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 just wanted to say thanks for being there. The world needs more of you. Your site continues to positively change my life daily.
Chasw
Well I want to thank P. Davis for his style and for the fact that he affirmed my thoughts for a correction. He was right and his confirmation of my bias saved me thousands. Mr. Davis is amoral when it comes to money. He realizes the poor are screwed but we must fight to win. A measure of sarcasm and dark humour and it is great reading. 100% right on the correction.
Chaffey
CZR – well that was fun! Opened the play yesterday. As the arb premium was now almost all gone from the box spread today, I just decided to close it. The rundown, after all commissions: my net was $183.51 profit for an overnight trade tying up $2000 margin in an IRA account. That's a 9% overnight return (3200% annualized!) …And all that learning, too! Thanks PSW!
Scottmi
100KP dividend plays - FYI, I'm loving them...thanks, Phil!!! Including the $0.848/share dividend, I am up 100% on my $2.38 net entry on LYG...that's pretty cool!
SSDirk
Thanks Phil, for banging the table on getting short and getting to cash. Usually when this happens in the market I am freaking out but I actually made money this week thanks to you. That HOV trade was a great way to re-deploy some of my cash.
Julian
GLD I took out my callers and rolled down my longs this morning, woo hoo!
Ephmen85
It is hard to learn the process that Phil teaches, but it is worth the effort. I think it is finally sinking in & so I say Thanks teacher for your patience & expertise! I've had a very good week so far & I know it is because of persisting in this learning process that you teach.
Pirateinvestor
Joined last year and and started profitably trading options thanks to everything I have learned here. THANK YOU!!
OnWisconsin
Boring trading – Phil/ Thanks to PSW, my yearly covered-writes are on pace for 15%. Add the long puts and well over 20%… and I look at it once a day and never lose sleep over it. Actually doing better than my trading account at this point (Thanks, summer 2013)
Anyway, the point is that anyone with enough money would be wise to do the 20% – 40% stuff and do trading as a hobby…
Arivera
Every time I read Mr. Davis' market analyses and reports about his super profitable trades I feel admiration mixed with envy for the overall brilliance of this man, intellectual and verbal, his extraordinary savvy in the exotic art of options and, last not least, his moral passion with which he writes, even if in passing, about the darker aspects of capitalism.
RussianBear
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
Phil - DIA 107 Calls. As suggested I am taking the money and running to home depot for some shelter supplies! This is the grand finale of several successful trades from you through this roller-coster and as you have further suggested it is time for me to sit back and relax in cash. May even be able to talk my wife into the premium membership after these intelligent trades in a stupid market.
DOStrade
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
Its been a "perfect" month. Every stock I wrote calls against looks like it will be called away next week, every put I wrote will expire worthless. Thanks Phil, now I need some new buy/write candidates, or the new 100K portfolio….
Barfinger
Phil- I am a former portfolio manager and now retired. I have been following you for about six months and I now know why you have so many followers you are very insightful and knowledgeable.
Mkozberg
Phil, I wanted to thank you for all of your teaching, advice, and guidance. Because of you I don't chase, don't worry about missed chances, and play things much more selectively. Yesterday's /ES and /TF and today /CL are my first futures plays of the month. Thanks Phil. (Out of /TF and /ES yesterday with a nice gain)
Japarikh
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
Praising PSW for enlightenment is a bit akin to praising the Pope for being holy. I've been reading PSW for about two months now and have learned more about investing technique and the world in general than I've learned from the books and seminars I've paid for. Thanks for the enlightenment, the education, the guidance and the truth, which is not a commodity these days, but a virtue in short supply.
Andy Morris
Phil is a master at keeping you laughing, as well as making you money. - It is like " laughing all the way to the bank!"
Gel1
Nice intraday trading calls this week Phil. You have me hooked on trading SPY options analogously to your DIA moves. I paid some tuition the last few weeks but I think I have the hang of it. Don't be greedy and be happy with 0.05 to 0.10 and sometimes you're lucky with much bigger moves. Thanks for the training!
TmDecay
I have to say, hands down, this is one of the best educational experiences I've had in my life. I've even gotten my wife (accountant) into the webinars and she wants to master this concept of selling premium and making smart, conservative investment decisions. She'll eventually use this knowledge to manage her clients' wealth and make smart investment choices for them. Bib big thanks Phil!!
AmalfiCoast
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
The wonderful resource that Phil has created for us and nourished by its members is so powerful in what it can teach us going forward, but also what we can learn from the past. I never say it often enough, but Phil – thanks for all the work you do for us.
