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Friday August Finally – Dressing that 2,000 Window

Saved by the bad news!  

August has been a spectacular month in which we ignored the most bad news ever ignored by a species that is still not extinct.  With any luck, an asteriod will head straight for us next month and we can rally the markets another 5% in anticipation of more Fed easing on impact.  The asteriod struck the other side of the Earth this morning as Russia Invaded Ukraine and Euro Zone Inflation plunged to 0.3%, miles below the 2.0% target considered "healthy".  

This is, of course, GREAT NEWS, because it means Super Mario is free to go ahead and do something – like he always says he will do but never does.  That doesn't stop people from believing it because they WANT TO BELIEVE – they want to think someone is going to save them and make all their hardships go away.  11.5% of the people in Europe are still out of work, double the rate in the US.  Over 25% of the people under 25 are out of work, about the same as the US.  These are horrific figures – of course people are eager to hear the words of a potential savior.  

Since it's Friday, we're not going to debate the merits or discuss what a farce it all is – we've done that this week.  Today we'll talk about making money.  

On Tuesday, in the morning post, I suggested the TNA Sept $72.50/76.50 bull call spread at $2, selling the Sept $68 puts for $2.  10 of those would not have cost you a penny (since it netted out to $0), though about $7,500 in margin on the short puts.  Today the spread is $2.50 and the short puts are $1.15 for net $1.35 or +$1,350 in 3 days, which is an 18% gain on the committed margin despite the fact that TNA has essentially gone nowhere.

I don't point this out to brag, we have plenty of trade ideas that have done much better – I point this out because it was a free trade idea, right in the morning post which anyone could have done and it worked because we followed our system of BEING THE HOUSE and selling premium to others, not buying it!  

The only portfolio trade we made that day in our Live Member Chat Room (other than the Futures) was on XRT, as it his our shorting target at $89 again.  Our XRT play in our Short-Term Portfolio was the Oct $93/88 bear put spread at $3.25, which will make 53% if XRT finishes the cycle below that line (49 days).  It's still playable – we did 20 for $6,500 and hope to make $3,500 if we're right.  

What we are doing is very simple, our strategy is very simple, just like fishing is very simple – you just have to know when and where to drop your line – that part takes many years to learn!    

Another Trade Idea we had on Tuesday was a reaction to the news of BKW buying THI:

BKW/Pfeh – $10Bn for THI?  They were  $5Bn last year, what have the done to earn another $5Bn in value?  I guess it's all about the tax inversion for BKW but they will get such backlash for this that I doubt it will go through so I'd lean towards shorting THI initially but BKW popped 20% today as well so, couple that with the overpaying and the fact the deal is likely to fail and that means we can sell 5 BKW Jan $30 calls for $3.25 ($1,625) and buy 4 April $30/34 bull call spreads for $2 ($800) for an $800 credit per set.  BKW is at $32.50 now, up from $27 yesterday so it would take another $5 pop before you get in real trouble on the trade.  

Again, in this trade we're selling more premium than we buy and that puts time on our side.  We're also taking advantage of the fact that most investors can't do simple math and tend to pay completely unrealistic prices for things based solely on news reports or, even worse, analyst reports by people who are absolutely no smarter than you are and may, in fact, be paid to decieve you.

In this case, the April $30/34 bull call spreads are still $2.05 ($820) while the short Jan $30s have dropped to $2.42 ($1,210) and that's net $390 we'd have to pay back off our $800 per set credit for a $410 profit (51%) in 3 days.  That trade, if all goes well, will make another $1,000, so we're not done yet – just a progress report so far! 

This is the same style of trading that has our 5 Virtual Portfolios doing so well this year and, if the market doesn't collapse (as we suspect) in the next 10 days, we have 11 stocks to add to our Buy List (Members Only) that we'll ride out into the Christmas leg of the rally.  Last year, the market added 10% from October to Christmas (after a September swoon) and the year before that, we fell 10% from Sept to November but then made much of it back on QE3.  

Maybe they'll announce QE4 or maybe Draghi will bring out his bazooka or maybe China will build another 10,000 miles of railroads no one will actually use to connect more cities that no one actually lives in.  There is no maybe for Japan – they are already running the printing presses day and night over there.  

Still, we have to have faith to stay bullish in this market – if not, we're staring into a very uncomfortable economic void and it's much more fun to just BELIEVE!  

Have a great weekend,  

- Phil

 


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  1. Oil Lines

    R3 – 96.61
    R2 – 95.71
    R1 – 95.24
    PP – 94.34
    S1 – 93.87
    S2 – 92.97
    S3 – 92.50


  2. Luckovich: Cradle to grave :-)


  3. On the other hand, maybe more jobs are coming:

    http://qz.com/257421/this-hidden-leading-indicator-tells-us-that-the-us-job-market-is-getting-even-stronger/

    The jobs differential is considered a good leading indicator of the job market’s health. (The official US jobs report is due a week from tomorrow, on Sept. 5. Economists expect 213,000 jobs were created in August, with the unemployment rate holdings steady at 6.1%.)

    And in recent months, it has been falling fast—a good sign. In August, it fell to 12.4, a new post crisis low, from 15.3 in July. This is an indication that job creation has been so robust that regular Americans are starting to notice. Essentially, Americans now feel jobs are about as hard to get as they were during early 2004, when the US economy was really starting to gain traction after the recession of the early 2000s.


  4. TSLA is flying in Premarket


  5. Phil / Draghi ;   What is clear is that we in Europe can not afford for more time the printing machine of Fed, the offered in 2009 that could be a temporary situation, that jobs could jump up  quickly….and we are just still waiting….and waiting, so for 2015 I think is time to try some "Fed like" policies, we has been correcting European economies for 5 years, we suffered internal devaluations of salaries and goods ( something U.S doesn´t know), we hare the most fitted to have a healthy monetary push from ECB.

     

    From my point of view "super" Mario has neglected his duty giving too much space  for the "wait a little longer" of Mrs. Yellen.


  6. Phil /  About fishing:

    Knowing where to drop the line is not all, you need …….your wrist movement  to imitate ( or try to )  the behavior  of the bait  is as important as where to drop the line……….my 2 cents!.



  7. Phil / article

    …………."Still, we have to have faith to stay bullish in this market – if not, we're staring into a very uncomfortable economic void and it's much more fun to just BELIEVE!  ", you are no JesusX I know,  but ….are you bullish from now to  Santa Claus?


  8. TSLA is flying because they are building 400 charging station in China in 120 cities.


  9. Good Morning!


  10. Phil

    This is great stuff…."we ignored the most bad news ever ignored by a species that is still not extinct"..made me chuckle this morning, thanks for that!!


  11. I am glad I did not “sell in May and go away” … what a GREAT summer! :-)

    Sell in September and come back in November? ;-)


  12. And TSLA new what they were doing to release this news on the last trading day of August before labor day when volume will be very weak and their stock can get an extra push today.  Musk is the master manipulator.


  13. Good morning!  

    Now this is what I call reporting:

    "Joan Rivers In Critical Condition – An Obama Hit Or Another Attempted Hollywood Illuminati Sacrifice?"

    I don't know if you guys realize how much crap I read just to find a few things worthy of sharing…

    Futures kind of flattish, as is Europe.  Same lines as yesterday on the Futures, 2,000, 17,100, 4,075 and 1,170 and definitely, it's short the laggard or long the laggard – whichever you prefer as we'll probably see both today.  

    /RB still my favorite (long), now $2.605

    Labor Day/StJ – It is absolutely amazing that people take this crap.  That's why I got out of the workforce back in the 90s – I realized if I worked at a job where I depended on someone else to pay me what I was worth, that I'd never make any real money.  

    TSLA/Abseth – Big news in China on a super-charging network.  

    • Tesla Motors (NASDAQ:TSLA) signs a deal with China United Network Communications to build 400 charging stations in 120 different Chinese cities.
    • The EV automaker will provide the equipment for the stations, while China Unicom will contribute the real estate.
    • 20 supercharging stations will also be constructed by the companies in China.
    • TSLA +2.1% premarket

    So the company gains $600M in market cap by promising to put in 20 supercharging stations where they will give away electricity.  What a model!  

    Draghi/Advill – I'm not saying you SHOULDN'T do stimulus, it's obvious that austerity was a massive failure, but don't do what we did – we haven't helped the vast majority of our citizens at all – it's been nothing more than a $6Tn wealth transfer from the bottom 90% to the top 1% (and a little trickled on the top 10%).  It's not the ECB that should be solving problems but the EU – although, the way you guys are structured the ECB has to let them fund deficit spending, of course.  

    Fishing/Advill – Well you also need to know which options to buy and how many, etc.  Wasnt' trying to give a whole fishing lesson, but thanks for the tip.  yes  Frankly, when I go fishing, I just need to know what depth to set the charges…

    Stars/Shadow – Cool.  

    Bullish/Advill – I think if we survive Sept, we should be able to creep up into the end of the year.  2,000 has to be established as a floor first and I don't see that happening before we pull back at least 100 points (5%) first. 

    400/Rustle – Yes but only 20 superchargers.  The other 380 are what we call in the US – "outlets".  I like shorting those Sept $270s at $8 on this BS. 

    You're welcome Jeff, good to spread some cheer on a Friday.  

    Catch phrases/Diamond – How about "watch the lines and you'll be fine"? 


  14. Phil – That sounds too much like TA.


  15. Speaking of volume – how low can we go on SPY?

    Date Open High Low Close Avg Vol Adj Close*
    Aug 25, 2014 200.14 200.82 199.15 200.14 54,268,800 200.14
    Aug 18, 2014 196.80 199.76 196.69 199.19 70,132,400 199.19
    Aug 11, 2014 193.97 196.65 192.94 195.72 82,825,400 195.72
    Aug 4, 2014 192.87 194.30 190.55 193.24 117,752,700 193.24
    Jul 28, 2014 197.76 198.45 191.57 192.50 125,181,700 192.50

    2nd lowest weekly average I see is 66M, so down 20% from that this week.  I know I keep saying this but that's because I keep hearing people still acting like it's not important – the low volume this week makes all "technical" moves meaningless.  

    You can't trust anything you see on a chart because it's not a realistic sample size – it's like doing a flawed survey, the results you see may be +/- 10% in either direction and I think that direction is much more likely down than up once we get a chance to see more data. 

    TA/Diamond – Well FA is out the window at these levels so we have to work with what we have.  

    By the way, I forgot to specifically mention but I hope no one is still in a bullish TNA play.  Hopefully the fact that we rolled and added shorts on Wednesday was enough of a clue to take those profits off the table at 1,170+!  


  16. Good analysis of France's problems by Krugman:

    http://krugman.blogs.nytimes.com/2014/08/27/whats-the-matter-with-france/

    French economic data look nothing at all like the story everyone tells. Yes, you can tell stories of excessive regulation, but they don’t dominate the macro picture. Yet Mr. Hollande is meekly going along with demands for ever more belt-tightening, reserving his wrath for those who want France to stand up for itself. And the result is a sort of multiplier process in which austerity causes growth to falter, which worsens the budget prospect, which leads to even more austerity.

    What’s going on here politically? Simon Wren-Lewis makes a very good point. In America, many of the people who shape economic discourse are forever living in the 1970s, when stagflation was the order of the day; in France, the corresponding nightmare is the early Mitterand era, when France was suffering from Eurosclerosis and an attempt to pursue unilateral fiscal expansion (with a fixed exchange rate) failed. But now is not then. To an important extent, what ails France in 2014 is hypochondria, belief that it has illnesses it doesn’t – and this hypochondria is leading it to accept quack cures that are the real cause of its distress.


  17. Phil

    good morning from southern californa

    what do you think of selling the Jan 15 $950 puts for $12, stop loss  at $15, selling the Jan 15 $900 puts for 

    $8.

    if the stop triggers on the 950's, will be left to own PCLN at $895.

    no problem with margin.

    what's a better trade?

    as always, thank you for the work you do every day here!


  18. BTW, THATS PCLN!



  19. Good article about Pump and Dump:

    http://www.nakedcapitalism.com/2014/08/pump-dump-rig-entire-ipo-market-just-20-million.html

    Inflating Snapchat’s valuation by $8 billion with a few million dollars rigs the entire IPO market that depends on buzz and hype and folly to rationalize these blue-sky valuations. Unnamed people “knowledgeable in the matter” who leak these valuations to the Wall Street Journal are an integral part of the hype machine: It balloons the valuations of other startups. And it creates that “healthy” IPO market where money doesn’t matter, where revenues and profits are replaced by custom-fabricated metrics.

    The hope is that the IPO market remains “healthy” long enough for investors to be able to unload hundreds of these companies at crazy valuations. The hype surrounding these valuations is creating more enthusiasm about IPOs in a self-reinforcing loop. The hope is also that the broader stock market continues to soar so that potential acquirers can print more overvalued shares to acquire more overvalued startups so that the exists can come about. Under the motto: after us the deluge.


  20. ZZ – enjoyed your exposition this morning. Speaking of perceptions, reality and truth, we clearly don't all operate with even the same vantage as a single species. One wildly different benchmark: DMT

    http://www.vice.com/read/dmt-you-cannot-imagine-a-stranger-drug-or-a-stranger-experience-365

    I know there's plenty that I don't even know I don't know..


  21. Phil – What is your preferred hedge of the moment? Thanks,


  22. Phil,

    I dont have much Apple positions other than four of 80/100 BCS. Do you suggest that we can get more bullish on AAPL for a trade with Sep 9th coming up?


  23. Interesting take on AAPL:

    http://www.bloombergview.com/articles/2014-08-27/apple-moves-upmarket-because-it-can

    While the rest of the world speculates about upcoming changes to Apple's product line — a smartwatch? a giant iPad? — southern Europe agonizes about a different kind of leak. An employee of the Spanish telecoms company Telefonica has reported that Apple is planning to sell its new, large-screen iPhones for 950 euros ($1,253) apiece.

    That's the rumored price for the mammoth 5.5-inch screen version. In Italy, it may even reach 980 euros. The 4.7-inch model may be offered for 750 euros. If true, Apple is upping the stakes in its bid to remain the most profitable producer in what is now a commodity market. As long as the Cupertino company is able to sell millions of devices at prices that reflect nothing but the brand's cachet, it doesn't have to care about its shrinking market share: it will continue to skim the cream while rivals sweat every dollar.

    Still, a lot of  money for a phone! My Nexus 5 was only $400 and it's very much good enough for everything I need.


  24. Global auto sales up 1.5% in July • 10:27 AM

    Clark Schultz, SA News Editor

    Global auto sales rose 1.5% in July to 6.87M units.

    A strong month in China and India helped offset weakness in Japan, Brazil, and Russia.

    YTD sales are up 2.6% Y/Y to 50.2M units through July, paced by strong demand in North America and Asia.

    What to watch: South America continues to see its market share for global auto sales slide. The region could see automakers pull back further on capacity and investments due to the slump.

    Automakers: GMFTMOTCPK:FIATYHMCOTCPK:NSANYTSLAOTCQX:VLKAYOTCPK:DDAIF,OTC:HYMLFOTCPK:BAMXYOTC:KIMTFOTCPK:MMTOFOTCPK:PEUGFOTC:RNSDFTTM


  25. Phil – SLW – I have a Sept 23/25 BCS. How do you normally handle these plays? If I close the play I will make some money but do not normally do spreads, so do you leave it until expiration as a bonus or close early with a small profit. I financed the spread with a put so its essentially a free spread. 


  26. I'm warming up to the NYT at $12.  I think it's best to go with the April $11/13 bull callspread at 0.90 and just looking for the $1.10 gain (122%).  If NYT goes lower, then I'd like to sell $11 puts (now .75) for $1 or more and maybe use that money to pay for a roll longer and lower (strikes not yet available past April). 

    The New York Times Company Reports 2014 Second-Quarter Results

    The Company had an operating profit of $16.5 million in the second quarter of 2014 compared with $46.2 million in the same period of 2013, with the decline mainly resulting from investment spending associated with the Company’s strategic initiatives. Adjusted operating profit (defined below) was $55.7 million in the second quarter of 2014 compared with $70.7 million in the second quarter of 2013.

    “We saw continued growth in digital advertising and circulation revenues during the quarter,” said Mark Thompson, president and chief executive officer, “but know that we still have more work to do to transform our business and deliver long-term sustainable revenue growth for the Company. We grew our digital subscriber total by 32,000 in the quarter, 39 percent more additions than in the same quarter of 2013, with our newly released products – including NYT Now, NYT Opinion and Times Premier – contributing the majority of that total. We’re encouraged by the reaction of users to the products, especially the high consumer satisfaction levels we’re seeing with the NYT Now app. But, while we expected the portfolio to take time to build, we want to accelerate the rate of growth in subscription sales, so over the coming months, we will refine some of the offers and the way we market the portfolio to accomplish this.

    Cameron making an Isis speech as well.  

    I like MAT too.  Barbie sales down 6% ($1.2Bn) but American Girls is up 11% at $632M and other girl dolls are up 25% at $1.3Bn so more than making up for lost Barbie revenues.  Like AAPL, MAT is cannibalizing their own sales with new products – can't be helped as there's a finite amount of girls and money and, like AAPL, analysts don't bother looking at the broader story and focus on one click-getting headline to back their entire premise.  

    MAT does have 2016s and they do pay a 4.3% dividend ($1.52) and they've been buying back 5% of their own stock this year and last so worth owning the actual stock at $34.50 and sell the 2016 $33 calls for $3.70 and the $30 puts for $2.05 for net $28.75/29.38, which is a 15% discount if put to you and a 15% profit if called away plus $1.90 of dividends is another 6.6% for 21.6% at $33 on round one.  

