Yes, Texas Is In Bad Shape Now, But It’s Only Going To Get Worse
by ilene - February 21st, 2021 2:22 pm
Yes, Texas Is In Bad Shape Now, But It’s Only Going To Get Worse
The Deep Freeze Is the Disastrous Result of Decades of Republican Government in the State
Courtesy of David Cay Johnston, DCReport
The misery and death in Texas, where the state electric grid was taken down by unusual but predictable cold weather, underscore the misguided conservative Republican values of less regulation, devil-may-care burning of fossil fuels, dangerous tax cuts and unfettered trust in markets as the universal problem solver.
In Texas, the blame for the unheated homes, the dark urban skylines and winter water shortages is on just one politician—Greg Abbott. He has been governor of the Lone Star state for more than six years.
Abbott gained notoriety in the past few days for making the ridiculous claim that Texans are freezing because windmills fail in the cold. The fact is that they are running just fine in such spots as Iowa, Minnesota, Alaska, Finland and even Siberia.
Texas didn’t require that natural gas pipelines be built in anticipation of severe weather, didn’t require sufficient natural gas storage for electric power plants and didn’t insist that the electric grid itself be hardened against severe heat and cold.
The reason Texans are freezing is that Texas state government:
- Failed to require that natural gas pipelines be built in anticipation of severe weather
- Didn’t require sufficient natural gas storage for electric power plants
- Neglected to insist that the electric grid itself be hardened against severe heat and cold, more of which is certain as climate change generates raucous weather
What did Abbott do? He appointed all three members of the Texas Public Utility Commission who failed to ensure adequacy of the Texas electric grid for all weather.
Inadequate Reserves
Abbott’s commissioners, embracing his anti-regulatory philosophy, did not require adequate power generation reserves. That’s crucial. When electric generators go down in extreme weather, accidents or even planned maintenance, there needs to be plentiful additional capacity
…
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Phil fantastic call on the markets… I owe you BIG…thanks and have a great weekend!
Kustomz
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I am not a user of phil's site now, but was for a couple years. His advice and information is excellent. Perhaps even better, you get access to real-time trades of additional traders on his site (OptTrader, etc) and the other members who post what they are buying and selling. Overall, its a very valuable information tool. Expensive, but paid for itself many times over. I did not renew my membership because I switched jobs and did not have time to trade nearly as much.
XRTrader
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Phil- I would like to echo the sentiments of dclark41. Joining this site was the best thing I have ever done to aid my growth as a trader/investor. There are so many smart and experienced people here sharing their ideas that regardless what your investing style is you will learn something daily. Thank you and all the regular contributors for your generosity.
Acd54
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GOOG, NFLX and AAPL all bought last hour Friday. Sold into the excitement the first hour today for an average of 15% on the options. And lots of them. Thanks again Phil for teaching me so well.
lflantheman
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Phil Thank you very much, I appreciate your help and wisdom.
CdsdpDean
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Thanks super helpful re: UGN example…..other inflation/market-correction-defensive-related play you threw out that has jammed UP in less than a month is TITN 6/14 $15 puts, up 40%. Excuse my enthusiasm but haven't had those types of gains in multiple plays in years let alone days doing it on my own…….maybe I should host the PSW infomercial!!!!
stevegeb200
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By the way thank you Phil for the DNDN idea. 3x till this morning and will 4x my small investment by next OE THANKS !!!!
Microflux
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Phil – just wanted to say a sincere thank you for teaching me how to offset, hedge, roll, and not panic. My account is up 10% in the last two weeks, and far from panic, this is becoming great fun. Thanks again,
Deano
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What a great post today, Phil. A veritable feast of ideas! I've been reading your posts for years and have modeled my whole trading style after yours. You should be taking 2 and 20 off of me at this point ????
Jablams
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I discovered PSW while reading up on the US economy and how it applies to all the poor folk of the world and to myself as a humble UK desk slave. This year I put time into learning options trading. I upgraded (with great administrative difficulty!) my stock dealing account to deal options. Now I am an avid reader of PSW and subscribed for voyeur membership. Initially feeling out of my depth struggling to keep up with the peculiar language of options traders, I unsubscribed feeling a little under confident and uncertain if the small stake I have to invest in options could generate enough to justify my PSW subscription. Nevertheless, I've benefited considerably from the member's material. From a small number of initial trades, I've exceeded profit targets enough to consider re-subscribing in some capacity. Thanks for the knowledge and more than anything I appreciate the human angle, the humour and the ecologically sympathetic approach rarely seen in other financial media. Best wishes all - Jon
Jon
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Being a bear is easy (and I am not convinced we are doing all that well on the whole as an economy), but one cannot fight the trend (didn't Phil say that a while ago)? Just cover, make 5-10-15-20% and move on. It really does add up by chipping away. All I can say is I am back to 2007 levels in my account b'f the crash with this run up and some very nice help on this board….so kudos to us (and me!!)…
Pharmboy
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Wishing Phil and all fellow PSW members a Happy, Healthy and Prosperous New Year 2017! Thanks to all of you for your insights and comments which help make me a better investor every day. Wishing everybody the best of luck for 2017
Learner
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Phil, those OIH $80 p that you recommended last week for ~$1 are now worth $5.50!