Winston
thanks for the DNDN recommendation last week phil. that was moneeeee….
Kwan
Phil…..You have absolutely NAILED IT! This is not a bull market, nor is it a bear market. It is a Rangeish market, and it's going to stay that way for a long time (the latter is my prediction. I love the word. What I love more is the fact that I've found someone with some investing intelligence greater than mine who can assist me in playing this type of market. Your description today of how it's playing out is right on. I predict some media ‘guru' will steal your word and your description within the next few days and we'll all get to read about what ‘they' discovered about this market. Thanks Phil!
Iflantheman
Don't expect to get rich quick here, but you can get easy 30 - 50 % per year, just by buying good stocks at discount (as we often discuss), selling monthly premiums of calls and puts.
Tchayipov
Phil- I want to let you know that you really helped me make some money this morning when I probably would have lost on my own. I was stuck in doctors waiting rooms most of the morning starting at 8AM. By following the game plan you laid out and using my smartphone, I went short on oil whenever we got to 61.50 and long at 61 waiting for the spikes ahead of inventory. When 10:30 rolled around I was out after selling longs at 61.60 a few minutes earlier. I went short at 61.75-61.80 and voila, rode it down to 60.60 or so. Thank you.
craigsa620
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
Thanks for all the work you put into this site. I have looked at a few other option advisory or "mentoring" services this year, but no one offers even a fraction of the content or the level of services you provide at PSW!
“We now have an economy in which five banks control over 50 percent of the entire banking industry, four or five corporations own most of the mainstream media, and the top one percent of families hold a greater share of the nation’s wealth than any time since 1930. This sort of concentration of wealth and power is a classic setup for the failure of a democratic republic and the stifling of organic economic growth.” - Jesse –http://jessescrossroadscafe.blogspot.com/
Source: Barry Ritholtz
“All of the old-timers knew that subprime mortgages were what we called neutron loans — they killed the people and left the houses.” - Louis S. Barnes, 58, a partner at Boulder West, a mortgage banking firm in Lafayette, Colo
ZeroHedge obtained an internal memo from Wells Fargo detailing the banks new procedures to handle what may be a flood of repurchase requests, as end investors use fraud allegations and sloppy paperwork to demand refunds on the mortgages they bought from the bank.
Here’s the gist:
Step 1
Wells Fargo receives a deficiency notice or demand from the investor. Typically, Wells Fargo has 60 days to resolve the issue.
Step 2
Wells Fargo notifies the Seller and provides supporting documentation when available. At this time, the Seller is given twenty-one calendar days to provide an explanation, facts or documentation to demonstrate that the mortgage loan complies with the requirements. If the Seller does not respond within 14 days of the initial notice, Wells Fargo will follow up with the Seller.
Step 3
Wells Fargo will begin internal research (concurrently with Step 2) to resolve the loan issues. During this process, Wells Fargo will determine if there is a missing document and if the document can be located.
For all other issues, Wells Fargo will perform research to
Thanks for writing and sharing your wonderful column. It has been very informative and educational.
Could you please help us mere mortals decipher the ALLL/LLRNPT chart in a follow up post?
I have difficulty reconciling the units, and I suspect I’m not the only one. Exactly what does that chart depict?
Thanks.
Henry
From my previous post …
Assets at Banks whose ALLL Exceeds their Nonperforming Loans
The ALLL is a bank’s best estimate of the amount it will not be able to collect on its loans and leases based on current information and events. To fund the ALLL, the bank takes a periodic charge against earnings. Such a charge is called a provision for loan and lease losses.
One look at the above chart in light of an economy headed back into recession and a housing market already back in the toilet should be enough to convince anyone that banks already have insufficient loan loss provisions.
That is one of the reasons banks are reluctant to lend. Lack of creditworthy customers is a second. Quite frankly would be idiotic to force more lending in such an environment.
To further clarify, the chart depicts the ratio of loan loss provisions to nonperforming loans across the entire banking system (all banks). There are 33 ALLL charts by bank size and region for inquiring minds to consider. The above chart is the aggregate.
The implication what the chart suggests is that banks believe nonperforming loans are NOT a problem (or alternatively they are simply ignoring expected losses to goose earnings).
The implication what I suggest is banks earnings have been overstated. Why? Because provisions for loan losses are a hit to earnings. I believe losses are coming for which there are no provisions.
The chart depicts a form of "extend and pretend" and overvaluation of assets on bank balance sheets. The Fed and the accounting board ignore this happening (encourage is probably a better word), hoping the problem will get better. With more foreclosures and bankruptcies on the horizon, I suggest it won’t.
