Archive for 2011

Investor Sentiment: Are We Clear?

Courtesy of ZeroHedge. View original post here.

Submitted by thetechnicaltake.

Let’s be clear.   There are very few positives when considering the economic landscape.  It is hard to see what the catalyst might be that could change the fortunes of the economy and the stock market.  The old tricks, like we are going to spend more money we don’t have (i.e., the American Jobs Bill), don’t seem to be wetting the speculative appetites of investors.  The market sold off hard the day after President Obama announced more of the same.

Let’s also be clear that prices remain above support levels carved out 2 weeks ago, and in my opinion, this bounce, which has yet to morph into a rally, isn’t dead until we get a weekly close below those support levels.  So for now it is “game on” and the ball is in the bull’s court.  For the SP500, that key pivot or level stands at 1133.65.

Let’s also be very clear one more time that prices on the major indices have pulled back to those support levels, and in my opinion this represents another buying opportunity for those aggressive investors looking to get long.  But is it really aggressive?  Well if you consider the recent price action and the lack of meaningful catalysts, I would probably say it is aggressive or speculative.  On the other hand, with prices so close to support levels, your risk is lowered as you are buying against that level where you should be cutting your losses.   Any weekly close below support levels should be reason enough to defend capital vigorously.

And lastly, let’s be really super clear, this is a bear market.  (I made the “call” August 9).  The current trade set up is a counter trend within a bear market.  This is for aggressive traders.  Research that I have shown in this article shows that if an investor did absolutely nothing — i.e., sat on their hands and did no trading  — until the next buy signal, the most likely scenario is that they would be giving up no more than 5% in gains.  In other words, looking to catch a bottom isn’t really necessary for outperforming the market.  What is necessary is protecting your capital vigorously!!

The “Dumb Money” indicator (see figure 1) looks for extremes in the data  from 4 different groups of investors…
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It Looks Like Everyone’s Giving Up On Greece

Courtesy of Joe Weisenthal of Business Insider

greece far-right fascists

Image: AP

Greece isn’t ripping the cord this weekend, but it probably doesn’t matter.

Everyone’s throwing in the towel.

Headlines about Germany bracing for a Greek default are pretty telling.

Says Bloomberg: "Germany May be Ready to Surrender in the Fight to Save Greece."

The gist: After two years of step after step to prevent a default, all the smoke signals from Berlin indicate that the fight is over, and that Greece is probably going to default.

Of course, the market has known this was probably the outcome all summer, with short-term yields hitting cartoonishly high levels.

The question is: Can banks avoid an immediate hit, and will a Greek default cause a crisis of confidence in Italy, Spain, and elsewhere?

If there is a ray of optimism, it’s that Greek PM Papandreou certainly didn’t sound like he was throwing in the towel at his speech yesterday.





Guest Post: In Praise of Flexibility

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Charles Hugh Smith from Of Two Minds

In Praise of Flexibility

This time may well be different, but not in a positive way.

Despite the unprecedented nature of the current financial/fiscal/debt crises globally, a remarkable number of observers evince great confidence in their diagnoses and predictions. Given the unpredictability of the many colliding dynamics, one has to wonder if their confidence is misplaced, or perhaps unduly derived from the intrinsically false precision of their models.

To mention just one example of dozens, if not hundreds, John Mauldin quoted London-based UBS analysts in his weekly E-Letter (free, and always interesting). The analysts peg the risk of a breakup of the European Union as “close to zero probability.”

In my view, presented here many times, most recently in Why the Eurozone and the Euro Are Both Doomed (June 23, 2011), their “zero probability” is awfully confident about a complex situation that has no recent precedent--the Eurozone’s inherent contradictions and the immensity of its debt and political black holes are truly unprecedented.

The analysts go on to estimate the potential losses per person in a breakup:

We estimate that a weak Euro country leaving the Euro would incur a cost of around €9,500 to €11,500 per person in the exiting country during the first year. That cost would then probably amount to €3,000 to €4,000 per person per year over subsequent years. That equates to a range of 40% to 50% of GDP in the first year.

The number of assumptions behind this analytic exercise is as remarkable as the false precision of its predictions. What if the “weak” nation (their phrase, not mine) exiting the Union chose to assert its sovereignty and renounce the debts owed to the big European banks? What if its imports were aligned (by broad-based national consensus) with its exports? What if the people of that “weak” nation peacefully retired their parasitic financial Elites and bankers from power?

