Posts Tagged ‘Citigroup’

Black Swan in Computer Trading? Nasdaq to Cancel Some Trades; Plunge Raises Alarm on Computerized Trading

Black Swan in Computer Trading? Nasdaq to Cancel Some Trades; Plunge Raises Alarm on Computerized Trading

Courtesy of Mish 

Black Swans

Larry Leibowitz, the chief operating officer of NYSE Euronext says Electronic Trading to Blame for Plunge

Computerized trades sent to electronic networks turned an orderly stock market decline into a rout today, according to Larry Leibowitz, the chief operating officer of NYSE Euronext.

While the first half of the Dow Jones Industrial Average’s 998.5-point plunge probably reflected normal trading, the selloff snowballed because of orders sent to venues with no investors willing to match them, Leibowitz said in an interview on Bloomberg Television.

Plunge Raises Alarm on Computerized Trading

Inquiring minds are reading Stock plunge raises alarm on algo trading

A spine-chilling slide of nearly 1,000 points in the Dow Jones Industrial Average, its biggest intraday points drop ever, led to heightened calls for a crackdown on computer-driven high-frequency trading.

The slide, which in one 10-minute stretch knocked the index down nearly 700 points, may have been triggered by a trading error. Major stock indexes eventually recovered from their 9 percent drops to close down a little more than 3 percent.

But the follow-through selling that pushed stocks of some highly regarded companies into tailspins exacerbated concerns that regulators can quickly lose control of the markets in a world of algorithmic trading.

"The potential for giant high-speed computers to generate false trades and create market chaos reared its head again today," Senator Edward Kaufman said in a statement.

"The battle of the algorithms — not understood by nor even remotely transparent to the Securities and Exchange Commission — simply must be carefully reviewed and placed within a meaningful regulatory framework soon."

Computers vs. Computers

In essence computers trading against computers decided at some point today to throw in the towel and not bid.

At some point (manual intervention?) they all decided to bid again, driving stock prices back up. This is what our stock market casino has become.

Lovely, isn’t it?

I have been waiting for this to happen and today it did. Supposedly, computer trading lowers volatility and bid/ask spreads for traders. Today we see that works until it doesn’t.

Most of the day Citigroup was erroneously blamed for the plunge. Citigroup was not to blame, flash-trading computers vs. computers with fake orders appears to be the culprit.

Who benefits from…
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DÉJÀ VU

DÉJÀ VU

By James Surowiecki, The New Yorker 

A major Wall Street firm is accused of misleading clients by concealing key conflicts of interest. E-mails suggest that an employee touted its wares in public while slamming them in private. The scandal is front-page news, and observers anticipate severe damage to the firm’s reputation. We could be talking about Goldman Sachs today. But we could also be talking about Citigroup or Merrill Lynch in 2002, after the tech bubble burst. Then there was widespread anger at banks’ dodgy practices and reckless behavior, and an insistence that investors and regulators needed to be more vigilant. So why are we going through this all over again?

 

In the middle of the past decade, it seemed as if Americans thought that Wall Street could do no wrong. But just a couple of years earlier people thought that Wall Street could do nothing right. High-profile analysts had put “buy” ratings on the stocks of companies that they privately called “pigs.” WorldCom and Enron committed outrageous accounting fraud, the latter abetted by the venerable Arthur Andersen. There was so much bad behavior that it was hard to keep track—I.P.O. spinning, mutual-fund late trading, Adelphia, Tyco. There was shock that companies whose viability depended on reputation had so casually exploited their clients, and a sense that it would take a long time for the banks to win back trust.

Continue Deja Vu here.>>

Don’t You Forget About Me – Simple Minds

 


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Bill Black: Lehman’s demise is “a story of fraud”

Bill Black: Lehman’s demise is "a story of fraud"

Courtesy of Edward Harrison at Credit Writedowns 

Veteran regulator believes Lehman Brothers is a case of fraud and believes the Feds need to bring charges.

But, more than that, Black hones in one the mortgage fraud which underlies much of the speculative fervour in the market by citing the 60% of GSE eligible Citi loans which Citigroup executives indicated did not conform to Freddie and Fannie’s standards.

Very short interview. I would like to have heard more.

Update: Below Black goes into some detail in his later testimony before Congress. Good stuff.


