Archive for the ‘Members Only’ Category

Possible Currency War Would Be A Disaster For Oil

Courtesy of Nick Cunningham, OilPrice.com

Oil prices plunged on Friday after the U.S. and China both announced tariff hikes in tit-for-tat fashion. At the same time, markets opened on a positive note early Monday after President Trump struck a more conciliatory tone. But the respite could be brief.

Global financial markets are completely at the mercy of Trump’s twitter account these days. On Friday, stocks and commodities fell sharply after China announced an increase in tariffs on U.S. goods. In response, Trump announced yet another 5 percent increase in the suite of tariffs on Chinese goods, although, notably, he waited until after financial markets had closed for the week.

Over the weekend at the G-7 Conference in France, Trump sent mixed messages on the trade war, suggesting he had “second thoughts,” with his team subsequently clarifying that his second thoughts regarded his regret he hadn’t hiked tariffs by an even greater amount. Nevertheless, traders took comfort in his comments about wanting to make a deal with China, in addition to his assertion that China had called him up asking for a return to negotiations.

Stocks opened up on a positive note on that news. However, it should be noted that Chinese officials said that they were “not aware of” the phone call that Trump alluded to. When pressed by reporters about the nature of the phone call, Trump said: “I don’t want to talk about calls. We’ve had calls. We’ve had calls at the highest levels.”

If we’ve learned anything over the past few months, it is that these events turn on a dime. The incoherent strategy from the White House, and the complete lack of an official policymaking process, makes it impossible to predict how events will unfold. It is odd then that financial markets were so sanguine at the start of the week.

One particular area of risk to watch is the further weakening of the yuan to the dollar. The yuan depreciated to 7.15 yuan to the greenback, the weakest rate since prior to the global financial crisis 11 years ago.

“It has been a bit of a roller coaster. We had the dollar opening up quite weak in Asia last night. Then


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PhilStockWorld August Portfolio Review (Members Only)

Image result for one million dollars animated gif$2,075,462! 

That's down $209,538 since our July 28th review and back to where we were at the beginning of July so, as we expected, a bit of a wasted summer as we've had a hard time gaining advantage in the market chop.  The challenge has been protecting the positions we have while trying to position ourselves to take advantage of a China Trade Deal that never actually comes.  

As you know, I'm very skeptical of a deal getting done and I wanted to cash out as even $1.4M (233%) is a silly amount of money to gain in less than 2 years in our paired LTP/STP portfolios.  Our aim is to make 60-80% in two years and we usually cash in and reset our portfolios when they are up 100% so we're miles ahead of our normal pace, thanks to the huge rally and also to our timing which turned the STP, which usually treads water when the LTP does well, into a bigger winner than the LTP.  

Since we are "going for it" and not cashing out (and see last week's webinar where I made an impassioned case for cashing out), we made a lot of aggressive moves this month to take advantage of the recent sell-off and, though we did add another hedge, I think our risk to the downside is substantially higher now so I'm setting a stop at $1.2M in the LTP (now $1,283,604) as it would be idiotic to let these gains slip away – I'd much rather cash in the whole thing and start from scratch.  And yes, if we're cashing in the LTP, we'll cash out the rest as well.

CASH!!! is a valid position.   In fact, since early July, the US Dollar has gained 2.5% so, had we cashed out early in the summer, we'd be better off than we are now.  I know that, as traders, you feel like you're not doing your job if you are not trading but WAITING is part of trading – or at least it should be.  We wait, patiently, for better prices on stocks we love – there's always something going on sale.

As much as I love our LTP positions,…
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Crowding Is Now One Of The Biggest Market Risks, Goldman Warns

Courtesy of ZeroHedge

Six years ago, back in 2013, we presented what we then viewed (and still view) as the best trading strategy of the New Abnormal period, when we said that buying the most shorted names while shorting the names that have the highest hedge fund and institutional ownership is the surest way to generate alpha, to wit:

… in a world in which nothing has changed from a year ago, and where fundamentals still don't matter, what is one to do to generate an outside market return? Simple: more of the same and punish those who still believe in an efficient, capital-allocating marketplace and keep bidding up the most shorted names.

Fast forward to three weeks ago, when Bank of America confirmed once again that with just one exception, the historically unvolatile 2017, going long the most shorted names and shorting the most popular ones has continued to be not only the most consistently profitable, alpha-generating strategy, but that in 2019 YTD, the top 10 crowded stocks underperformed the 10 most neglected stocks by 19% YTD, a 5-year record!

