Archive for 2007

Staging Trades

Nothing pleases me more on the weekend than having an opportunity to chat with wily old investors that have “been there, done that and seen it all!” So, it was with great pleasure this weekend that I scheduled a chat with an old friend who has been around the real-estate investing block more times than he cares to remember. 
In the midst of our discussion he spoke of his children. One son in particular had a penchant for starting a venture involving organic fresh food. Given the increased sophistication among the general populous towards exercise and diet in recent years I thought this sounded like a winning concept if he could execute well. However, it came as a surprise to me that my friend strongly discouraged his son from launching his company. Instead, he encouraged him to become an investor.
The reason behind his advice emanated from one of the habits discussed in Stephen Covey’s “7 Habits of Highly Effective People”, which is to “Start with the End in Mind”. For most of us, career and learning take up most of our formative years while investing is shelved to a later stage. The danger, as he perceived it, for his son was that he would work a lifetime, save a nice sum of money and one day would seek to invest it but would have no idea where to begin.
Just think about all the hours demanded of the average employee. So much time and energy is invested to save money and yet, at retirement, many people who worked so hard for the capital they saved, often deploy it quickly to “investments” without much due diligence or consideration. The old investing rule of thumb is that if you spend more time researching the purchase of a car then you do purchasing a stock that is comparably priced, it’s time to stop trading and start learning! 
With that said if you know that you are going to be an investor, do all you can to learn as much about investing as possible as soon as possible. We are here to help in any way we reasonably can.
Digressions aside, let’s get to the concept of staging trades. Most novice investors follow the rash decision-making process I

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Weekly Wrap-Up

Last Friday at 13,600 I baited the bears.

My words at the time were: "Come on bears, is that all you’ve got?  I called for a retest of 13,500 yesterday but below that and things may get very ugly indeed as we could easily drop back to 13,200 and even the dreaded 13,000 mark where we failed to consolidate properly back in August when we had the chance."

A week later we are pretty much on target with the Dow finishing at 13,042 but we were lucky enough to call a top way back on Oct. 29th, when the Dow was still up at 13,900 and I moved our doomsday clock up to Jan 13th, 2000 (5 days before the crash) including the fact that we would get a BS Fed bounce that would signal the end on the 31st.  That was the night I accused the MSM of "yadda yaddaing" the bad news…

I won't get into why we crashed, it's easy to see now, less so when we were discussing it before the actual pullback (when people were calling me a "perma-bear" because I expected a pullback) but there are 100,000 places where you can go and here how smart people are after the fact, I prefer to use this space to discuss the future and how to invest in it.  The weekends, however, ARE a time to be retrospective so let's just see how we handled the worst week in the markets since 2002:

On Monday, after surviving a 400-point dip the week before, I worried "Have I gotten too bullish?" and I cautioned we had been conditioned to "buy on the dips."  I went into what has lately become a mantra for me: "We won’t be able to post a real rally until the financial community steps into the confessional and clears the deck so we can see where the floor is."  The question remains – is THIS a floor and, if not, how much further down into the pit can we slip?

Monday evening I decided the foreclosure crisis was reaching critical mass and NY AG Cuomo threw a spotlight on the issue by going after the home valuation scam, which we noted would reverberate throughout the financials as their…
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k1 Project – Trend Following II – Cooking with Optrader

My second month with PSW coincided with the huge increase in volatility and big drops of August 2007. In the midst of that craziness, Optrader posted a significant thread on his trend following strategy. This situation has recently been repeated, with the big drops on Nov. 8-9. Collected here are a bunch of those postings, arranged to give a beginner background on the strategy.

Balancing Act

You must have balance Daniel-san!

Some things stick with you your whole life and that line, or concept, from the Karate Kid was one of those things for me.  As Mr. Miyagi says to Daniel: "Lesson not just karate only. Lesson for whole life. Whole life have a balance. Everything be better. Understand?  Better learn balance. Balance is key. Balance good, karate good. Everything good. Balance bad, better pack up, go home."

