Phil/ I hope the next 5 year bear market will be as much fun and as profitable as this 5 year bull market. For those who survived 2008/2009, and who imbibed the wisdom of PSW, what a time it has been. Good to have you by my side. I think you are selling yourself short – you need to triple your prices :)
Winston
Took profit on QQQ 57 Puts, bot 40 at $0.07, sold 20 for $0.15 and 20 for $0.32. Thank, Phil
Bobhu
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
Thank you Phil we appreciate all the work you put in to teach us valuable lessons about investing.
Pat Swap
I have been trading for quite a few years and in good years made about 25%. After joining PSW, I followed closely the PSW strategy and my trading profit for this year is close to 70% to date. For fun, I like to mix in a few "Hail Mary" plays that really worked out well, but overall the simpler Buy/Write strategy, as presented by Phil so often, created the majority of the profit.
Gel1
Thanks to your teaching and guidance, I was able to make a killing on my /TF shorts. I averaged into 12 shorts at 1252 and got out of 6 at 1242 and 6 more at 1235. Last week I did the same with /CL, though I got out too early and left $2 on the table. Thank you!
Japarikh
I don't post much, but I guess this morning has brought me out. This site has made me tens of thousands, every year since I have become a member. It took me nearly two years devoting 3 hours per day to get on the ball, and actually understand portion sizing, and which trades fit my personal trading style. Before that I spent at least two years working on Buffet style fundamental investing. (Intellegent Investor, Security Analysis, ect.). This site really will teach you amazing things if you just pay attention. Literally it has changed my day to day life, has allowed my family and I to move back to the U.S. from overseas with confidence even with a paycut at my day job, and literally put me in a different league financially. Seriously my life and my children's is better because of this site.
Knightpilot
Best day ever trading the futures, thanks to Phil's excellent call this am, and his "play the laggard" instruction. Well done Phil!
Deano
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
Phil… My portfolio, in the past few months, has acheived a high degree of stabilization. I've noticed that on up days, down days, even days, it doesn't matter, my portfolio rarely varies more than 2%. And over the long haul it just slowly increases in value. I attribute this not to investment choices, but to style. Thanks to you and others on this site I'm paying close attention to position size, delta neutrality, downside protection, and concentrating on selling premium rather than buying it. I've developed increasing patience, not having to trade daily, or even weekly. I'm concentrating on the finer points of trading, letting the profits come to me, rather than the other way around. I appreciate the help everyone here has given in getting me focused on this principle. I'm pumped!…in a calm sort of way.
Iflantheman
Thanks, Phil. I really appreciate your sentiment and commitment! Just want to thank you for what you do for all of us.
JBaker
Phil – great calls this past week, esp. friday and monday. in the old days I would have let Prechter et al scare me into trimming my longs and going short at just the wrong time. your feel for the markets is Tiger-esque. CHK, HOV, BX, TLT and XLF are big winners for me today. My biggest up day in a long time. Thanks!
Terrapin22
I remember that call (to sell gold at $1,850) as well... and the many Buy-Writes that were created on your site during that period... thanks to you, I had an average ROI of close to 70% for over 2 years, averaging 4,000 trades per year. Busy trading, but lots of fun and memorable trades.
1234gel
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
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
Blessings, ALL: So we have completed two months of 2015. So far it has been a good ride with my PSW all short put portfolio showing a 15.73% gain with $83K in profits harvested in 2015.
IHS4GOD
I'd like to wish Phil and everyone else that contributes to this board a very Merry Christmas and happy New Year. The wealth of knowledge on here is incredible, and it has greatly contributed to my understanding of markets, politics, and the world in general. This year was when Phil's teachings all seemed to click in place, and my portfolio's performance shot up, and for that I am very grateful. Thank you!
Palotay
Phil: I cleaned up today. A rather stark contrast to my untutored performance April/May 2009, after I had written to you to explain how wrong-headed your bearishness was. Many thanks.
