Phil - I am 3 month follower and shout a big thanks for all the good advice and training. I read all the materials and posts as suggested. I am retired CFO and took over my investments 2 years ago from broker after frustration with returns. I followed some conservative advice for retirees and have 60% bonds currently in a 5m portfolio. I had been doing covered calls on my stocks to boost returns and slowly am getting more aggressive after following your site and my son who has been with you for 6 months. I allocated 1.5m to stocks and am scaling up from 30%. I did some of the trades suggested in early June using Aug & Oct buy/writes on CSCO, WMT, MON, WFR, DO in addition to calls on XOM, CVX, PEP, PG, WM, T that I owned. Most are doing very well (4-24%) in 60 days. My good problem is that instead of getting longer, I will be making 6% quickly (50% plus annualized) and getting called away on many positions. What would you advise for getting long again. Thanks again for such a great job advising all of us!
TXChili
Man, what a week: Bought C at 1.40, sold half at 1.59 (relatively big position), another quarter at 3.04 just now. Ran SKF down from 270 with one April put, still holding some 115's expiring in a couple days. I'm going to gamble this position like a champion Friday. Bought FAS at all sorts of levels and started cashing out. Long HOV, stock and some nickel calls for fun - Mocha up your buy-out from 5 to 8 and that's 10,900% return for the May-2.50's . Ha!
Biodieselchris
WOW, glad I went bearish… Phil, thanks for the help on the QID calls yesterday, I turned it into a partial cover rolling down to the Feb 52s selling the 55s 1/2 covered. Sold 1/2 and now lowered my cost basis to $4.38 on the $52s (fully covered).
Texasmotion
Phil – I think I finally figured out your "crystal ball" time frame. You're about 5-14 days AHEAD of what the market is going to do. It's taken me a long time to realize this, but boy it's been profitable. I go in when you recommend something at about 25% allocation, and then add to it each day it "goes the wrong way" Then BOOM, one day it's all good…. The long put list was literally exact in it's timing.
Burrben
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
Thank you Phil for this site – the trade discussions on PSW are mind boggling. Future trading while learning to be a value investor. Priceless
Joseph
All I can say is — I understand that the Universe sent me to PSW for a reason. So, I'm listening!! …and studying. Your commentary is literally outstanding. …and your members are impressive as well.
Seaquill
Probably the best approach and method I have ever seen for the public and I have worked for some serious traders at the biggest houses doing research. Those guys all have various forms of inside info that you and I do not and cannot have. Davis simply has a great system based on a very deep understanding and experience that gives him market savvy that is very real. A very smart guy and he shares it for a fee. He knows how to use options to great advantage and make money trading.
DowntoEarthThinking
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
The strategy you have laid out pretty much mirrors much of my trading activity. I also mix in some momentum plays and "drop dead" bargains that come across my radar. My YTD trading profit is 63%. Back in March when Phil said "unless you think the world is coming to an end, then NOW is the time to start taking positions in Buy/Writes with the VIX so high." I jumped in with both feet - ( thanks, again Phil)
Chaps
Great call on expe Phil! Went long 50 shares and sold for a nice profit! And Great call on the nkd shorts as well. I didn't use a stop that tight and was able to cover for a $400 gain. Works been keeping me pretty busy and I'm jealous of all the members who are able to check in here more often! It's almost always quite profitable! Looking forward to Vegas!
Jromeha
PHIL: The most important lesson I have learned is how to hedge using SQQQ, SDS and TZA. A big thanks.
IHS4God
Very nice in and out on those USO puts again, easy way to get the subscription covered in just a couple of hours. Thanks again Phil and everyone here contributing to such intelligent and informative discussion! I have wasted countless hours reading "professional newsletters" and message board blather over the years. Have learned a great deal here in a very short time. I have sent out a number of invites to friends and family for stockworld!
Eyezz
Phil - Wow…wow. The vision and inate grasp of the options world you posess is rather staggering. It's this type of experience that I really hope to develop. I'm afraid I still can't see the moves, but I WILL learn. I cannot thank you enough for the patience, knowledge and effort you put into this place. Please keep it going!
Where
I must add yet another paen to Phil's "cash and short" call, as my TZA shorts are past paying for Similac and Pampers and have now covered all doctors and Mt. Sinai hospital bills for young Charlotte, as TZA took the portfolio up 10%.
