"I will not fear Fearisthemind killer, Fearisthe little death
That brings total Oblivion
I will permit my fear to pass
Over me and through me
And where it has gone
I will turn the inner eye
Nothing will be there
Only I will remain."
That isthe Bene Gesserit incantation for bravery from Frank Herbert’s "Dune," one of my favorite books. When the markets turn nasty on us it is time to get analytical, not emotional and we need to let our fear pass over us as we step back and evaluate the situation with fresh eyes, and a calm mind.
Above is a chart of our major indexes and their year-to-date performance. As we tested our -5% lines last week, we added a fresh round of Disaster Hedges, a series of trade ideas that can make 500% or more if the market falls further and in an afternoon Alert to Members yesterday, we added another SDS hedge with a 400% upside. Having some high-reward hedges in your virtual portfolio allows you to set aside just 2% to protect your entire virtual portfolio against a 10% drop in the markets. 10% is A LOT for the markets to fall and, of course, now that they have brakes on the market, we can always add more hedges along the way down. Should the market fall "just" 5%, we STILL make 10% on our hedges and that nets our virtual portfolio (in this example) UP 5% on a 5% drop in the market. If our bullish plays were also hedged with covers – then so much the better!
Most importantly, having a balanced virtual portfolio with hedges allows you to play the market WITHOUT FEAR. Warren Buffett famously advises investors to "Be greedy when others are fearful" and our own PSW Rule #1 is "Always sell into the initial excitement," which doesn’t mean always buy but we look for opportunities to sell fear (naked puts) on a dip, the same way we sell our own positions into spikes up that we consider overdone.
In last week’s "Disaster" article, I wondered if we were in the panic/capitulation part of the above chart and,…
Note that in David’s picture, Bernanke is still playing the role of the generous bartender he played in the hit video "Hayek vs. Keynes – An Economic Smackdown." Note this all ends badly for Keynes but WHAT A PARTY!
We made 3 aggressive upside spreads looking for a big finish for the week in yesterday morning’s Alert to Members on SSO, QLD and DDM. Fortunately our timing was good as my call to look for a run once we got past the 10:30 oil inventory report was on the money but then we were very disappointed by the size of the sell-off in the afternoon – even though we were short at that point (we can root for the bulls while betting against them). It’s all about jobs this morning and we need to see less the 450,000 pink slips handed out in the past week to get a little more aggressive.
My prediction in the morning was: "We should get our bottoms with the crude inventories at 10:30 so no hurry on bullish plays, most likely. Selling XOM $60 puts for $1 or more (now .47) on a dip today is a nice play into expirations as you can always roll them along." The XOM puts topped out at .63, so no luck there, but the action (see Davids chart) was right on the money for us:
We took a long play on USO at the bottom that did well (and we took money and ran) and we flipped back to bearish at 1:41 with put plays on IWM and DIA that did nicely into the close. As I had said in the morning post – blissful agnosticism!
8:30 Update: 500,000 jobs lost last week! Ouch!!! Looks like we should have held onto those puts because this is going…
Steve Klasko, president of Thomas Jefferson University and CEO of the Jefferson System, is the author of We Can Fix Healthcare: The Future Is Now, with Gregory P. Shea and Michael Hoad. In the book, the authors propose 12 disruptive transformations to the health care industry.
Dirk Bezemer is a professor of economics at the University of Groningen, the Netherlands. Michael Hudson is a distinguished research professor of economics at the University of Missouri, Kansas City, and a professor at Peking University. The authors thank the editor and two anonymous referees for helpful suggestions that gr...
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer. One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."
Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.
Genetic components are the DNA sequences that are 'inherited.' Some of these genes are stronger than others in their expression (e.g., eye color). Yet, some genes turn on or off due to external factors (environmental), and it is und...
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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
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 firstname.lastname@example.org 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.
Note: The material presented in this commentary is provided for
informational purposes only and is based upon information that is
considered to be reliable. However, neither PSW Investments, LLC d/b/a PhilStockWorld (PSW)
nor its affiliates
warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither PSW nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance, including the tracking of virtual trades and portfolios for educational purposes, is not necessarily indicative of future results. Neither Phil, Optrader, or anyone related to PSW is a registered financial adviser and they may hold positions in the stocks mentioned, which may change at any time without notice. Do not buy or sell based on anything that is written here, the risk of loss in trading is great.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only intended at the moment of their issue as conditions quickly change. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
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