Archive for 2012

Goldman’s God Problem on Executive Pay

Courtesy of ZeroHedge. View original post here.

Submitted by EconMatters.

By EconMatters

In addition to suffering a one-day $2 billion loss in market value on March 12 bestowed upon by the Goldman Letter at New York Times on March 12 , Goldman also has to deal with God problem regarding executive compensation packages as well.

 

According to Reuters, in the past two years, a group of religious institutions that hold Goldman shares, including the Sisters of St. Francis of Philadelphia, has been successful in getting its proposal requiring Goldman to conduct an independent examination of whether Goldman’s executive pay levels were appropriate taken into regular shareholders’ meetings.

 

However, this year, for the first time, the U.S. SEC (Securities and Exchange Commission) sided with Goldman, which argued it had already complied with the request. The SEC’s letter of rejection came out just one day after Gregg Smith’s Goldman Letter appeared on the Times.

 

From Reuters,

The SEC sided with Goldman this year because it felt the company had “substantially implemented” the proposal, an SEC spokesman said. “If the company’s actions effectively moot the proposal, then we permit exclusion.”

In its January 11 letter to the SEC, Goldman described a number of processes that the firm has in place that it says address the religious group’s concerns.

For example, the company has an independent committee that reviews executive compensation packages, and it discloses the compensation principles in proxy reports to shareholders, according to the letter.

While it is true that many Wall Street big banks, including Goldman, had to endure pay cuts after the financial crisis partly in response to backlashes stemming form lavish paydays on its executives.  Nonetheless, since the paycut has lofty starting point to begin with, the current average pay is still much higher above the…
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From The Archives – Bunker Hunt And ‘Silver Thursday’

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Back in May of last year, just after the now historic silver slamdown of “Silver Sunday” on May 1, 2011, when the metal imploded by nearly 20% in the span of seconds, a move that some considered ‘normal’, primarily the CFTC, we presented the extended biopic of the infamous “Silverfinger”: Bunker Hunt, who attempted to corner the silver market, and succeeded, if only briefly (and they say Playboy has no good articles). Today, courtesy of Grant Williams, we have dredged up the following clip from the archives, which is a 10 minute overview of just how there is really nothing new ever in the silver market, bringing up memories of Silver Thursday, March 27, 1980, and raising questions whether last year the move in precious metals was not due to the same attempt to corner the silver and gold markets as happened 30 years prior. A far more important question perhaps is how was it that tried a redux of the Hunt brothers (and Warren Buffett of course), and when will someone take their place next?

And for those who may not have seen it the first time around, here is a repost of our original article from April 2010, “A Deep Insider’s Walkthru To Silver Market Manipulation

A second whistleblower speaks. As the topic of physical delivery has gained prominent attention recently, it is crucial to complete  the circle and show how this weakest link in the PM market is (ab)used by the big boys: Phibro and Warren Buffet. Pay particular attention to the analogues between the methods employed in the 90′s commodity market and how the PM (and equity) market is being gamed currently. And to think that each new generation of traders believes it has discovered something new… (All emphasis below is ours)

 


Background

  • As a market maker in silver options from 1989 to 2000 I was present during both the 1994 and 1997 silver events. They were seminal in my education of gamesmanship in trading and how probabilities can come up short.
  • Prior to going out on my own, I traded at a small market making firm. When a trader finished training there, he had top-tier options knowledge but was not educated in whom the players were, the fundamentals of the


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Stock Markets, ETFs Claw Higher (SPY, IWM, XLK, QQQ, GLD)

Courtesy of John Nyaradi.

Markets Crawl Higher (SPY, IWM, XLK, QQQ, GLD)

Stock markets clawed higher this week, reaching milestones and overextended conditions

The recent powerful rally in the S&P500 has been fueled by improving economic reports and the promise of continued easy money and zero interest rates from the Federal Reserve.

The response by global financial markets has been nothing less than impressive with a strong rotation out of commodities and into equities, putting precious metals and some commodities into bear markets and propelling the S&P 500 to highs not seen since 2008.

So now the question is, “can this rally continue or is a correction overdue/in order?”