Zeroxzero
Phil thanks. You never cease to amaze me with your thoughtful perspective on a myriad of different issues and challenges. It's kind of an embarrassment of riches since I joined this board a few years back. The ride from Dow 9,000 or was it 8,000? up to Dow 15,000 seems hard to believe. I wish I could have it all over again, except with the capital I have now.
Winston
I have to thank you for excelling yourself during this past week. I have spent a good few hours going over your notes and comments and there are so many gems on repairing and rolling trades that I have been beavering away on paying special attention to my major positions and analysing them using your approach on Tuesday. Being able to look at a group of trades on the same underlying (in this case AAPL) and taking a detached view by assessing the impact of the underlying reaching different price points was extremely reassuring.
Winston
I'm just starting my second year as a member, and I'd like to thank all of you for sharing your trading ideas and insight, and especially Phil of course for great all-around investing advice as well as trades! In addition to learning patience and profit-taking, I think one of the most important things I'm learning here is to stick to stocks and trades that suit my temperament. And wow, I had NO idea how hard it was to learn patience. I should say "practice" instead of "learn", because it seems to be a constant struggle. Phil, please keep reminding us how nice CASH is!
Jerseyside
Hey Phil -- I want to thank you every chance I get for helping me to grow my previous portfolio to being profitable enough to pay off some debts my family had and left me with $1,000 left to use in the markets. You should know that your premium membership is amazing on many levels, You and your readers offer a ton of economic and statistical analysis that I was able to use in my clerical level job in finance. It's a shame that someone as talented and honest as you is not on television each night providing a true service to the investing public and not the clowns and hucksters that are talking up their books to dump on retail investors. Sorry for the long post. I had to say something to you that I never thought I would have the opportunity to. You helped put my family in an almost debt-free life through the stock and option plays that I made during my time as a customer of your service and that has made us very happy. You are a good man and I wish you and your family many years of joy and happiness. I wish I could do ads for you!
DaveJ
Hey Phil - writing to thank you! First of all, and I know you have heard this a few times form some others - the portfolio updates you have done - with entries and targets and even margin reqs are invaluable! I find myself understanding what is done here IN THEORY most of the time..however, there is a much bigger difference in placing and setting up the hedges properly than just understanding…This has been eye opening for me and Ifeel like I just took a major step in trading during the last week.
Bcfla
Phil I have been applying your arsenal (matresses, Edz plays, Ugl verticals etc.) to my gold holdings . So a big thank you for "teaching me how to fish" rather than just giving me the fish...
Magret
Phil, thanks for the webinar and options subject…I wasn't shown as attending but I was there for most of it. Your memory amazes me, your speed on the computer amazes me, your math skills blow me away. coke
Coke
Phil — gotta thank you for your advice this week, and especially today. I took many aspects of your advice this morning, with all of my shorts -- being prepared on the short side, selling into intial excitement, taking the money and running, not being greedy. I also made money on the your /QM and /YM calls. It used to be I would be terrified of weeks like this one. Now, it feels somewhat comfortable, for want of a better word.
Escohen5
I have been very fortunate over the years as an investor. Last year was on of my best in terms of percentage gains. I have to attribute much of this success to my membership in PSW which gave me the best education available anywhere when it comes to the understanding of option trading , discipline and general trading strategies. I will be forever grateful to Phil and the many "highly skilled" traders that have offered their advice.
Gel1
A truly great website with a lot of information for investors. Whether you are a novice, seasoned, or a professional there is a lot to be gained about stock options and options trading from this very informative website.
ZKatkin
I have been reading the "free" PSW for about a year and have always liked Phil's style as it closely resembled the way I like to trade (mostly naked put options). I have been a paid subscriber for about 5 weeks and I have been learning a lot from Phil and other members. I had made some money on Phil's "free" ideas in the past and I joined because one of Phil's futures ideas paid for my subscription within the same day (NG). Phil deserved my subscription and I was eager to learn more. I just did a quick tally and within the last 5 weeks the ideas that I chose to follow from Phil generated over 25K in options profits and 12K in futures profits (some of my trades were more conservative than what Phil's had suggested). I have a lot to learn, experience and confidence to gain. Thanks again Phil and Successful Trading to all.
Verreaul
I thank you for the years of being my teacher, always took the time to answer my questions. You are the BEST !
QCMike
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
Phil is a fundamentalist to his fingertips. His ability to value a stock goes well beyond p/e, as he understands the essence of many businesses, what gives them value and how they make their money. As such, his recommendations are invaluable to a investor who takes a value-oriented approach.
Zeroxzero
Phil: I have 263 positions - 70% in options ( balance stocks) in three portfolios with a value of 3 mil. YTD profit is about $750,000. Thanks!