Even assuming their prepostrous estimates of losses were even close to reality, did they factor into their model the “value” to the “weak” nation’s citizenry of freeing themselves from the jackboot of E.U. “integration,” the code-word for the sacrifice of national autonomy and permanent servitude to the big European banks? Perhaps the citizens…
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In Praise of Flexibility

Courtesy of  Charles Hugh Smith, Of Two Minds

In Praise of Flexibility

This time may well be different, but not in a positive way.

Despite the unprecedented nature of the current financial/fiscal/debt crises globally, a remarkable number of observers evince great confidence in their diagnoses and predictions. Given the unpredictability of the many colliding dynamics, one has to wonder if their confidence is misplaced, or perhaps unduly derived from the intrinsically false precision of their models.

To mention just one example of dozens, if not hundreds, John Mauldin quoted London-based UBS analysts in his weekly E-Letter (free, and always interesting). The analysts peg the risk of a breakup of the European Union as "close to zero probability."

In my view, presented here many times, most recently in Why the Eurozone and the Euro Are Both Doomed (June 23, 2011), their "zero probability" is awfully confident about a complex situation that has no recent precedent--the Eurozone’s inherent contradictions and the immensity of its debt and political black holes are truly unprecedented.

The analysts go on to estimate the potential losses per person in a breakup:

We estimate that a weak Euro country leaving the Euro would incur a cost of around €9,500 to €11,500 per person in the exiting country during the first year. That cost would then probably amount to €3,000 to €4,000 per person per year over subsequent years. That equates to a range of 40% to 50% of GDP in the first year.

The number of assumptions behind this analytic exercise is as remarkable as the false precision of its predictions. What if the "weak" nation (their phrase, not mine) exiting the Union chose to assert its sovereignty and renounce the debts owed to the big European banks? What if its imports were aligned (by broad-based national consensus) with its exports? What if the people of that "weak" nation peacefully retired their parasitic financial Elites and bankers from power?

Even assuming their prepostrous estimates of losses were even close to reality, did they factor into their model the "value" to the "weak" nation’s citizenry of freeing themselves from the jackboot of E.U. "integration," the code-word for the sacrifice of national autonomy and permanent servitude to the big European banks? Perhaps the citizens would gladly choose the "payment" of 10,000 euros in the present rather than pay 10,000 euros over time to the "too big to…
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American Jobs Bill 2011: Too Late For A Do-over For President Obama

Courtesy of www.econmatters.com.

By EconMatters

When President Obama delivered his much anticipated jobs speech on Sep. 8, I was actually driving on one of those highways the President said would benefit from the infrastructure spending included in his proposed $447-billion American Jobs Bill. Listening to the live speech, and judging from the audience reaction, it was a good speech reminiscent JFK-style and was what American public wanted to hear.

However, the proposed bill is short on implementation detail, and the claim that “Everything in this bill will be paid for. Everything” seems more of a wishful thinking and empty rhetoric as it rests on the assumption that the resulted budget and deficit cuts would not be rolled back by future leaders and policymakers. And that, of course, would not be President Obama’s problem.

Looking at the proposal on the basis of allocation, there does not appear to be any provision for the public sector, which is shedding jobs at an accelerated rate outpacing the job gains in the private sector due to budget cuts, revenue losses, and the winding down of the stimulus package. U.S.News noted that since the end of the recession, government employment--including federal, state, and local jobs--has fallen by roughly 600,000. Furthermore, there’s no provision for the housing sector which is still hemorrhaging from the financial crisis dragging down the rest of the U.S. economy.

At $447 billion, the proposed Jobs Bill is about half the size of the first stimulus package passed under President Obama – the $787-billion American Recovery & Reinvestment Act of 2009 (ARRA 2009). While both bills have a significant portion allocated to tax cuts/relief, one notable difference is that the Jobs Bill 2011 has devoted a much greater percentage and dollar amount to infrastructure—31% or $140 billion vs. 10% or $81 billion in ARRA 2009. (See Chart)

In the speech, the President made reference to China’s construction spree noting that the U.S. has the capability as well to build out infrastructure on its own. The heart of the matter is that Beijing gets that ….three years earlier than the Obama Administration, which made a decision to go the ‘alternative’ route.

