1933 Friday – Best 100 Days Since the Great Depression – Markets Love Mayhem!
by phil - August 14th, 2020 8:01 am
Here we go again?
The last time the S&P gained 50% in 100 days was on the bounce off the first leg of the great Depression. In the 90 years since, we've never repeated that trick – until now, when the S&P has popped 50% in 100 days. You'll notice we flattened out after that in 1933 and that is despite MASSIVE STIMULUS at the time. In fact, we didn't really get the economy going again until World War II broke out and, between the military service and the war manufacturing, the US went to full employment – so much so that they even let the women work!
The Depression was persistent because it's all about jobs and jobs are all about Consumer Spending and we'll be getting our Retail Sales Report at 8:30 this morning, followed by Consumer Sentiment at 10 am. Just like the Trump Depression, the Great Depression began when there was very low unemployment – just 2.2% in 1929. Then the market crashed, like it did in March, and then we had a bit of a recovery but then we completely collapsed as job losses mounted and businesses could not get back on track.
I know it's hip to be complacent and pretend everything is awesome, etc. because who wants to face the reality of our situation and, believe me, I take no pleasure in being Cassandra for the group but the sky IS falling and ignoring it won't make it go away. These are not abstract things, this is stuff that's right in front of our faces that people are simply brushing off – mostly because we have a Government that encourages you to brush it off.
While we are off our (mostly) April highs, we still have MASSIVE unemployment and we don't know what the effect of Lockdown II is going to be but, since this report was filed, there have been 11 major Retail Bankruptcies in two months, after 12 in March, April and May:
…
Posted in Appears on main page | Join Member's Chat - 51 Comments Here »
 Twitter
|
LinkedIn
|
 del.icio.us
|
|
-
Phil, 26% on the week for the 20% I day-trade, and since drinking the kool-aid last fall, the whole portfolio has doubled. Have a great weekend !!
JRW III
-
/NKD- Kownichiwa Cowboy!! One week of patience and scaling in and out pays off. This is a testament to Phil's fundamental analysis with the PSW technique. Thanks Phil.
JohnO
-
Peter D, Just a note of thanks. Eight weeks ago, I entered my first RUT strangles, when the RUT was at 625. Tomorrow, I will let them expire, with the RUT at 625 (give or take). I didn't care when the RUT went to 650, nor when it dropped to 590. Easiest, no touch money I've made in a long time.
Judahbenhur
-
Thanks super helpful re: UGN example…..other inflation/market-correction-defensive-related play you threw out that has jammed UP in less than a month is TITN 6/14 $15 puts, up 40%. Excuse my enthusiasm but haven't had those types of gains in multiple plays in years let alone days doing it on my own…….maybe I should host the PSW infomercial!!!!
stevegeb200
-
Phil - I celebrate today, having reached my goal for the year, trading in sync with your education and guidance, of 1 million in profit. I learned a lot, achieved much, and am profoundly grateful. To be honest, when I set the goal I thought it was daunting, as I have for many years been an investor in equities but did very little with options. Learning and doing has for me been a blast! I reached my goal by following Phil's strategies - lots of Buy/Writes, covered calls on equities , naked put entries for income production. I did it with 2.5 mil and kept 600,000 in cash in case I got in trouble. I concentrated on stocks (many of my own choosing) that had decent dividends and wrote front month calls against (OTM) which has worked well in this market run. 25% of my gain is in dividends and premium selling, with the balance in appreciation.
Gel1
-
I'm just starting my second year as a member, and I'd like to thank all of you for sharing your trading ideas and insight, and especially Phil of course for great all-around investing advice as well as trades! In addition to learning patience and profit-taking, I think one of the most important things I'm learning here is to stick to stocks and trades that suit my temperament. And wow, I had NO idea how hard it was to learn patience. I should say "practice" instead of "learn", because it seems to be a constant struggle. Phil, please keep reminding us how nice CASH is!
Jerseyside
-
Way back did 20 of your suggested short BP Jan 11 26 P @ 4.3 now .85 — sold half. this am — paid for a years sub AGain!! thank you very much!