Gel1
by ilene - May 2nd, 2010 4:24 pm
Courtesy of Edward Harrison at Credit Writedowns
I have written a number of posts which point to a shift in the center of power on Wall Street from the client-facing advisory business to the market-making trading business. I think understanding this shift is vital to understanding what caused the financial crisis and to understanding the defense that Goldman Sachs has proffered for its actions in the Abacus AC1 deal.
What has happened is that major international investment banking groups have taken on a sales & trading ethos of caveat emptor where once the client was king. In my view, this is a direct result of the rise of securitization, structured products and derivatives as a profit center in financial services and is the major contributor to Wall Street’s new unfortunate public image as a casino.
I took on different aspects of this shift in these posts:
I suggest you read them to get more colour on various aspects of Wall Street culture which have eroded the ethics of bankers and led to self-preservation over client-focus.
Here’s the statement in all of those posts I want to dwell on. It came in my post on Goldman’s earnings announcement from July of last year. I wrote:
The Goldman press release is here. What I find notable is the order in which the press release presents the earnings, with a statement on the advisory business first, followed by equities and then fixed income even though fixed income was where the most revenue and profit came. That is revealing – and shows Goldman execs still consider the advisory business of relatively more importance from a reputational perspective. (emphasis added)
Reputation is one thing, reality is another. Former banker turned journalist Bill Cohan gets at the heart of this in his recent blog post "Goldman: Still Greedy, No Longer Patient." He writes:
Once upon a time, Goldman Sachs’ raison d’etre was to serve the ongoing needs of
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by ilene - February 23rd, 2010 2:23 pm
Courtesy of John Carney at Clusterstock/Business Insider
Today’s bleak consumer confidence number is undoubtedly bad news for the economy. The bigger than expected drop suggests that consumers have lost confidence in the recovery, which will drive down home prices and consumer spending.
Consumer confidence is typically our "first look" at the state of the economy. While most government aggregated data come out with a two-month lag, or more, consumer confidence hits with just a one month lag. Studies have shown that consumer confidence is a good predictor of consumer spending numbers. Basically, people surveyed seem to be good at accurately reading their own economic situation, and those surveyed accurately reflect the broader economy. When consumer confidence drops to such deep unexpected levels--today’s were the worst in 27 years--then it is a flashing red-light about the economy.
There wasn’t anything good about today’s numbers. Every part of the survey was awful. On jobs, the optimistic folks who say jobs are plentiful fell to 3.6 percent from 4.4 percent. The pessimistic people who said jobs are hard to get increased to 47.7 percent from 46.5 percent. The gauge of expectations for the next six-months fell to 63.8, from 77.3 the prior month. The share of people who believe their incomes will increase over the next six months fell to 9.5 from 11 percent. The share of those expecting more jobs fell to 12.4 percent from 15.8 percent.
The message: the economy sucks.
The recovery we were supposed to have.
You’ll read a lot about how the consumer confidence numbers are a lagging indicator. Indeed, they are a lagging indicator when measured against the stock market. The real time data conveyed by the stock market is often a better indicator than any survey or government data. But that doesn’t mean you shouldn’t pay attention to the consumer confidence number, especially since stocks have declined for most of this year.
Lets be clear here. The story-book recovery was dependent on a recovery of the consumer and a decline in the saving rate. If consumers lost some of their apprehension about future income prospects and future employment, they might begin to spend more on both retail goods and to purchase homes again. Anticipating this return of the consumer, businesses would increase capital spending and inventory.
We got half of that equation. Business spending…
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by ilene - February 20th, 2010 8:33 pm
Courtesy of Vincent Fernando at Clusterstock/Business Insider
ETFs bill themselves as low-cost alternatives to standard mutual funds or even hedge funds. The idea is that their management fees are lower and trading costs are low since you can simply buy and sell them easily through a discount online broker.
But here’s the problem -- it’s only true if ETFs are actually tracking their benchmarks effectively. Unfortunately they aren’t.
In 2009, ETFs missed their targets by an average of 1.25 percentage points, a gap more than twice as wide as the 0.52-percentage-point average they posted in 2008, according to a study of ETF returns released this week by Morgan Stanley.
Part of this so-called tracking error stems from the recent proliferation of ETFs targeting exotic investments or areas where trading is less frequent, such as emerging-market stocks and junk bonds.
Last year, 54 ETFs showed tracking errors of more than three percentage points, up from just four funds the prior year. And a handful of the 54 missed by more than 10 percentage points.