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Most Wall Street Banks Using Lehman Style Accounting Trickery Enabled by the Fed to Hide Their Risk

Most Wall Street Banks Using Lehman Style Accounting Trickery Enabled by the Fed to Hide Their Risk

Courtesy of  JESSE’S CAFÉ AMÉRICAIN

This analysis from the Wall Street Journal indicates that most of the big US Banks are engaging in the same kind of repo accounting at the end of the quarter that Lehman Brothers was doing to hide their financial instability until deteriorating credit conditions and liquidity problems made them precipitously collapse, as all ponzi schemes and financial frauds do when the truth becomes known.

The basic exercise is to hold big leverage and dodgy debt, but swap it off your books with the Fed at the end of each quarter for a short period of time when you have to report your holdings.

This could easily be corrected by requiring banks to report four week averages of their holdings for example, rather than a snapshot when they can hide their true risk profiles so easily, compliments of that protector of consumers and investors, the Fed.

This is nothing new to us. Many of us have noted this sort of accounting trickery and market manipulation at key events especially at end of quarter.

It is facilitated by the Federal Reserve, and FASB, and the agencies.

"Their Fraud doth rarely falter, and is subsidized, instead, 
for none dare call it bank fraud, if it’s sanctioned by the Fed."
(apologies to Ovid)

The US is Lehman Brothers on a scale writ large. And when it is exposed by some series of events, the implosion could be more sudden than any can imagine. But in the meantime the US is still the ‘superpower’ of the world’s financial system, through its currency, its banks, and its ratings agencies.

WSJ
Big Banks Mask Risk Levels
By KATE KELLY, TOM MCGINTY and DAN FITZPATRICK
April 9, 2010

Quarter-End Loan Figures Sit 42% Below Peak, Then Rise as New Period Progresses; SEC Review

Major banks have masked their risk levels in the past five quarters by temporarily lowering their debt just before reporting it to the public, according to data from the Federal Reserve Bank of New York.

A group of 18 banks—which includes Goldman Sachs


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Doug Kass and Jim Cramer Need to Change the False Ads for Real Money

Doug Kass and Jim Cramer Need to Change the False Ads for Real Money

Courtesy of Damien Hoffman at Wall St. Cheat Sheet

As if TheStreet.com didn’t already have enough troubles with the SEC investigating their accounting, another Street veteran Doug Kass joins the pile fools who have tried to make prophetic claims regarding the stock market. (Nouriel Roubini is still my favorite.)

On August 26, 2009, Kass authoritatively proclaimed, “Markets top during times of enthusiasm. I believe that the markets are now overshooting to the upside and that the U.S. stock market has likely peaked for the year.”

On September 30, 2009, 


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Prince Alwaleed Needs a Turnaround at Citigroup – Or Else

Prince Alwaleed Needs a Turnaround at Citigroup – Or Else

Courtesy of  Jesse’s Café Américain

Prince Alwaleed has given Vikram Pandit one year to shape up or else.

I wonder what sharia has to say about investing like a doofus, throwing more money on a losing position, and then expecting common taxpayers to bail you out. 

"Last week, Alwaleed boosted Kingdom Holding’s balance sheet by transferring $600 million worth of his own Citi shares onto its balance sheet. Shares of the investment group — of which Alwaleed is a 95% owner — have lost about half their value since 2007 and it’s had capital losses of 65% as of the end of the third quarter. The transfer of Alwaleed’s Citi shares should help secure its borrowing capacity, and it also means that the Citi shares aren’t going to be sold anytime soon." Citi and Its Princely Problem

It appears as though the Prince’s investment empire is on shaky ground.

No wonder Vikram Pandit has been noticeably absent from such recent, unimportant meetings like those with the President and the Congress.

Business Standard India
Perform or perish, Saudi Prince tells Vikram Pandit

Washington January 16, 2010, 14:05 IST

Saudi Prince Alwaleed bin Talal, who is a major shareholder in the Citigroup, has told the bank’s Indian-American CEO Vikram Pandit that his two-year honeymoon is now over and 2010 is a make or break year for him.

"I don’t threaten those CEOs that I meet but I told him (Vikram Pandit) that the market gave you two years’ leeway, but I think now it’s time to deliver and 2010 for him is really the year to make it or break it and he has to deliver," Alwaleed said in an interview.

Alwaleed had recently met with Pandit and he had told him that he must deliver solid results in 2010.

"It’s very important… For the shareholders that have been very patient with Citibank that the honeymoon is over now; two years is enough and I think he will deliver in 2010," Alwaleed said.

At the interview, the Saudi Prince also acknowledged that China is an economic power and eventually, it would translate that into political power.