    Don't forget, we do conservative entries like this on speculative positions (we don't KNOW this is the bottom for them) because our worst case is owning 2x at $29.38 – $1.90/2 in dividends = $28.43 so let's say we are in the Income Portfolio with $1M in buying power and $50K allocation blocks and we allow for 1,000 shares at $28.43 = $28,430 if assigned.   That means we start with 500 shares and 5 short puts and calls and we make $6.15 if called away (incl dividends), which is $3,075.

    $3,075 in 16 months doesn't sound sexy against a $50,000 allocation but we're only actually using $14,000 or less in margin so we're not tying up $50,000 at all.  If the trade starts doing well, the extra $36,000 margin allocation is freed up for something else.  If the trade tanks, however, and we still like MAT at $22 – then we will (forgetting about rolls) be stuck with 1,000 shares at $28.43 with the stock at $22 (down $6,430) and all we have to do is sell 10 2018 $25 calls and $20 puts for about $5 and we lower our basis to $23.43/21.72 on 2,000 shares or $43,440 if assigned.  

    Meanwhile, if we still get the dividend (otherwise why are we doubling down?), our dividend is now $1,520 on the 1,000 we own against $10,850 in margin – almost 15% a year on margin on just the dividend!  If the stock flattens and we do end up with 2,000 at $21.72, then our dividend is $3,000 a year (still 15%) but now we can sell just the 2020 $25 calls for $2 and that's another 10% and then our basis is $19.72 on 2,000 and we're called away at $50,000 and, while we wait, we get a $750 quarterly dividend. 

    Keep in mind we have 20 block allocations like that and 20x $750 is $15,000 a quarter in dividends alone – may all of our trades do so "badly"!  Wash, rinse and repeat that process for 5 more cycles (to 2030) and you either drop your basis to $10 or you get called away with a $10,000 bonus – either way your free up a lot of cash to make more trades along the way, not to mention the $30,000 in dividends you collect.

    It's important to think about your trades over those long periods of time – it helps keep the current nonsense in perspective!  

    And wheeeeee! by the way….


  27. Leonid Bershidsky is a hedge fund shill who writes what he’s told.


  28. IRBT – not such a strong week.. right down to a trend support line at the moment..


  29. Phil// Any suggestions regarding sqqq/tqqq in the event market tanks?  Thanks.



  30. Phil / fishing  ; Sorry !, just  to say this otherwise  will forget it , when fishing specially fly you have to imitate as much as you can the natural movements of your bait.

    I found this …

    http://ozarkenglishman.me/2012/10/28/to-wrist-or-not-to-wrist-that-is-the-question/

     

    Happy weekend!.


  31. Hypochondria/StJ – Well we also need to know at who is providing they hype to steer these fear-based economic policies.  In that, Krugman fails to point fingers.  That's the difference between the NYTimes and Rolling Stone, I guess.  

    PCLN/Maya – Oh darn, that was going to be my guess, too!   I like PCLN but, if you are playing a game to make up a couple of bucks, you can get very badly burned in a flash crash or an actual crash.  If you REALLY want to own PCLN for $895 a share – then it's fine but aren't you still tying up a lot of margin for a little money?  Don't forget, a stop loss only works if the drop happens during market hours – otherwise you wake up and it's just tough luck on the overnight move.  Also, you're not guaranteed $15, even during market hours, all it does is trigger a sell at market price order.  If PCLN is plunging and there are no offers to buy your puts, the trigger can be miles off where you set the stop.  That's why MoMos are VERY DANGEROUS to play with open puts and calls on. 

    Another sickening chart on income distribution.  Thanks StJ.  

    Snapchat/StJ – And they say this is nothing like the dot com bubble?  Seems exactly like it to me except we've added a zero to the transaction sizes.  

    DMT/Scott – There are lots of fun drugs out there apparently.  I've never indulged in those things, as I like my mind as it is and I do know people who did get messed up from LSD and such.  In know plenty who seem fine too, but why risk it?  

    Hedge/Deano – With RUT 1,170, I lean back to good old TZA.  Oct $14s are a super-reasonable $1.20 and you can sell $17s for .45 and that's .75 for the $3 spread that's .40 in the money, so great upside coverage to $3, which is up 300% on a $2.50 move in TZA which is less than 20% so a 6% RUT drop will make you 300%.  So, if you are going to lose $30,000 on a 6% drop, you can cover $15,000 with 50 of the spreads ($3,750) and leave it at that or sell an offset that you REALLY want to own if it gets cheaper, like our trades above.  

    AAPL/Rookie – I like AAPL for 10% of a portfolio, so it depends on your size.  I think it's toppy now so I don't think now is the time to add more, I'd wait until after the announcement and see what happens.  

    Submitted on 2014/08/21 at 2:59 pm

    AAPL/Diamond – A lot of stops are triggered on AAPL over $100 – longs taking profits, shorts capitulating.  I think they need the 200 dma to come up from $82.50 to $87.50 before they can get going again so that's +$5 and AAPL is at $100 so call it $20, which means it will take 50 days to bend the 200 dma that high but that will push the 50 dma (now $95) up to $97.50 in 25 days so AAPL may drift up around $105, then come back to $97.50 by Sept expirations and THEN it can bounce off there and have clear sailing to $120+.  How's that for a vague TA prediction?  

    AAPL/StJ – I don't know about paying for a bigger phone but a 12.9" IPad sounds good to me.  

    Autos/Jabob – They, more than any industry but Finance, are the primary beneficiaries of all this free money.  Though it's still driven by the low-cost Financing of the autos and not a real recovery.  

    SLW/Willsons – Well it's on target and $1.40 with .60 more to make so you should, from this point out, make about 0.03 per day and you will either be on or off tract to the full $2.  If you get 0.09 ahead, I'd be inclined to take it off the table and if you go 0.09 behind, I'd also be inclined to stop but keep in mind that line changes by 0.03 per day.


  32. Jobs – this example is kind of a sick display of dog eat dog.. not only do these guys have their internal and industry competition, now the bosses have brought in backstabbing interns…!

    http://www.marketplace.org/topics/economy/summer-interns-art-installation


  33. They are determined to keep 2000 on the day with a side of momo window dressing.


  34. TSLA is now very close to half the market cap of Ford.  That's just insane from any metric, number of cars sold, revenue, net earnings, book value, cash flow.


  35. Report: China considering gas tax • 11:08 AM

    Clark Schultz, SA News Editor

    Comments out of China from BYD Company's Wang Chuanfu are creating a stir in the electric vehicle industry.

    Chuanfu maintains that a new consumer tax on gas is being considered by Beijing.

    He notes that even a 0.2 yuan per liter tax adds up to "hundreds of billions" which could be funneled by the government to support EV infrastructure and development programs.

    Tesla Motors (TSLA +2.3%) printed an all-time high of $270.60 earlier with the China news helping to boost sentiment a bit.


  36. FU CHINA!!!!!


  37. advil

    Comments years ago, Phil is not a fisherman. If I had money I would buy a specialized fishing boat and I don't mean some outlandish fuel guzzling look at me thing. I love to eat fish and my grandfather and an uncle were commercial fishermen. You are correct, it takes finesse to do well, pay attention. Many times I have been out with 4 and myself or one other catches all the fish, the others attempt to follow but not close enough. 


  38. adding IRBT short puts.  Mar 2015 $30.


  39. Good Am from No Wisc! The camper's at the campgrounds are getting soaked & this climate is turning into a jungle with amazing amounts of water & bugs. Usually this time of year its dry. Fishing. you've forgotten the element needed first is the body of water with fish in it. We have loads of it here with the big lake & the Brule River with amazing amounts of trout. Great fish- fresh, smoked  come from our local commercial fishing family's-cheap too.


  40. Window dressing supreme! Ran TNA $76 calls from .21 to .72 between 10:30 and now. S&P over 2,000. Great call Phil.


  41. @jabo

    Funny, Jimmy Carter talked about the same idea in 1977 and wanted to put a penny tax on gas which would go to a special fund for alternative energy infrastructure.

    https://www.youtube.com/watch?v=-tPePpMxJaA


  42. Huh…I opened up that article you linked, shadow, and had to stop reading it.

    "The researchers detected a huge disk of dusty debris around a sunlike star called NGC-2547 ID8, which lies about 1,140 light-years from Earth in the constellation Vega. The cloud was likely spawned when two planetary building blocks slammed into each other just two years ago or so, scientists said."

    The planet is 1140 light-years from Earth yet we see it after two years?  I'm not calling BS on you, but I do have to question how the hell something that clearly wrong got reported…


  43. and Carter in 1979, about 24 min into it:

    https://www.youtube.com/watch?v=kakFDUeoJKM


  44. Private Fishing

    So true ID and WY are famous legendary fishing spots but surprise very few catch little tiny fish. 20 years ago in MT there were places that you limited in 30 minutes, one place I went to over and over would get 4 to 6 lb Coco salmon and I believe that was because no one wanted them. I would go with just one guy and he threw all his back, a chief mind you. What I really liked was fishing the Atlantic ocean, best tasting fish. My fav eating in MT was Walleye but extremely had to catch in very few places.


  45. phil,

    a little bit ago you suggested the following….AAPL/Mill – I'd see how the Fed is taken but you want to simplify the position so you have a clear 2016 bull call spread covering the short calls so you can manage the rolls effectively and add more longs (or short puts) as necessary.

    present positions

    + 21 jan6 64.29 @ 19.00

    + 14 jan6 78.57 @ 9.65

    - 35 jan6 100 @ 3.20     these are my orig long term bullish play

     

    - 35 oct 89.29 @5.80

    + 21 jan5   92.14 @ 6.65…trying to cover the sht calls……..

    - 6 jan 5 100 @ 3.70…… 

     

    since i have the jan5 postion 21x 92.14 ..i was thinking about adding 14 more jan5 92.14  and selling the jan5 105's for net -800 and buy back the 6x jan5 100 for -4200…….leaving me with a jan5 35x 92.14-105 bcs…(discussed selling puts if it comes in)

     

    im now covered  to jan5 if i have to roll the sht calls to jan and if above 105 in jan roll every thing and if below 105 then the sht/long calls and add another sht segment………is this kind of what you were suggesting and position for future rolling………….or hold off awaiting the pullback you alluded to in earlier posts……………tks


  46. scottmi

    That thing is worthless, can't fish from that high!


  47. Phil // GLL
    If Bear Put Spreads require no margin, why do we offset them with short puts on a preferred stock ?


  48. Shadow-My fav is Walleye, & every now & then they have it here at the fish market. Higher price, but well worth it. The Atlantic fish I had never heard of was one we caught in the Carribean called "WAhoo." Only available in the winter for 2-3 weeks. but it was some of the best ocean fish I ever tasted. It was big so I got to eat it every day for a week at my son's restaurant.



  49. ~~Why investors shouldn't ignore geopolitics

    http://finance.yahoo.com/news/why-investors-shouldn-t-ignore-geopolitics-131204126.html

    That what you keep saying Phil.


  50. wahoo, is that a type of sea bass?


  51. Shadow – no, it's a UVA sports team. 8-)

    What Is A Wahoo?

    The most prominent and widely accepted nicknames of Virginia athletic teams are "Cavaliers", "Wahoos", and "Hoos".

    Legend has it that Washington and Lee baseball fans dubbed the Virginia players "Wahoos" during the fiercely contested rivalry that existed between the two in-state schools in the 1890's. No doubt this was a reference to the carp of the same name found in the waters of Virginia which is capable of retaining a prodigious amount of liquid to increase its size and fend off enemies. By 1940 "Wahoos" was in general use around the grounds (campus).

    Today the University faithful or "Hoos" for short, embrace and celebrate the "Wahoos" spirited capacity to prevail as their athletic teams continue the proud tradition of success and achievement at UVA.


  52. Shadow-Yes I believe so; very white, firm & mild. A little like Walleye, but not as firm flesh. My son catches Tuna, Swordfish, Shark, which he doesn't like, but puts up a big fight & has a good time. The Swordfish are great to watch as they fly out of the water with their acrobats-beautiful fish.


  53. albo / wahoos 

    do they compete retaining prodigious amounts of liquid to increase their size ?


  54. ~~The flesh of the wahoo is white to grey, delicate to dense, and highly regarded by many gourmets. The taste is similar to mackerel, though arguably less pronounced.

    http://en.wikipedia.org/wiki/Wahoo


  55. It's up, up & away in these markets-last hour sell-off?


  56. Wahoo – no, it's a town in Nebraska, somewhat to the west of Omaha (like almost everything in Nebraska). Composer/conductor Howard Hanson hails from Wahoo.


  57. Shadow-I've tasted Mackerel-this didn't taste anything like that. More like our Lake  Sup white fish.


  58. IRBT/Scott – If they want to keep giving us chances to buy, that's just nice of them.  

    TQQQ/Rookie – Same trades as before:

    Submitted on 2014/08/25 at 9:36 am

    SQQQ/Wombat – Of course the SQQQ is a bet against AAPL to some extent but, longer-term, there is some advantage to going short TQQQ (because of the decay) and I like the Jan $87.50/75 bear put spread at $4.75 in the $12.50 spread as TQQQ is up at $88.27 and decay alone will put you a buck or two in the money if the Nas flatlines at 4,550.  

    Anything below 4,500 (1%) is a 3% drop on TQQQ to $85 and that's $2.50 in the money already and another 1% to 4,450 is $82 and 4,400 is $79, etc – so, a few % drop in the Nasdaq can give you up to a 163% gain on TQQQ and that's nice leverage and the whole thing can be offset with short AAPL 2016 $80 puts at $4.15 or maybe BRCM 2016 $32 puts at $2. 

    Submitted on 2014/08/25 at 2:47 pm

    SQQQ/Sn0 – Well, if you sell naked puts and the Nas pops, you will end up owning a LOT of SQQQ – is that what you want?   I mentioned TQQQ above and for SQQQ I'd go for the Oct $35/39 bull call spread at $1.20 with SQQQ at $35.87 so you are mostly in the money with $2.80 upside (233%) if SQQQ goes up 9%, which would be a 3% drop in the Nas.  That's a good play by itself but then you can hedge it with something you REALLY want to own if the Nas does drop 20% – like those BRCM 2016 $32 puts I mentioned earlier at $2 – let's say you sold 5 of them and raised $1,000 cash and then you bought 20 of the spreads for $2,400.  That puts you in $8,000 worth of the spreads for net $1,400, pretty good protection against a small Nas drop and, long-term, you might get to own 500 shares of BRCM for $16,000.  

    TQQQ/Burr – All good except don't forget, you don't have to sell a "lower" put as you are going to be rolling up the Jan $75 put anyway.  So maybe you'll end up selling the Jan $75 puts for $3 and you will roll to the $85 puts at $6 (now $8), which would be net even for you on the roll and you'd have the same basis but now with the $85/75 bear put spread.  It could be $90/100 – whatever works best….   Same goes for the other roll – just examples, when/if it happens, we'll have to look to see what works best at the time.  

     Dyson/DC – Would be a logical thing for them to do.  

    Fly fishing/Advill – The natural movements of MY bait is using Open Table to book a seafood restaurant. cheeky

    Interns/Scott – The World has gone mad.  Again, this is why I don't work for people:

    "This year’s internship program was entirely cast and recruited through Instagram," said Jason Peterson, who runs the 500-person office and designed the internship.

    To apply, potential interns posted to Instagram.

    "It was a hashtag, Iamheretotakeyourjob," said intern Chris Hainey. That’s I. Am. Here. To. Take. Your. Job. "So, basically you challenged an employee that works here, and kind of posted something on Instagram saying why you would be better-suited for the position."

    She applied through a smartphone app called Popular Pays — a startup with offices at Havas. Popular Pays allows users get free stuff from local businesses if they agree to post photos of those rewards to a big enough group of Instagram followers.

    "That’s currency," Peterson said, "because I can go into Antique Taco and I can go:  OK,  because I have a thousand followers, I can exchange that currency for a free milkshake."

    "You will share that photo with that amount of people," Russett said. "Like, guaranteed."

    This prompted a question: "So, you’re saying, like:  I will pimp myself out to a hundred thousand people for a milkshake?"

    "Well…" Russett began. 

    Peterson interrupted, "Whoa, whoa, whoa. First of all, have you been to Antique Taco? It’s a horchata milkshake? It’s delicious!"

    If I had the job they are discussing and I were sitting at my desk with my constitutionally protected firearm – they'd both be dead!  

    2,000/Rustle – Well we knew that on Monday.  

    China/Jabob – I wish we'd do that here.  Then TSLA would go to $500, though. 

    $95.50 too beaucoup for oil so far, back to $95.25. Gasoline (/RB) topped out at $2.62 again for another quick $480 but not a good sign it can't close the deal over that.  Back to $2.605 now. 

    Thanks Den.  

    Carter/Rustle – The GOP killed that by saying a penny more on gas would destroy the economy.  That was back when gas was under $1, of course – it would be like adding a 3.5 cent tax now.  Fortunately, China is not as stupid as we are and they'll actually do something about it without selling out to special interests and selling their countrymen down the river.  Oh, I'm sorry, I mean those Godless Communists are going to subvert the free-market process again!  

    2 years/JPH – I thought it was odd too but I assume he meant 2 years ago + the 1,140 years it took for the light to get here.  

    Yacht/Scott – Well, I wouldn't mind being a guest but no, I don't want one:

    It stopped at Harbor Island last night for more than $500,000 worth of fuel to get the tank to full… and a crew of 42. 

    Gates rented another big one for $5M a week.  Now, IF I were going to want a Yacht, I'd much rather keep my $300M in the bank and just book a week here or there with the profits.  