1.25% is more than the management expense of some actively managed funds, or some hedge funds even (before performance fees).
We think ETFs are great for tracking broad, liquid benchmarks such as the S&P 500 where they are likely to be worthwhile in terms of cost and trading ease. But ETF products for niche investments are highly suspect. The more illiquid investments the worse off ETF investors will be, especially since savvy traders will likely be able to line up and pick-off trades ahead of the ETF.
For anything niche, investors are probably better off with old fashioned mutual funds once all of their real expenses are factored in.
Yet we’re fully aware of the fact that expenses of an ETF such as the above are near-invisible, especially if someone is been trading in and out of an ETF. So we’ll expect investors to keep lapping these products up. In investment management, products with the least visible expenses, and best ability to avoid blame, win.
(Tip via Abnormal Returns)
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by ilene - February 8th, 2010 11:39 am
Courtesy of Joe Weisenthal at Clusterstock/The Business Insider
What are banks doing with the billions upon billions of dollars they’ve taken from the taxpayer?
The St. Louis Fed has just updated its latest data on bank health and activity, and the charts paint a great picture of what’s really going on in our banking system.
The bottom line: lending is still tanking (unless you count lending to the government)
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by ilene - February 2nd, 2010 1:13 pm
Courtesy of Vincent Fernando at Clusterstock/Business Insider
Anyone who thinks that the business of derivatives ended with the financial crisis had better check out the recent trading volumes released by the derivatives exchange company CME Group.
Just this January, total derivatives trading volume shot up 19% year over year, with particularly feverish activity in interest rate derivatives (for fixed income, Up 33%), foreign exchange derivatives (Up 78%), and metals derivatives (Up 65%).
Traders are loving derivatives like never before:
Also, keep in mind that CME Group just began clearing infamous credit default swaps (CDS), which comprise an enormous market for further trading growth. The sky’s the limit, until it comes crashing down again.
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by ilene - January 25th, 2010 8:31 pm
Courtesy of Jesse’s Café Américain
Here is an interesting chart that shows the ascendancy of the financial sector in the US.
Commercial banking is largely an administrative function, with a few highly paid decision makers, and many lower paid functionaries and clerks that make a decent if unspectacular wage commensurate with a utility function.
Starting with the Reagan privatization revolution, the finance sector began to grow in importance, moving from a utility serving the capital distribution and storage needs of the real economy taking a relatively small percentage of real output, to a dominant force in the national decision making process, controlling the allocation of capital through its powerful influence and lobbying in Washington, placement of its supporters in political positions of power, and the consolidation of the mainstream media into an oligopoly of four or five major corporations.
Now we have a financial sector dominated by a relatively few number of multinational corporations that are certainly not utilities serving the productive economy. In reality the big multinational banks have become hedge funds speculating in a broad range of markets, often in competition if not contrary to the interests of their customers, relying on other people’s money for capital to sustain an outsized leverage and a steady stream of rents and speculative winnings, and to cushion any losses in the event of the occasional market downturns.
And if we do not give the banks their demands, if we do not maintain the status quo, then they threaten that they cannot protect the world from financial ruin and a collapse of the money system, which they themselves control. And this is no mere extortion, no corruption of a single party or person, but the foundation of an enduring modern tyranny.
“Single acts of tyranny may be ascribed to the accidental opinion of a day; but a series of oppressions, begun at a distinguished period and pursued unalterably through every change of ministers, too plainly prove a deliberate, systematic plan of reducing a people to slavery." Thomas Jefferson
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by ilene - December 27th, 2009 1:05 am
Courtesy of Henry Blodget at The Business Insider
This includes retirees who did exactly what they were supposed to do--save. Their incomes are now getting clobbered.
Meanwhile, for those who prefer to borrow money, the ongoing bailout has created the world’s easiest way to make $1 billion. Borrow short-term from the taxpayers and lend the same money back to the taxpayers--and get a guaranteed risk-free spread.
Here’s Bill Gross:
“What the average citizen doesn’t explicitly understand is that a significant part of the government’s plan to repair the financial system and the economy is to pay savers nothing and allow damaged financial institutions to earn a nice, guaranteed spread,” said William H. Gross, co-chief investment officer of the Pacific Investment Management Company, or Pimco. “It’s capitalism, I guess, but it’s not to be applauded.”
Mr. Gross said he read his monthly portfolio statement twice because he could not believe that the line “Yield on cash” was 0.01 percent. At that rate, he said, it would take him 6,932 years to double his money.