I ran into someone once who played on the Bulls with Jordan for quite a few years. He was asked what he had learned from playing with MJ for so long. He smiled and said "Give him the ball."
Zeroxzero
PSW – Price/Value; The value of PSW on a regular basis exceeds by far the price of the annual subscription. The edition of February 26 'Which Way Wednesday – Popping or Topping?', – priceless for the serious investor.
Winston
The virtuous trade / Phil throws out so many ideas, that understandably he rejects all calls for a running total of how all ""quoted"" ideas are performing – it would be unworkable. But without such a list, I think it behooves us to call out the trades that have made a difference. January 13 expiration is going to be a big month for me as a significant number of sold put positions will expire worthless. One example of the power of patience and leaving well alone:
VLO – sold Jan 13, 17.5 puts for $3.45 – and this trade was placed in August 2011. VLO is currently a tad over $35!
And as time went by, and I got more experienced – with the help of Phil and the contributions from board members, I started selling short term puts and calls around this position. Sometimes having to roll, sometimes doubling down but always knowing what I was getting into, and feeling very calm and focussed that whatever happened I could handle it. And if I couldn't then there was always Phil to lend a helping hand. All in all, my profits since August 2011 would qualify as a tidy addition to any earnings from the day job.
Thank you Sir.
Winston
Phil, I'm up 34x what I paid in fees for your service, and that only counts the trades I didn't think of myself. Thanks!
Barfinger
Kudos on the POT puts! I studied the charts last night and you couldn't have hit the inflection points more perfectly. Since there are often many head fakes in the charts, that was very well done. I know they can't all work this well, but that was an extra unexpected bonus yesterday.
Ocelli7
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
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
Hey Phil, Your HOV suggestion about 3 months ago basically paid for my Philstockworld subscription for years to come. My average cost is about $1.
Ether
Phil - Your logic not only makes sense, but it made a lot of premium profit for me over the past 12 months. I have recovered much of the massive equity losses of last year. My Monday play is the sale of long term puts on FXI. Love the premium!
Gel1
HOTT / Got great trades with it: Enter 6.75 at open, out at 7.18 (avg) at 10:13
Reentered at 7.00 and out all 7.11 few minutes ago- Was a small play but I collected enoght for next month PSW subscription.
Spider
Bought some QQQ's today on the dip. Added a little bit more to my son's account. Up about 8% in 2 months! I think I've learned some stuff here. Thanks to all that contribute, and of course to the boss. Thanks Phil!
JeffDoc
What a quarter! (AAPL, etc.) "People react; PSW'ers anticipate." Thanks everyone for a vibrant board.
Silentstorm
Hey Phil,
You called all the trends and market movements with perfection this week. I enjoyed it! Thanks for keeping us sane!
Plunging rents are great news for renters, but they’re lousy news for homeowners. Aaron Task and I discussed this issue on TechTicker this morning:
The vacancy rate for rental apartments in the U.S. is now 7.8% and climbing, says the Wall Street Journal. This is the highest vacancy rate in 23 years.
Worse, the vacancy rate is expected to keep climbing through the winter, ultimately hitting the highest rate on record.
This is good news for renters and bad news for landlords. It’s also bad news for anyone who owns and would like to sell a house.
Why are rising rental vacancies bad news for homeowners?
Because rising vacancies put pressure on rents, as landlords have to cut prices to woo a smaller pool of tenants. As rents drop, meanwhile, one of the key measures of house-price value--the price-to-rent ratio--also changes, and not for the good.
All else being equal, when rents drop, the "Housing P/E ratio" — price to rent — increases as rents decrease. This is the same thing that would happen to the P/E ratio of a stock if the company’s earnings began to shrink.
The more the rent/earnings shrink, the more expensive the house or company is as a multiple of the rent/earnings.
Will people suddenly refuse to pay as much for houses because the price-to-rent ratio rises a bit? No. But they may decide to rent instead of buy, which will remove some demand from the housing market. And, this, in turn, will put pressure on house prices.