Ban2
-
I have been a member of Phil's site for three years and counting, and my advice is that all investing takes time. There are o shortcuts, no secret way to riches. Same with Phil's site- you need time and patience to start benefitting fully from his advice. But it is often spot on and also very useful, especially to me as I try to keep a level head in this turbulent stock market environment.
Jordan
-
Peter D: great write-up for Short Strangles, Part 1, looking forward to Part 2, particularly the adjustment part.
RMM
-
I did the same thing via your logic (sold puts that is). I glanced one time and they were already up 15% which is considered a good return for an overnight hold in most circles. This is PSW though and to us it's just another day…
Kwan
-
I am not a user of phil's site now, but was for a couple years. His advice and information is excellent. Perhaps even better, you get access to real-time trades of additional traders on his site (OptTrader, etc) and the other members who post what they are buying and selling. Overall, its a very valuable information tool. Expensive, but paid for itself many times over. I did not renew my membership because I switched jobs and did not have time to trade nearly as much.
XRTrader
-
Sold the BG puts I got yesterday at $1.30 for $2 just now. Might be a little early, but I'm happy with that gain. Thanks Phil.
Smasher
-
I started with $250,000 in cash as of Oct 1 and have realized gains of $81,000 thru close of business. And that's in an IRA with no margin or naked trades. Whenever you are in Argentina or Chile I owe you a drink. I'm looking forward to it.
Denlundy
-
Phil - Another excellent teaching article - when you write like that it blows me away. Thank you! I had the ideas from earlier articles but what I didn't have was enough understanding. The familiarity of ideas through repetition, re-working, revision - over time - the variation, the pulling out of implications - it all contributes to understanding and mostly thats on the student - but a good teacher (worth their weight in gold) makes understanding a pleasure. I wanted to learn about trading options because it makes my brain feel better - fitter, healthier. Actually mostly it makes me happy to think about the trade and trading options. You are a good teacher and I know that or I wouldn't value the subscription the way I do. It pays for itself through the pleasure of understanding alone.
Redfern1
-
CZR – well that was fun! Opened the play yesterday. As the arb premium was now almost all gone from the box spread today, I just decided to close it. The rundown, after all commissions: my net was $183.51 profit for an overnight trade tying up $2000 margin in an IRA account. That's a 9% overnight return (3200% annualized!) …And all that learning, too! Thanks PSW!
Scottmi
-
Greetings Phil, I am an Economist at Harvard and some of my colleagues and I would like to let you know that we follow your posts on SA, and find your analysis refreshing, rigorous, and acute. Great work! Though many of us (including myself) have our work covered in the Wall St Journal, in many ways your macro commentary is more fearless and accurate than what is generally found in that venerable publication. Kind regards, Daniel
Daniel
-
I like the retirement picks too. The futures trading is certainly more sexy, but the boring retirement picks are the ones that consistently make me money.
jjennings
-
Market manipulation…. One of the things I've gained from this site is the concept of market manipulation. I never thought it was so prevalent, but now I know it is. I actually consider its effect when I make trades. Several days ago, when AAPL was moving toward 220 I sold 210 calls. My reasoning was that they will probably pin this month at 210. They came in big time as the stock moved ever closer to 210. I agree with Phil's comment that one of the things we need to do is find out what they are manipulating, and how, and hitch a ride. They are doing this with several equities. I've actually seen one article describing several equities that were being manipulated to pin at expiration each month, and describing how it was done, and of course Phil has described it well. In some ways it's easier to figure this out than it is a ‘normal' market behavior, and thus easier to make money in certain equities.
Iflantheman
-
@Philip Davis, Per my review you are the best options trader that I have seen. You've made money for your investors and those that subscribe to your service. Many cudos to you for a just ahead of the curve buying or selling opportunity. Yes, you've hit HRs when others were hitting singles.
153972
-
Thanks for the USO directions today. Made it 3 times (up/down/up) for a very nice win.
Doro165
-
Phil – great calls this past week, esp. friday and monday. in the old days I would have let Prechter et al scare me into trimming my longs and going short at just the wrong time. your feel for the markets is Tiger-esque. CHK, HOV, BX, TLT and XLF are big winners for me today. My biggest up day in a long time. Thanks!
