greece Again?

Courtesy of John Rubino.

The Greek financial/political crisis is becoming an annual event. For a sense of just how long this unfortunate little country has been struggling to survive under the relative sound money regime of the eurozone, here’s a Greek Crisis Timeline that CNN published in 2011. Even back then the pattern of near-collapse followed by temporary respite had been repeating for seven years.

The most recent lull seemed longer than usual, so long in fact that many people probably assumed that Greece had been “fixed” and was now a more-or-less fully-functioning member of the eurozone, ready to settle back into its enviable lifestyle of hosting tourists, drinking ouzo and avoiding taxes.

But no. Nothing has really changed. Youth unemployment remains around 50% —...



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Chart School

Can you make a living trading Springs and UpThrusts?

Courtesy of Read the Ticker.

We tell the truth about trading springs and upthrusts, no holding back!

More from RTT Tv

NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net Investing Quote...

..“The market always tells you what to do. It tells you: Get in. Get out. Move your stop. Close out. Stay neutral. Wait for a better chance. All these things the market is continually impressing upon you, and you must get into the frame of mind where you are in reality taking your orders from the action of the market itself — from the tape.”…

Richard D. Wyckoff
.."Markets are constantly in a state of unce...



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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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Insider Scoop

#PreMarket Prep Guest List For The Week Of December 22, 2014

Courtesy of Benzinga.

Brian Kelly, Curtis Erickson and Jerremy Newsome will all be guests on this shortened week of Benzinga's #PreMarket Prep broadcast, sponsored by Nadex.

Be sure to tune in at 8:00 am EST Monday-Friday here to tune in to the exciting show.

Don’t miss our #FedForecast2015 event either!

You can learn more about that here.

Monday, December 22, 8:35 a.m.

Jonathan Corpina (...



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Digital Currencies

Chart o' the Day: Don't "Invest" in Stupid Sh*t

Joshua commented on the QZ article I posted a couple days ago and perfectly summarized the take-home message into an Investing Lesson. 

Chart o’ the Day: Don’t “Invest” in Stupid Sh*t

Courtesy of 

The chart above comes from Matt Phillips at Quartz and is a good reminder of why you shouldn’t invest in s...



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OpTrader

Swing trading portfolio - week of December 15th, 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: Energy sector rains on bulls' parade, but skies may clear soon

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

Courtesy of Scott Martindale of Sabrient Systems and Gradient Analytics

Stocks have needed a reason to take a breather and pull back in this long-standing ultra-bullish climate, with strong economic data and seasonality providing impressive tailwinds -- and plummeting oil prices certainly have given it to them. But this minor pullback was fully expected and indeed desirable for market health. The future remains bright for the U.S. economy and corporate profits despite the collapse in oil, and now the overbought technical condition has been relieved. While most sectors are gathering fundamental support and our sector rotation model remains bullish, the Energy sector looks fundamentally weak and continues to ran...



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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 this week's Stock World Weekly.

Click here and sign in with your user name and password. 

 

...

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Option Review

SPX Call Spread Eyes Fresh Record Highs By Year End

Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...



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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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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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