In life we need balance.  Work and family need to be balanced (and you type-A workaholics should rent the movie "Click" and think about your lives!) and our virtual portfolios need to be balanced as well.  If we are going to keep capital in the markets, we need a strategy that keeps the bulk of our positions market-neutral so that we can play on the fringes, spending our time looking for market opportunities rather than trying to preserve our capital.  On Survivor a couple of weeks ago there was a game where one team tries to throw water into a boat while the person in the boat tries to either paddle to avoid the water that is coming in or bail it out (with their hands).  Of course this is a hopeless choice as either you are bailing water and a sitting duck for more water attacks or you are a moving target that is taking on water but not doing anything to bail it out.  The winner was the team that sank last but, inevitably, there is no strategy that can keep you from sinking eventually.  The winners were the ones that achieved a good balance of time between avoiding the other team AND bailing water out.

Bad virtual portfolio management is like that.  When we are unbalanced in our virtual portfolios and the market shifts against us, we have to spend all of our time bailing out of losing positions, leaving us less time to steer ourselves to safer waters.  If we choose to concentrate on changing our investment direction then we don't have the time (or capital) we need to salvage our misdirected choices.

As I often say, for me, being 100% bullish means 70% of my virtual portfolio is bullish and 30% bearish and when I'm 100% bearish then 70% of my virtual portfolio is bearish and 30% is bullish.  This is why on Thursday…
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Friday Virtual Portfolio Moves

November 9th, 2007 at 9:40 am | Permalink   edit

OK, let’s see if 13,100 can hold!

November 9th, 2007 at 9:44 am | Permalink   edit

I took out my GOOG callers but added back $670 callers just in case, will take them out in stages if we go up but it leaves me free to play the upside naked (not for the $25KP though). Picking up $690s at $10 XXX

COH – they are restructuring an no one has patience. I do really like them long-term.

November 9th, 2007 at 9:56 am | Permalink   edit

13,100 holding is huge.

COH – I have the Jan ‘09 $35s but just a small entry.

Below 13,100, 13,000 should be a big bounce spot so we don’t want to go crazy with downside betting either way. When in doubt, CASH!

November 9th, 2007 at 10:10 am | Permalink   edit

GOOG $25KP – I assume you mean December calls and the answer to that is roll them down. For $5 you can roll the $730 calls to the $710 calls so let’s do that with the open ones. XXX

November 9th, 2007 at 10:19 am | Permalink   edit

IBM/Any $5 roll – try to roll for $2.20 or less. With $10 rolls, try to roll for $3.50-$4. It’s pretty much a no brainer to spend 40% to improve a position, as long as you still believe in the position.

Out of index puts now. XXX

November 9th, 2007 at 10:32 am | Permalink   edit

QQQQ – longer is better but if you really want it then get it now so you can sell calls against them if it gets put to you.

Very broad buying kicking in but GOOG has to go somewhere if we are going to be serious about this.

APPL/GOOG V – yes these are day trades only! Holding a Nov overnight, especailly over the weekend is crazy.

November 9th, 2007 at 10:36 am | Permalink   edit

PTR and CEO both moving up.

JSDA having a strange couple of days.

GSK breaking $50.

As usual, it’s amazing how low our expectations have gotten that we are happy to bounce off 13,100!

YHOO pathetic!

If GOOG doesn’t break $680 by lucnch it may be in serious trouble.

LVS popping.

GOLD looking good (all gold stocks too).

STX coming off the floor, I like the Dec $27.50s XXX

November 9th, 2007 at 10:43
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k1 Project – Basic Tactics – Trend Following

"I don’t know if we are out of the woods, no one knows. And it should not matter to us. We should only follow price, and price is going down, has been for a couple weeks now." – Optrader

Freaky Friday

Here we go again!

All aboard the volatility train.  We have trade data out today and Congress is debating taxes, which always freaks Wall Street out but it's the same old, same old that is spooking the markets this morning.  The timing of these events make me wonder if this market melt-down isn't being used to help conservatives push their new mantra (which I heard 75% of the guests on Fox say) – "Now is not the time to be eliminating the AMT."