If you or I was involved in drug laundering of as little as 2 dollars and fifty cents we would be in prison.
Wachovia bank, now part of Wells Fargo via a merger, has laundered countless sums of Mexican cartel drug money and will get off with a slap of the wrist. The reason …Wells Fargo is too big to fail.
Just before sunset on April 10, 2006, a DC-9 jet landed at the international airport in the port city of Ciudad del Carmen, 500 miles east of Mexico City. As soldiers on the ground approached the plane, the crew tried to shoo them away, saying there was a dangerous oil leak. So the troops grew suspicious and searched the jet.
They found 128 black suitcases, packed with 5.7 tons of cocaine, valued at $100 million. The stash was supposed to have been delivered from Caracas to drug traffickers in Toluca, near Mexico City, Mexican prosecutors later found. Law enforcement officials also discovered something else.
The smugglers had bought the DC-9 with laundered funds they transferred through two of the biggest banks in the U.S.: Wachovia Corp. and Bank of America Corp., Bloomberg Markets magazine reports in its August 2010 issue.
This was no isolated incident. Wachovia, it turns out, had made a habit of helping move money for Mexican drug smugglers. Wells Fargo & Co., which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers — including the cash used to buy four planes that shipped a total of 22 tons of cocaine.
Wachovia admitted it didn’t do enough to spot illicit funds in handling $378.4 billion for Mexican-currency-exchange houses from 2004 to 2007. That’s the largest violation of the Bank Secrecy Act, an anti-money-laundering law, in U.S. history — a sum equal to one-third of Mexico’s current gross domestic product.
“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” says Jeffrey Sloman, the federal prosecutor who handled the case.
No bank has been more closely connected with Mexican money laundering than Wachovia. Founded in 1879, Wachovia became the largest bank by assets in the southeastern U.S. by 1900.
This was no isolated incident. Wachovia, it turns out, had made a habit of helping move money for Mexican drug smugglers. Wells Fargo & Co., which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers — including the cash used to buy four planes that shipped a total of 22 tons of cocaine.
The admission came in an agreement that Charlotte, North Carolina-based Wachovia struck with federal prosecutors in March, and it sheds light on the largely undocumented role of U.S. banks in contributing to the violent drug trade that has convulsed Mexico for the past four years.
That’s nice. Guns and ammunition cost money – lots of it. Getting that money requires some means of transporting it and "laundering" it. For that, we turn to the largest financial institutions in the world, who, it turns out, have never been prosecuted for these felonious acts.
“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” says Jeffrey Sloman, the federal prosecutor who handled the case.
Blatant disregard? Sounds like something you’d say at a sentencing hearing, right? Well, no….
No big U.S. bank — Wells Fargo included — has ever been indicted for violating the Bank Secrecy Act or any other federal law. Instead, the Justice Department settles criminal charges by using deferred-prosecution agreements, in which a bank pays a fine and promises not to break the law again.
‘No Capacity to Regulate’
Large banks are protected from indictments by a variant of the too-big-to-fail theory.
Indicting a big bank could trigger a mad dash by investors to dump shares and cause panic in financial markets, says Jack Blum, a U.S. Senate investigator for 14 years and a consultant to international banks and brokerage firms on money laundering.
The theory is like a get-out-of-jail-free card for big banks, Blum says.
“There’s no capacity to regulate or punish them because they’re too big to be threatened with failure,” Blum says. “They seem to be willing to do anything that improves their bottom line,
The Financial Reform Bill, which I’ve nicknamed The Let’s Not Allow Our Largest Donors To Embarrass Us Again Act of 2010, is not a total failure, but it fails miserably to address perhaps the worst part of the crisis - Too Big To Fail.
The bill doesn’t really address the Hexopoly of Too Big To Fail Banks. I’m also calling theseThe Systemic Six.
The big six banks (Goldie, Morgan, JP, B of A, Wells and Citi) will be limited in their hedge fund investments and trading activity, but not very limited. The interconnectedness, however, is unchanged, and this is the very crux of the matter.
Citi was saved to prevent it from dragging Wells down, Wachovia, Merrill, Morgan were all "assisted" to prevent Goldman and JPMorgan Chase from going down, and on and on. We were told that the dominoes were already falling after Lehman and so emergency measures (bailouts) were necessary.
And for arguments sake, let’s say this was true at the time or was the best option to prevent the Depression. OK, fine. But so why doesn’t the new legislation address that and seek a change for the fact that these six banks (and others) can cause such a massive chain reaction? It’s a shocking gap in the provisions of the bill.