On My Wall Street Radar

Markets Crawl Higher (SPY, IWM, XLK, QQQ, GLD)Chart courtesy Stockcharts.com

In the chart of the S&P 500 we see RSI in the overbought region at 71.54 in the top display, a region from which significant declines oftentimes occur.  Also recent action, while breaching the 1400 level, puts the index into another significant resistance zone dating back to the beginning of the financial crisis.

Bulls will point to MACD just turning positive to a “buy” signal, the unbroken uptrend above the diagonal red line and the formation of the “golden cross,” another bullish signal when the blue 50 day moving average crossed the red 200 day moving average.

Fundamentals offer a mixed picture, as well, as positives include declining unemployment and a slate of positive economic reports in manufacturing and retail sales, while Friday’s consumer confidence and price reports were negative.

The biggest potential headwind of all, of course, is the ongoing high price of oil, now at $107.05, and gasoline which jumped 6% last month and now averages $3.82, the highest level in nearly a year.  Gas prices in three states, California, Hawaii and Alaska, average north of $4.00/gal.

So for ETF investors, it appears that the best, easy part of this rally is behind us and that general markets may have come too far, too fast, on a technical basis.  Indicators a very overextended, complacency is high, while oil prices and geopolitical concerns add further uncertainty to this coming week’s situation.

The Economic View From 35,000 Feet

Last week’s economic reports were a mixed bag with retail sales growing, the Philly Fed and Empire Manufacturing reports showing continued growth but with some weakness in the sub indexes, unemployment claims continuing to decline, the Fed committing to zero interest rates for years, and major stock indexes…
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Mid-Day Update

Reminder: Harlan 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





A Revolt, the Quiet Japanese Way

Courtesy of ZeroHedge. View original post here.

Submitted by testosteronepit.

Wolf Richter    www.testosteronepit.com

New revelations seeped out about the control Japan’s nuclear industry had over its regulators. In early 2006, five years before the apparently preventable meltdowns at the Fukushima Daiichi power plant, the Nuclear Safety Commission (NSC), an "independent" agency, began studying the enlargement of disaster-mitigation zones around nuclear power plants—from Japan’s standard 8-10 km to the International Atomic Energy Agency's standard of a 5-km “top priority zone” and a 30-km “priority zone.”

But the Nuclear and Industrial Safety Agency (NISA), which is under the Ministry of Economy, Trade & Industry (METI), demanded the study be shelved, claiming in emails that were just released that the expansion ''could cause social unrest and increase popular anxiety.”

It worked. But if the expansion of the zones had been implemented, it could have prevented the chaos of the evacuations from the areas around the Fukushima plant—and the deaths that occurred during it.

Another revelation seeped out Saturday. In 2005, the IAEA proposed that emergency food regulations should be prepared for a zone with a radius of 300 km around nuclear power plants—a relatively large area on the narrow Japanese islands. But members of the NISA, the NSC, and the METI requested the removal of any reference to the “300 km.” They were worried about "negative publicity and other factors."

It worked again. However, the validity of the 300-km food regulation zone has been confirmed: "Radioactive cesium exceeded the safety standard in tea leaves from Shizuoka Prefecture, more than 300 km from the Fukushima plant," said Hideaki Tsuzuku, a director at the NSC, which is currently re-reviewing the guidelines.

Continuous revelations of how much Japan Inc. had conspired to accomplish its goals at the expense of the people have an impact: the people, known for their patience, have become impatient with the nuclear industry and its regulators—stirred up further by the daily drumbeat of the insidious spread of nuclear contamination:

- High levels of radioactive cesium were detected in condos built last July in Fukushima Prefecture. Turns out, the crushed stones in the concrete were radioactive. And, according to the METI, radioactive stones from the same quarry were used in over 80 other buildings, a street in front of a school, and an irrigation canal.

- ARCO, an independent French lab,…
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Morgan Stanley, Italy, Swaps And Misplaced Outrage

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

From Peter Tchir of TF Market Advisors

Morgan Stanley, Italy, Swaps And Misplaced Outrage

One of the big stories of the week was that Morgan Stanley “reduced” its exposures to Italy by $3.4 billion mostly by unwinding some swaps they had on with Italy.  Morgan Stanley booked profit of $600 million on the unwind.  The timing couldn’t have been worse coming on the heels of the “Darth Vader” resignation at Goldman Sachs, attracting more attention to profits on derivatives trades was the last thing the investment banks need.  Much of the outrage seems misplaced though.  In this case, don’t blame Morgan Stanley, blame Italy, and be very afraid of what else Italy has done.