The chart below from Calculated Risk illustrates the price-to-rent ratio over the past 15 years. As you can see, it got way out of whack during the peak bubble years and has now fallen back within the realm of normal. As rents fall, however, the ratio will start rising again.
That is, unless house prices fall, too, which is the more likely scenario.
Outside experts hired by Wells Fargo to pour through its books are reportedly shocked at the bank’s exposure to derivatives trades it took on when it acquired Wachovia may trigger huge losses at the bank, Teri Buhl reports at BankImplode.com
It appears that Wachovia wrote credit default swaps on the junior tranches of commercial mortgage backed securities it was selling, which means that it is on the hook for losses in the riskiest CMBS tranches it sold. Wells itself might not even know the size of its exposure, Buhl reports.
From Buhl:
According to sources currently working out these loans at Wells Fargo when selling tranches of commercial mortgage-backed securities below the super senior tranche, Wachovia promised to pay the buyer’s risk premium by writing credit default swap contracts against these subordinate bonds. Should the junior tranches eventually default, then the bank is on the hook. Dan Alpert of Westwood Capital says these were practices that he saw going on in the market at large.
Alpert says in reference to how he saw CMBS trades get done, “These guys would say ‘We’ll just take back that silly credit risk you’re worried about.’ Of course that was a nice increase to earnings when they got the security sold. The bank made money at the time.”
Buhl points out that investors might be caught off-guard if Wells has to start paying out on the swaps it sold. Wells, like most banks, almost certainly holds the credit default swap liabilities off balance sheet and most likely does not recognize them as a loss until they actually have to pay, Buhl writes. Wells says it carefully monitors its derivatives exposure. "We have provided extensive transparent disclosures on our derivatives in our 2008 annual report beginning on page 132,” Wells says.
Here’s Wells own calculation of its derivatives exposure as of the day it closed the Wachovia deal.
But it seems fair to wonder if Wells really understood all of the derivatives exposure it took on when it acquired Wachovia. Buhl wonders if Wells really has enough capital set aside to handle the derivatives liability.
…So could Wells really have enough capital to handle the liability of credit
One year after America’s brush with economic catastrophe, there’s plenty of looking back at the bubbles that caused financial chaos.
But what’s next?
There are surely dangerous economic bubbles forming as we speak. As Alan Greenspan warned this week, "They [financial crises] are all different, but they have one fundamental source," he said. "That is the unquenchable capability of human beings when confronted with long periods of prosperity to presume that it will continue."
The trick, of course, is spotting them. By definition, most people don’t spot a bubble before they form and burst.
Good news! The rate of the price decline in the housing crash has finally begun to ease.
Bad news! Prices are still falling 18% year over year.
Specifically, in April, according to the Case Shiller index, the rate of decline in nationwide house prices eased slightly in April--to 18% from 19% in March. The rate of decline has hovered around 19%-20% for the last several months. And prices have now declined a staggering 33%-34% from the peak.
As we’ve noted over this period, before house prices can start recovering, they have to stop falling. And the first step toward prices stopping falling is a decline in the RATE at which they are falling. And we are finally beginning to see that.
But we’re still talking about an astonishing rate of collapse. And we’re still looking at a peak-to-trough decline of at least 40% and probably closer to 50% nationwide, which would be unprecedented. And even today, with prices down 33%-34% from the peak, prices are still above fair value.
So the folks who use this slight moderation in the rate of decline to spin tales of a "bottom" or, worse, a "recovery" are smoking something. Prices have at least another 10%-15% to fall, and they’ll likely be falling for at least another year or two.
Here’s the small uptick in the rate of decline:
Prices have now rolled back to mid-2003 levels. They’ll likely be back to 2000 levels before we’re through.