Indeed, never has the power of positioning been more active than in 2019, when as BofA recently calculated, the overlap between positioning by mutual funds and hedge funds reached an all time high, and as a result, "positioning has been a big driver of returns in 2019" (we discussed this topic far more extensively back in April in "BofA Finds The Secret Recipe How To Consistently Beat The Market").

Now, with the mandatory several week (or year, depending on how one looks at it), it's Goldman's turn to warn that "as recession fears rise, so does the risk from crowding", or said otherwise, ever greater "crowding" by hedge funds in a handful of positions has rapidly emerged as one of the biggest risks to the increasingly illiquid market.

Of course, the fact that most hedge funds are unimaginative copycats of others' best positions is hardly a secret: after all recall that just before it imploded, serial fraud Valeant was a top-10 most popular firm among…
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Philstockworld Mid-Year Portfolio Review (Members Only)

Image result for one million dollars animated gif$2.1 MILLION Dollars!

$2,093,568 to be exact in our primary portfolios, the paired Long-Term Portrfolio (LTP) and the Short-Term Portfolio (STP) whose job is to protect it.  It's really nothing to crow about as we're actually DOWN $40,487 since our June Review (through mid-May) though these numbers are only through mid June and the month finished with quite a bang.  We close our months on option expiration day, of course, so we won't really know how the first half went until after July 19th and, by the time I consolidate that into a review it will be August and it would sound silly to call that a mid-year review – so that's why I'm calling this one a mid-year review.

While semantics are fun, let's get back to talking about trading strategies:  Our intention over the summer was to lock down our portfolios in neutral as $2.1M is up from our Jan, 2018 start with $500,000 in our LTP and $100,000 in the STP so, overall, we're up $1.5M (250%) in 18 months and, with China Trade still up in the air, I'd rather protect my $1.5M in gains than risk them trying to make another $150,000 (10%).  That's one of the problems you have as you make more and more money – you spend a lot more time protecting your wealth, rather than concentrating on making more wealth.

That's why we like to have multiple virtual portfolios at PSW.  The LTP/STP is where we keep the bulk of our investing capital and they follow a strategy that is constantly hedging to protect what we started with.  Nonetheless, they can still make spectacular gains but this cycle we have a very odd situation in which we have usually guessed correctly when we have added and removed hedges in the STP, causing an unusual $600,000 gain in a portfolio that usually loses money while the LTP gains.  

It's been a very unusual market with lots of dips and recoveries and that kind of suits our trading style perfectly as we tend to scale into positions, buying small, conservative spreads to begin and adding more and widening the spread on dips.  Another strategy we use is rolling our profits and the leads to a lot of our big gains.  For…
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Philstockworld April Portfolio Review (Members Only)

Image result for one million dollars animated gif

Your love (your love keeps lifting me)

Keep on lifting (love keeps lifting me)

Higher (lifting me)

Higher and higher (higher) – Jackie Wilson

Up and up the markets go, where they stop — well, they don't seem to be stopping, do they?

Last month we couldn't believe we were already close to $2M in our primary paired portfolios.  The Long-Term and Short-Term Portfolios stood at $1,990,381 as of about the 15th of March and, although we played cautiously and added more hedges, the LTP has marched on to $1,429,270 by itself (as of the 4/18 review) while the STP took a $36,413 hit but that still left it at $704,785 for a combined total of $2,134,055 – up $1,534,055 (255%) from our original $600,000 start on Jan 2nd, 2018 and up $143,674 for the month, which is 24% of $600,000 but "just" 7.2% higher than where we were in March.

I hate to be in this position as we're clearly benefitting from RIDICULOUS market conditions and I know from experience that, no matter how many times I say it, people won't believe how quickly we can give back a big chunk of these profits.  Just this morning, GOOGL went down 8%, INTC is down 13% in the past week…  If that can happen to big blue chip stocks – what can happen to the other crap?  

We've been purging things we think are overvalued and we keep hedging but, when you make 255% in less than 18 months you have to KNOW that there's something wrong with the markets and, eventually, things may normalize on you.  I've discussed FOMO (fear of missing out) a lot lately and sure, we'd hate to have missed another $143,674 in gains and now those gains are a buffer against future losses but $2M is A LOT of money to risk and we're getting to the point where I'd rather cash it and start again with a fresh $600,000 – locking $1.4M away in a safer place.


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Philstockworld March Portfolio Review (Members Only)

Image result for one million dollars animated gifAnd the madness continues.  