    AAPL/Mill – See above, I'd give them a chance to pull back and, if they don't, THEN you can get more bullish.  It doesn't make sense to sing more money into it ahead of a binary event (9/8 announcement), which could send them either way.  There's still too many positions, it gives me a headache to look at it.  

    GLL/Wombat – What does one have to do with the other.  The purpose of the offset is to cover your trade idea in case it doesn't work out, not to decrease margin.  With GLL, the point is that it's a bullish play on oil and, if oil doesn't go up and put the spread in the money, then ABX will go down too but we don't mind owning them for net $17, so the $2 we collect selling those puts is like free money to put into GLL.  If  we're right (now $86.61), it's net $2.30 on a $10 spread and, if we're wrong, we own ABX for net $17.30.  These are both outcomes we would like – THAT's what makes it a good trade.  

     Blindside/Shadow – I hope not but this is disturbing by Trim Tabs (nothing we haven't discussed).  I like how Biderman knocks down one of Joe's standard talking points saying "I think that's nonsense."  Good interview with a smart guy.

    Meanwhile, 2,000, 17,090, 4,070 and 1,170 – time to play "short the laggard" again! 


  59. Phil // GLL
    Understood – cool.
    Thanks


  60. Wombat – I suspect it's a combination of whiskey and steroids to increase their size.


  61. Phil

    Could you please let your friends know 10% of one or 1% of the other is all I need to get surgery!

    It stopped at Harbor Island last night for more than $500,000 worth of fuel to get the tank to full… and a crew of 42.  

    Gates rented another big one for $5M a week.  Now, IF I were going to want a Yacht, I'd much rather keep my $300M in the bank and just book a week here or there with the profits.


  62. Yacht

    Some years ago a friend was the Captain on Victor Borge's boat, not a superyacht. The boat was kept in Connecticut in summer and moved to the Carribean in winter. He would call every fall to say we are moving the boat want to come along?. I'd always say " No I'm too busy" "What a fool I was". While in the Caribbean he ran into the captain of Tatoosh then about #3 in size, Paul Allen's yacht. He got a tour, was thoroughly impressed with the fact that the yacht "had no budget" said every boat had a budget but Tatoosh just spent what ever was needed! 

    About three years ago I got an invitation to visit the Octopus, another Paul Allen boat but the boat was in Cannes at the height of their season, I was here. I passed. 

    I did tour a "small" yacht in San Diego, about 125 foot. Had a crew of 6 was told the "budget" was 2 million a year! A bit beyond my means!


  63. 10%/Shadow – And then what would happen to the poor boats that run out of fuel 10% from their destination.  I don't even see a helipad on that Yacht, that would just be tragic.  blush

    Anyway, back to stocks:  CHK is beginning a triangle squeezy thingy between the 200 ($26) and 50 ($27) dmas and I can't see them being below $24 but I can easily see them in the $30s so I figure it's more likely to resolve up than down.  

    We've got the Ukraine and nat gas is over $4 again so the time for this one is now, even though they might tick lower should things calm down.  The 2013 $25/32 bull call spread is $2.75 and you can sell the $23 puts for $2 to drop the net to 0.75 on the $7 spread that's $2 in the money to start but I'd just be happy with the bull spread for now and, if all goes well, it pays $4.25 (154%) and, if CHK goes lower, then we can sell the $20 puts (now $1) for $2+ and maybe use that money to roll the $25 calls (now $4.75) to the $20s (now $8).  

    Last on my list is EXC, who proved they could hold the 50 dma at $31.50 so game on now.  We looked at them on 7/25 when they still had a bit more to fall:

    Submitted on 2014/07/25 at 2:23 pm

    EXC/Scott – Looking good but kind of a falling knife at the moment.  Any reason you are unable to wait and see if it actually makes a bottom?  Some family emergency perhaps???  

    They just did a big dilution with 50M new shares issued, which was about 6% of the float and the dividend is $1.24 and I doubt they sold those shares to give back $60M in dividends so expect those to be lower along with earnings, of course, since the money they raised is for long-term projects.  So, down the road – sure it's a nice stock to be in but, short-term, I think the only reason they PAUSED going down is because they hit the 200 dma at $31 (yesterday).  

    From $37 to $29.60 is 20% and 15% would be $31.45 so those are the lines to watch.  They didn't complete the 20% move but blew through 10% and slowed but made 15% and a bit lower so 20% still a good target but, at the moment, held up by the 200 dma.  Figure the $7.40 move would have the 20% bounce and that's $1.50(ish) to $31.10, so that's weak bounce support and another $1.50 is $32.60 and THAT is when they start to look like they are recovering.  

    NOW I feel comfortable picking them because they completed the downside move – especially as the 5% Rule worked like a charm on them.  That means we can expect them to be fairly easy to predict going forward.  

    EXC pays a nice 4% dividend, so that's worthwhile ($1.24/year) and we can buy the stock for $33.26 and sell the 2016 $32 puts and calls for $6.50 for net $26.76/29.38, which is a nice 13% off if assigned and 19.5% if called away at $32 plus the 4% dividend + 1% this year is 24.5% in exchange for promising to buy 2x of this stock for 13% off – nice work if you can get it!  

    Yachts/Gerry – I think part of the point of owning them is the ability to say "Look what I can afford!"  Those running costs make even rich people squirm.  


  64. phil, i have some QQQ $98 sept puts, bought at $1.10, now $0.55.  do you suggest rolling up, or up an out, or switching to the TQQQ spread?  thanks.


  65. Betting against some of Phil's beaten down faves: BTU, CLF, HOV, IRBT, RIG, TASR, TITN is rarely the right way to go. He has this uncanny knack of making his table thumping rewarding in the end. His stock of the century IRBT (or was it decade) can be had in the following combo: Buy Dec 30/35 BCS @ $2.35 financed through the sale of the Dec 30 put @ $2.00. Net cost of $0.35 with the spread already $2.22 ITM.


  66. Paul Allen has a place in this valley. He is one of the fly in-out in total secret. Never employed one local. I question if he is even a nice guy. Think he gets it? We know why he hides so is he having fun? 


  67. GSK/Phil:  Opened the trade this morning.  BTO stock at 49.10, STO Jan16 47/45 strangle for $6.90. 

    Found this very encouraging:

    The National Institutes of Health and GlaxoSmithKline are launching the first fast track human trials of an ebola vaccine. GlaxoSmithKline vice president of U.S. public policy Donna Altenpohl discusses the trials on the News Hub with Tanya Rivero

    http://live.wsj.com/video/human-trials-of-an-ebola-vaccine-launch-2014-08-28/1A31B778-4E29-4762-B6CE-F626D6FCB077.html#!1A31B778-4E29-4762-B6CE-F626D6FCB077


  68. Phil

    Bill Gates is saving Africa! How about 1 American?

    Crew of 42? Most with big BOATS ha ha use them to get away. Sounds more like a mob scene. Ever heard of the computerized sailboat built in Holland with silicon valley geeks and computers. Clark wanted to actually get away.


  69. IRBT redux/ another great combo: Mar 30/35 @$2.11 financed by the sale of the Mar $30 put for $3.25 (I filled at those prices) for a credit of $1.14 on the trade. Maybe it's the sale of the century.


  70. More Rolling Stone goodness:

    http://www.rollingstone.com/politics/news/sludge-match-chevron-legal-battle-ecuador-steven-donziger-20140828

    Not looking good for future generations. The corporate Congress will happen.


  71. …and of course kudos to lunar for the catalyst.


  72. I'm buying back my short calls on my long term 2016 CLF position.  Will sell them again when we get back to $18.  I've done this a couple times in the past year to further reduce my basis.  


  73. Good afternoon Phil, I was thinking about putting a hedge on, what do you think of TNA Oct 80-65 bear put spread @ $5.18?  Or I could buy the same spread for Jan 15 @ $6.00, but I'm thinking maybe if there is a selloff, we will get it in Sept / Oct, if not maybe current conditions continue through the end of the year?

    Thanks in advance


  74. CHK/ the last time I followed Phil into trading CHK it turned out exceptionally profitably – it just aged me by 10 years during the time I was trading it. Or should I say while I was using CAT type equipment to dig myself out of holes and rolls that seemed to be going nowhere but to kingdom come.


  75. QQQ/Lunar – I don't suggest naked puts at all, spreads are much better.  

    IRBT/Winston – That's century for them, TASR is decade, only 5 more years and I'll have to come up with another one for the 2020s!  

    As you can see, IRBT is a slower mover but, going past 2020, I'd certainly want my money on them.  

    You know, some guys would just make two picks like that, milk them for all they're worth and retire!  

    GSK/Jbur – I like the fact that they are in the UK and away from onerous US regulation.  It lets them get things done a lot faster sometimes.  

    Getting away/Shadow – I don't know, when we go on cruises I love walking the decks at 5am.  It's just me and the crew on a 1,000-foot ship and I think there's 1,400 of them and you'd hardly notice so I'm pretty sure 42 people on a 300-foot yacht are not "in your face".  Getting away from everyone sounds nice until I need an omelette or until the toilet clogs – then I want my crew!  

    Corporate Congress/StJ – Damn, by then my kids will be too old for the Hunger Games.

    CLF/Palotay – If you recognize a channel it's great to make those little adjustments. 

    TNA/Pwright – Not bad, TNA is $76.42 so $65 is – $11.42 or 15% so a 5% drop in the RUT gives you back $15. But, on the other hand, our TZA spread above pays 300% on the same move, so you've basically constructed a trade that has much more out of the money premium and pays much less.  I'd go with those (Oct) and, of course, when the price of the Oct $14s (now $1.13) falls to the net of 0.75, then you consider rolling to Jan, where the $14s are currently $2, so + $1.25 indicates this protection costs about 0.45 per month for the $3 spread.

    CHK/Winston – Oh yeah, good times…  cheeky  Those guys were under constant media attack for a long time and I know I seemed crazy telling people to stick with it but it seemed so obvious to me that the whole thing was being engineered to take the stock down.  That's why you shouldn't buy stocks you don't really believe in – it makes it so much harder to make good decisions going forward.  On the other hand, you shouldn't play stocks you believe in too much either – for essentially the same reason.  


  76. Phil – These picks that you are putting up.  Are they going into one of the portfolio's?  Just wondering.  


  77. Hedges/ my 2 cents worth. I took hedging seriously about 3 years ago, when my stash started to get to a level where I knew I was going to be seriously peeved if I lost a significant chunk of it. The hedges only acted as a drag on the full velocity of the markets crashing upwards. I know I should have gained comfort that I should consider myself fortunate that I was able to buy all those insurance premiums off of those nice people. Alas, no such comfort only bitterness and regret. TZA is an evil mistress. She sucks you in when she looks most attractive and you are most vulnerable then spits you out after having her wicked way with you. (You only need to look at the chart to tell you that). I came to agreeing with Phil that the ultimate hedge is cashing out. But under the rubric 'Why do good people do bad things?' I could never do the very thing that I knew was right. 

    If you are still in this market at these levels and fortune has been good to you, cashing out is probably the lesser of many evils. As Phil says, if we are really as good as we think we are (and collectively we may well be) there will always be plenty of opportunities at future lofty levels. 


  78. Phil – I've been looking at COG (Cabot) instead of CHK. Any views on COG? COG is at the bottom of their trading range going back to early March 2013. COG has a stronger balance sheet – less debt relative to CHK. COG has a higher ROIC (return on invested capital), similar P/E ratio, but trades at a higher P/B and P/S ratio. Option pricing is similar with CHK roughly 1% higher in implied vol. Not sure how to evaluate quality of management or drill site acreage. Hmmm, suppose I should research their reserves too. Thanks for your thoughts. Eric 


  79. phil/DXD, is the oct 25/29 bull call spread still open? or did it get rolled?  thanks.


  80. Winston thanks for your comment, that's exactly the quandary I'm faced with.  The decay on TZA has nailed me every time.  But it sure looks toppy at the moment.  I'm about 40% cash and about 30% in butterflies (which can do OK in a bearish environment), I keep thinking maybe I could play /TF in a downturn, but not sure I'm good enough yet to do that.  I may do what has been my default mode recently, take no action and ruminate over the weekend :)


  81. Phil-Speaking of cashing out, I need help. I bought 15x twtr 37c b4 earnings & sold the 15x 41 calls. I thought I was being the bank, BUT now I can' get out of this trade-I'm hemmed in. The 37 calls are heavy ITM & so are the 41's. I realize I should have sold further OTM calls, but never expected twtr to fly this high. I can hang tough until expiration but I am thinking they may just keep going higher on basically no earnings. At any rate, I learned a valuable lesson. Now I look very hard at the BCS I do since with this trade I have a lot of $ sitting there on the 37 call with no access. I can see a put, but does that cover the 41 call I sold?


  82. CHK / Phil – A lot was related to McClendon's antics at the time! He finally agreed to leave in January 13 and the stock is up 50% since then. Sometimes a change at the helm is what is needed… (cough) Ballmer (cough)


  83. "Sell" puts I meant. Anyone have any ideas? That's what happens when your new-learn the hard way.


  84. dclark41 – I was reading through the week's posts, and saw that you posted you're acct was up by 95%.  As I'm always wishing to learn, what was the major reason? 

    Good stock picks, a bull market, and options play's by Phil?

    Futures? Oil?  

    Just wondering.  My own acct is up nicely, but no where near 95%.  I'm sure that's due to my low use of portfolio margin on my acct (and having a baby girl).  Just wondering.


  85. Oops – anything can be cracked these days:

    http://arstechnica.com/business/2014/08/rival-may-have-roasted-keurigs-coffee-pod-drm/

    Back in March, Keurig announced plans to lock down its popular coffee pod system in an effort to make third-party pod makers pay for a license. But the company's plans may be foiled. A press release last week from Mother Parkers Tea & Coffee suggests that the Keurig "DRM" used to lock out third parties has been cracked and that Mother Parkers is now making coffee pods that can work in Keurig's brewing machines.

    I just don't know why people bother with these DRM protections schemes anymore. It usually only take days to crack them – look at DVD, blu-ray, ebooks, software. 


  86. Portfolios/Burr – Whoa, hold on there cowboy!  They MIGHT go on the Buy List and then, when and if they present themselves as exceptionally good buys AND they fit in an empty slot in our portfolio, THEN they MIGHT go into the portfolios.  We average 200 trade ideas a month, it would be a little impractical to put them all into our virtual portfolios.  The point is there are always trade ideas for people who want to construct portfolios LIKE the ones we demonstrate.  

    Hedges/Winston – Well over-hedging is as bad as under-hedging.  The main idea of a hedge is so that, if the market dives 10% overnight, you should only lose about 5% because you have your hedges and those hedges should cost about 1.5% to maintain.  Trying to make your portfolio "loss proof" only guarantees you will lose money no matter which way things go.  It's called a hedge – not a TOTAL LOSS STOPPER – those don't exist.  It hasn't happened since the Flash crash (and that reversed same day) but if you suddenly lose 10% – it can be annoying and the reason we can leave on a portfolio that's up over 20% is BECAUSE it's hedged.  If we weren't hedged and essentially even in the last 5% dip, that dip would have probably forced us out.  THAT is the value of a good hedge.  

    COG/Eric – They are simply not relatively cheap so CHK wins.  COG has a $14Bn value with (generously) $400M in income for a 35 p/e and they have $2Bn in debt and no cash ($40M).  CHK has a $17.5Bn value heading to roughly $800M in income for a 21 p/e but there's $20Bn of debt and $200M in cash.  Still CHK dropped $550M in cash to the bottom line after paying debt service last year while COG has no cash flow.  If you worry about debt and you believe COG is good at their job and will expand, then it's not a bad deal but it's a tough business and, in cyclicals sectors, I much prefer the biggest and best to the "promising" ones.  As to quality of reserves, COG is heavy into Marcellus and Eagle Ford, which can be expensive places to drill (and subject to potential regulations) while CHK, like ABX, has large and diversified interests and, when one place gets too expensive, they simply don't drill there.  

    DXD/STP, Lunar – We have just the Oct $25 calls in the STP, there are no short $29s anymore.

    TWTR/Pirate – Missing a big piece here.  If you bought 15 $37 calls and sold 15 $41 calls, then you have a $37/41 bull call spread and TWTR is at $49 so, if you leave it alone, you will likely expire in the money and collect your net $4.  When you sold the $41s, you capped your gains at $4 – there's no magic way to unwind it now and I wouldn't sell puts or do anything other than collect my $4.  No matter how high TWTR goes, you will still get $4 more than the short caller and your net would still be $4.  I know you now WISH you didn't cap your gains – but you did. 

    McClendon – They were railroading him, what he did wasn't so bad.  Aubrey was #6 on Forbes list of best CEOs of the past 20 years by returning an average of 20% a year to his shareholders.  Nothing at all like Ballmer.  It was the moves to get rid of him that tanked the stock, along with low nat gas prices last spring, so I'd hardly call the bounce back since to be "up 50%" because he left.  

    GMCR/StJ – Maybe that's what finally halted the up move.  


  87. Ok, that's why I was confused.  I'm reading this:

    "We've got the Ukraine and nat gas is over $4 again so the time for this one is now"

    "Last on my list is EXC, who proved they could hold the 50 dma at $31.50 so game on now."

    as NOW meaning right now.  I think you mean now as in "round about now"


  88. Thanks-From here on out I will definitely cap my gains much higher. Being the house didn't work for me this time, but since I'm learning a new system, I have to take my lumps. I did well just buying calls & puts up to now so I am going to have to blend my systems! This was way too much to lose.


  89. Phil re: hedges, if you're aiming for a cost of 1.5% of account value, is that on an annual basis?  Or over what time frame? 