From what I can tell, Italy entered into some interest rate swap or swaption contracts with Morgan Stanley, a long time ago in a galaxy far away.  Since the purpose of the trades were to “reduce” the interest expense that Italy was paying, I assume the contracts were more likely swaptions than straight interest rate swaps – selling volatility would reduce your payments up front, but would be costly if you were wrong on direction.  So over the course of time the mark to market value of these trades grew to $3.4 billion.  That mark to market valuation would show up on the reports of Morgan Stanley (buried too deep for anyone to find easily, but there nonetheless).  The mark to market loss would not appear anywhere in the Italian government budgets.  That should be a big concern for investors – the derivative trades that the country enters into aren’t marked to market by them for their accounting purposes.  Maybe that is why they have such an affinity for swaps and swaptions – they can hide problems. 

But anyways, back to Morgan Stanley.  At some point during the course of the year, it looks like MS took a “credit reserve” of approximately $600 million because of concerns that Italy wouldn’t be able to pay.  That is what credit hedging desks and risk management are supposed to do.  Simplistically, let’s say they assigned a 25% default probability to Italy  with an expected “recovery” of 30%  (in line with where CDS was trading).  They $3.4 billion * 25% (default probability) * 70% (loss in event of default) = $595 million.  So MS…
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The Fed’s Stress Test Was Merely The Latest “Lipstick On A Pig” Farce

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Last week we learned two things: that Jamie Dimon specifically telegraphed he is now more powerful than the Fed, and that the US economy is back down to the same March 2009 optical exercises in financial strength gimmickry to stimulate rallies. Recall that on FOMC day, the market barely budged on Bernanke’s ambivalent statement and in fact was in danger of backing off as the readthrough was that of no more QE… until JPM announced a major stock buyback and dividend boost. The catalyst: a successful passing of the latest and greatest Stress Test, which according to experts was “much more credible” than all those before it. Wrong. The test was merely yet another complete farce and a total joke. But as expected, the test had its intended effect: financial shares soared across the board, and banks promptly took advantage of investors and robot gullibility to sell equity into transitory strength. Bloomberg’s Jonathan Weil explains.

How stressful were the Fed’s tests? One anecdote stands apart: Regions Financial Corp. (RF), which still hasn’t paid back its bailout money from the Troubled Asset Relief Program, passed.

 

The footnotes to the company’s latest financial statements tell the story. There, the Birmingham, Alabama-based lender disclosed that the loans on its books were worth $8.1 billion less than what its balance sheet said, as of Dec. 31. By comparison, the company’s tangible common equity, a bare-bones measure of net worth, was $7.6 billion.

 

So if it weren’t for the inflated loan values, Regions’ tangible common equity would have been less than zero, with liabilities exceeding hard assets. In short, the test was a joke, although it had its intended effect. Shares of Regions and other large banks soared, and Regions raised $900 million selling common shares on Wednesday. The company, which hasn’t reported an annual profit since 2007, plans to use the money to help repay the $3.5 billion it got from the Treasury Department in 2008.

 

Tangible common equity became the capital benchmark of choice for many investors during the last U.S. banking crisis, because the government’s main capital measures lost credibility. It excludes preferred stock, which in substance acts more like debt than it does equity. It also excludes airy intangible assets such as


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2011 – The Year Of The Earthquake: A Visual And Auditory Guide

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

If there is one thing 2011 taught us is that one totally unpredictable and unexpected event, such as the great March 11 Tohoku earthquake, tsunami, and Fukushima disaster, can wreak massive havoc on otherwise stable economic ecosystems, models and forecasts. According to many, most certainly the Fed, the events in Japan had a major spillover effect on global GDP that lasted for months, in turn forcing fiscal and monetary responses around the world. A true black swan. As the following brief video summarizes, 2011 was the year of earthquakes. Has the earth become increasingly unstable? Will the pattern from 2011 continue into 2012 and beyond? Is mother nature getting angrier? We have no idea, but we do know that the following clip is quite awesome: make sure you have your volume turned up high.





Guest Post: Global Trade Fragility

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by Azizonomics

Global Trade Fragility

Yesterday I got my new iPad.