The Alternative Minimum Tax is a crushing and ridiculous tax law that might have made sense in 1970 but has never been adjusted for inflation and was intended to stop the wealthy from avoiding taxes but has been perverted into an onerous burden on the middle class that will affect 1 in 5 taxpayers next year and shifts $1 Trillion dollars of tax liability from the top 1% of the country down to people in the 75-99% income range (this is probably you if you earn $50K+!).  According to Wikipedia: "In 2006, the IRS's National Taxpayer Advocate's report highlighted the AMT as the single most serious problem with the tax code. The advocate noted that the AMT punishes taxpayers for having children or living in a high-tax state, and that the complexity of the AMT leads to most taxpayers who owe AMT not realizing it until preparing their returns or being notified by the IRS." 

Bush is already threatening to veto the House measure that will raise taxes on the top 1% to prevent 23M households from owing more taxes next year.  Rangel's plan is to offset lost revenue by doubling the tax rate on so-called carried interest, the payment that executives at buyout and venture-capital firms, as well as real estate and oil and gas partnerships, receive for managing investments.


So that's what's bothering the US markets this morning and I know it sounds paranoid but tanking the markets is just what the conservative doctor ordered to get the Congresspeople to back off on the poor hedge fund managers.  Here is a chart detailing the proposed changes to the federal tax rate.  Notice EVERYONE making less than $500,000 a year gets a DECREASE.  Those making $500K-$1M will pay 1.6% more taxes and those making more than $1M per year…
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LTP Update

These are the open positions in the LTP.

I don’t think there are any pressing changes, the only things that aren’t covered are things that weren’t worth covering.  Don’t forget that STP puts are covering these guys too!


Description Type Cost Basis Opened Sale Price Closed Days Gain/Loss $ %
100 APR 08 175.00 AAPL CALL (APVDO) O $ 64,020.00 7/25/2007 $ 249,000.00   107
$ 184,980.00 288.9 %
10 JAN 10 150.00 AAPL CALL (WAAAJ) O $ 28,010.00 9/6/2007 $ 67,100.00   64
$ 39,090.00 139.6 %
10 NOV 07 180.00 AAPL CALL (APVKP) O $ 3,550.00 11/8/2007 $ 5,490.00   1
$ 1,940.00 35.3 %
100 NOV 07 180.00 AAPL CALL (APVKP) O $ 35,500.00 11/8/2007 $ 54,980.00   1
$ 19,480.00 35.4 %
Total Gain/Loss for AAPL
$ 245,490.00 187.3 %
30 JAN 09 60.00 AIG CALL (VAFAL) O $ 23,860.00 11/2/2007 $ 26,100.00   7
$ 2,240.00 9.4

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STP Update

These are the currently open positions in the STP.

YHOO is a DD.  The DIA calls I’m goign to roll down into the sell-off.  CSCO is a roll down.  PTR is a roll down unless oil crashes (will sell $210s at least).  Taking profits on DRYS.  Rolling ECA to Dec.  Rolling OIH up to $190 puts.  RTP is going to suck as the whole world is buying into this nonsense.

Description Type Cost Basis Opened Sale Price Closed Days Gain/Loss $ %
40 NOV 07 200.00 AAPL CALL (APVKT) O $ 8,210.00 10/30/2007 $ 1,000.00   10
$ -7,210.00 -87.8 %
40 NOV 07 195.00 AAPL CALL (APVKS) O $ 2,480.00 10/30/2007 $ 13,990.00   10
$ 11,510.00 82.3 %
Total Gain/Loss for AAPL
$ 4,300.00 40.2 %
20 NOV 07 35.00 AIR PUT (AIRWG) O $ 5,210.00 10/10/2007 $ 7,800.00   30
$ 2,590.00 49.7 %
Total Gain/Loss for AIR
$ 2,590.00 49.7 %
70 JAN 09 15.00 AUY CALL (VPPAC) O $ 12,250.00 2/23/2007 $ 21,700.00   259

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$25KP Update

FrankenGoogle lives!

Like the $10KP, we haven’t made many adjustments since Wednesday other than doubling the amount of Google positions.  Unlike the $10KP, the $25KP had a more bullish mix and we took a big hit in PTR but that was nicely offset by a very nice string of Google plays so far.