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by ilene - December 20th, 2009 11:40 am
Arnold Kling explains why our political leaders won’t break up the Too Big To Fail banks:
My answer to both relates to what I call the Harvard-Goldman filter.
The Harvard-Goldman filter works like this.
1. To get into a position of power, you have to pass through a filter. The easiest way to show that you can pass through the filter is to go to Harvard and then work for Goldman.
2. If you do not go to Harvard and work for Goldman, then you have to show that you can get along with people who did.
3. The best way to show that you can get along with people who pass the Harvard-Goldman filter is to show that you believe in applying the Harvard-Goldman filter.
Why was Tim Geithner regarded as such an obvious, in fact necessary, choice to be Treasury Secretary? Because he satisfies the Harvard-Goldman filter, particularly point (3). He is not going to bring people from the wrong social caste into the policymaking arena.
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by ilene - December 7th, 2009 1:40 pm
Two articles on collections of second mortgage debt being attempted, prior to resolution of the first mortgage. 
Normally, first mortgages have priority, but it appears owners of second mortgage obligations – debt collection agencies – are cutting ahead and demanding payback early and then using questionable tactics to accomplish their goals (e.g., filing suit without giving notice). – Ilene
Decency, security, and liberty alike demand that government officials shall be subjected to the same rules of conduct that are commands to the citizen. In a government of laws, existence of the government will be imperiled if it fails to observe the law scrupulously. Our government is the potent, the omnipresent teacher. For good or for ill, it teaches the whole people by its example. Crime is contagious. If the government becomes a lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy. Justice Louis Brandeis
By Vince Veneziani, courtesy of Clusterstock
Housing Doom: Josh Zinner of the Neighborhood Economic Development Advocacy Project in Manhattan said some lenders or trusts for banks that went out of business are selling off second mortgages today to debt collectors for pennies on the dollars. Those debt collectors are then going after the homeowners’ bank accounts or pay checks to recoup whatever money they can.
And if a bank or debt collection agency goes after you, for god’s sake, respond to the complaint in a timely manner:
Perhaps in part because they are not notified, people sued in New York City often fail to appear in court to protect their interests, according to a study released last year by MFY Legal Services, a nonprofit law firm in New York.
MFY found that just seven law firms filed nearly one-third of all the cases seeking to collect $25,000 or less in
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by ilene - November 27th, 2009 12:05 pm
Good morning! Hope everyone had a great Thanksgiving. – Ilene
Kian Abouhossein at J.P. Morgan delivers some excellent insight into the Dubai crisis. The wealthy UAE will be able to easily bail out Dubai if need be, this time. It just might not be so optimistic to do so in the future.
We are less concerned for global banks about Dubai World’s direct $59bn outstanding debt exposure with $4.3bn due to mature in Dec-09 and a further $4.9bn in 1Q10, considering “only” $13bn of syndicated loans across global banking sector based on Dealogic data. Assuming a 10% “hold” strategy, the most exposed banks would be RBS with $0.23bn, DB and CS with $0.17bn each.
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The view from our MENA team is that this event reflects cash flow challenges rather than refinancing ability. They believe that obligations on Dubai World and its property unit Nakheel PJSC are likely to be fulfilled at the new May 2010 earliest repayment date, and that Dubai should be eventually be able to fulfill its debt obligations maturing in the short-term ($4bn in Dec-09, relating to Dubai World, and $9 to $10 in 2010) with continued Abu Dhabi support. Abu Dhabi is strong financially with fiscal and current account surpluses, ~$150bn in FX reserves and a ~$300bn sovereign wealth fund. However it seems that Abu Dhabi will no longer be happy to underwrite all debt, and rather will differentiate more strongly between supporting Dubai’s strategically important assets (such as DEWA, and Dubai Ports), and the non strategic assets – hence the concurrent timing of the Dubai World debt restructure and the Abu Dhabi underwritten government of Dubai debt raising.
Here’s one rough measure of relative bank exposure to Dubai, based on Dubai World syndicated loans since 2007. Overall, JP Morgan believes the exposures are relatively small compared with the major banks involved.
Here’s probably a better estimate of relative exposure, by loans made to the UAE as a whole. The amount of direct loan exposure to Dubai specifically, within this UAE-wide figure, are apparently very difficult to know.
Conclusions for some of the major banks exposed:
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Overall
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March 29th, 2020 9:31 pm
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 ...
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
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Contact Ilene to learn about our affiliate and
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