"China is a rising power. For sure now, China is amassing huge power economically, financially, not yet politically, but I think eventually it is


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Citi’s TARP Repayment: The Downside for a Troubled Bank

Citi’s TARP Repayment: The Downside for a Troubled Bank

Citi - TIME By Stephen Gandel, courtesy of TIME

Can Citigroup survive without a government safety net? Some analysts aren’t sure.

On Monday, Citigroup said it had worked out a deal to repay $20 billion in government bailout money and terminate a loss-sharing agreement the bank had with the government for Citi’s riskiest assets. Citi CEO Vickram Pandit said the moves were signs that his company was returning to financial health. The deal would also remove much of the government’s pay restrictions on the bank. "These actions move us closer to ending a very difficult period for our company," wrote Pandit in an internal memo to Citi employees.

But analysts say Citi’s rush to repay the assistance it got through the government’s Troubled Asset Relief Program (TARP) will make the bank weaker, not stronger. The move will reduce Citi’s capital ratios and hurt earnings; it may also accelerate a retreat of foreign investors from the company’s shares. Worse, the government is demanding stricter terms from Citi than it did from Bank of America on the repayment deal it struck just a week ago. The different treatment shows that the government remains more concerned about Citi’s finances than those of its rivals.

Veteran analyst Richard Bove of Rochdale Securities, who had been recommending Citi’s shares since the summer, downgraded the stock on news that it was going to repay TARP from a "buy" to a "sell" rating. "What does it do for the company? Management can increase [executive] salaries," says Bove, referring to the fact that Citi will now be free of the government’s compensation rules. "What else? Nothing."

Indeed, Citi’s shares fell on the news that it was repaying TARP, down $0.27, or nearly 7%, to $3.68 a share.

Citi’s deal to pay back the government was reportedly hashed out over a week’s worth of marathon negotiations following Bank of America’s repayment last week of $45 billion in government assistance. Citi did not want to be one of the few remaining big banks still using the government’s crutch.

Citi’s effort to repay the government will remove some of the stigma surrounding the firm that has evolved since the start of the financial crisis. Treasury officials say Citi will no longer be considered one of the companies that have received "exceptional assistance" from the government. That means pay czar Kenneth Feinberg…
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The Rich Have Stolen the Economy

From Offshoring Jobs to Bailing Out Bankers

The Rich Have Stolen the Economy

big banksBy PAUL CRAIG ROBERTS at CounterPunch

Bloomberg reports that Treasury Secretary Timothy Geithner’s closest aides earned millions of dollars a year working for Goldman Sachs, Citigroup and other Wall Street firms. Bloomberg adds that none of these aides faced Senate confirmation.  Yet, they are overseeing the handout of hundreds of billions of dollars of taxpayer funds to their former employers. 

The gifts of billions of dollars of taxpayers’ money provided the banks with an abundance of low cost capital that has boosted the banks’ profits, while the taxpayers who provided the capital are increasingly unemployed and homeless.  

JPMorgan Chase announced that it has earned $3.6 billion in the third quarter of this year.

Goldman Sachs has made so much money during this year of economic crisis that enormous bonuses are in the works. The London Evening Standard reports that Goldman Sachs’ “5,500 London staff can look forward to record average payouts of around 500,000 pounds ($800,000) each. Senior executives will get bonuses of several million pounds each with the highest paid as much as 10 million pounds ($16 million).“

In the event the banksters can’t figure out how to enjoy the riches, the Financial Times is offering a new magazine--”How To Spend It.”  New York City’s retailers are praying for some of it, suffering a 15.3 per cent vacancy rate on Fifth Avenue. Statistician John Williams (shadowstats.com) reports that retail sales adjusted for inflation have declined to the level of 10 years ago: “Virtually 10 years worth of real retail sales growth has been destroyed in the still unfolding depression.”

Meanwhile, occupants of New York City’s homeless shelters have reached the all time high of 39,000, 16,000 of whom are children. 

New York City government is so overwhelmed that it is paying $90 per night per apartment to rent unsold new apartments for the homeless. Desperate, the city government is offering one-way free airline tickets to the homeless if they will leave the city. It is  charging rent to shelter residents who have jobs. A single mother earning $800 per month is paying $336 in shelter rent.

job lossesLong-term unemployment has become a serious problem across the country, doubling the unemployment rate from the reported 10 per cent to 20 per cent.  Now hundreds of thousands more Americans
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Corruption: Big Banks Using “Silent Subs”?