Terrapin22
-
Hi Phil, Thanks for the free disaster hedge ideas. I implemented variations of two of them on SDS bull call spreads and EEM bear put spreads (haven't done the TZA yet) and they really hedged my short term longs nicely today. Makes it seem a lot less like gambling. You are the man (of the people)!
Howard Roake
-
The best play I made this year was PSW. Will renew my membership tonight. Looking for the same trading profit percentages next year, but will have an advantage from the compounding, and much better skills acquired from you and the many skilled PSW co-pilots. Thanks!
Gel1
-
Phil – In the event of a mkt meltdown, which of the indices, in your opinion do you think has the most potential for % move down. I'm looking at call options on SDS and the DXD. Any thoughts? Ideas? Thanks .. and thanks for being a great teacher! I've learned so much in only a month!
Louis631
-
Phil thanks. You never cease to amaze me with your thoughtful perspective on a myriad of different issues and challenges. It's kind of an embarrassment of riches since I joined this board a few years back. The ride from Dow 9,000 or was it 8,000? up to Dow 15,000 seems hard to believe. I wish I could have it all over again, except with the capital I have now.
Winston
-
Tesla et. al. – I've spent many months getting hammered shorting overvalued Momos, until, finally, I internalized Phil's message. Play small; give yourself plenty of room to double/move up the [lack of value] chain in terms of price. Play short; take [Musk's, eg.] latest bleep and sell the spike for a short time frame, because his tweets always come to naught. I've been coining money doing it, I just watch that premium melt away with scarcely veiled amusement. Swinging for the fences is for suckers [me, for a long time]. Those little gains really add up — $2k per week of evaporated premium and you could actually buy a Tesla by the end of the year!!
zeroxzero
-
Phil is a master at keeping you laughing, as well as making you money. - It is like " laughing all the way to the bank!"
Gel1
-
I took $2 (up 133%) and ran on those USO puts, quite a bit more than the 20 you played in the $25KP. Thank you once again for turning a bad market week into a great personal week. You will be happy to know I am back to cashy and cautious with a few of your favorite longs into the weekend. Thanks to Phil, JRW and all the members who share their knowledge here.
Dennis
-
USO, QQQ- Phil, thanks for these plays. Out of USO for about 65% gain today and just keeping 1/4 QQQ.
Ksone88
-
New member/1st time posting: Thanks Phil and Pharm for the rec on TOS. I've emailed Scott to get myself setup so I hope to hear back soon. As a newbie on PSW for a month now, I've been readin' and readin' and readin'. Gonna start paper-trading for a while. See how I do before putting a single dime into it. New at options but seems like this is the best training and educational platform out there. I'm a long-time mortgage broker who got too involved with real estate investing. LOVED your article, Phil, on mortgage interest scams. Right on!! Let me know if and how I can contribute back to the community here. Cheers! - Mark
Mark
The US economy is reliant on consumer spending – can it survive a pandemic?
by ilene - August 13th, 2020 5:20 pm
The US economy is reliant on consumer spending – can it survive a pandemic?
The U.S. spends the most money on advertising in the world. Marketing and advertising spending in 2020 is projected to reach nearly $390 billion. Photo by Deon Fosu for Unsplash
Courtesy of Halina Szejnwald Brown, Clark University
The COVID-19 pandemic has radically affected the American economy, reducing spending by American households on materials goods, air travel, leisure activities as well as the use of automobiles. As a result, greenhouse gas emissions have temporarily fallen dramatically.
While this may be a positive for the environment, the social price is high: Since the U.S. economy depends heavily on consumer spending, the country is experiencing the highest unemployment rate since the Great Depression, the threat of homelessness for tens of thousands of people and a failure of businesses large and small. How did the U.S. arrive at the point whereby mass consumption – and the greenhouse gas emissions associated with it – is necessary for economic and social well-being? Are greenhouse gas reductions and a thriving economy incompatible?
A consumer society is a 20th-century construct. The American Dream has become synonymous with buying material goods such as cars, houses, furniture or electronics, distorting its original meaning. Today, the spending habits of American households make up 70% of the U.S. gross domestic product, a measurement that describes the size of the economy. U.S. companies spend about US$230 billion on advertising each year, half of all the money spent on advertising globally.