Yeah, I bought one like millions of other suckers. Apple can take my dollars and recycle them buying treasury bills and so partially fund, at least for a short while, America’s unsustainable debt position.

But really, I bought one to enjoy the twilight of the miraculous system of global trade. An iPad is the cumulative culmination of millions of hours of work, as well as resources and manufacturing processes across the globe. It incorporates tellurium, indium, cobalt, gallium, and manganese mined in Africa. Neodymium mined in China. Plastics forged out of Saudi Crude. Aluminium mined in Brazil. Memory manufactured in Korea, semiconductors forged in Germany, glass made in the United States. And gallons and gallons of oil to ship all the resources and components around the world, ’til they are finally assembled in China, and shipped once again around the world to the consumer. And of course, that manufacturing process stands upon the shoulders of centuries of scientific research, and years of product development, testing, and marketing. It is a huge mesh of processes.

The iPad is an extreme example of the miracle of civilisation There are less extreme ones. Take, for example, the hamburger. Hamburgers did not exist until the age of regional trade, and refrigeration. The ingredients in a hamburger were not in season at the same time. Cows were not slaughtered at the time when lettuce was harvested. Lettuce was not harvested at the same time tomatoes or onions were typically harvested. For thousands of years previous to this we ate seasonal concoctions, like turkey, yams and cranberries at thanksgiving, as well as smoked and cured foods all year round. In modernity, we have been able to use modern technology to bring about any combination of produce: from greenhouses, to air freighting, to refrigeration, and so.

I look at the global trade system — which we here in the West rely upon for goods, resources, consumption, etc — and I see something akin to the problem with the financial system in 2006. We abandoned robust and aged local systems, local knowledge, artisanship, etc, in favour of a huge interconnected mesh of trade where all counter-parties are interdependent, and where one failure can break the entire system.

This is…
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The REAL Cause of the Global Obesity Epidemic

Courtesy of ZeroHedge. View original post here.

Submitted by George Washington.

By Washington’s Blog

World Wide Obesity Epidemic

Some 68% of all Americans are overweight, and obesity has almost doubled in the last couple of decades worldwide. As International Business Tribune reports:

Studies conducted jointly by researchers at Imperial College London and Harvard University, published in the medical journal The Lancet, show that obesity worldwide almost doubled in the decades between 1980 and 2008.

 

***

 

68 per cent of Americans were found to be overweight while close to 34 percent were obese.

Sure, people are eating too much and exercising too little. The processed foods and refined flours and sugars don’t help. And additives like high fructose corn syrup – which are added to many processed foods – are stuffing us with empty calories.

But given that there is an epidemic of obesity even in 6 month old infants (see below), there is clearly something else going on as well.

Are Toxic Chemicals Making Us Fat?

The toxins all around us might be making us fat.

As the Washington Post reported in 2007:

Several recent animal studies suggest that environmental exposure to widely used chemicals may also help make people fat.

 

The evidence is preliminary, but a number of researchers are pursuing indications that the chemicals, which have been shown to cause abnormal changes in animals’ sexual development, can also trigger fat-cell activity — a process scientists call adipogenesis.

 

The chemicals under scrutiny are used in products from marine paints and pesticides to food and beverage containers. A study by the Centers for Disease Control and Prevention found one chemical, bisphenol A, in 95 percent of the people tested, at levels at or above those that affected development in animals.

 

These findings were presented at last month’s annual meeting of the American Association for the Advancement of Science. A spokesman for the chemical industry later dismissed the concerns, but Jerry Heindel, a top official of the National Institute of Environmental Health Sciences (NIEHS), who chaired the AAAS session, said the suspected link


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Zero Hedge

"I Was Wrong. And I Am Sorry": Bloomberg Apologizes To Black Megachurch For 'Stop And Frisk'

Courtesy of ZeroHedge View original post here.

As Michael Bloomberg weighs a bid for the White House next year, the former New York mayor told the congregation at a 'black megachurch' on Sunday that he's sorry for his support of the city's controversial "stop-and-frisk" program which targeted a disproportionate number of blacks and Latinos.

"I was wrong. And I am sorry," Bloomberg said at the Christian Cultural Center in Brooklyn, pandering to the black vote.

In 2013, a federal judge who ...