    I think the trouble I've had was, I might pay 1.5% to cover my account, but that'll only get me 2 months, if I have to do that 6 times over a year, it's 9% a year, which is a lot.  But if I buy only 1.5% of my account value in hedges to cover me the whole year, it's not going to offer me much protection.

    Thanks


  90. Aubrey McClendon – As T. Boone Pickens said, "If you bet against Aubrey McClendon, you'll be scratching a loser's ass ! " ;-)


  91. pirate – What did you pay for the spread initially?  With a BCS that isn't a ratio play, it's easy to set an alert which would have you take action.  A straight up bull call spread, you will know how much you risk (what you paid as a debit), what the break even is (lower strike + debit paid), and what max profit is (width of the spread – debit paid).  You should know that info prior to even entering the trade.  It will also help you figure out if the Risk (R) is worth the return.  For me, a BCS has to be over 2R at least to play.  Ex.  Pay 2.50, if I can just make $5 (or 2R), it's not worth it, unless it's deep ITM.  JM2C.


  92. T. Boone not exactly a great reference himself Albo… Propped up on CNBC when they need to spike oil here and there! In any case, CHK not doing so badly without McClendon. I guess everybody has an expiration date!


  93. STJ – Yeah,  T. Boone always  talked up his book.  He's a colorful character, tho.


  94. Just a couple thoughts on hedges: TOS has the ability to tell you why the theta is across your portfolio. This  should give you some idea of what you are earning per day & month, and if you are spending a percentage of this on your hedges, and it helps you sleep better at night, it is, in my opinion, well worth it. This also helps you remain bullish during a brief selloff, and minimizes the in and out churn in your portfolio. 

    Alternatively, you can also just buy back some of the puts you have sold when they get ahead of schedule. Either of these approaches (and I do some of both) will reduce the overall profitability of your portfolio in a uni-directional (up) market, but the value you gain in peace of mind is priceless. 

    I usually buy back putters on an up day, when they are low cost and ahead of schedule, and that leaves me  flexible for the next sell off. 

    I also am mostly spreads and cash at this point, but for certain companies (AAPL, IRBT, HPQ, CSCO, KO etc) slow to pull the puts.

    I hope that helps as for some years I over hedged, and I don't believe I do anymore. 


  95. Phil

     It is fact that most people with boats are like people with cars. There are some that think riding in the back is pampering and being served an omelet is where it is at. Most want to drive the cool machine, catch the fish not be served it. If you cam have someone clean the fish, cook it, and clean up, but the fish I caught. I had a friend in CA that made lots of money tuning and detailing exotic cars. Tuning after say 500 miles but he was a bit offended that the owners would not let him even start them. He almost instantly had more than he could do, these car nuts were a big click and no one ever was so fastidious, once seen everyone wanted the same, most he ever got was a ride and dam few of them.


  96. deano – Too add onto that, while we never talk about greeks here.  Knowing you're overall portfolio greeks is an essential risk management tool.  Having a portfolio that is long delta, short vega, and neutral or low theta will be a killer in a selloff.  

    The caveat to this is if you are including inverse ETF's.  In an analysis, you almost have to invert the greeks of these ETF's if you are trying to understand how a portfolio will behave under stress tests.


  97. Phil

    This was not a service center, these people wouldn't' allow a dealer to touch their car. He came to their house with a van full of tools and cleaning stuff. The motor was most important, all polished parts, even underneath the car, polished exhaust pipes as well as the tip showing.


  98. Now/Burr – Well, yes, if you have room for trades in your portfolio, now is the time but we are already very bullish in our portfolios and certainly not looking to get more so into the holiday weekend.  There are hundreds of trades I like that I don't put in the portfolios.  If I did, then I wouldn't have time to look at any new trades, which is far more important – nor would I have time to manage or review the portfolios we do have – equally important.  

    Cap/Pirate – There's nothing wrong with a sensible cap, don't let the lesson be to be super-aggressive and take risks on the off chance your stock pops 20% on you.  

    1.5%/Pwright – No, that's of each 5% you expect to gain.  So, in general, about 1/3 of your profits should be recycled into hedges on a regular basis.  So yes, if we're making 20% a year, we probably did lose 9% on our hedges (1/3 of 30%) – that's the conservative, balanced portfolio approach.  As we talked about earlier this week (see, this is what a Wiki should be used for), our "Be the House" strategy is expected to make 20%+ in a flat or up market but it's also self-hedged (it doesn't really lose money until the market drops 10%), so we lightly hedge at the beginning but, as we make money, we hedge some more to lock in the additional gains.  Last week, we spent maybe $12,000 rolling DXD and SQQQ to provide more protection through Jan and, if we didn't expect to make another $36,000 (5%) between now and Jan if the market DOESN'T fall, that would be silly – we'd be better off cashing out!   Since we made 22% in the first 8 months, expecting to make 5% in the next 4 doesn't seem too crazy.  

    Good point on Theta, Deano.  

    Rides/Shadow – Are you saying cleaning the car give the guy the right to joy ride in it?  I hope the guys at my local car wash don't start getting ideas like that.  And, as to boats, at $500,000 a tank for gas, I'm pretty sure I'd shoot anyone I caught driving it around without my permission…  Isn't that ludicrous?  It cost the guy 20 Toyotas to fill up just one tank of gas.  

    On the other hand, a guy with $1Bn, even at 5% is making $50M a year while he sits.   That's $1M a week and I'm sure those tanks last a while, still has $500K of mad money left after a fill-up and then, next week – he gets ANOTHER Million!  That's why Oprah can do this.  


  99. pirateinvestor – Too late now, but what you “might” have done …

    If you still believed that the stock was going to move higher, when it moved near or past your sold call, you could have added another BCS at a higher strike (perhaps even out in time).

    Or, if you still believed that the stock was going to move higher, when it moved near or past your sold call, you could have then sold a put and used that money to roll your sold call higher. 

    The second scenario would add more risk than the first, but either one would work. Of course, it should go without saying: make sure you have a proper stop for the trade. 

    Note: adding to a winning position is hard for most people because they initiated the trade at a lower price and it begins to look (relatively) expensive. However, if the stock is trending up it could very well continue up and by adding to your WINNING position you can increase your overall gains. Also, by adding to your winning position, you already have a built in cushion in case you need to exit the trade (and still have a profit).


  100. Do you suppose the 42 year-old Russian billionaire just might have made his money by being a crony of Putin ?


  101. Phil

     You got the wrong idea. He did not want a joy ride, just to start and make sure they idled smooth, he had to go get them to time the engine, the bugged him along with pushing the thing. My impression was never joy riding but these people were paranoid about their things beyond reason, I said are they missing nails when you call they out?

    You are right about they have them to say I can. I admired Jim Clark, Netscape, silicon graphics, who drove the cars sailed his boat, and flew his helicopters and jet planes. The idea man that doing was more than having billions.


  102. I am tiring of the changed words, makes me sound stupid, I proof it and submit it changes. I see that happens to others including Phil.


  103. WOW! They knocked the 119 out of TLT.


  104. Crony / Albo – These guys made their money before Putin and then he turned them into his cronies and they made even more money! And a lot for him and his families as well. The ones who didn't turn cronies ended up in jail. Tough choice I guess…

    Amazingly, when I was in Russia I asked my boss why they are not angry about the fact that these oligarch made billions stealing from the state, basically from the people and he could not give me an answer. On the other hand, as pointed out by the chart I posted above, the top 1% in the US have been stealing from the bottom 99% and no one is angry either. Apathy has taken over this world it seems.


  105. phil……tks and have a good weekend.


  106. stjean

    I for one am pissed off that it was ever allowed!


  107. Thanks, scottmi, I have fun writing it, as it gave me the opportunity to think it through a bit.  Out of pocket today, changing countries over the weekend, running.  Good luck all.


  108. I am pissed off as well Shadow, but we are a very small minority!


  109. Phil, deano, burrben, many thanks re: hedges.  I will need to spend some time analyzing what you are saying against what I have in my portfolio, but I can say with confidence I'm gaining a much deeper understanding of the different variables at play in all of this, start feeling like I can drive this sumbitch, know what I'm saying?  It's a good feeling, although still a lot of work ahead of me yet to go.

    Thanks again, and good weekend..


  110. Phil – The Captain has informed me that the yacht is fueled and ready to go. ;-)  

    Have a great weekend all!


  111. Phil

    Textron Inc. (TXT) on defense

    Baxter International Inc. (BAX) on dividing the company like abbot

     

    For the buy list?


  112. stjean

    My Mormon friend, played the song I believe this AM, scary but he really does. In his 30s once divorced, one BK, lost house and car, and no job. Red as they come and "KNOWS!" he is about to be rich, married, and 10!!!! children. Can't get a date or job.


  113. Speaking of our Portfolios:  We're very well-balanced so no point in messing with things over the weekend.  The STP is up 33% at $133K and the LTP is up 21.8% at $609K so that's $742K, down $1,000 from last week – very balanced.   

    I do want to buy back the XRT Sept $88 puts for .85 in the STP.  

    There is no point to the short CAKE Oct $49 calls, let's close them at 0.10. in the STP

    The WYNN Jan $240/210 bear call spread is at $25, not worth keeping open as there is risk it could come back in the STP.  

    S25KP still getting killed for being too bearish at 6%, Income Portfolio up 8%, which is 0.9% better than last week and the Butterfly Portfolio is up 22.2%, up 0.2% from last week – slow but steady.  


  114. Just watching all indices go to green with the late stick:

    I would be nice to figure what stock they will manipulate to paint it where they want…

     

    Top Gainers & Losers In INDU

    Top Gainer

    % Change

    Home Depot Inc/The

    +0.83%

    Verizon Communicatio…

    +0.80%

    Microsoft Corp

    +0.69%

    Goldman Sachs Group …

    +0.57%

    Johnson & Johnson

    +0.57%

    American Express Co

    +0.48%

    Intel Corp

    +0.43%

    Travelers Cos Inc/Th…

    +0.35%

    JPMorgan Chase & Co

    +0.22%

    UnitedHealth Group I…

    +0.14%

     

    Top Loser

    % Change

    United Technologies …

    -0.98%

    Visa Inc

    -0.95%

    McDonald's Corp

    -0.64%

    Walt Disney Co/The

    -0.60%

    Exxon Mobil Corp

    -0.49%

    Wal-Mart Stores Inc

    -0.44%

    Boeing Co/The

    -0.43%

    General Electric Co

    -0.40%

    NIKE Inc

    -0.38%

    3M Co

    -0.19%


  115. Burbben

    Some large AAPL spreads, large GTAT spreads (twice!), and successfully playing CMG a few times on the upswing.  Those were major winners on my not so large portfolio (200k). Probably most important, no major losses!  One thing I have been doing better is not falling in love with any position. Over 20% is! well…., over 20%!!!! There are many things to trade in every day.  Part of my problem in the earlier days was holding trades too long without sound reasoning.  Now as a position gets more and more profitable (over 20%) I try to get more and more skeptical – actually looking for reasons to sell.  

    I wish I could tell you more, but I am not that good!  Like everyone else I am trying to improve my discipline and the reasoning I use on every trade. I have had alot of good fortune and the benefit of this site to help me this year that by the way isn't over.  Now, I have to find a way to increase my discipline and protect what I have earned without falling prey to this never-stop-climbing market!


  116. Phil // XRT
    Can you confirm ? I have a Sept 93/88 Bear put spread ( $3 )


  117. Idling/Shadow – Well if he's a detailer, that's not really part of his job but, on the whole, I don't care.  Yes, when you have an $80,000 car, you are a little particular about who rides it!   As to changed words, I'm pretty sure it's just my fast typing that causes the problem, not gremlins trying to make me look like a bad speller.  If I type on the IPad, I look really challenged, so I don't do that very often as AAPL does tend to decide what words I meant, vs what I actually said.  

    Nice little pop into the close – Window Dressing Rules!  

    Apathy/StJ – It's all media brainwashing.  They sell you the American Dream (cue Carlin Rant) and tell you everyone can have it and of course, out of 300M people, there are going to be hundreds of examples of people who beat the odds and climbed out of poverty and became rich so, if you don't do it – blame yourself, not society!  Then, if you watch what your kids are watching on TV, you'll notice some really insidious messaging in most of the shows and it's no different for us.  

    Hardly anyone on TV has bill collectors after them or can't pay their mortgage or is unemployed for 40 weeks and gets their insurance cut off.  People on TV don't have to beg their parents for money or struggle to put their kids through college and the police never stop and frisk anyone who doesn't deserve it.  Everyone at the hospital can pay their bills and the doctors can approve any life-saving measures, no matter what they cost.  Even the "reality" shows are the lives of completely unreal people doing unreal things.  

    People don't read books anymore, they don't read papers, they don't watch the news - this is all they know…  

    Oops, yes, have a fantastic holiday weekend everyone!  Get out there and CONSUME – your country is counting on you!  

    You're welcome Pwright – It's one of those tricky things that takes time to get used to (finding your balance).  Once you do get good at it, it's amazing how much less stress you'll have.  

    TXT, BAX/QC – I'll take a look.  

    XRT/Wombat – Now just the $93 puts.  


  118. Burrben

    Sorry for butchering your name with an additional "b"! 


  119. Burrben & all-thanks for your insight. Yes, I should have jumped when I saw that thing take off & reloaded. At times I just get stunned & find myself unable to make the definitive decision. Getting better-sometimes you just can't over think things. Nothing should surprise me, but…it still happens! This last "stick save" didn't though. Getting mighty predictable. Have a good & safe weekend everyone!


  120. Phil still missing it!

    He was a mechanic and a very talented one and restorer not a detailer!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1

    It started with one car at I believe at Silicon Graphics that would not start, girlfriend worked for that guy and said Walter can get it going. Allowed to replace the starter and he slicked up the engine compartment, expanded. Why are you looking for the bad side?


  121. 2003 - We did it!  Oil $95.88, gasoline $2.622 but /RBU4 shot up to $2.788 (up 0.06 from yesterday) – HAPPY HOLIDAYS!!!


  122. Mechanic/Shadow – Oh that is silly then.  How can a mechanic fix a car without driving it?  


  123. Burr-I have had gtat spreads four times & doing another. U might want to look at tqnt. Made some great plays on them. Waiting for the illusive "correction." Not yet it seems.


  124. One more thing on hedging: If you are watching the total value of your portfolio, even with a number of positions, you will find that the stated value swings wildly on a daily basis, as TOS (or whatever platform you are trading), may use the last trade or a theoretical value to calculate the value of a position. I find that these are typically WRONG or WILDLY MISTATED and prefer to watch the value of the underlyings, along with some understanding of what the vix and the market are doing. Oh, and I watch cash, probably most of all. 

    Have a great holiday weekend all!


  125. Exactly! They wanted tuning to perfection and an engine compartment to eat off. Ready for the Concurs De Elegance with the hood open. He never drove one of them. CEOs in CA are different than NYC. They drive million dollar cars to work at least in silicon valley. It isn't Hollywood either. 


  126. I was playing around with TASR today, and got my Jan16 -13P, +15/17 bull call for a credit of -1.33.

    Mid looks to be around -1.00 with TASR at 15.52, the spread is 0.52 ITM, but with the credit, the BE would be 13.67 on TASR.  Me like.


  127. Comic relief: "Kim Jong Un’s personal banker ‘defects’ – with his $5m"

     

    Less amusing – Putin playing the nuclear card, not reported in the English language press I've read:  [from La Vanguardia, Spain] "Putin contestaba preguntas de los jóvenes seguidores, algunos de los cuales ondeaban carteles con su rostro, en un campamento a la orilla de un lago. Vestido con un jersey gris y unos vaqueros, parecía relajado, pero su tono ganaba en intensidad cuando hablaba del poderío militar de Rusia, recordando a la multitud que Rusia era una fuerte potencia nuclear. "Los socios de Rusia… deberían entender que es mejor no jugar con nosotros", dijo Putin."  Oh, yeah.

     http://www.lavanguardia.com/internacional/20140829/54414124018/putin-recuerda-socios-rusia-potencia-nuclear.html#ixzz3BoYDxEhL 
     


  128. Rides/Phil – Ok Phil, need to call you out here. Would you really shoot a guy who took a joyride in your exotic?! I noticed a couple times recently when you said you'd "shoot" this guy or that guy…I understand being the father of pretty daughters, but really. Is it a liberal thing, or a Jersey thing, to bandy words regardless of meaning or true intent, implying one thing while on the other hand not actually owning any or even promoting the things be banned? Or is it just ignorance of the real seriousness of such tools that allows you to feel so free to say you would do such things, even in jest?

    A must read book for any gun owner (or "I'd shoot 'em" talker) is "In the Gravest Extreme" by Massad Ayoob. Really helps anyone understand just how much that actually shooting someone is the very last thing you would want to do.

    http://www.amazon.com/In-Gravest-Extreme-Personal-Protection/dp/0936279001

    Of course, I believe you use that term in jest, without literal meaning, and are fully cognizant of the seriousness of guns, but I do wonder about the general non sequitur of those who promote banning guns also so freely threaten their use in everyday conversation. I have observed that numerous times, from a number of "gun banners" I know as it stands out so much to me.  — And, it is a great book that I heartily endorse for anyone who has ever contemplated actually shooting someone (implicit in owning any firearm with a thought it might be used in self defense) to read! (And for people who say they would shoot someone!)

    Have a good holiday weekend! :-)


  129. Phil

     These excessive compulsive rich guys I can somewhat understand but I think they go too far. This is foreign to you but I like doing myself. I wanted to make my car as fast as possible on pump gas, an industry of idiots that talk the talk but that's it other than $$$$$$. I did my own, took 3 months down time upgrading every input output, injectors turbo, intercooler enlargements, polishing runners in a compartment we 1/4" clearance. Then first I paid a tuner to reflash the computer, he got it running but not good. Spent 6 months learning how to program the thing and do other stuff little known to perfect it. now my only issue is I have to use a hybrid computer mode to have a smooth idle. I am sure it has to do with cam timing but no info because it effects emissions.