Here’s Karl Denninger’s commentary on the article by Pam Martens, "Wall Street Titans Use Aliases to Foreclose on Families While Partnering With a Federal Agency" - Ilene

Corruption: Big Banks Using "Silent Subs"?

Courtesy of Karl Denninger at The Market Ticker

Now this is interesting….

In a stealth partial privatization, the U.S. Department of Housing and Urban Development (HUD) farmed out its mandate of working with single family homeowners in trouble on their mortgages to the industry most responsible for separating people from their savings and creating an unprecedented wealth gap that renders millions unable to pay those mortgages.

What Pam is referring to here is…

In this case, from 2002 to 2005, HUD transferred in excess of $2.4 billion of defaulted mortgages insured by its sibling, the FHA, into the hands of Citigroup, Lehman Brothers and Bear Stearns while providing the firms with wide latitude to foreclose, restructure or sell off in bundles to investors.

In other words, this "organization" took in the defaulted notes on property (homes) and then did with it whatever they wanted.

But wait a second – who wrote that paper in the first place?  "All roads lead to Lehman", when it comes to subprime, remember?  (Incidentally, that’s a big part of why they blew up!)

The ugly, however, is here:

What the program effectively did was allow the biggest retail banks in the country to get accelerated payment on their defaulted, FHA-insured, single family mortgage loans while allowing another set of the biggest investment banks to make huge profits in fees for bundling and selling off the loans as securitizations. Once the loans were securitized (sold off to investors) they were no longer the problem of HUD or the Wall Street bankers. The loans conveniently disappeared from the radar screen and the balance sheet.

Uh, except for one problem – was it disclosed to the buyers that these loans were previously defaulted?  Hmmmmm…. not really sure.  See, those notes have to be performing to securitize them, but Pam does raise the question as to whether the source of these notes was reasonably disclosed to buyers.  Note sales can be profitable for someone, the question is whether everyone buying knows what they’re getting - in this case there’s a dubious "homeowner" who has already demonstrated inability to pay on the end of…
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Wall Street Titans Use Aliases to Foreclose on Families While Partnering With a Federal Agency

Wecome to Pam Martens!  Pam wrote this article for CounterPunch and kindly allows us to reprint it here. This is Part One of CounterPunch’s Special Investigation Series - I’m looking forward to additional great articles by Pam. – Ilene

Wall Street Titans Use Aliases to Foreclose on Families While Partnering With a Federal Agency

By PAM MARTENS

A federal agency tasked with expanding the American dream of home ownership and affordable housing free from discrimination to people of modest means has been quietly moving a chunk of that role to Wall Street since 2002.  In a stealth partial privatization, the U.S. Department of Housing and Urban Development (HUD) farmed out its mandate of working with single family homeowners in trouble on their mortgages to the industry most responsible for separating people from their savings and creating an unprecedented wealth gap that renders millions unable to pay those mortgages. This industry also ranks as one of the most storied industries in terms of race discrimination.  Rounding out its dubious housing credentials, Wall Street is now on life support courtesy of the public purse known as TARP as a result of issuing trillions of dollars in miss-rated housing bonds and housing-related derivatives, many of which were nothing more than algorithmic concepts wrapped in a high priced legal opinion.  It’s difficult to imagine a more problematic resume for the new housing czars.

To what degree this surreptitious program has contributed to putting children and families out on the street during one of the worst economic slumps since the ’30s  should be on a Congressional short list for investigation.  HUD’s demand for confidentiality from all bidders and announcement of winning bids to parties known only as “the winning bidder”  deserves its own investigation in terms of obfuscating the public’s right to know and the ability of the press to properly fulfill its function in a free society. 

Despite three days of emails and phone calls to HUD officials, they have refused to provide the names of the winning bidders or the firms that teamed as co-bidders with the winning party.  Obtaining this information independently has been akin to extracting a painful splinter wearing a blindfold and oven mitts. 

That a taxpayer-supported Federal agency conducts a competitive bid program of over $2 billion and then refuses to announce the names of the winning bidders is beyond contempt for the American people.  If the
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Phil's Favorites

Buyer beware: How Libra differs from Bitcoin

 

Buyer beware: How Libra differs from Bitcoin

Recent revelations about the lack of privacy protections in place at the companies involved in Facebook’s new Libra crytocurrency raise concerns about how much trust users can place in Libra. (Shutterstock)

Courtesy of Alfred Lehar, University of Calgary

Facebook, the largest social network in the world, stunned the world earlier this year with the announcement of its own cryptocurrency, Libra.