Greg
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Phil - Moved today to send kudos. You're in my top 5 to see/read daily. I do not trade... but as former econ-finance adjunct faculty near Stanford U. I give you lots of attaboys.... and provide your links to many to spread some understanding of the mess we are in. Best to you and yours,
HJ Kobbeman
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SPY/Phil, I took a big swing on January 26th following your advice to another member and bought 1615 contracts of Mar 185/190 BCS on SPY that will expire ITM today paying $290,700 on the $500k bet. I thought it might be fun to see what a winning trade looks like. Great call on your part and looking back it seems pretty obvious.
Sibe14 (premium)
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Nice call on the QQQ puts this morning Phil. I bought 10 at .13 this morning for fun day trade. Just closed at .95. Sweet hedge for the day!
RevTodd64
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Peter D, Just a note of thanks. Eight weeks ago, I entered my first RUT strangles, when the RUT was at 625. Tomorrow, I will let them expire, with the RUT at 625 (give or take). I didn't care when the RUT went to 650, nor when it dropped to 590. Easiest, no touch money I've made in a long time.
Judahbenhur
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I have followed along with your commentary and alerts and have been flabbergasted at your quick analytical skills and your journalistic skills to explain it clearly. In a little over three weeks I have cleared almost 1000.00 dollars and got an intensive education at the same time. I would like to immediately upgrade my membership.
TokyoLife
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Started my membership in mid-Oct and have since then learned so much about options by reading the site's articles and postings, members' chats and suggested trades – as a bonus, the articles are entertaining as well! Phil's long-term investing strategy makes really good sense as I've seen its effect on my GLW positions. Phil – thanks for sharing your knowledge of the market! I've worked as risk analyst for the investment dept of a $19B insurance company, and the scope and depth of your daily commentaries blows away what I have seen and heard from the PMs and even the chief investment officer! Most of all, I will continue to be a member because you have your priorities right (from my POV) – it's not all about money and power.
Bai2r
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I've been trading/investing since the early 80's (my dad started me out young). I've had seven figure accounts (in the past) and I've done lots of trading, so I can say that I'm a well seasoned investor. Phil is the real deal. His trades make sense and his strategy is sound. He sees things that others miss and he's one of the best at finding price anomalies. When he makes a mistake, he has an exit strategy already planned. He hedges very well and he has an instict which tells him to go to cash or to be all in.
Autolander
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hil, I hit my targets for the year in my 401K (thanks in no small part to your site), so I cashed out of all positions a couple of weeks ago. Feels good... I'm conservative with this money –looking for 2% per month, which i've been able to do… thx.
Lunar
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Phil – Great calls yesterday, you were in top form. As I was reading your postings, I had hindsight of what the day brought. The calls were uncanny!
Jfawcett
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Phil, Thanks for the long calls@ $ 85 on AAPL. A quick $4900. Paid for my subscription!!
Newthugger
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Phil, thank you for all the education here. I've gained so much knowledge being a part of PSW. Thanks to the rest of the members as well! I appreciate all of the contributions you make.
JeffDoc
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I am struck by several things over the last few days. First is how level-headed we all are as Greece and China develop. Second is how very helpful it is to see the different trading styles we have, partly because of personal preference and partly because of different stages of development and education. It's very helpful. Well-done, Phil, to have developed this community.
Snow
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New members – a word of advice: you should check out the track record of Phil's last few trades of the year, and what the return would be if you just rolled all the gains into the next years trade of the year. Remember – trade of the year is one he's virtually sure of, and he rarely misses on those
Deano
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Sold out my AAPL mar95 calls. Up over 100% today on them!
Singapore Steve
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Thank you Nantucket. It is hard to be a complete beginner in the market with this complicated, fast moving, and very advanced group. Phil is the Great One, but the membership is absolutely amazing! Had I known this ahead I would probably log in as "awe struck" everyday.
Coke
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Phil/ et al- Thanks for the answers to my spread questions last night, as I really needed that little piece of knowledge to crystallize my understanding of spreads. Your help is much appreciated and I have been doing really well for the last couple of months with fewer and fewer missteps as I embrace the PSW ways and watching my portfolios grow.