As a result, China has overbuilt in some areas, and…
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Is U.S. Money Supply Growing Due to Euro Panic?

Courtesy of Charles Hugh Smith, Of Two Minds

Money supply is rising, but not just from money-printing by the Federal Reserve.

There are two articles of faith about U.S. money supply: 
1) the Federal Reserve is printing scads of money
2) this expansion of money supply will weaken the dollar and fuel inflation.

So far so good, but as investors and traders it behooves us to be not just skeptical of received wisdom, but to also be wary of the infamous confirmation bias, in which we avidly seek data which confirms our already-set convictions.

This is a consequence of the human mind’s resistance to changing its convictions once they are set.

Experienced traders have learned the hard way that they benefit much more from actively seeking evidence that they’re wrong, not that they’re right, i.e. that they’ve missed some key data that does not confirm their current position.

In this spirit, let’s consider a data point submitted by long-time contributor B.C.:

Europe’s Banking System: The Transatlantic Cash Flow into the U.S. (The Street Light)

In essence, the story suggests that U.S. money supply is surging because of external flows from Europe into U.S. banks as non-dollar assets are being liquidated and transferred into dollars in response to risk aversion (i.e. panic), and an understandable preference for dollar liquidity over increasingly risky assets held in euros.

Also of interest from the same source: Europe’s Banking System: A Slow-Motion Bank Run in Progress?

Once again, avoiding confirmation bias, we might ask: what else other than external demand could spike the U.S. dollar above its critical resistance levels so quickly? If money supply growth is all Fed printing, then why is the dollar skyrocketing instead of plummeting? The dynamic offered above is the better explanation of how U.S. money supply can be expanding at the same time the dollar is spiking higher.

To ask another question: why can’t gold and the dollar rise at the same time? Is their inverse correlation set in stone? Why can’t the dollar and gold miners (HUI) rise at the same time? After all, if non-dollar assets are seeking a less risky home, wouldn’t that explain both the demand for dollars and assets such as shares in gold mines denominated in dollars?

Just for context, global financial assets are estimated to be in the $160 trillion range. $1 trillion isn’t such an overwhelming force in…
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Things That Make You Go Hmmm – Such As The Keystone Cops At The Helm Of The Eurozone

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

After the earlier sheer amusement from Jim O’Neill, we shift to pure entertainment of a more macabre variety, as Grant Williams submits his diary chronicling the last five days in the collapse of the Eurozone (and much more). “I am writing this piece on the Monday of a week in which the sheer number of potential catalysts in Europe is extraordinary and so, by way of a change, and as a social experiment of sorts, I am going to write this edition of Things That Make You Go Hmmm….. diary-style in order to catalogue a week’s worth of lack of cohesion, absence of unity, misalignment, mixed messages and u-turns as conjured up by the modern-day Keystone Cops at the helm of the Eurozone. This may mean we run a bit longer than usual, but you can always just read the days you care about… Hopefully I’ll see you all at the end of the week…”

Here are the people fighting for the survival of their jobs, their careers, and their legacy: 


Things that Make You Go Hmmm- September 11, 2011

 





Guest Post: Gold Technical Outlook: Looks Set For Upside Break

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Chris Capre of 2ndSkiesForex

Gold Technical Outlook:  Looks Set for Upside Break

Looking at the weekly chart on Gold (vs. USD), the sell-off from two weeks ago at the rejection of $1900 was impressive not so much in how much it dropped in a single week, but on how well it recovered.  The following act in the next week was a solid weekly gain of 3.4% from an opening price of $1822 – 1864 closing towards the highs suggesting buyers were holding into the weekend and thus not taking profits.  The following week was a sell-off but very mild in nature and a third week of price rejecting off the weekly lows.  Three weeks of selling and three weeks of strong rejections off the lows clearly communicating to us anytime the shiny metal is sold off, buyers are eager to come back in.  And each time, they are doing so with more confidence because every time, they are buying at a higher price suggesting they are happy to take any dips as an opportunity to buy (or invest/hold) more gold. 

This clearly communicates the underlying buyers are not afraid of the short term effects CME margin hikes may have on it or their futile (and puerile for that matter) attempts to manipulate something the market clearly wants to have and to hold.  If they were afraid, they’d simply wait for a longer or deeper correction but the elevated buying rejections/levels suggests traders and holders appetite has not been satiated and continues to be part of their desired palette.