We just finished the best Q1 in 10 years and, keep in mind, we're at the top of a 300% rally from the 2009 bottom so we're accelerating, not decelerating.  The Fed is keeping their foot on the gas and the economy isn't showing the usual signs of overheating (inflation, rising wages, rapid housing increases, commodity shortages) so they don't have a compelling reason not to boost the economy further – despite the stock market inflation that's causing the largest wealth gap this country has ever seen since the start of the Great Depression.  

It's very simple really, the Fed and the Government have boosted the market 300%, which has greatly increased the wealth of the investing class but none of that wealth has trickled down so demand for goods, services, housing and even labor remains restrained.  In other words, the rich get much, much richer and the poor barely hold their ground.  

While my liberal heart bleeds for them, we are running portfolios for the Top 1% and our two paired portfolios (LTP and STP) are now just under the $2M mark at $1,990,381 – or they were back on the 15th, when we did these reviews.  That's up $1.4M (233%) since our 1/2/18 inception at $600,000 so it's been a very good year for long-term investing, although the STP has actually outperformed the LTP by a wide margin in this crazy market.  It's an odd kind of rally indeed when your hedges outperform your longs – but that's the way it's been for the past year or so.  

With the market topping out again, we haven't found too many bargains recently but that doesn't stop our portfolios from making money as we make quite a lot of money by the very reliable method of time (theta) decay from the options we sell – the system we call "Being the House – NOT the Gambler".  

Options Opportunity Portfolio Review (OOP):  $283,465 is actually DOWN $3,622 from our 2/14 Review but was closer to $300,000 a couple of days ago – so luck of the draw as to when I do a review.  ALK took a big hit, BHC was better, CHK went our way, GNC got hit,…
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For The Average Investor, The Next Bear Market Will Likely Be The Last

Courtesy of Lance Roberts, RealInvestmentAdvice.com

Just recently Anna-Louise Jackson published an interesting article asking if “The Financial Crisis” still haunted your investing…

“This month marks the 10-year anniversary of the current bull market’s beginnings. Yet, many Americans remain reluctant to invest in the stock market, a scary hangover from the 2007-09 recession.

From October 2007 to March 2009, the S&P 500 plummeted nearly 57% and it took more than five years for the index to recover. But the share of Americans with money invested in the stock market still hasn’t returned to pre-recession levels, according to various studies.

In 2018, a Gallup Poll survey found 55% of respondents were invested in stocks or stock funds, either personally or jointly with a spouse, down from 65% in 2007. Among those younger than 35, the drop-off is especially pronounced: An average of 38% of the youngest Americans owned stocks from 2008 to 2018, down from 52% in the 2006-2007 period.”

The rest of the article is the typical pedestrian advice of accepting that bear markets happen, ride it out, and hope for the best. (Read this for why you shouldn’t.)

What Anna missed was the most crucial aspect of what is happening to the relationship between individuals and Wall Street.

The Loss Of “Trust”

A surprising number of Americans who have financial advisors don’t trust them to act in their best interests. In a 2016 poll by the American Association of Individual Investors (AAII), 65% of respondents said they mistrust the financial services industry to some degree. In fact, only 2% of respondents claim to trust financial professionals “a lot,” while 15% say they trust them “a little". 

It isn’t just the “Baby boomer” generation who have “lost trust,” but the up and coming millennial generation as well. 

Can you blame them? 

After two major bear markets, years of retirement savings goals were wiped out. More importantly, financial plans which depended on 6%, or more, in annual returns were decimated due to the time lost in getting to retirement goals. This isn’t just recently; this has been the case throughout history.

All those promises of “buy and hold” investing cranking…
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Bubble 3.0: No Way Out

 

BUBBLE 3.0: NO WAY OUT

By David HayEvergreen Gavekal blog

“We’re paddling against the current in trying to sustain public faith in the Fed.”
–Federal Reserve Chairman JEROME (JAY) POWELL

“The FOMC (Federal Open Market Committee, the Fed’s key rate-setting entity) is in panic mode now, facing the Frankenstein monster balance sheet it has created. The FOMC has come to the realization that it cannot unwind it.”
–Jones Trading’s chief strategist MIKE O’ROURKE

“The Fed today is as much a prisoner of the market as the market today is a prisoner of the Fed.”
–Epsilon Theory’s BEN HUNT

“Big hat, no cattle”. “All sizzle, no steak”. “Talks a good game”. Those and other popular sound-bites are meant to refer to someone who is, to use another colloquialism, “all bark and no bite”. When it comes to most of the world’s central banks, all of those quips apply.