    My 1986 motor cycle is I owned a Harley franchise in 1987 and to show what could be I let my main guy try to make something of my bike. He failed not once but 3 times including after I shut that down with Harley wanting too much money put in to ever make a go of it. So eventually I rebuilt the entire thing and all was well until the main drive gear broke Oct 2000, just before the accident Mar 2001 I have be on and off fixing my first transmission ever 2 months because I want it fixed forever not another weak gear put in. Other than I can't move in sometimes as little as 30 minutes I am enjoying it, the transmission is back together with upgraded gears, seals and now I have to put together the first multi-plate fluid clutch ever. Maybe next year I can ride it or at least I can now sell it, a very rare maybe 500 ever made bike. Parts were a total nightmare and when done it has 2X stock HP and the drivetrain will be stout enough to take it, that was part 2 on the car also. There is no finer satisfaction than I DID THAT for some of us.

    Learning is a bonus that many never try. If not hard, little reward.


  130. And they said that healthcare.gov was a disaster:

    http://talkingpointsmemo.com/livewire/florida-health-choices-30-people

    This March, as an alternative of sorts to the Affordable Care Act, Florida's Republican-led government launched a health insurance website called Florida Health Choices. It had no relation to HealthCare.gov, the federal Obamacare website, and offered limited-benefit options that cover things like prescription drugs and dental or vision services.

    But since the launch of the Republican alternative, Florida Health Choices has signed up 30 people, the Tampa Bay Times reported Friday. By comparison, 984,000 Floridians enrolled in private coverage under Obamacare and 764,000 low-income residents were unable to obtain any kind of coverage through the federal law because the GOP- controlled state legislature refused to expand Medicaid.

    Wow, 30 people… Must Marco Rubio's family!


  131. On why forecast are foolish:

    http://www.ritholtz.com/blog/2014/08/about-david-tices-60-crash-call/

    Earlier this week, Prudent Bear fund founder David Tice warned of an imminent crash — as bad as 30-60% down on the S&P500.

    One small thing: This is pretty much the same call that Tice made in 2010 and 2012. Apparently, if you make the same crash call every 2 years, most of the media and viewers will have forgotten the prior crash forecast.

    Only Google never forgets. In 2010, Tice warned that the Secular Bear Market will not end until we get back to book value or below (Federated’s David Tice Is Not A Fan Of Fed-Manufactured, Free Money Driven, Bear Market Bounces, Sees “Huge” Potential For Decline 03/19/2010).

    He repeated that crash call in 2012, predicting “Gold Will Surge To $2,500 And The S&P 500 Will Plunge To 1,000.” Meanwhile, the market rallied to 2000, a 100% gain versus the forecast.

    Regular readers know that I believe forecasts are folly.

    And one day, the market will have corrected 20% and CNBC will parade this guy as having predicted the correction even though is he wrong 90% of the time!


  132. Excellent article about Ukraine and Putin:

    http://www.vox.com/2014/8/29/6082769/one-chart-why-putin-invading-ukraine

    In a rational world, Putin would have cut his losses and withdrawn support for the rebels. But, thanks to months of propagandistic state media, Russians do not live in a rational world. They live in a world where surrendering in eastern Ukraine would mean surrendering to American-backed Ukrainian Nazis, and they believe everything that Putin has told them about being the only person capable of defeating these forces of darkness. To withdraw would be to admit that it was all a lie and to sacrifice the nationalism that is now his only source of real legitimacy. So Putin did the only thing he could to do to keep up the fiction upon which his political survival hinges: he invaded Ukraine outright.

    What makes this so scary is that it means that Putin does not have a rational strategy in Ukraine, because he is not invading for rational strategic reasons. If he had a specific objective, then the West could make some concession or find some way to meet him halfway. But he does not. He is invading because the momentum of the crisis he himself created is careening beyond his control, and there's nothing that he or Ukraine or the United States can easily do to stop it.


  133. Ukraine/Stj – do your Russian coworkers agree with the article?


  134. Ukraine / Scott – I have not asked them yet, but for most of them, I already know they won't as they are themselves victims of the propagand!


  135. I meant to say unless something is 100% truth it is false.

     

    zero said;

    Truth?  Well, let’s see.  I assume you accept the “scientific fact”, based on DNA and much else, that we humans are simply a more advanced form of monkey.  Even the word “advanced” can be doubted, given the rate at which we are destroying our earth habitat, so let’s just say “clever” for now.

     

     

    No, I do not believe we are a more advanced form of monkey. I believe human beings are created with free will and animals are not. Human beings might make bad decisions but that does not mean that we are only clever monkeys.

     

    zero said;

    So you believe in the existence of “100% truth”, do you?  But you do agree, I should think, that humans are trapped within our own perceptual limitations.  Whales and other cetaceans detect wavelengths well below our hearing range, insects detect wavelengths well above our ability to see light, wavelength, and dogs detect scent thousands of times fainter than we can.  All forms of “truth” of which humans are blissfully unaware. 

     

     

    Animals could be stronger physically and have better senses but that does not mean they have the ability to make moral or immoral decisions like human beings.

     

     

    zero said;

    So 500 Billion X 17 Billion planets would equal more planets than Phil would tolerate me writing out in zeros on his site.

     

    I don't know about martians or other life forms and/or civilizations. Neither of us have seen any proof that there is other civilizations besides the ones on planet earth.

     

    zero said;

    Hence there can be no “objective truth” upon which all creatures in the universe would agree.

    There is no escaping the point of view of the observer – unless, of course,  you re-define “truth” to mean “what any creature of any composition whatsoever and whatever form of consciousness it may have [lizards, dogs, Martians, Alien Atomic Slime Mold] perceives to be “true”, even if they all disagree radically.

    In which case there is no One Truth – there are only observers and interpretations.  Jabob, you don’t even have to leave the Planet Earth to see that – just ask the Pope, Putin, the leaders of ISIS, the Dalai Lama Jerry Falwell, or Phil on any given day!!!!

    And as far as your belief that there are phenomena known as “objectively moral”?  Your problem is much worse there, I’m afraid, since moral systems are invariably products of local conditions.  But surely you can see that, given the variety of religions and belief systems that have evolved [and often disappeared] over the ages???  As-salamu alaykum.

     

     

    We could agree to disagree. There can be an objective morality even if human beings disagree or don't want to believe it is true if it was given by the Creator. Again, I am not talking about animals since I do not believe they have free will. The life from outer space I have no opinion about since we do not even know if it really exists. The people you mentioned could all disagree about an objective truth, right? Which is part of the reason why I said that subjective morality does not and has not ever worked (e.g. ISIS). There are moral "rules" that will stand the test of time in my opinion. Whether they are observed or not is up to us. Again, I am not saying that all religions are true or that you need to be religious to be moral. But I think most religions are very helpful when it comes to helping a person become more moral if he or she desires to be. Gotta run.

     

    Have a great weekend PSW


  136. Morality and Truth - The weekend is here and oh, this is too much fun. Like a high school party! ;-)   Einstein did not actually say "everything is relative,"  but can there be an 'objective' morality? Sounds too much like Plato's perfect forms. Is there an actual table that is Plato's perfect table? (Count me in the "Plato Sucks" camp!)  Now truth.. uh oh. By promoting the scientific method and the notion that we are (genetically) little more than clever monkeys, Zero implicitly endorses the concept of objective truth. But… a truth is not a moral thing. I don't know where that leaves us, but straw men, red herrings, tautologies and circular arguments aside, arguing truth and morality sure is good entertainment! ;-)

    http://www.einstein-online.info/elementary/specialRT/relative_to_whom

    http://www.ehow.com/how_2148157_understand-platos-forms.html

    http://www.audible.com/pd/Comedy/Plato-Sucks-Audiobook/B002V0Q0SS

    http://atheism.about.com/od/philosophyepistemology/a/ObjectiveTruth.htm

     

    To throw some more things into the mix, here's a moral code that doesn't require 'religion':

    Philosophy of Liberty
    http://www.youtube.com/watch?v=muHg86Mys7I

    and here are a few screeds from the inimitable Pat Condell (some will enjoy more than others):

    Why does Faith deserve Respect
    http://www.youtube.com/watch?v=WPAC_cGVnUg

    What's good about religion
    http://www.youtube.com/watch?v=Ly62n36nn0k

    God bless atheism
    http://www.youtube.com/watch?v=y4mWiqkGy-Y

    God the psycho
    http://www.youtube.com/watch?v=G5JtxrR6msg


  137. StJ:  I don't agree with your "no strategic objective" premise.  I don't see much evidence that Putin is a spontaneous or impulsive type.  Entirely the contrary:  one doesn't rise from being a 3rd level KGB agent in a crumbling empire to effectively its "Czar" if you have don't have very clearly and attainable strategic objectives in mind at all times.  I am no student of Russia in any professional sense, but at quick look at the map would suggest that cutting off non-Russian speaking Ukraine from all coastal access to the Black Sea seems pretty strategic to me — along with his more general objective of re-establishing the large buffer zones created by the architects of the Soviet Union between Russia and its traditional enemies - Germany,  Poland, Japan et. al..  

     

    This is not, historically speaking, irrational.  You have heard of the Teutonic Knights, of course:  "In 1337 Emperor Louis IV allegedly granted the Order the imperial privilege to conquer all Lithuania and Russia. During the reign of Grand Master Winrich von Kniprode (1351–1382), the Order reached the peak of its international prestige and hosted numerous European crusaders and nobility."  And I need not mention Hitler's invasion of Russia, a war in which Russia lost up to 20M people — at the least 11 Million soldiers and almost 7 million civilians.

     

    Historical enemies aside, Putin perceives that the Soviet Union was destroyed by "external forces" that have turned Russia into a weak and humiliated backwater — "Upper Volta with missiles", I've heard it called — and, for all his Machiavellian impulses and undoubtedly immense personal wealth, is thoroughly Russian – and Russian do love the "Rodina."  In sum, Putin is behaving more or less the way you would expect any strong Russian leader to act in similar circumstances.  But Russia has very seldom initiated wars.


  138. Russia – must see movie is "Russian Ark." Fabulous.

    http://en.wikipedia.org/wiki/Russian_Ark


  139. Zero – In many cases, people start with a limited strategic objectives and things get away from them in spectacular fashion. That has happened many times in history. I believe it to be the case at the moment and I think that it's the gist of the article. Putin did start with the idea of creating a buffer zone with Belarus, Ukraine and the old Soviet Republic. He supports (and supported) politicians in these countries (look at the Belarus dictator) but in the case of Ukraine, the people were looking West to Europe rather than East to Russia. At that point, Putin had 2 choices, forget about Ukraine as a buffer and let it integrate the European economic zone or move ahead with other means. That led to the invasion of Crimea which quickly led to the Easter Ukraine mess we are in. I doubt that Putin wanted the kind of situation that Russia is in right now. Wars are never popular for a long time especially if casualties and costs mounts. 


  140. Scottmi:  I'm not sure what your point is, exactly.  But if anything I said implied that I am "against religion", I am not.  Yes, we are a kind of monkey, sorry — DNA is not a fiction invented by devil worshippers.  On the other hand, we are a particularly savage kind of money — I believe the term "killer apes" has been applied to the human race at times — and I am in favor of any form of social control, whether religious, idelological, political or social, that restrains the less fortunate impulses of mankind and helps us live together peacefully.

     

    And, no, I argued exactly the opposite — that there is no "objective truth"  -- that truth, like beauty, is purely in the eye of the beholder.  Or, as I stated it last evening, of the "observer."  

     

    In sum:  one  doesn't have to believe in invisible devils or gods [or visible, if you've imbibed the right substances or rearranged the right brain cells] to understand that "belief" can be a force for good, and a very positive influence on human behavior.  I am not against religion.  I am against one person ,culture or religion [think "Islamic State" or Spanish Inquisition"] staking a superior claim to "what g-d intends" and lording it over the rest of us.  Belief should a private matter between a man and his g-d, not a doctrine used as tool of temporal political control.

     

     To the extent religion helps accomplish that — which at times it has, and at other times, it has not — I am in favor of it.  I attended 


  141. Catholic schools all my life, was given first Communion in Rome, and am well familiar with religion and it's practices.


  142. StJ:  I'm not sure was Putin is up to, since he hasn't called me recently.  In general, I think he believes that the disintegration of the Soviet Union was both humiliating and strategically unfortunate in Russian terms, and that clawing back some of it is a good thing.  I don't believe, as you do, that his aggression in the Ukraine was happenstantial — after all, he was firing artillery into the Ukraine in support of Russian interests from the get-go.  And I think he's rightly convinced that the West is not going to go to war to "liberate" the Russian-speaking part of the Ukraine, which happens also to be the part that has Black Sea coastline.  I don't think Putin planned this, but I believe he's pretty sure he can take advantage of it.


  143. StJ:  This just posted: "Putin compares Kiev to Nazis as Ukraine conflict intensifies"  - http://www.thetimes.co.uk/tto/news/world/europe/article4190710.ece


  144. Another great mind on religion – Bertrand Russell: 'Why I am not a Christian'. video (3:23)


  145. Phil:  At your recommendation I stress tested my portfolio. It has 55 positions all but one are options. All have desk stops with the maximum risk of 1% of the starting $500,000 portfolio. If all stops are hit the loss would be $135,240. The profit on closed 2014 trades is $197,349; unrealized profits $62,205.

    Hope this makes sense.  Have a wonderful Labor Day weekend. 


  146. ISH4GOD/    How dare you post a question about investing, especially after hours!    :)

    Jabo/   In the conclusion of your 6:19 post you said  "subjective morality does not and has not ever worked (e.g. ISIS)."  I hope you are correct,  but as far as ISIS is concerned, the answer remains to be seen.


  147. U.K. Wants EU to Block Russia From SWIFT Banking Network

     

    We still have a lot of soft power left to use on Russia before we need to resort to any military action.  Russia can still conduct normal bank transactions via SWIFT. If you think about it, we really haven't even begun to turn the screws on them.  Disrupting their entire banking system would be a good start, and I think thats Obama's plan — tan suit notwithstanding.


  148. Good point Deano, those swings can get very wild and, as spreads widen, can give you pretty inaccurate readings.

    Putin/ZZ – I agree with your analysis.  That's why I put up that policy speech of his the other day – he's quite the thoughtful guy and certainly a gamesman – not some thug to be taken lightly.  Even more so, as I noted a couple of weeks ago – he's aging and thinking about his legacy.  With Billions of Dollars, this isn't about money or power for him, but about making a mark and going down in history the way he wants to be remembered.  I had thought he was going to flip around and turn this into a Nobel Peace Prize (after all, Obama got one while bombing two countries), but it is possible he's now caught up in a Nationalistic momentum that can become worrying.  

    By the way, does anyone even remember that, had we not interfered and trained and armed people like Osama Bin Laden to fight off Russia, that Russia would control Afghanistan by now?  I hate to say it but I certainly doubt things would have been worse with Russia in charge and they probably would have kept Iraq in line too.  

    Shooting people/Scott – Well, I apologize.  I had mistakenly thought that Steve Martin had clarified the concept of humorous references to shooting people back in 1978.  Or perhaps it was the earlier works of Sam (Yosemite) and Fudd (Elmer) that really paved the way for gun humor?  Of course, I guess it's different in different parts of the country because I live in NJ and, despite our reputation, we don't have many guns and we certainly don't go waving them around threatening people with them so it's pretty much a given that if someone says they will shoot someone, they are JOKING, because it's RIDICULOUS – civilized people don't shoot people – ever, for any reason.  

    So yes, I guess it's a liberal, Jersey thing that we don't take people seriously when they say they will shoot someone because I don't know anyone who has shot anyone else (other than war) EVER.  I guess it's an "other freakin' side of the country thing" that you could possibly entertain the idea that a person could be serious saying they would shoot someone and all I can say about that is – thank God you guys are 3,000 miles away!  

    I do realize shooting someone is the last thing you'd want to do.  We solve this problem BY NOT HAVING GUNS!  And yes, we do prefer it if other people don't have them either.  I know this may be a shocking statistic but, in countries where guns are banned – people tend not to get shot.  I know, it's a stunning leap of faith to imagine such a thing is possible – less guns equaling less gun violence – who'd have thunk it?  

    The correlation chart does indicate how far to the polar opposite us Liberal, educated gun-banners are from the Conservative "freedom lovers" we share this country with!  

    Florida/StJ – Wow, I wonder if there was an investigation into how much money was wasted on web sites and administration, etc to create an entire health care system that ends up serving 30 people.  Apparently their web site had "several delays" – was anyone fired?   Calls for impeachment?  Here's a good quote about the Florida program:

    he bill,  SPB 7144, "would not remotely provide health coverage of any kind," said Greg Mellowe, policy director for Florida CHAIN. "Quite frankly, many drug store chains have coupons in the Sunday paper that would accomplish more than this."

    Richard Polangin, government affairs director for Florida Alliance for Retired Americans, offered similar sentiments. "Unfortunately, Senator Bean's anemic proposal is like giving an aspirin tablet to a patient who needs open heart surgery," he said.

    The bill rejects federal funds and offers just $10 a month in state funds to put in a "health-benefits account." To get it, the patient would have to put in $20 of his own (as the bill was originally written; however, Bean said that might be altered to $10).

    So the result would be $20 to $30 a month that could be used to shop on a state-sponsored health-product exchange — if anything were available at that price. 