The launch has raised questions about the difference between Libra and existing cryptocurrencies, as well as the implications of private companies competing with s...



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Digital Currencies

Buyer beware: How Libra differs from Bitcoin

 

Buyer beware: How Libra differs from Bitcoin

Recent revelations about the lack of privacy protections in place at the companies involved in Facebook’s new Libra crytocurrency raise concerns about how much trust users can place in Libra. (Shutterstock)

Courtesy of Alfred Lehar, University of Calgary

Facebook, the largest social network in the world, stunned the world earlier this year with the announcement of its own cryptocurrency, Libra.

The launch has raised questions about the difference between Libra and existing cryptocurrencies, as well as the implications of private companies competing with s...



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Zero Hedge

What's Hot In Women's Fashion?

Courtesy of ZeroHedge View original post here.

Via Global Macro Monitor,

Capitalism at its best or worst?

We have a few questions:

1)  Does the Tariff Man get a royalty for the sale of each dress sold, and will that violate the Emolumen...



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Lee's Free Thinking

Look Out Bears! Fed New QE Now Up to $165 Billion

Courtesy of Lee Adler

I have been warning for months that the Fed would need new QE to counter the impact of massive waves of Treasury supply. I thought that that would come later, rather than sooner. Sorry folks, wrong about that. The NY Fed announced another round of new TOMO (Temporary Open Market Operations) today.

In addition to the $75 billion in overnight repos that the Fed issued and has been rolling over since Tuesday, next week the Fed will issue another $90 billion. They’ll come in the form of three $30 billion, 14 day repos to be offered next week.

That brings the new Fed QE to a total of $165 billion. Even in the worst days of the financial crisis, I can’t remember the Fed ballooning its balance sheet by $165 bi...



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The Technical Traders

Is A Price Revaluation Event About To Happen?

Courtesy of Technical Traders

Skilled technical traders must be aware that price is setting up for a breakout or breakdown event with recent Doji, Hammer
and other narrow range price bars.  These types of Japanese Candlestick patterns are warnings that price is coiling into
a tight range and the more we see them in a series, the more likely price is building up some type of explosive price breakout/breakdown move in the near future.  The ES (S&P 500 E-mini futures) chart is a perfect example of these types of price bars on the Daily chart (see below).

Tri-Star Tops, Three River Evening Star patterns, Hammers/Hangmen and Dojis are all very common near extreme price peaks and troughs.  The rea...



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Kimble Charting Solutions

India About To Experience Major Strength? Possible Says Joe Friday

Courtesy of Chris Kimble

If one invested in the India ETF (INDA) back in January of 2012, your total 7-year return would be 24%. During the same time frame, the S&P 500 made 124%. The 7-year spread between the two is a large 100%!

Are things about to improve for the INDA ETF and could it be time for the relative weakness to change? Possible!

This chart looks at the INDA/SPX ratio since early 2012. The ratio continues to be in a major downtrend.

The ratio hit a 7-year low a few months ago and this week it kissed those lows again at (1). The ratio near weeks end is attempting to...



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Insider Scoop

10 Biggest Price Target Changes For Friday

Courtesy of Benzinga

  • Credit Suisse raised IHS Markit Ltd (NYSE: INFO) price target from $68 to $76. IHS Markit shares closed at $67.75 on Thursday.
  • Wedbush boosted Restoration Hardware Holdings, Inc (NYSE: RH) price target from $170 to $185. RH shares closed at $169.49 on Thursday.
  • Mizuho lifted Seagate Technology PLC (NASDAQ: STX) price target from $46 to $50. Seagate shares closed at $52.94 on Thursday.
  • UBS raised the price target for Weight Watchers Intern...


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Chart School

Crude Oil Cycle Bottom aligns with Saudi Oil Attack

Courtesy of Read the Ticker

Do the cycles know? Funny how cycle lows attract the need for higher prices, no matter what the news is!

These are the questions before markets on on Monday 16th Aug 2019:

1) A much higher oil price in quick time can not be tolerated by the consumer, as it gives birth to much higher inflation and a tax on the average Joe disposable income. This is recessionary pressure.

2) With (1) above the real issue will be the higher interest rate and US dollar effect on the SP500 near all time highs.

3) A moderately higher oil price is likely to be absorbed and be bullish as it creates income for struggling energy companies and the inflation shock may be muted. 

We shall see. 

...

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Biotech

The Big Pharma Takeover of Medical Cannabis

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

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

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About Phil:

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

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