Total gains are up to $62,604, up from $56,079 on Wednesday even though our average gain dropped from 18.4% to 18%.  Again and again I will keep reminding you that it’s better to make 15% ten times than 100% once!

Description Type Cost Basis Opened Sale Price Closed Days Gain/Loss $ %
5 JAN 08 22.50 CAKE CALL (CFQAX) O $ 1,265.00 10/2/2007 $ 650.00   38
$ -615.00 -48.6 %
15 JAN 08 22.50 CAKE CALL (CFQAX) O $ 3,815.00 10/2/2007 $ 1,950.00   38
$ -1,865.00 -48.9 %
10 OCT 07 25.00 CAKE CALL (CFQJE) O $ 110.00 10/8/2007 $ 390.00 10/15/2007 7
$ 280.00 71.8 %
15 NOV 07 22.50 CAKE CALL (CFQKX) O $ 675.00 10/19/2007 $ 2,230.00   21
$ 1,555.00 69.7 %
5 NOV 07 22.50 CAKE CALL (CFQKX) O $ 225.00 10/29/2007 $ 375.00   11

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Zero Hedge

Will The US Slap Sanctions On Nord Stream 2?

Courtesy of ZeroHedge. View original post here.

Authored by Nick Cunningham via,

There is a growing push in the U.S. Congress to slap sanctions on the Nord Stream 2 pipeline.

The pipeline under construction would carry Russian natural gas to Germany, and has been a lightning rod of controversy both in Europe and across the Atlantic. Many governments and officials from Eastern Europe fear deeper dependence on Russia for gas supplies, a sentiment echoed by the U.S. government. Meanwhile, many in Western Europe are less concerned,...

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Phil's Favorites

US is already fighting a conflict with Iran - an economic war that is hurting the wrong people


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US is already fighting a conflict with Iran – an economic war that is hurting the wrong people

Courtesy of David Cortright, University of Notre Dame

Many are worried about the risk of war with Iran after the Trump administration leaked discussions of a troop deployment in response to claimed threats to U.S. warships in the region.

And in r...

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Insider Scoop

Jefferies Sees 60-Percent Upside In Aphria Shares, Says Buy The Dip

Courtesy of Benzinga.

After a red-hot start to 2019, Canadian cannabis producer Aphria Inc (NYSE: APHA) has run out of steam, tumbling more than 31 percent in the past three months.

Despite the recent weakness, one Wall Street analyst said Friday that the stock has 30-percent upside potential. 

The Analyst

Jefferies analyst ... more from Insider

Kimble Charting Solutions

DAX (Germany) About To Send A Bearish Message To The S&P 500?

Courtesy of Chris Kimble.

Is the DAX index from Germany about to send a bearish message to stocks in Europe and the States? Sure could!

This chart looks at the DAX over the past 9-years. It’s spent the majority of the past 8-years inside of rising channel (1), creating a series of higher lows and higher highs.

It looks to have created a “Double Top” as it was kissing the underside of the rising channel last year at (2).

After creating the potential double top, the DAX index has continued to create a series of lower highs, while experiencing a bearish divergence with the S...

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Chart School

Brexit Joke - Cant be serious all the time

Courtesy of Read the Ticker.

Alistair Williams comedian nails it, thank god for good humour! Prime Minister May the negotiator. Not!

Alistair Williams Comedian youtube

This is a classic! ha!

Fundamentals are important, and so is market timing, here at we believe a combination of Gann Angles, ...

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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control


Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...

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DNA as you've never seen it before, thanks to a new nanotechnology imaging method

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


DNA as you've never seen it before, thanks to a new nanotechnology imaging method

A map of DNA with the double helix colored blue, the landmarks in green, and the start points for copying the molecule in red. David Gilbert/Kyle Klein, CC BY-ND

Courtesy of David M. Gilbert, Florida State University


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More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...

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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism


The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...

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Swing trading portfolio - week of September 11th, 2017

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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Free eBook - "My Top Strategies for 2017"



Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:


·       How 2017 Will Affect Oil, the US Dollar and the European Union


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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.

Market Shadows >>