As a trader and quantitative technician, this all communicates continued upside pressure and a likely breakout (and close) above the $1900 barrier is coming soon to a market near you.  We feel whoever is attempting to depress the prices (albeit sovereigns or manipulators alike) will soon have to yield the $1900 barrier and a close above it.

It should be noted that Gold (vs. USD) has only closed down on a weekly basis 13x this year out of 37 weeks (35% of the time).  Of those 13x it closed down, only 5x (38%) did it close the following week down.  We suspect this week will follow the majority pattern of another up-close on a weekly basis with renewed interest (not like people…
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Jim O’Neill Bets The (Horse) Farm On Chinese Decoupling All Over Again

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Like a Swiss watch, Goldman’s Jim O’Neill, who refuses to acknowledge that decoupling between the US and the BRICs not only never existed, but was always a flawed premise to begin with, has released his latest dose of Kool-Aid, in which he bets the horse track on, you guessed it, Chinese decoupling…. Sigh. Then again what can one expect: just like Bernanke will keep trying QE until QE succeeds (it won’t) or the market breaks; and just like the Krugmanites will keep pushing for an ever bigger fiscal stimulus (because the last one is never big enough, regardless of how big it is), why should one expect the latest addition to Goldman’s biggest loss leader (GSAM) be any different. And what makes this particular episode not only tragic but very much comic, is that the former “Red Knight” now sees the Chinese launch of a fully convertible and floating Yuan by 2015 as the panacea to the US stock market, and Goldman bonus doldrums (because when one cuts to the chase, that’s really what it’s all about). Little does it bother the BRICer that the advent of a new reserve currency would have a devastating impact not only on existing risk markets, but on so-called risk free ones as well. Remember that 0.000% yield on last week’s 4 week bond auction? Yeah… that would not come back. Ever. Anyway, with the upcoming week sure to provide significant tears, especially to European readers, here is at least some comic relief (yes, O’Neill does in fact “applauds” the move by the pegging move by the SNB – apparently loading up the asset side of your balance sheet with toxic paper which may or may not exist post the Greek expulsion is considered prudent when one is a Goldman partner) to start it off with.

From Goldman’s Jim O’Neill

THE ST LEGERS TO THE RESCUE – OR NOT?

Another tumultuous week comes to an end, coinciding with the 10 year anniversary of 9/11 adding to a weekend mood of reflection on the past decade.

There have been a remarkable number of things happening this week, especially on the policy front. Unfortunately, this has not included major policy developments on the European front, which continues to be the biggest source of disturbance to world markets. Worryingly, the hole…
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The Student Loan Swindle

More on student loans. Courtesy of Mike Whitney.

Originally published at CounterPunch

Alan Nasser is professor emeritus of Political Economy at the Evergreen State College in Olympia, Washington. He co-authored "The Student Loan Debt Bubble" along with Kelly Norman, which appeared in CounterPunch.)

MW Is it possible to "walk away" from a student loan and declare bankruptcy?

Alan Nasser— No, it’s not possible for student debtors to escape financial devastation by declaring bankruptcy. This most fundamental of consumer protections would have been available to student debtors were it not for legislation explicitly designed to withhold a whole range of basic protections from student borrowers. I’m not talking only about bankruptcy protection, but also truth in lending requirements, statutes of limitations, refinancing rights and even state usury laws – Congress has rendered all these protections inapplicable to federally guaranteed student loans. The same legislation also gave collection agencies hitherto unimaginable powers, for example to garnish wages, tax returns, Social Security benefits and -believe it or not- Disability income. Twisting the knife, legislators made the suspension of state-issued professional licenses, termination of public employment and denial of security clearances legitimate measures to enable collection companies to wring financial blood from bankrupt student-loan borrowers. Student loan debt is the most punishable of all forms of debt – most of those draconian measures are unavailable to credit card companies. (Maybe I’m being too harsh. Sallie Mae recently announced that it will after all forgive a debt under either of two conditions: in case the borrower dies or becomes totally disabled.)

MW–Is it fair to say that the student loan industry is a scam that targets borrowers who will never be able to repay their debts? Are these students like the people who were seduced into taking out subprime loans? How much money is involved and how much of that money is either presently in default or headed for default?