    "Not only is it not coverage, it isn’t even a minimally adequate health savings account," said Florida CHAIN's Mellowe. If anyone signed up, they would still have to cover nearly 100 percent of their own medical expenses, he said.

    These are not well-meaning people trying to help.  These are evil people purposely stopping 1M+ people from getting the help they need – help that is being offered to them – out of spite and for political game.  I hope there is a Hell so the people behind this farce in Florida can burn in it!  

    ‘Lord, when did we see you hungry or thirsty or a stranger or needing clothes or sick or in prison, and did not help you?’

    45 “He will reply, ‘Truly I tell you, whatever you did not do for one of the least of these, you did not do for me.’h

    46 Then they will go away to eternal punishment, but the righteous to eternal life.ij

    Seems pretty clear-cut to me…


  149. Forecasts/StJ – Hey, it worked for Rubini as well as Meredith what's-her-name (already forgotten).  

    Truth/Jabob – So you are saying you don't believe in DNA?  DNA analysis clearly shows we are exactly an advanced form of monkey, barely distinguishable and sharing 99.99% common traits.  If you can't accept that as being true – I'd stay away from Biotech investing. wink  I'm not trying to be mean, just want to legitimately discuss but, as I'm sure you know, I do find these discussions generally humorous because we're not going to settle anything – I just find other people's points of view fascinating. 

    As to animals not having the ability to make moral or immoral decisions – haven't you ever owned a dog?  I've seen my dogs guilty on many occasions – they KNOW when they've done something wrong, I have no doubt whatsoever about that.  That's what morality is, they understand right from wrong as well as most children.  

    Here's a great example of how close gorillas and people really are, not scientifically but emotionally:

    Now, on to civilizations.  The problem is, for the most part, that the universe is 14Bn years old (or 5,000 years old, depending on what books you rely on) and we've only been able to listen and broadcast for the past 100 of them.  Since most planets are hudreds and thousands of light-years away, even if they are full of life, a round-trip communication would take longer than we've been broadcasting so far.  

    Even if we assume there are millions of civilizations out there, they would still be spread across billions of years and unless the civilizations themselves survive long enough not to nuke themselves out of existence or melt their planet through Global Warming when they discover fossil fuels or accidentally create a black hole in a super-collider that sucks up their planet – then there's maybe only a very short coincidental window that would overlap when two civilizations might hear each other.  

    If Einstein is right and light is the fastest we'll be able to travel – visiting other solar systems just isn't going to be a thing – no matter how advanced a civilization becomes.  For example, saying there is life on other planets is about as certain as saying there is a certain type of caterpillar eating a certain type of leaf on a tree in a forest and that, at this precise moment, it's also pregnant.  Statistically, it's almost a certainty that that's true (and then consider how many forests there are on Earth besides the one you are in) - but good luck finding it or of it finding you!  

    Unfortunately, if you do happen to find the caterpillar, the encounter is not likely to go well for the caterpillar because you are a gigantic, clumsy, very advanced species that has little respect for the caterpillar, its privacy or its environment – this is what Steven Hawking is concerned about.  

    I disagree with ZZ though in that there are some objective truths.  Math should be objectively trues for all of us as well as physics and chemistry.  Just because you are silicon-based doesn't mean 1+1 would = 3 on your World or that you don't need two hydrogen atoms and one oxygen atom to make water.  Water might be poison to them – but it would still be water.  

    That's the problem with truth, you have to have a better definition for it before you start declaring it objective or not.  Is water poisonous?  Well, not for us but for wicked witches and aliens – maybe.  Is it wrong to chop a person in half or, if they are a worm, are you helping them to reproduce?  This is why Buddha says we must all seek our own path to enlightenment – those paths may be different, but it's the journey that matters, not the destination.  

    Now, the objective morality thing is very tricky.  Man is the only creature on the planet that kills for sport and also the only creature that murders ourselves.  Are we defective?  Hard to say.  Apparently it's some kind of advantage as we've spread across this planet like a virus and become the dominant life form in less than a 5 Million years – so much so that we're killing the planet.  As I mentioned before, for the first 4,990,000 years of this human roll-out, we haven't even had written language and I doubt speech is more than 100,000 years old so, for 4.9M years, we evolved (I know, iffy word) from Austrolopithecus to modern man relying ONLY on objective morality to guide us – whatever that is.  

    Einstein/Scott – What Einstein said that relates to this discussion is: "Since the mathematicians have invaded the theory of relativity, I do not understand it myself anymore."  You're right, he said no such thing, though he did hope to prove that everything was connected somehow.  

    Nazis/ZZ – That's a very unfortunate term for Putin to use, incites a lot of bitterness and hatred in Russians.  

    Stress Test/IHS – And would you not be upset to lose $135,240?  Maybe, at this point, it might make sense to take your $197,349 off the table and now CONSERVATIVELY try to set up a well-hedged set of positions aiming to make a modest 20% more over the next 12 months (or call it 16 months using 2016 options).  55 positions is a lot to manage and way too many to deal with in a crisis.  If there's no crisis – you'll make 20%.  If there is a crisis, maybe you'll save $100,000 – isn't that worth risking not making 30% by continuing to be so aggressive?  

    Final word goes to the master:


  150. WinstonPort Returns – various parameters

    First 2 numbers Incr/Decr on absolute current value (as stated by TOS statement

    Second set is return on invested capital (i.e. portfolio value – option buying power) – obviously I would be using those figures if I was marketing a proposition to subscribers/fund investors :)

    Jan 14:  MTD -5.8%;  YTD -5.8%;  MTD -10.7%;  YTD -10.7%

    Feb 14: MTD +5.8%;  YTD -0.4%;  MTD +27.4%;  YTD +13.8%

    Mar 14: MTD +1.4%;  YTD +1.0%;  MTD -4.7%;  YTD +8.4%

    Apr 14: MTD +6.9%;  YTD +7.9%;  MTD -7.5%;  YTD +0.3%

    May 14: MTD +4.6%;  YTD +12.9%;  MTD +19.4%;  YTD +19.8%

    Jun 14: MTD +0.3%;  YTD +13.3%;  MTD -1.6%;  YTD +17.9%

    Jul 14: MTD -0.7%;  YTD +12.5%;  MTD +1.2%;  YTD +19.3%

    Aug 14: MTD +3.0%;  YTD +15.9%;  MTD +3.7%;  YTD +23.8%

    So, the portfolio is up nearly 16% year to date, and if I use the basis as the actual funds invested (which in TOS terminology is Net Liq. Val. – option buying power) then the portfolio is up nearly 24%. This performance included the January setback. I don't know whether the figures of returns on invested capital are 'valid' – but it does show how effectively margin is being used. Cash in TOS is rather a misnomer – the only retrievable amount from a TOS is the amount of option buying power you have.


  151. YTD return for major US indices:

    DJIA: +3.15%

    S&P500: +8.39%

    NASDAQ: +9.67% 


  152. Lotta stones posting that, Phil  - Torquemada  might cancel his Membership.


  153. Putin / Zero and Phil – That's the point of the article I posted. He is now caught up in that nationalistic frenzy and he can't back down so what does he do – go one notch further and starts using terms like nazis, fascist and so on.

    When I was in Russia, that was the term that they used for the Ukrainian protesting in Kiev. In their mind, everybody in the streets of Kiev was a fascist thug and that's the way it was described on TV even though I am quite sure there was plenty of provocation from pro-Russian agitators.

    The problem is that when you escalate to that level, it becomes very difficult to track back because how can you explain letting fascist thugs go unpunished. It's not going to end well… We have to be careful when we give a guy like Putin too much credit for being some kind of chess master. The guy is certainly very smart, but he benefited from a huge power vacuum at the top of Russia. It's somewhat common in history – look at Hitler for example, or Napoleon, and many others. Not many of these guys do well in the long run. No doubt Russians are now doing better than before, but it's also possible that they could do better without his heavy handed methods and the rampant corruption that he promotes. You can't give Putin too much credit for oil prices going from $30 to $100 for example and that plays a big part in the "success" of his policies!  And in the meantime, he is making plenty of enemies and in a globalized world, you need more friends than enemies. Especially when you have China in your backyard eyeing these natural resources you have in Siberia.


  154. And furthermore, I would be interested to see how Putin's methods would work with a Republican congress in a more open democracy! The other day, one of the Fox girls was saying that she wished Obama was more like Putin. Of course, she probably doesn't realize that if Putin was in power here, no opposition TV network like Fox would be tolerated! Details of course…


  155. This is really a dangerous market – we know it's propped up by free money but over the last 3 years, every single dip has been a buying opportunity leading to higher highs. A pretty reliable indicator seems to be the number of S&P stocks below their 50 DMA:

    Every time it has dipped below 30%, you can enter long the market! Even the recent dip has led to a 5% move. In a month… And this is an index, not a 3x ETF! The danger with that is that one day, we might enter an extended period where a majority of stocks will be below their 50 DMA and there won't be a snap back for a while. And some people will be caught with their pants down! 


  156. Lots and lots of data next week! On top of the geopolitical issues – could be a dynamite week!


  157. BTW, Bloomberg says that ADP is released on Wednesday but I checked at the ADP site and they say that the release date for the August numbers will be on Thursday 9/4. That happened last year because of Labor day as well.


  158. Maybe robots won't replace us:

    http://fivethirtyeight.com/features/if-a-computer-can-diagnose-cancer-will-doctors-become-obsolete/

    Put simply, Autor told me, “I don’t think technology is responsible for our employment malaise over the last 15 years.”

    But even if the tech enthusiasts’ wildest dreams come true, Autor said he believes computers won’t replace highly skilled workers, they’ll just enhance the job these workers do. The more likely scenario, as his paper lays out, is that other jobs will be created, and with them the need for different skills.

    We can see this going back to the industrial revolution. In 1900, 41 percent of the U.S. labor force worked in farming, but by 2000, that share fell to 2 percent. Autor said we could have never envisioned how jobs would change, or what new industries would be created.

    “It’s very difficult oftentimes to recognize what is coming,” he said, “and much easier to see what is going away.”


  159. IHS4GOD- your results are remarkable and I would love if you would feel comfortable sharing how you have made over $250,000 in gains on a $500,000 portfolio in the first 8 months of 2014! I am not in any way questioning the veracity of your statement, I would like to learn from your strategies if possible. I think it would be really helpful to see how another Phil follower has taken his teachings and used them so successfully. If you are not comfortable posting for all to see, perhaps you would be willing to send me a spreadsheet detailing your positions, with entry and exit dates. I am managing portfolios for my family of approximately $600,000 and have not even come close to your success, so I obviously am doing something wrong and would love to study the moves of another Phil-ite who has apparently done it right. I hope you will be open to sharing your success with another member here. My email address is craigsa620@gmail if you would like to do this privately.


  160. Looks like a good monitor for trading Phil:

    http://www.engadget.com/2014/08/30/dell-curved-monitor-u3415w/

    Good thing that alongside the new Alienware Area 51, Dell's pulled the curtain back on its 34-inch Ultrasharp U3415W display then. It boasts a wider-than-widescreen 21:9 aspect ratio that's paired with 3,440 x 1,440 lines of resolution (just under 4K's 3,840 x 2,160) and a curved screen.


  161. MAT/Phil- I want to thank you for the post you did early on Friday regarding MAT. I have been following since last December and I think this was the first time you gave a recommendation with a full explanation of what you expected to happen and what you might do under various scenarios all the way through to expiration in 2016. It was really helpful to me and pulled together a lot of what I have been learning with this example of what you would do if the underlying stock tanked, or increased and how you would adjust under these varying scenarios. Thanks, and perhaps you could do this just a bit more often when posting a trade idea. Giving us the expected outcome and what we might do along the way until the trade is complete. Not all the time, but perhaps once a month on different types of trades or strategies. 


  162. StJ: Whether Putin is the victim of his own rhetoric or the architect of it is now academic.  This is coming down to who is going to blink first, and I don't think it's going to be Putin.  Eurozoners will not be willing to die in order to eject Russian troops from the Russian-speaking eastern part of the Ukraine.  "Sanctions?"  Giving Putin a swift kick in the SWIFT?   Meh.  Dictators stay dictators by not showing weakness.  Putin is already rattling the nuclear saber.  

     

    This war is already lost — on paper.  But on the ground, not yet  -- meaning there will now follow much tension and nuclear references and retaliatory suggestions which will pile drive the already unsteady Euro in the direction of 1.25.  It might also shove Draghi towards actually walking the walk and easing his "austerity is good for Spain et. al." fiscal and monetary policy.   "It's an ill wind that blows no one good."  

     

    But I don't think this will apply to the long-suffering Russian people, unfortunately.  The old saw that "people get the leaders they deserve" somehow has never applied to Russians, and I am sorry for that.


  163. Zero – Putin cannot blink because that would be way too damaging to him internally. Therefore, he pushes forward, raising the ante and putting the lives of fellow Russians on the line. Ukraine won't give us easily so it could be a protracted conflict that will be costly both financially and humanly. Which of course doesn't matter to Putin. As you said, they probably deserve better than him, but they have come up short in that department over the last 500 or so years!


  164. Multi-monitor monster, the very best. Some one recently asked about building a system. I used one of these a few years back and I don't have problems. Want to break  speed records with game power after hours, this is finally the new improved. Questions just ask. Why spend more to get less. 

    http://www.evga.com/articles/00866/EVGA-X99-Motherboards/



  165. Phil / Caterpillar

    You said: “For example, saying there is life on other planets is about as certain as saying there is a certain type of caterpillar eating a certain type of leaf on a tree in a forest and that, at this precise moment, it's also pregnant.  Statistically, it's almost a certainty that that's true (and then consider how many forests there are on Earth besides the one you are in) – but good luck finding it or of it finding you!”

    Naaah! I can tell you with ABSOLUTE certainty that there is NOT ONE pregnant caterpillar in this planet ;-) . Caterpillars are the larval state of the order Lepidoptera and they can only “get pregnant” in their butterfly/moth state :-)

    Or were you talking about the /CAT NYSE version? http://www.ptrofi.hu/files/panorama/SWE_Panorama_02_Caterpillar.jpg

    Naaah! Those can’t get pregnant either… yet ;-)


  166. How exciting was your day?

    30 minutes ago we have a strong earthquake, even an after shock. The one about a month ago was 3.1, this was at least twice as shaky, the walls were moving.


  167. For the listening, I had a setback yesterday afternoon. Hoping to put my motorcycle clutch back together, all things mechanical must be super clean and there it was, no need to clean, the clutch hub where it is keyed on the drive shaft was split, the clutch pack was worn out of round, total junk! Maybe just one of you have a clue what I am saying but this is really bad and just the parts too much. Now I will continue to have a no anything holiday!


  168. I was in the Government housing section last night and the mood was so very clear. People out with their children when approached disengaged and went indoors. Even 2 years ago it was totally different, another visible difference is most parking places are empty while every apartment is lit, so were empty in the past.  Gas stations are empty $3.729 per gallon when national average is $3.40. For sure on labor day the tourist season was a bust! Get out of your 1% neighborhood and take a close look at the rest.


  169. some were empty


  170. Phil / Alien Math:  "I disagree with ZZ though in that there are some objective truths.  Math should be objectively trues for all of us as well as physics and chemistry.  Just because you are silicon-based doesn't mean 1+1 would = 3 on your World or that you don't need two hydrogen atoms and one oxygen atom to make water."

     

     Well that's been fun to think about.  Universal math — necessarily true for all creatures with enough intelligence to grasp the application of math to some aspect of what we term reality.  No "subjective point of view of an observer" need apply.  Sounds right.

     

    I'm working on it.  The root of my riposte, intuitively, would be a creature composed fluidly of matter /  energy [which are each phases of the other], a "shape-shifter" sort of creature, whose consciousness would not grasp the notion of quantities [numbers, and/or "counting"]  because, as an observer, our creature would view all the energy and matter in the universe as one continuous quality, hence you would never get past the number 1, so no math.

     

     Of course, if there were in fact a big bang, "time" would squelch this notion, since energy or matter aside, one could/would quantify time — before and after a shape-shift, for example.  So even with creatures composed of a continuous synctium of energy and matter, there would have to be a quantifiable "before" and "after", even with a universe with no beginning and no end, because events [supernovae, big bangs, etc.] do take place in some sequence.  H'm.  Unless, of course, Phil's watch were running faster or slower than mine, since time is an abstraction that must be defined and measured in relation to physical events. Damn.  This is where a peyote bud might come in handy, perhaps.  Unfortunately, the last one I saw was under someone's bed in dorm room a very long time ago.


  171. craigsa620

    Hi could not miss your question on IHS and Complements on Phil. It might be difficult for IHS to disclose his actual pot or ports but I might say it was in deed not difficult to achieve his results in the present market conditions. Looking at the statement of TOS in my ports I show similar and even better results. I have seen a considerable drop in the past where I had to watch and balance very careful my margins as they grew incredible during the drop. But I managed to balance the margin and looked mostly only at a paper loss.

    The same ports show today a profit, which is beyond all expectations. Thinking to cash out all and retire on some exotic Island. But what will you do there all day? So I keep on trading and keep Alsheimer at bay. 8) 

    I have built up my ports during a period of time mainly with Tree planting plays ( from PSW Tree planting idea) from Jan15 and Jan16 plays combined with selling puts of same month and short month callers. Even that the short caller plays were OTM at the time many have turned in to ITM and have to be rolled or even cashed out. But in reality the long calls and short puts are normally keeping up or exceeding any loss on the short monthly callers. I normally let them play out to the end watching patiently the ups and downs during the period as I am set to receive say on a 10$ spread 10 dollar! My plays exist out of BCS and buy writes. If the stock does not offer any or little div. it is cheaper to buy the BCS with say .80 delta on the call. The only difference between stock and call is obviously the limited life time of the call. In respect to selling short month callers, some people prefer the ATM or ITM caller but in present market conditions I still prefer the OTM situation. The ITM sale of calls is more for a bear market as the ITM might get very quickly OTM under these circumstances. Selecting stock for BCS requires different analyses and can not taken lightly and should not just be copied from some one else's recommendation. 