Craigsa620
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Have been a member for about 6 months or there abouts. Signed up for a quarter at first and then for a year. To me, and it's only my opinion, it's an investment and I have made the membership fees back many times over on the strategy advice. Since joining and implementing the strategy of buy/writes and hedges I have cut my portfolio losses for the year and have a really good chance of going positive this year. If I would have continued down the road I was on, I would still have been fumbling around without a strategy and completely inept in what I was doing. I feel now the strategy is working and I am far more comfortable with the risks I am taking. I still have a lot to learn but I feel the fees have been one of the best investments I have made. The returns have been fantastic. Still have problems with the politics but hey nobody is perfect
DKGuy
COVID-19 has crippled the winter sports industry – but a digital revolution will help it recover
by ilene - February 20th, 2021 11:53 pm
COVID-19 has crippled the winter sports industry – but a digital revolution will help it recover
Courtesy of Sascha L. Schmidt, WHU – Otto Beisheim School of Management and Nicolas Frevel, WHU – Otto Beisheim School of Management
It was all going so well. When China sparked the greatest winter sports boom in history by trying to inspire 300m people ahead of the Olympics in Beijing in 2022, the forecast for the industry was great. The 2018/2019 season was the most successful for 20 years, as the American and European markets were thriving too.
Then the pandemic hit, and winter sports, like many other industries, were severely affected. But our recent research suggests the technological developments the pandemic has also ushered in could help secure its future by changing the way elite sportspeople and amateurs approach the sports they love.
The pandemic’s impact has been widespread. Ski resorts, hotels, bars and tourism operators have all been affected, as have a whole range of suppliers who depend on demand from these organisations.
While some venues can at least remain open and maintain operations, others have had to shut down entirely for the time being.. Equipment manufacturers and retailers will be worrying about full warehouses that are waiting for buying customers.
Many businesses will not have the financial stamina and resilience to carry on. It is clear the industry will have to adapt to survive.
We investigated the future of winter sports by soliciting opinions from a diverse panel of experts from 15 countries. They included industry officials, former elite athletes, managing directors of ski resorts, technology experts, equipment manufacturers, esports video game developers and media representatives. Our report aimed to nurture a discussion on the future of the sector.
The experts, surveyed in November 2020, believe that winter sports will take at least two to three years to reach pre-COVID-19 levels (for example, in terms of live attendance at ski events). But, perhaps surprisingly, a clear majority of 30 out of 53 said they thought the pandemic would change the industry slightly for the better. And this was despite the severe, short-term challenges.
This…
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Rethinking the US-China fight: Does China really threaten American power abroad?
by ilene - February 19th, 2021 6:19 pm
Rethinking the US-China fight: Does China really threaten American power abroad?
President Biden has so far kept most of his predecessor’s tough-on-China policies. Malte Mueller via Getty Images
Courtesy of Andrew Latham, Macalester College
President Joe Biden is so far maintaining his predecessor’s tough China policy, which aims to curb China’s international power both economically and politically.
In the U.S. and Europe, China is widely recognized as a rising star that threatens Western power.
But my research on the country suggests China may no longer see itself that way.
China’s rise
In the three decades I’ve studied and taught Chinese foreign policy, I have witnessed three discrete eras in China’s approach to international relations.
After the death of the Communist Chinese leader Mao Zedong in 1976, Mao’s successors, Deng Xiaoping and Jiang Zemin, introduced economic reforms that launched China on a path of phenomenal economic growth. The country rose from 11th to second place in the global GDP rankings between 1990 and 2020.
The prevailing view in Western capitals in the 1990s was that China’s economic transformations would inevitably culminate in an affluent, peaceful and democratic country.
To ensure this outcome, the major economic powers were prepared to embrace China as a full member of their club of open-market societies, admitting it into international institutions like the World Trade Organization and integrating it into global markets. The West was keen to bring it into this network of international political institutions constructed after World War II to promote cooperation and peaceful conflict resolution.
And China was happy to join the club, at least when it came to trade and investment. Chinese leader Deng Xiaoping’s foreign relations strategy in the 1990s was to “hide capabilities and bide time,” adopting a policy of “tao guang yang hui” – keeping a low profile.
In the early 2000s, President Hu Jintao took a few modest steps toward greater Chinese assertiveness on the world stage, building up China’s navy and initiating a series of port projects in Pakistan and beyond. For the most part, however, Hu still espoused a…
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PhilStockWorld February Portfolio Review – Part 2
by phil - February 19th, 2021 8:36 am
Does trading have to be exciting?
While the market remains at all-time highs, I remain skeptical and a lot of that is because I allowed myself to become complacent in 2007, after having missed the rally of 1999 because that, too, was ridiculous. In retrospect I was right – but not until March of 2000 and I could have had some fun betting on anything with a pulse in 1999 so, when 2007 came along – I finally went with the flow and, while we had pretty good timing in 2008 getting out on top – a lot of people didn't. So I guess, this time around, I just want to make sure nobody gets burned when this thing collapses.