If you think I’m being excessively judgmental, consider recent developments: The European Central Bank (ECB) has been adamant about its desire to both begin raising interest rates and shrinking its bloated-like-a-Sumo-wrestler-on-steroids balance sheet.

Source: Financial Times, 2/19/2019

Adamant, that is, until recently. Thanks to weakening inflation and continuing anemic growth on the Continent, rate hikes are off the table. Soon-to-be-outgoing ECB emperor chief Mario Draghi is already making noises about restarting its quantitative easing (QE) program rather than reversing it as its American counterpart, the Fed, has done. This is despite the fact that the ECB’s balance sheet—or stash of European bonds bought with pseudo-euros—is an outrageous 40% of GDP versus “only” about 20% in the case of the Fed (GDP represents a country’s total economic output).

It’s true that Europe’s chronically flaccid economic pulse has faded one more time (European economic “liveliness” almost makes a corpse look animated). As a result, the number of negative-yielding bonds (the ultimate Alice In Wonderland financial condition where borrowers charge lenders to use the latter’s money) is once again swelling. The total value of these legalized investor extortion instruments is now $11 trillion, most of them from European issuers. This is up from the trough of $6 trillion…
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Philstockworld January Portfolio Review (Members Only)

Image result for one million dollars animated gifWhat an amazing first year!  

As of Friday's close, the LTP alone is at $1 Million, finishing the day up 101.1% from our Jan 2nd, 2018 start date.  We've spent a lot of time in December discussing our system as we had a lovely real-World situation to see how it works in action in a market reversal that occurred in weeks, rather than months.  

The way our system is designed to work is to force you to buy low and sell high through the discipline designed into our trading pattern.  First of all, we SCALE into our positions, usually starting with a short put sale and then, if the stock gets cheaper – we initiate our initial long position but it's usually just a 1/4 allocation and we don't get to a 1/2 allocation unless the stock gets EVEN CHEAPER as we roll and scale into a larger position.  

That means we are buying when things are low – that's the plan from the minute we buy and we don't buy unless we think we have a bargain in the first place.  If we get our Fundamentals right and the stock does turn back around – the rewards can be incredible – especially as we're using option positions to greatly leverage the stocks bullish recovery.  

But, in order to ride out a 10-20% market correction, you have to have CASH!!! and you have to have margin in reserve and that means you have to NOT over-extend – even when things are going very well and that means we are also forced to cash in our positions when the market goes too high as well.  So, following our system simply forces you to do the most basic thing any stock guru tells you to do (more or less) – buy low and sell high!  What can be simpler than that?  

As you can see from the S&P chart for this year, we've had 3 times when the market has fallen 10% along with one 6.66% correction so it's not at all rare that we get a chance to add to our positions on dips.  Also you'll note that the 2,600 line on the S&P (…
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Walmart Testing Flippy The Job-Stealing Robot Cook

Courtesy of Zero Hedge

Walmart is testing out a new kitchen robot assistant named "Flippy" at its Bentonville, Arkansas headquarters in order to see if it might make for a valuable team member in its in-store delis, according to Yahoo! Finance

While Flippy had somewhat of a rocky start at a Pasadena, California burger joint – having to be taken offline after its human co-workers couldn't prepare patties fast enough, the robot has had more recent success flipping 17,000 pounds of chicken tenders and tater tots at Dodger Stadium in Los Angeles. 

"Walmart saw what we were doing and said, ‘Could you bring Flippy from Dodgers Stadium to our Culinary Institute?" said Miso Robotics CEO David Zito. 

Yahoo Finance visited Flippy to see it in action at Walmart’s Culinary Institute and Innovation Center.

The way it works is Flippy automates the frying process for many of the items served in the deli, including chicken tenders, mozzarella sticks, and potato wedges. -Yahoo! Finance

 

The way Flippy would work at Walmart is that an associate would place a frozen product on a rack, which Flippy would then identify and pick up using visual recognition technology. Flippy then "agitates" a basket of frying food to ensure even cooking, after which the robot will move the basket to a drip rack. 

After a human tests the food's internal temperature, the associate can season it before it's placed in the hot food display case. 

"If you think about commercial kitchens, they really are micro-manufacturing facilities. And yet, they are some of the hardest conditions for people to work in," said Zito. "Our whole thing is not about job replacement, right. You hear this over and over again. Automating food is very difficult. Ask any chef. Their…
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Zero Hedge

A Corporate-Debt Reckoning Is Coming

Courtesy of ZeroHedge View original post here.