Buy your dreams
Today’s consumer society emerged after the end of World War I, fueled by the emergence of the modern advertising industry and facilitated by widespread adoption of consumer credit. Edward Bernays, the nephew of Sigmund Freud, is generally credited with inventing the field of marketing during the 1920s. The essence of his approach was to tap into people’s desires to feel good, powerful and sexy instead of emphasizing the usefulness of a product. Bernays created the term “engineering of consent” and popularized the term “consumer” when referring to American people.
Mass consumption grew steadily until the onset of the…
Posted in Appears on main page, Biotech, Immediately available to public, Phil's Favorites | No Comments »
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
3,350 Thursday
by phil - August 13th, 2020 8:34 am
The S&P 500 topped out yesterday at 3,387.
That was just shy of the 3,393 high we hit in February, the day before we plunged 1,200 points (35%) over the next four weeks. HOPEFULLY we won't repeat that disaster but, just in case we do, we're beginning to cash in our positions and, today, we're going to once again roll up our hedges to help lock in our gains.
The market is up not 35% (that's what we dropped from) but 50% abover 2,200 and that's a pretty good run. According to our 5% Rule™, we should be expecting a 20% pullback (of the 1,100 gain) from 3,300 back to 3,080 as a weak retracement and a stronger pullback would give back 40% of the gains, to our Must Hold Line at 2,860. That would NOT be bearish if the Must Hold line does, in fact, hold – it will just feel that way.
Still, no point in riding out the dip if we don't have to so we're going to raise more CASH!!! and there are plenty of great stocks to buy, like WBA, INTC, BA and VIAC (see Tuesday's Report and yesterday's Live Trading Webinar) so we'll have somewhere to put that cash if the market doesn't crash but I'll feel a lot better heading into the Back to School Disaster with more CASH!!! in our portfolios.
Our Long-Term Portfolio Positions are up over 100% for the year and they are protected by our Short-Term Portfolio, which is up 315% for the year at $415,152. That's actually down about 100% as TSLA has once again spiked up on us but we think we can outlast the Tesla bulls – even as the stock hits $1,600 again today. It's time, once again, to make some adjustments as the Nasdaq tests 11,150 as well this morning:
- CANE – Just a simple bet on Sugar. I don't see any reason not to ride it out as it's breaking up nicely.
- AAPL – On track and we don't need the margin but we may as well buy it back and clear the slot.
…
Posted in Appears on main page | Join Member's Chat - 82 Comments Here »
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
Insider trading has become more subtle
by ilene - August 12th, 2020 5:01 pm
Insider trading has become more subtle
Michael Douglas in Wall Street: Money Never Sleeps (2010)
Courtesy of Barry Oliver, The University of Queensland
Insider trading comes in two main forms: arguably legal and clearly illegal.
But, as with drugs in sport, it’s hard to tell when arguably legal ends and clearly illegal begins.
It is generally accepted that it is wrong to buy shares in the company you run when you know something about it that the market does not.
It’s especially wrong to buy shares when you are telling the market that things are much worse for the company than you know them to be.
But what about suddenly sharing everything – an avalanche of information – in the lead-up to a share purchase in order to muddy the waters and create enough uncertainty to lower the price?
Chief executives have enormous discretion over the tone and timing of the news they release, generally answering to no one.
A linguistic analysis of twelve years worth of news releases by 6764 US chief executives just published by myself and two University of Queensland colleagues in the Journal of Banking and Finance suggests they are using this discretion strategically.
Not clearly illegal (how can oversharing be illegal?) their behaviour can have the same effect as talking down their share price while buying, something that is clearly illegal.
Spreads matter, as well as signs
Earlier analyses of insider trading have looked at only the “sign” of the information released to to the share market. On balance was the tone of one month’s news releases positive or negative?
Spreads matter as well as signs.
We have looked at the “spread”, the range from positive to negative as well as the net result.
It doesn’t make sense to treat as identical a month’s worth of releases which are all neutral tone in tone (sending no message) and a month’s worth of releases of which half are strongly positive and half are strongly negative (stoking uncertainty).