We are all shaped by our past and we all run our own gauntlets to become the people we are today. I know I trade like an old man because I learned from my Grandfather, Max Davis, who was born in 1903 and, in 1973, 10 year-old me laid on the floor on Sundays with the stock section of the paper laid out on the floor (you only got stock reports on Sundays back then), circling companies that made new highs or new lows so we could later investigate why it was happening and then Grandpa would do his Fundamental Analysis of the companies (often including actually visiting the company) to decide if there were any hidden values there.
Having lived (in England) through World War 1, the Pandemic that followed, the Great Depression and World War II, Grandpa Max had seen a lot of shit – and he was very good at conveying his experiences to me from both a Social and Economic perspective. Though he never went to college, Grandpa Max was a voracious reader and a very sharp businessman. Learning from him always gave me a long-term and patient perspective on stocks and, since we only got stock news on Sundays anyway – you learn to be patient by default.
So of course, growing up, I gravitated to books by Jeremy Grantham (also British) and Warren Buffett and that's my "style" – value investing but my twist on it (as I'm 30 years younger) is to use options for hedging and leverage – rather than just trying to…
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How the Texas electricity system produced low-cost power but left residents out in the cold
by ilene - February 18th, 2021 5:49 pm
How the Texas electricity system produced low-cost power but left residents out in the cold
Waiting in line in freezing rain to fill propane tanks in Houston, Texas, Feb. 17, 2021. AP Photo/David J. Phillip
Courtesy of Theodore J. Kury, University of Florida
Americans often take electricity for granted – until the lights go out. The recent cold wave and storm in Texas have placed considerable focus on the Electric Reliability Council of Texas, or ERCOT, the nonprofit corporation that manages the flow of electricity to more than 26 million Texans. Together, ERCOT and similar organizations manage about 60% of the U.S. power supply.
From my research on the structure of the U.S. electricity industry, I know that rules set by entities like ERCOT have major effects on Americans’ energy choices. The current power crunch in Texas and other affected states highlights the delicate balancing act that’s involved in providing safe, reliable electricity service at fair, reasonable rates. It also shows how arcane features of energy markets can have big effects at critical moments.
Let there be light
The electric age began in 1882 when the Edison Illuminating Company sent power over wires to 59 customers in lower Manhattan from its Pearl Street Generating Station. Edison was America’s first investor-owned electric utility – a company that generated electricity, moved it over transmission lines and delivered it to individual customers.
The scope and scale of electric utilities grew rapidly from those humble beginnings, but this underlying, vertically integrated structure remained intact for more than 100 years. Each utility had a monopoly on serving customers in its area and reported to a public utility commission, which told the company what rates it could charge.
Since the utilities knew more about their costs and abilities than anyone else, the burden was on regulators to decide whether the utility was operating efficiently. Regulators also determined whether the costs that utilities proposed to pass on to customers – such as building new generating plants – were just and reasonable.
Thomas Edison created the model for the traditional electric
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PhilStockWorld February Portfolio Review
by phil - February 18th, 2021 8:57 am
$1,766,591!
Our paired Long & Short-Term Portfolios have gained $157,564 since our January Review and that is, of course, ridiculous and reflective of this ridiculous bubble rally. The LTP went up and the loss of the STP went down – even as we increased our hedging. That's because we sell a lot of premium and the premium decays regardless of the market direction. Time is our friend using this strategy.
Also, we have SUBSTANTIAL amounts of CASH!!! across all of our portfolios as we think this entire market is BS and will collapse at some point. At least 2 or 3 days each week I wake up wanting to just cash out and go on vacation – only I can't go on vacation and I'd be bored so we stay invested – but that's a really stupid reason to risk your assets if this is money that is critical to your future.
The S&P 500 is up almost 100% from it's March lows and yes, that was a 35% drop from the February highs but now we're 20% above those (3,393) and it's simply too far, too fast so we're being very careful with our positions and very aggressive with our hedges. In our last STP Review, we determined we had a good $300,000 worth of protection and we only have $551,828 worth of position in our LTP – that is well-covered!
We added new longs however in the LTP on BABA, GOLD, OIH, TOT, VLO, WPM and WU in the past 30 days as we've been enjoying earnings season and the bargains it brings. We still have $1,057,650 of CASH!!! sitting on the sidelines and we've sold very few naked puts so we also have tons of margin to play with. On the whole, we'd love a good crash – so we can go bargain-hunting. I will repeat what I said back on December 16th as the strategy still holds and, after making 10% for the month, perhaps more people will pay attention:
We have 33% less
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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...
Ilene is editor and affiliate program
coordinator for PSW.