    AS you do, on this website you very welcome to ask questions and some one will get down to answer. I personally do not know where Phil takes the time to answer them all, he must be sleeping in the stockworld!!!!

    Just to keep things not to BOOORING I enter, in very moderation, some shorter term plays, picked up from our website as well from other research sides. Here you can win or lose some play but never the farm!!!! Many of the longer term plays get discussed or suggested by Phil, other members and myself, however always do your final research yourself and never just rely on what some one else says. They all give comments but the decision should be only made by you alone. Here you make or brake your port. 

    But never expect just to copy some one else's system and expect to make a fortune.


  172. A Startup Is Tackling One Of The Biggest Problems With Wearable Devices— Battery Life
    http://www.businessinsider.com/ineda-chips-for-wearable-devices-2014-8



  173. Movies Are Having Their Worst Summer Since 1997
    http://time.com/3228698/summer-movies/


  174. U.S. begins airdrops to town ringed by ISIS
    http://www.cnn.com/2014/08/30/world/meast/isis-iraq-syria/



  175. The Science Behind What People Love to Share on Social Media
    https://blog.kissmetrics.com/share-on-social-media/




  176. Booming Electric Car Sales Have Become A Problem In Norway
    http://www.businessinsider.com/afp-booming-electric-car-sales-under-fire-in-norway-2014-8






  177. Investors’ eyes pinned on ECB as Europe’s health deteriorates
    http://www.reuters.com/article/2014/08/31/us-global-economy-weekahead-idUSKBN0GV08P20140831





  178. EU set to tighten Russia sanctions ‘within a week’
    http://www.bbc.com/news/world-europe-29001596


  179. Drought-Stricken California Makes Historic Move To Regulate Underground Water For The First Time
    http://thinkprogress.org/climate/2014/08/30/3477615/underground-water-regulation-california-first-ever/




  180. A Rare Glimpse Inside The NY Fed’s Favorite ‘Quote-Stuffing’ Hedge Fund: Citadel
    http://www.zerohedge.com/news/2014-08-30/rare-glimpse-inside-ny-feds-favorite-quote-stuffing-hedge-fund-citadel


  181. Garry Kasparov: It’s a War, Stupid!
    http://time.com/3227869/garry-kasparov-its-a-war-stupid/



  182. Massachusetts May Shut Down Casinos Before Even One Opens
    http://www.nytimes.com/2014/08/31/us/31casino.html


  183. Investors’ eyes pinned on ECB as Europe’s health deteriorates
    http://www.reuters.com/article/2014/08/31/us-global-economy-weekahead-idUSKBN0GV08P20140831


  184. Ayn Rand’s Capitalist Paradise Is Now a Greedy Land-Grabbing Shitstorm
    http://gawker.com/ayn-rands-capitalist-paradise-is-now-a-greedy-land-grab-1627574870


  185. Hong Kong Has Solved The Most Annoying Thing About Going To The Airport
    http://www.businessinsider.com/hong-kong-solves-airport-problem-2014-8


  186. CHART: How Many Birds Are Killed By Wind, Solar, Oil, And Coal?
    http://thinkprogress.org/climate/2014/08/25/3475348/bird-death-comparison-chart/


  187. Cataclysm in suburbia: The dark, twisted history of America’s oil-addicted middle class
    http://www.salon.com/2014/08/30/cataclysm_in_suburbia_the_dark_twisted_history_of_americas_oil_addicted_middle_class/


  188. The First Images From The World’s Most Powerful Commercial Satellite Are Shocking Detailed
    http://www.businessinsider.com/the-first-images-from-the-worlds-most-powerful-commercial-satellite-are-shocking-detailed-2014-8


  189. Yodi-,thank you for your thoughtful answer. Perhaps I wasn't as clear as I should have been. I am not looking to copy what some one else has done in the past. I am looking to learn from some one who has had success by seeing how they structure trades, how they exit, how long they hold, etc. since I have been here less than a year I haven't seen a lot of bcs trades all the way to the end and i am curious what that looks like. I don't get how you do some of those short term trades either, and I certainly am not understanding what will cause an option to be exercised. I was hoping to get a peak at another persons successful play book to assure myself about how these play out over time. I am not looking for the stocks that were picked as much as what was done with them. Your talking about ITM and ATM short callers and puts is hard to translate, but if I could see what you traded and when, then I might understand. That's why I was so glad to see Phil explain the various scenarios of the Mattel trade with examples of exactly what and when to act. I am a visual learner who needs concrete examples. I Also with all the talk about a top or deep correction coming, i don't know whether to let a bcs that is up 20% or more just continue or if I should cash it out. So, I wanted to see what someone else does . I have always felt that the more information I can gather the better off I am. Seeing how others handle their trades and holdings helps me understand the various concepts discussed and get it all to gel, just as looking at Phil's virtual portfolios does. Just looking for other perspectives in addition to Phil's .


  190. Were European Bonds Mispriced in 2012 or are they Now?
    http://www.econmatters.com/2014/08/were-european-bonds-mispriced-in-2012.html



  191. http://www.nytimes.com/2014/09/01/world/asia/hong-kong-elections.html?smprod=nytcore-ipad&smid=nytcore-ipad-share

    China’s legislature laid down strict limits to proposed voting reforms in Hong Kong, drawing battle lines in what could be a deepening confrontation over the future of the city and of China.


  192. http://www.nytimes.com/2014/08/30/upshot/is-owning-overrated-the-rental-economy-rises.html?smprod=nytcore-ipad&smid=nytcore-ipad-share

    Entrepreneurs say the new way of consuming is part of a growing, post-recession movement to value experiences over possessions.


  193. http://www.nytimes.com/2014/08/31/sunday-review/the-boomers-biggest-challenge.html?smprod=nytcore-ipad&smid=nytcore-ipad-share

    For many of us, it is a psychological quandary that is causing the most unpleasantness: looking around and suddenly being the oldest.


  194. http://www.nytimes.com/2014/08/31/world/europe/russia-pushing-ukraine-conflict-to-point-of-no-return-eu-leader-says.html?smprod=nytcore-ipad&smid=nytcore-ipad-share

    President Petro O. Poroshenko of Ukraine won no pledges of military assistance from the European Union, but his warnings helped set the stage for a new round of sanctions against Russia.


  195. http://www.nytimes.com/2014/08/31/us/california-closes-in-on-plastic-bag-ban.html?smprod=nytcore-ipad&smid=nytcore-ipad-share

    California lawmakers have approved a measure that would make the state the first to impose a ban on single-use plastic bags.


  196. craigsa620 

    OK here one of my short term trades CAT 7/29 sold sep14 110 c @ 1.08 bought to cover unlimited losses Oct14 115c @ .58 net paper profit at sale .50 Now CAT has come up quite well as I am waiting to the 110 will go worthless and I can sell the 115 Oct call for what ever is left. This is a play with a limited risk and you can still roll the Sept. 110 if needed in to weeklies. 

    5/13/13 BCS on C Jan15 40/50 @ 12.25/6.41 and sell  Jan15 40p @ 3.28 present situation and you do the math 11.95 / 3.50  /.21 My latest short term caller sold 8/26  Oct1 52.5 @  .90 now .64. I am looking for my 10$ on the BCS now only 8.45, 1.65 to go the 3.28 put sold I still will not give up the .21 

    and I am still cashing in my weeklies or monthlies against the BCS for my morning muffins 

    I can show you hundreds of these in my ports. Mostly limited to a long play of 5x or 6x against my short term plays of 2 to 3x. Obviously there are things like AAPL where I now have 21 33 and 45x the original!

    More risky play on NFLX 8/13 sold Sept 480c @ 3.05 now 3.95 against  buy Sep 490c @ 1.65 now 1.32. I never actually expected the stock to go over 480 but it did and came down again. Here you do not panic as again your loss is some how limited by your long. My expectation Stock will stay under 480 at witching day so the caller will be worthless and I sell the call for what ever I can get.

    I have not been playing Phil's futures as I have the urge to go to the bathroom same times.  

    Here I have a strong approach not to put all eggs in the same basket.

    Hope this helps


  197. craigsa620 

    While we on a roll here are some of the plays where angles fear to tread 

    IOC a crooked oil stock I sold all my stock a while back when it was trading at 93$ I bought it at 58& so as you can see I built up a good back bone, as I set up with some of the cash a BCS trading mostly weeklies against them. Be warned the stock goes from 93 to 45 in no time so here you find some excitement in trading just ask Stj. My BCS was set up 1/27/14 at Jan16 50/62.50 showing at the moment a nice credit. NO puts on this one!!! So now I play for my muffins every week some weeks I have to roll some run worthless. Always try to roll where I still have a good combined credit. ( Combined credit is credit of the first caller minus debit on the buy back and credit on the new caller)

    Looking at the latest traded 8/22 sell Sep1 62c @ 1.34 now .64. Would you close for a 50% profit over this period many would. With my comfortable cushion in the back I sit patiently and wait until the last .64 are gone but only if they still .05 in premium I will roll at 15.45 on the Fridays.

    Take LVS from 85 to 66 what is this a casino stock? you like to gamble join the club. But here again 

    and this is the problem today it is hard to find cheap stocks, I bought them @ 50.00 so you see here again you have a good back bone. I have no BCS's at the moment but puts and calls against them.

    1/3/13 sold the jan15 37.25p for 4.95 and just left it patiently in the GARDEN!!! not worth .06 would I close it. No why give some one 6 cents for nothing?

    5/13/13 sold Jan15 50p @ 6.80 now .35 same approach as above Patient. 

    1/8/14 sold Jan15 80c for 9.24 now .28 If that call would go ITM by Jan15 My stocks would be laughing all the way to the bank. By the way closing a .06 or even a .28 cents put or call will do very little to improve any margin. But never forget anything can happen in this market!

    Against my Jan15 80 caller, I sold a Jan15 60 p for 2.42 now 1.72 just to balance of the two trades a bit.

    I trust this is all for one day to go through or do you want me to go in to TSLA and GOOG.? 

    Set up slowly a good Tree garden and exercise patients all day. There are still the hedges to go but Phil is the real expert in that one, as said you always have to pay the piper, If you lose on the swings you will make up on the round a bouts. Better said if you are losing on TZA your garden must be doing well.


  198. PSW Premium annual subscription payment plan. For those who want to pay for their subscription by playing for their subscription the following is on offer:

    Sell 10 COST Jan 16 $85 puts @ $1.22 – now (Buying Power impact $8,500)

    Sell 10 COST Jan 16 $85 puts @ $X.XX – in 3 months time

    Sell 10 COST Jan 16 $85 puts @ $Y.YY – in 6 months time

    Sell 10 COST Jan 16 $85 puts @ $Z.ZZ - in 9 months time

    COST is currently @ $121.08. If after 9 months of hanging out on this board and you have to ask questions as to what to do with your current COST positions, consider cancelling your subscription and putting your money into an S&P500 index fund.

    Between now and Jan 16 the markets will go down significantly, and before Jan 16 the markets will go up significantly. You can use COST as the canary in the coalmine. As your anxiety levels increase resulting in 04.00am being your normal wake up call, then lighten up on the portfolio – cash is the best hedge, cautious is the best attitude.. As you find your nights of slumber intensifying, consider adding to your positions.


  199. Winston

    Some what strange comments some how wanting to ask you what are you smoking? But selling naked puts is not the best way of recommending a trade. I know pot is legal in some states of the US. Just remember I am 6 hours a head of EST. 


  200. Holiday weekend project -

    1/ review ports and in each one, what one position (A) would you close when market opens again to add to what other position (B)? What loser would you close to add to a winner? 

    2/ What winner(s) would you take profit in? 50% or close it fully? Or cover? Is it done going up? How do you know? When will you know it's time to exit? Are your stops moved up? Why is your stop where you set it? Will you act if it crosses your stop?


  201. Motivation.

    While a bit sports focused, the message in the video rings true to our 'profession' as well.  Speaks of skill, practice, focus.  (and it makes me want to run somewhere!)

    Why we Fall


  202. YODI  thank you for the notes to Craig. Very helped to me as well.

    Now a question for you or anyone :

    I have in my IRA lots of conservative BCS, no naked puts, a very few put spreads, some stock with the sale of calls. This is one example of a BCS I have, most like this one are 100% in the money  :

    UNH Jan 15  70/75 BCS  paid 3.00  purchased March 2014 :  at expire 5.00  Return at expire  66%   

    Underlying now 86+  

    TDA values are: for short 75 using ask 16.25:  using bid for the long 70  12.70 or  3.55 for the package. Can not buy it for that! I think a GTC sale at 4.10 or 4.20 would close fairly soon giving me a return of  35-40 % for six months. My inclination is to wait it out and get the full 66% or close to it probably putting up a GTC sale at 4.90 a little later.  I get the feeling that some would say GREEDY! Sell now, however what I hear you say is wait!   I wonder what others say. That’s one question.

    The other that bothers me is the valuation by TDA using their very conservative values. In this case 15 -18% less than I think it is worth!  Is anyone else bothered by that? Are there other ways you value spreads?


  203. Winston –  I'm with yodi.  I don't get you're point on COST.  


  204. Watching the news, CA HAD A 3.2 AFTER SHOCK, I had a much more intense shake than that, nobody cares because we have no wine. I have cracks in my walls that eventually must be fixed. Years ago this would be big money fixing every ones damage, now I contemplate the work at my house.


  205. After 27 years Showboat closes in NJ 5,000 people canned. Since religion was a subject maybe the message is clear on morality and that has nothing to do with religion.


  206. Yodi: what is the reason for selecting a delta of 0.8 on the long call of your bcs? Do you always pick that leg based on delta?


  207. ceegee

    Everything is balance if you delta balance some legs need big numbers, ITM is safer.


  208. India/Phil – Looking at Doug Short's update: http://www.philstockworld.com/2014/08/31/world-markets-weekend-update-the-rally-moderates/

    sure looks like india has been the place to be for a while now.. looking over the ETFs, INXX pays a good dividend too.. I know feels like chasing at the moment, but good to keep (india) on a buy list?


  209. scottmi

    India continuously produces doctors and the smartest computer programmers, maybe that is their greatest products.


  210. It is true that India has an impressive education system but generally speaking, I don't see much innovation coming from that country.


  211. Massive ICloud hack releases tons of pics of stars.

    http://www.businessinsider.com/4chan-nude-photo-leak-2014-8

    Wonder if it will affect stock price or launch?


  212. grenowoods

    Totally agree India has smart people with no direction. I will add that they "were'" producing the greatest but I must question the Asian input even if it is from the negative side as surpassing. WTF America? Get a grip!


  213. Yodi/Burrben: Pointless. In other words, selling puts on stocks we would really like to own at the strike price sold epitomises 'being the house'. Deep OTM puts on robust companies gives a margin of safety. Combined with scaling in potentially reduces the risk further. The approach allows you to take the ebb & flow of the markets with a greater perspective. Would you like to own COST @$85 when it is now trading @$121? Or IBM; you can sell the Jan 2016 $115 puts for $1.22 with IBM currently trading @$192 would you have a problem owning IBM @$115? 

    If two bellweather stocks dropped 20% in price would that be a good thing or a bad thing? I think it would tell you something about the overall market. Would you see opportunity if those two stocks started approaching the strike price of the sold puts? Would you have a problem rolling down and out to lower strike 2017 puts? Would massive increases in option premiums be helpful to option sellers? 

    Core PSW principles as taught by PD methinks. You don't feel comfortable selling naked puts in the above scenario – better reflect on why? If it is because you do not want to own COST @$85 or IBM @$115 then obviously you would not sell naked puts on those two stocks. 

    But if you exclude selling naked puts as part of your toolkit then you may be unnecessarily restricting yourself. Is it because you think the market is going to decline by 30%? Then I agree, you have more important things to worry about than the naked put selling strategy.


  214. ceegee

    Delta .80 Nothing is written in stone. It depends as well on the type of stock you using. You might be looking at a range of .70 to .85. The combination of your BCS is important as more you pay for the long call as more you can expect to get back in the end. My ideal position is if I pay 10$ on the long call I am looking to receive for about 5$ for the short call around some what a delta of .50 ITM or ATM. Now if you can find a same month put sale for 3$, as well say Jan16, not exceeding or better below the long call stock value you only paying 2$ for the play. Depending on stock paying some small div or none, the premiums of calls and puts are always higher. Sometimes you find a suitable putter receiving 5$ and you got a free trade. Just remember you could land up with the stock so make sure you like the stock by selling a put discounting the stock by 5$ in this example. Now at the saver play, selling the putter at say 3$, I like to make up my difference of 2$ by selling monthly calls so by the time the BCS is due I receive my 10$ on a 10 dollar spread or even more adding the income or even sometimes loses on the short monthly caller sales.

    If a stock pays a div say more than 2.5 or 3 % you might find the premium on the call side is much smaller and here you might decide to buy the stock adding the div to the play as well. Only last week Phil gave out some plays where a buy write was recommended.

    Just remember a stock has normally an unlimited live time where as the option has always a time limit after which it becomes worthless. So if the stock drops during any time you will only show a paper loss until you might decide to sell the stock. On site to which I am a member has the attitude I always get paid while holding the stock, by selling calls no matter what the stock price is.