…
Posted in Appears on main page, Immediately available to public, Phil's Favorites | No Comments »
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
Which Way Wednesday – Market Swings Getting Wilder
by phil - August 12th, 2020 8:35 am
Wheeee, this is fun!
On the whole, the Nasdaq has only fallen 150 points since Monday's open but it's had drops of 50 points, 200 points and 300 points in 3 days so I guess we're working up to the 600-point (5%) one-day drop ahead of us. Meanwhile, rumors of stimulus is still keeping us afloat. Yesterday, according to Treasury Secretary Mnuchin (why is it always a Goldman Sachs guy?), the Trump administration is open to resuming coronavirus aid talks with Democratic leaders and would offer more aid money to try to reach a compromise.
“The president is determined to spend what we need to spend. … We’re prepared to put more money on the table,” he told CNBC’s “Squawk on the Street.”
Well, that's what he said after the markets plunged into the close. Mnuchin promised they could get a deal done by the end of the week but they haven't actually re-started talks yet so that's a little hard to believe. Remember how many times we had a trade deal with China "any minute"? Meanwhile, Trump did not continue the moratorium on evictions because it's hard for homeless people to vote against him and so many of his friends are landlords.
Schumer and Pelosi also criticized the measures in a joint statement Saturday. They said the policies would provide “little real help to families” and would not address Covid-19 testing, efforts to reopen schools and food assistance. Dems call for $3Tn, the GOP wants to spend $1Tn. The White House has already rejected an offer by the Democrats to meet in the middle with roughly $2 trillion legislation.
.jpg)
On Monday, New York’s Democratic Gov. Andrew Cuomo said the unemployment benefits spelled out in Trump’s executive order would cost his state an estimated $4 billion by December. It would add to a budget shortfall that Cuomo said was already $30 billion. “That’s handing a drowning man an anchor,” the Governor said.
Overall state budgets were almost $200Bn in debt in the first half of this year and no better so far in the second half of the year and they simply can't afford to prepare the schools…
Posted in Appears on main page | Join Member's Chat - 42 Comments Here »
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
Trillions in coronavirus spending is putting AOC’s favorite economic theory to the test
by ilene - August 11th, 2020 8:00 pm
Trillions in coronavirus spending is putting AOC's favorite economic theory to the test
The Fed can create all the money Uncle Sam needs. GeorgePeters/Getty Images
Courtesy of Steven Pressman, Colorado State University
French philosopher Voltaire famously quipped: “If God did not exist, it would be necessary to invent him.” Something similar can be said of modern monetary theory, also known as MMT, because it may be the economy’s only hope to get through the pandemic.
Coined by Australian economist Bill Mitchell and popularized recently by Democrats like Rep. Alexandria Ocasio-Cortez to fund programs such as the Green New Deal, MMT holds that a country with its own currency can spend almost unlimited sums of money. While government spending is normally financed by either taxes or borrowing, MMT suggests that governments can also do this by simply creating money.
I’m currently working on a book chapter that examines various economic theories about government debt, including MMT. I believe this theory is now being put to the test as the U.S. and other countries spend unprecedented amounts of money to aid companies, workers and their citizens during the coronavirus pandemic.
Unprecedented spending
There is little doubt that the world faces enormous economic problems.
The situation in the U.S. is already worse than at any time since the Great Depression, with millions unemployed and tens of thousands of businesses filing for bankruptcy.
The U.S. government has already spent about US$3 trillion seeking to mitigate the damage. As a result, the federal government deficit for this fiscal year will be far greater than any since World War II. And the government is expected to add $1 trillion to $3.5 trillion more red ink, assuming lawmakers agree to another relief bill.
All this spending helps prop up industries such as beleaguered airlines, keeps small businesses afloat and supports Americans who have lost jobs or incomes. The U.S. is hardly the only country throwing money at the coronavirus recession. Most developed nations are increasing government spending and debt levels to prop up their economies.
…
Posted in Appears on main page, Biotech, Immediately available to public, Phil's Favorites | No Comments »
|
Twitter
|
LinkedIn
|
del.icio.us
|
|
German
Spanish
French
Italian
Portuguese
Japanese
Korean
Russian
Chinese
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...
Ilene is editor and affiliate program
coordinator for PSW.