Alan Nasser—It’s as fair as fair can be. First, the student loan industry is huge – a large majority of students from every type of school are in debt. Debt is held by 62 percent of students enrolled at public colleges and universities, 72 percent at private non-profit schools and 96 percent at private, for-profit ("proprietary") schools. It was announced last summer that total student loan debt, at $830 billion, now exceeds total US credit card debt, which is itself bloated to the…
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Phil's Favorites

Brexit identities: how Leave versus Remain replaced Conservative versus Labour affiliations of British voters

 

Brexit identities: how Leave versus Remain replaced Conservative versus Labour affiliations of British voters

Courtesy of Geoffrey Evans, University of Oxford and Florian Schaffner, University of Oxford

British politics was relatively stable in the post-war decades, and voters’ strong party loyalties were influenced by their place in society. More recently, there has been a marked decline in the number of people identifying with a political party, and in the strength of that attachment.

Now, our new research for a repor...



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Zero Hedge

Stocks Jump On Kudlow Denial: "There Is No Cancellation. None. Zero."

Courtesy of ZeroHedge. View original post here.

"There are no cancellations. None. Zero. Let's put that to rest."

Hours after a headline from the FT about the US cancelling a round of trade talks with two senior Chinese ministers send stocks reeling to their lows of the day, the administration has dispatched Larry Kudlow (who apparently had to wait until 20 mins before the close thanks to CNBC's wall-to-wall Davos coverage) to jawbone the markets back into the green by...



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Kimble Charting Solutions

S&P and Crude both testing key breakout levels!

Courtesy of Chris Kimble.

The correlation between Crude Oil and the S&P 500 has been rather high over the last 100-days, as each looks to have peaked at the same time around the 1st of October at (1).

After peaking together in October, Crude fell over 40% and the S&P nearly declined 20%, with both bottoming on Christmas Eve at each (2).

Both have experienced counter-trend rallies since the lows, as Crude is up 23% and the S&P 13%.

These rallies have both testing dual resist...



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Insider Scoop

Cowen Suits Up With Nike, Looks To Outperform

Courtesy of Benzinga.

Related NKE Consumer Discretionary Q4 Earnings: U.S. Consumer Appears Strong Amid Heightened Global Uncertainty Golf Equipmen...

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Chart School

Weekly Market Recap Jan 20, 2019

Courtesy of Blain.

After entering the week quite overbought, indexes took a small retreat Monday before hurling back upwards.  This is typical of the “V” shaped moves up after any significant selloff, we’ve seen most of the past decade and watching them unfurl is quite amazing actually.  Thought maybe this time would be “different” but not so much.  So two week’s ago we asked “Has the Fed solved all the market’s problem in 1 speech?” – and thus far the market has answered resoundingly yes.  The word of the year thus far in 2019 is “patience” as that simple insert into a speech change the whole complexion of everything.

China has also been busy stimulating; on Tuesday:

An announcement from the People’s Bank of China that ...



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ValueWalk

Everyone Else Is Selling Stocks, So Is It Time To Buy?

By Michelle Jones. Originally published at ValueWalk.

After a difficult few trading days in the beginning of the year, U.S. stocks are bouncing back with meaningful gains on Monday following Friday’s strong rally. The S&P 500, Dow Jones Industrial Average and Nasdaq 100 were all up by more than half a percent by midday. It looks like investors could be taking advantage of the end-of-the-year declines, but is this a wise time to be buying?

Trying to time the bottom of the market will almost always be a fool’s errand, but one firm suggests equities could have much farther to fall before they hit bottom in 2019.

...



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Digital Currencies

Transparency and privacy: Empowering people through blockchain

 

Transparency and privacy: Empowering people through blockchain

Blockchain technologies can empower people by allowing them more control over their user data. Shutterstock

Courtesy of Ajay Kumar Shrestha, University of Saskatchewan

Blockchain has already proven its huge influence on the financial world with its first application in the form of cryptocurrencies such as Bitcoin. It might not be long before its impact is felt everywhere.

Blockchain is a secure chain of digital records that exist on multiple computers simultaneously so no record can be erased or falsified. The...



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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

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

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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OpTrader

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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Promotions

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:

 

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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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