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Phil's Favorites

Tesla's business strategy is not chaotic - it's brilliant

 

Tesla's business strategy is not chaotic – it's brilliant

Courtesy of Nathan Furr, INSEAD

Few companies have attracted as much praise, derision, scepticism and enthusiasm as Telsa Motors and its founder Elon Musk. Having interviewed Elon Musk and the Tesla leadership as part of my research, one of the questions I’m asked most frequently is: how can you make sense of Tesla’s wild strategies? The latest example is the move to create a “Gigafactory” for car batteries just outside Berlin.

Part of the challenge in understanding Tesla&...



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Kimble Charting Solutions

New York Stock Exchange Double Topping or Sending A Strong Bullish Message?

Courtesy of Chris Kimble

A very broad index is testing last year’s highs, as monthly momentum is creating lower highs? Which indicator is more important, price or momentum?

This chart looks at the New York Stock Exchange Index (NYSE) on a monthly basis over the past 15-years.

The index peaked in January of 2018, as momentum was the highest since the peak in 2007.

The rally off the lows around Christmas last year, has the index testing the highs of January 2018. While the rally has taken place over the past 12-months, lofty momentum has created a series of lower highs.

Can you believe th...



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Insider Scoop

10 Biggest Price Target Changes For Tuesday

Courtesy of Benzinga

  • UBS raised AbbVie Inc (NYSE: ABBV) price target from $79 to $96. AbbVie shares closed at $88.73 on Monday.
  • JP Morgan lowered the price target for Intelsat SA (NYSE: I) from $22 to $9. Intelsat shares closed at $8.03 on Monday.
  • DA Davidson boosted the price target on Okta Inc (NASDAQ: OKTA) from $131 to $135. Okta closed at $121.15 on Monday.
  • Stifel lifted the price target for Leggett & Platt, Inc. (NYSE: ...


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Lee's Free Thinking

NY Department of Welfare Announces Increased Subsidies for Primary Dealers, Thank God!

 

NY Department of Welfare Announces Increased Subsidies for Primary Dealers, Thank God!

Courtesy of , Wall Street Examiner

Here’s today’s press release (11/14/19) from the NY Fed verbatim. They’ve announced that they will be making special holiday welfare payments to the Primary Dealers this Christmas season. I have highlighted the relevant text.

The Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York has released the schedule of repurchase agreement (repo)...



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The Technical Traders

VIX Warns Of Imminent Market Correction

Courtesy of Technical Traders

The VIX is warning that a market peak may be setting up in the global markets and that investors should be cautious of the extremely low price in the VIX. These extremely low prices in the VIX are typically followed by some type of increased volatility in the markets.

The US Federal Reserve continues to push an easy money policy and has recently begun acquiring more dept allowing a deeper move towards a Quantitative Easing stance. This move, along with investor confidence in the US markets, has prompted early warning signs that the market has reached near extreme levels/peaks. 

Vix Value Drops Before Monthly Expiration

When the VIX falls to levels below 12~13, this typically v...



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Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

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

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Chart School

Dow Jones cycle update and are we there yet?

Courtesy of Read the Ticker

Today the Dow and the SP500 are making new all time highs. However all long and strong bull markets end on a new all time high. Today no one knows how many new all time highs are to go, maybe 1 or 100+ more to go, who knows! So are we there yet?

readtheticker.com combine market tools from Richard Wyckoff, Jim Hurst and William Gann to understand and forecast price action. In concept terms (in order), demand and supply, market cycles, and time to price analysis. 

Cycle are excellent to understand the wider picture, after all markets do not move in a straight line and bear markets do follow bull markets. 



CHART 1: The Dow Jones Industrial average with the 900 period cycle.

A) Red Cycle:...

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Digital Currencies

Is Bitcoin a Macro Asset?

 

Is Bitcoin a Macro Asset?

Courtesy of 

As part of Coindesk’s popup podcast series centered around today’s Invest conference, I answered a few questions for Nolan Bauerly about Bitcoin from a wealth management perspective. I decided in December of 2017 that investing directly into crypto currencies was unnecessary and not a good use of a portfolio’s allocation slots. I remain in this posture today but I am openminded about how this may change in the future.

You can listen to this short exchange below:

...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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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Promotions

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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.

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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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