Via 13D Global Strategy and Research,

The following article was originally published in “What I Learned This Week” on March 26, 2020. To learn more about 13D’s investment research, please visit their website.

Corporate debt is the timebomb everyone saw ticking, but no one was able to defuse. Ratings agencies warned about it: Moody’s, S&P. ...



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ValueWalk

Pandemic-related deterioration may cause a drop in PMI

By Gorilla Trades. Originally published at ValueWalk.

In an intra Day note to investors, Gorilla Trades strategist Ken Berman, while commenting on the pandemic-related deterioration, said:

The major indices are all trading lower at midday following another choppy and bearish morning session on Wall Street. The continued exponential growth in the number of U.S. COVID-19 cases and the weak economic data have been weighing on investor sentiment, but stocks are holding up relatively well following yesterday’s bounce. The government jobs report was at the center of attention this morning following yesterday’s record number of new jobl...



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Phil's Favorites

Unmasking the Truth on Masks to Protect Against Coronavirus: Fire the Surgeon General

Courtesy of Pam Martens

By Pam Martens and Russ Martens: April 3, 2020 ~

On March 23 we wrote this:For want of a mask the largest economy in the world has been gutted, with Goldman Sachs now projecting that U.S. GDP could contract by as much as 24 percent in the second quarter.” Now, in the past two weeks, 10 million Americans have filed claims for unemployment. Let that sink in, 10 million of our fellow citizens have l...



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Kimble Charting Solutions

Depression Coming or Is the Bottom Already In? Joe Friday Says Your Answer Lies Here!

Courtesy of Chris Kimble

Are we headed towards a Depression or is the worst already behind us? In today’s world, comparisons to the great depression are easy to find.

Are the Depression concerns well founded or are the declines of late already pricing in a bottom?

In my humble opinion, this chart and the upcoming price action of this index will go miles and miles towards telling us if we are headed towards very tough times or if the huge declines of late are actually in a bottoming process.

This chart looks at the Thomson Reuters Equal Weighted Commodity Index on a monthly basis over the past 54 years. The index has been heading south, reflecting weakness in demand for basi...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Biotech/COVID-19

Antibodies in the blood of COVID-19 survivors know how to beat coronavirus - and researchers are already testing new treatments that harness them

 

Antibodies in the blood of COVID-19 survivors know how to beat coronavirus – and researchers are already testing new treatments that harness them

A person who has recovered from COVID-19 donates plasma in Shandong, China. STR/AFP via Getty Images

Ann Sheehy, College of the Holy Cross

Amid the chaos of an epidemic, those who survive a disease like COVID-19 carry within their bodies the secrets of an effective immune response. Virologists like me...



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The Technical Traders

Founder of TradersWorld Magazine Issued Special Report for Free

Courtesy of Technical Traders

Larry Jacobs owner and editor of TradersWorld magazine published a free special report with his top article and market forecast to his readers yesterday.

What is really exciting is that this forecast for all assets has played out exactly as expected from the stock market crash within his time window to the gold rally, and sharp sell-off. These forecasts have just gotten started the recent moves were only the first part of his price forecasts.

There is only one article in this special supplement, click on the image or link below to download and read it today!

...

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Chart School

Big moving Averages and macro investment decisions

Courtesy of Read the Ticker

When price is falling every one wonders where demand will come in.


RTT black screen Tv videos study the simplest measure of price (simple moving average). What has happen before guides us now. 














Changes in the world is the source of all market moves, to catch and ride the change we believe a combination of Gann Angles, ...

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Members' Corner

10 ways to spot online misinformation

 

10 ways to spot online misinformation

When you share information online, do it responsibly. Sitthiphong/Getty Images

Courtesy of H. Colleen Sinclair, Mississippi State University

Propagandists are already working to sow disinformation and social discord in the run-up to the November elections.

Many of their efforts have focused on social media, where people’s limited attention spans push them to ...



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Digital Currencies

While coronavirus rages, bitcoin has made a leap towards the mainstream

 

While coronavirus rages, bitcoin has made a leap towards the mainstream

Get used to it. Anastasiia Bakai

Courtesy of Iwa Salami, University of East London

Anyone holding bitcoin would have watched the market with alarm in recent weeks. The virtual currency, whose price other cryptocurrencies like ethereum and litecoin largely follow, plummeted from more than US$10,000 (£8,206) in mid-February to briefly below US$4,000 on March 13. Despite recovering to the mid-US$6,000s at the time of writin...



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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

...

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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.