    Hope this helps 


  215. Winston

    Selling naked puts 

    I think our discussions are more for newbies and I find it unwise to start recommending this method. Selling puts or naked calls involves not only a much higher risk but also chews up a good deal of margin. Look at my NFLX play given above, I covered my behind by buying a 490 call as well as reducing my margin. Here I am obviously not comparing a MoMo stock with COST or IBM even I have seen some good drops in IBM during my time holding this play for years. Sure now you would like COST for 85 but if for no reason it would drop to 75 your purchase at 85 would not look so good. Obviously this would be more like a disastrous drop. But we know anything can happen in the market. 

    Look how Putin (the new Adolf) starts taken over the world.


  216. Yodi/ I would not allocate the same risk profile to short puts (defined risk) and short calls (unlimited risk). But I guess its horses for courses. And remember, 'every man, sooner or late, sits down to a banquet of consequences'.


  217. gerryf 

    UNH 

    The stock is trading at 86 your short Jan15 caller is 75 so the stock need to drop more than 11$ by Jan15 not to receive your 5$ spread now showing at about 4.50 if you wish to close. The early closing as well depends much on the open interest of the stock, to get an early fill. The spread to close is at present between 3.55 and 4.57 so you might have to sacrifice nearly 1$ by closing now. Yes if you can get 4.60 now and you looking for cash OK. 4.90 hard to get before Jan15. I would wait and let the sucker die at 5$


  218. Winston, You must be an early riser or a late sleeper if somewhere near the US? As we have only 7AM here in Europe. 

    I have been burned by selling puts, and I can see still my scars. Defined risk yes in a way but still you should have a cash secured situation, obviously not possible by callers. In that way you right!

    Sitting down with a crazy man is hard to do. (Putin) He smiles in your face while putting a knife in your stomach.


  219. Yodi – I move regularly between time zones. I grab my sleep when I can :)  


  220. Winston,

    Guess you work for an airline


  221. Winston,

    My objection in your example is that you are ultimately selling 40 puts or 4000 shares of an $85 stock.  That translates to an obligation of $340,000.   If you follow our practice of proper position sizing and balance of around 20 stocks, you would have to have an extremely large pot of cash .  If not, then you are not properly diversified or are putting too much risk on one position, especially just to make your PSW fees. Just reread Phil's discussion of MAT above on Friday morning.


  222. Stockbern/Diversification. Aaah, knowing when to break the rules…. priceless.


  223. Good morning! 

    I hope everyone is having a nice holiday weekend.  We're just hanging out which, as you can see above, means I have a lot of time to read.  My goal for today is to update our Buy List with new positions.  

    Asia had a good day, up about half a point despite a China PMI miss and despite the fact that Hong Kong is coming under China's thumb:

    And this:

    Chinese companies are reporting profit hits from the weaker yuan, after borrowing billions of dollars from the U.S., Hong Kong and elsewhere abroad—and the problem is likely to continue.

    Nonetheless:

    China's economy sputtered on in August with manufacturing output slowing, according to two measures, as the effect of stimulus measures earlier this year fades

    ?

    • Capital spending by Japanese companies fell by 1.8% in the April to June period from the previous quarter, reflecting a slump in demand after the first sales tax increase in 17 years took effect.

    Hong Kong, Shanghai Shares Rise

    Hong Kong's Hang Seng Index and shares on the mainland traded higher Monday, brushing off weak Chinese manufacturing data earlier this morning.

    Japanese Teen Girl Wins Air Guitar World Championships

    Europe, on the other hand, is down a bit, only about 0.25% and the same sort of negative news that no one seems to worry about:

    Ukraine Loses Ground to Separatists

    Government forces lost more ground to Russian-backed separatists in heavy fighting in eastern Ukraine a day after European leaders threatened to impose more sanctions on Moscow.

    Germany's economy contracted in the second quarter after a robust start to the year, the Federal Statistics Office confirmed, putting pressure on policy makers to move ahead with measures to boost the economy.

    ECB Expectations May Be Overdone

    Mario Draghi's speech last week has fanned expectations of a fresh round of ECB action next week. But the ECB already has its hands full implementing policies it announced in June.

    Getting to the Core of the ECB's Inflation Problem

    Headline euro-zone inflation is down again, but core inflation is proving resilient. The euro zone risks falling prey to a panic over deflation.

    Europe's struggle to prevent ultralow inflation from derailing an already fragile economic recovery grew even more challenging as consumer prices weakened to a five-year low in August.

    Ruble Hits New Low

    Euro-Zone Consumers Turn Downbeat

    So BUYBUYBUY, I guess – as it's the same old bad news we've been getting all year.  Deteriorating conditions around the World completely being ignored as stimulus pumps up the US Economy.  This isn't LIKE 2008, this IS 2008, when Bush's stimulus gave us a false rally and record highs right before a massive crash bought on by banks in other countries finally failing as the flaws in the system could no longer be denied.  

    While I'm worried about that stuff, it did take a long time to hit us and we did get some pretty clear warnings (Iceland, Northern Trust, Lloyd's) from overseas and, at home, as early as 2007 FRM stopped buying sub-prime loans (because they saw it coming), New Century Financial went bust, BSC liquidated 2 sub-prime hedge funds, American Home Mortgage went BK and Fitch cut Countrywide to junk.  That was all 2007 stuff that we ignored right here at home.

    The markets topped out in Oct of 2007 and, of course, the drop from S&P 1,600 to 1,440 (10%) into November was considered a huge dip-buying opportunity and those dips were rewarded with a run back to 1,520 (5%) but then – SURPRISE! – we fall to 1,320 into Jan and then back to 1,440 and then down to 1,250 and then back to 1,300 and THEN things got ugly and, from July 2008 to October, we fell from 1,300 to 850 (35%), pretty much non-stop.  

    More dip buyers at 850, back to 1,000, then down to 666.  Of course the 850 dip-buying was about expected Government intervention, which was blocked by the GOP (TARP 1) but then we got it but faith was lost and we fell again anyway.  

    The greatest way to get rich in a crisis like that was to STOP LOSING MONEY at about 20% and wait PATIENTLY for things to settle down.  When things settle down after a 50% drop, you can afford to miss the first 10% of the recovery – keep that in mind.  There's no need to time a bottom, our speculative bottom plays made fantastic amounts of money without needing a lot of cash or commitments.  

    Our 13 trade ideas from March 6th were all straight-up plays (no margin) and $1,000 bet on each one ($13,000) returned $69,000 by Sept 10th and God knows what longer-term (I never did the math) but a couple of the were 142 shares of GE at $7, 318 shares of BAC at $3.14, 62 shares of DIS at $16, 16 shares of AMZN at $62.50, 1,538 shares of HOV at $0.65…  

    So they weren't all tricky option plays but to this day I can't believe how hard it was to convince people to pull the trigger on those stocks at those prices.  Don't cast stones, when your account is down 50% – it's hard to make good decisions.  

    That's why I now favor more conservative strategies.  As Buffet knows, the greatest market opportunities come, not from chasing rallies, but from being able to take advantage of downturns.  It's a long-term game that requires a lot of patience – but well-worth playing!  


  224. Nice job Winston, thanks for details.  

    Torquemada/ZZ – To thine own self be true…

    Putin/StJ – Who's to say that keeping oil prices high isn't a major motivation for this entire action?  A lot of his wealth is tied to oil and under $90 doesn't suit him at all!  

    Speaking of Fox – Good book called "Hack Attack" about Rupert's dealings on the other side of the Atlantic and how nothing is out of bounds for these guys, including bribes, blackmail and fake stories to destroy politicians who don't play ball with them.  

    According to the author – even the PMs are terrified of Murdoch and his papers.  Only when there was finally public outrage over their hacking of the phones of a family that had lost their daughter were they finally able to get a wedge in to take Murdoch's people down (but still not all – they are like a Hydra).  

    Big Chart – It's going to be tricky but, if we can last up here for more than a week – then we might be consolidating for a breakout to new highs.  Nas is already there, RUT needs to catch up. 

    Lot's of Fed speak after the BBook, makes me worry about what's in it.  Mester is a woman in Cleveland, replacing Pianalto (dove) but Mester was Plosser's (uber hawk) policy adviser, so doubtful she'll be dovish AND she's a voting member!  She has zero experience outside the Fed (been there since 1985), this will be interesting.  Powell is another voting member who we never hear from (St Louis Fed) and he was an investment banker before joining the Fed – seems to be a centrist.  

    fed powellThis is my favorite Fed story though:   Yellen's Wealth Grows as Rising Financial Markets Lift Assets

    Robots/StJ – They won't replace us until they can think and then we'll be left with just the creative jobs (I've got one!) but those too will fall at some point and then, really, what are we good for other than being pets?  There used to be lots and lots of horses – almost one for every person in most of the World, because they could do something machines couldn't do.  First we stopped using them for manual labor and then we stopped using them for transportation and now – there are still some left, but noting like what it was.  

    Actually, that's the true Randian ideal – we keep talking about the unfairness of a World in which only 1% of the people or less have to work and would, under our current economic system, get all the money while the other 99% starve but that's not the intention of the top 1%, their intention is to be the only 70M people on earth and THEY will be served by those machines.  They will eliminate poverty by simply eliminating the poor – this is why the system is designed to reward amoral behavior – one day they will need to count on that when "THEY" vote to, as Scrooge advocated, "decrease the surplus population."  

    Forcing a financial crisis was part of Norquist's "starve the beast" plan that has been in the works since Reagan so who's to say there's not a "kill the beast" plan already in motion?  Force a crisis at some point (maybe through climate change) that leaves us no option but to begin culling the population – once the door is opened politically to the concept that we can decide who lives and dies – then there is no reason for the top 1% not to be fully confident that they can take over and control that process and turn it in their favor too.   Here's one proposal

    The top 1% of earners contribute 17% of all tax, the top 10% tip in 45%, in fact after adjusting for handouts, only the top 20% of earners actually top up our $120bn tax reservoir while the other 80% drain it.

    Is it fair that those who have underwritten our national prosperity should now stump up even more? I think not, and have a more equitable policy alternative that Government might consider.

    Kill the poor.

    In contrast to the fabulously rich, the enormously poor make little useful contribution to society. They consume more than they contribute, putting tremendous strain on the national budget.

    A modest cull would strike at the root of our fiscal dilemma. If the least productive 20% of citizens were decommissioned it would directly release a recurrent $25bn, which would almost cover overspending by the Gillard Government between now and September 14th, assuming Mr Swan maintains his long-term average rate of profligacy.

    But there are other benefits. Innovative industries would spring up, creating exciting new jobs in processing camps, traffic would move faster unhampered by windscreen cleaners, streets would be cleared of pavement artists and beggars while homeless shelters in our better suburbs could be turned into agreeable gastro pubs, cafes and wine bars. Think of the inner city investment opportunities.

    HAPPY LABOR DAY!  


  225. Curved monitor/StJ – That does look cool.  

    MAT/Craigs – You're welcome.  Obviously, I don't usually have time (or inclination) to go into such detail but, when I notice people have a lot of questions on a strategy – I do try to fill in the gaps.  To some extent, it's a bit silly running through all the what-ifs – it's all out the window once we get the next earnings report and have new information anyway – this is just in a vacuum, like planning chess moves 3 moves ahead – your opponent may have something to say about things between now and then.  Still, remind me on slow day's and weekends and I can try to put together a path for a trade idea or two.  

    Caterpillar/Akad – Damn, I thought that was a good analogy too.  How about grasshopper, does that work?  

    Earthquakes/Shadow – Sounds like fun.  Between the fracking and Global Warming, you may have many to look forward to. 

    Aliens/ZZ – When you have to go that far out in suppositions to come up with a way in which something may, possibly, not work, I think Occam and Holmes take over and I'll have to check the "win" box on that one.  angel

    Questions/Yodi – And I remember you used to ask A LOT of questions!  Good examples, thanks!  

    Short selling/Winston – It is a bit iffy to obligate yourself to owning $85,000 worth of COST in exchange for $1,220 just to save a few bucks.  The problem is, if COST does drop 10%, to $109, for example, the short puts jump to $2 (down 100%) and the margin pops 100% as well so what is the strategy for 3 months from now if you're dropping 10% or 20%?  Even at 20%, COST is still barely below $100 but now the $85 puts are more like $4 with $25K margin.  

    I prefer to look at the whole goal.  You want to make $5,000 and if you want to use COST, you can sell 10 2016 $110 calls for $5.20 and there's $5,200 and you net into COST at $105.  If COST drops 20%, that's about $98 and you are down $7,000 but it's controllable and NOW you can consider doubling down but at least you're not committed to 4,000 shares yet.  And I certainly would not do it with COST because COST's 200 dma is $116 and their forward p/e is 24 and their growth since last year is anemic and doesn't justify the premium.

    BTU, on the other hand, is at $15.88 and you can sell 25 2016 $15 puts for $2.10 so committing to 2,500 shares at $37,500 puts $5,250 in your pocket with a net $12.90 entry (19% off) or a free $5,250 so committing net $32,250 at most with negligible margin in a position that is very easy to manage, even if the underlying drops 50% on you – that's what I call getting a free membership!

    UK Advertising Standards Authority Decision Supports Open Discussion Of Coal's Vital Role In Alleviating Energy Poverty

    India's Coal Freeze Could Boost Import Demand

    Coal Rebounds as the Flexible Fuel for the Long-Term Investor

    Project/Scott – Is this a project for you or me?  If me, then we need to work on our definition of "Holiday"!  

    Good video Burr. 

    Spreads/Gerry – Yes, the spreads are not meant to be closed early unless they go deep in the money and have little premium left.  As long as you are on track for a good close, odds favor sticking with the position.  UNH is at $86, you stand to make 20% more than you have now by keeping the spread.  How unsure are you of UNH holding $75?  Unless you are less than 80% confident that it will hold up, odds say stay in.  Frankly, with UNH at $86.68, I'd draw a line at $84 and consider getting out if that doesn't hold but then, if it's only dropping with the market – I wouldn't take that too seriously either.  

    I know people want to have "rules" for what to do when but this isn't some automated process – that's why we humans can still outplay the machines.  Each position depends on what you know NOW about your position and what the risk/reward is of the money you COULD cash NOW vs the potential for gain vs the potential for loss moving forward.  

    Let's not forget Rule #2, by the way – When in doubt – SELL HALF!  If you bought 10 of the spreads for $3,000 and they are now $4,200 and you sold 1/2 for $2,100 then you are leaving net $900 at risk.  You can put a stop on the 5 remaining spreads ($2,100) at $1,600 and you will have taken $3,800 off the table, just 10% less than if you had cashed out now and still up 26%.  

    If UNH stays up and you end up with the full amount on your 5 remaining shares, that's $2,500 and you net out $4,600 (up 53%), just $400 less than the max possible gain (66%) - but you sleep a lot better for 4 months AND you have $2,100 in cash you can put to work on something else.  

    By the way, how about asking for $4.40 and, if that fills, no brainer to take 5 off the table!  

    India/Scott – I like India long-term but short-term it's a stimulus rally coupled with plunging food prices that have released a tremendous amount of discretionary income – could reverse very quickly (we just shorted EPI, in fact) 

    AAPL/Burr – What makes you think this story is even real?  The celebs say it isn't them, do you really think all these girls sit around taking naked selfies and put them up on the ICloud?  I could see one or two but not all those big names.  I see no real news backing this up – it's just crap so, no, I don't think it will affect the stock price or launch of devices at all.  

    COST/Winston – Those are good points but points for people who have such large portfolios that $85,000 worth of COST is a 1/2 (at most) allocation block so figure 20 allocation blocks of $200,000 = $4M buying power or a $2M portfolio.  Not to mention your trade idea obligates you to own 4,000 shares, not 1,000 – if it all hits the fan at the wrong time!  If that's you, then God bless but that doesn't mean it's right for most people and certainly not the kind of people who are worried about trying to save a $500 monthly fee as 5% interest alone on $2M is $100K/yr!  

    I used to have a guaranteed trade that I put up and I would say that, if you bought a 1-year membership and made the trade and it failed to make you your membership back, the next year would be free but, unfortunately, I got a stern talking to from the authorities – apparently that's an illegal inducement, so we don't do them anymore (the last one was in "Secret Santa's Inflation Hedges" in 2010).   So now I just have my trades of the year and people can make them or they don't – no strings – haven't missed yet. 


  226. Phil – Jennifer Lawrence's rep admitted that the pictures were her.  Yes, I do believe they take those photos, but I doubt they even know what ICloud is.  They got a Iphone, it uploads.  CNN is running the story as well.


  227. Phil , Shadow / fishing:

    We think that fishes are stupid (which perhaps is partially true) but in feeding they are experts, we  just think that a trout  will bite whatever is in front and is not true, they studied the surroundings, in certain parts of rivers  I believe they know when fishers are there, (shadows, sounds ) and they know how a fly moves on the water,if the move is not what thay expect will not bite…..so not a bad idea that of Opentable.

     

    Phil /  big  like 2008 crash;   It could be a good idea dedicating more effort to follow the signals of a imminent moment of crash and also a defensive (break the glass in case of fire)  portfolio…..is difficult I know, but things can not move upward forever….


  228. Yodi- Thanks for the terrific information you posted on some of your trades. This discussion has been very helpful to me, as I said, when I can see the trades and how you played them out it helps to solidify the concepts Phil is teaching. It really helps to see examples to have all the information gel, at least for me. Also as we see  it generates lots of good conversation from members about what they are doing and where they have had success. While I would never copy exactly what someone else has done, it gives us ideas about how we should do our own trades. Thanks again to all. Happy Labor Day.


  229. Grasshopper / Phil

    Yes! That’ll do :-)


  230. PHIL THE RAZOR AND SHIRLEY??