And here’s the positive spin from the S&P press release (always look on the bright side!):
The 10-City and 20-City Composites declined 18.0% and 18.1%, respectively, in April compared to the same month in 2008. These are improvements over their returns reported for March, down 18.7% for both indices. For the past three months, the 10-City and 20-City Composites have recorded an improvement in annual returns. Record annual declines were reported for both indices with their respective January data, -19.4% for the 10-City Composite and 19.0% for the 20-City Composite.
“The pace of decline in residential real estate slowed in April,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “In addition to the 10-City and 20-City Composites, 13
The housing market is crashing, and it’s taking us, our banks, our economy, and our government down with it. Why? Because of the debt! The value of our houses is plummeting, but the value of our debt is staying just the same.
You knew that already. What you didn’t maybe know, or at least fully appreciate, is exactly what’s happening in the mortgage market that’s causing all this hideousness.
Well, thankfully, Whitney Tilson has laid it all out for us. START THE TOUR >
In the book, Whitney lays out the whole mortgage disaster in pictorial form, and he has been kind enough to allow us to reprint some of his charts here. If you’d like to see updated, interactive versions, please visit www.moremortgagemeltdown.com. Or just head over to Amazon and buy the book.
As a debate continues to rage within the Democratic Party over “Medicare for All,” the health care industry has quietly girded itself to fight the elimination of for-profit health care.
Global stocks, US equity futures, 10Y TSY yields and the US dollar dropped for a second day on Tuesday, amid what conventional wisdom said was "caution over a Dec. 15 deadline for the next round of U.S. tariffs" as well as looming Fed and ECB meetings and UK elections (although the real risk factor is the repo market as we will discuss shortly).
Following their counterparts in Asia, European shares fell again, with the Stoxx 600 index down over 1% on course for its bigges...
ObsEva, Inc. (NASDAQ: OBSV) stock increased by 24.8% to $4.03 during Tuesday's pre-market session. The market cap seems to be at $337.6 million. The most recent rating by H.C. Wainwright, on December 02, is at Buy, with a price target of $36.00.
ContraFect, Inc. (NASDAQ: CFRX) shares increased by 24.7% to $0.36. The market cap seems to be at $25.8 million.
Aevi Genomic Medicine, Inc. (NASDAQ: GNMX) shares increased by 8.1% to $0.15. The market cap seems t...
The Fed bought $2.2 billion in notes today in its POMO, “not QE,” operations. Actually $2.15 billion because they sold back a whole $50 million. Must have been a little glitch in the force.
This brings the Fed’s total outright purchases of Treasuries to $170 billion since it started Not QE, on September 17.
It also did $107 billion in gross new repo loans to Primary Dealers to buy Tre...
The big players in the market are looking for the next swing off good value lows. This means more money is finding it way into the gold and silver sector, and it is said gold and silver stocks actually lead the metal prices.
The cycle below shows prices are ready to move in the months ahead (older chart re posted).
Click for popup. Clear your browser cache if image is not showing...
Sacha Baron Cohen accepted the International Leadership Award at the Anti-Defamation League’s Never is Now summit on anti-Semitism and hate Thursday. And the comedian and actor used his keynote speech to single out the one Jewish-American who he believes is doing the most to facilitate “hate and violence” in America: Facebook founder and CEO Mark Zuckerberg.
He began with a joke at the Trump administration’s expense. “Thank you, ADL, for this recognition and your work in fighting racism, hate and bigotry,” Baron Cohen said, according to his prepared...
The VIX is warning that a market peak may be setting up in the global markets and that investors should be cautious of the extremely low price in the VIX. These extremely low prices in the VIX are typically followed by some type of increased volatility in the markets.
The US Federal Reserve continues to push an easy money policy and has recently begun acquiring more dept allowing a deeper move towards a Quantitative Easing stance. This move, along with investor confidence in the US markets, has prompted early warning signs that the market has reached near extreme levels/peaks.
Vix Value Drops Before Monthly Expiration
When the VIX falls to levels below 12~13, this typically v...
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.
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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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. She manages the site