And don’t even get me started on the Fannie and Freddie omission (consider those cans kicked down the road). If Finance Reform were a wedding, Fannie and Freddie would be placed at the farthest table from the action, over by the kitchen doors like the ugly cousins of the banks that they truly are.
Oh well, maybe we’ll get it right after the next economic evisceration. For now, The Hexopoly orThe Systemic Six are here to stay.
You may have seen this video before as it’s been on Zero Hedge and here at the Favorites, but the text below is from The Daily Bail and includes a little more description of the how the deal works. If this is true, it is truly outrageous. – Ilene
Listen to the deal OneWest Bank got from the FDIC to take over failed and seized Indymac. Don’t forget who is fundng the FDIC these days — taxpayers. Sheila’s been out of capital for months, so the bill comes to all of us now. An absolute don’t miss clip. Then do your best to spread it elsewhere.
As some of you already know, I blogged recently about being interviewed recently by our local NBC news affiliate. To read the blog, click here. Basically, IndyMac Bank (now OneWest Bank), is holding one of my clients hostage, demanding a $75k promissory note, or they will proceed to foreclosure. For the life of me, I couldn’t figure out why they were doing this. The BPO came in at the contract price of $275k, with a net to IndyMac of $241k. What advantage could there possibly be for them to proceed to foreclosure?
Yesterday, I figured it out. You see, IndyMac was taken over by the FDIC and sold to OneWest Bank in March/2009. Guess who the investors are behind OneWest? George Soros, Michael Dell, Steve Mnuchin (former Goldman Sachs executive), and John Paulson (hedge-fund billionaire).
Now, listen to the deal they got from the FDIC….
Basically, they purchased all current residential mortgages at 70% of par value (70% of the outstanding loan amounts). They purchased all current HELOCS at 58% of Par Value!!!
Next, in order to "sweeten the pot", the FDIC stepped…
The positive earnings announcement by Wells Fargo on Wednesday was marred by a sell recommendation from Dick Bove and a lot of chatter about credit writedowns and mortgage servicing rights (MSRs). I wanted to add a few words about the report, MSRs, and bank stocks more generally.
First of all, this has been a very good quarter for bank earnings. Many of the big names globally have surprised to the upside. this includes Goldman Sachs, Morgan Stanley, JPMorgan Chase, Wells Fargo, US Bancorp, SEB in Sweden, Credit Suisse in Switzerland and on down the line. As one would expect, most banks are profiting from record low interest rates.
The question for the big banks is whether the huge writedowns they are still taking and the run-up in their stock prices since march limits any upside in valuation. For smaller banks, we should expect weaker results as they are more leveraged to the sectors of the economy like commercial real estate and construction loans which are still suffering. Goldman and Morgan Stanley should do relatively better as they are really broker-dealers and both investment banking and sales & trading are doing well right now. On the whole, I have said I think upside is limited for the sector, but downside is vast. Hence I am bearish on bank stocks.
Let’s look at Wells Fargo (WFC) as an example of what is happening.
Wells reports record profits
Wells reported net income of $32 billion, a robust operating pre-tax profit of $10.8 billion, and record net income of $3.2 billion. Sounds wonderful. What’s not to like? That was bank analysts Dick Bove’s initial impression as well. Live on-air at CNBC, he said Wells Fargo “is proving itself to be a standout.”
But, once Bove got a peek under the hood and started to crunch the numbers at Wells, he was significantly less impressed – so much so that he issued a sell rating literally nine hours later. And he took a lot of flak for this about-face.
Prominent banking analyst Dick Bove, who caused a stir Wednesday with seemingly contradictory remarks on Wells Fargo, has decided he’ll no longer provide immediate earnings commentary on air.
Over the past week there’s been a lot of talk about Wells Fargo (WFC) and whether it mistakenly swallowed a hand-grenade when it bought Wachovia late last year.
So how’s the market reacted? Mostly ignoring it. In the middle of last week the stock took a hit, but it’s only back to where it was 5 days ago, and certainly the hit has been nothing of the scale you’d imagine if the bank were really in so much trouble.
At this point, we’re inclined to believe the market, which in the past has done a pretty good job of sussing out the banks that are in trouble. That the market isn’t freaked out by a few articles speaks volumes.
According to the data made available on the public website of the New York Fed, since September 17, 2019 it has funneled a cumulative total of $6.6 trillion to some of the 24 trading houses on Wall Street that are known as its “primary dealers.” The giant sum has been sluiced to Wall Street in the form of repurchase agreement (repo) loans without any details being provided to the elected representatives in Congress as to which fi...
Retail investors are last in line for market leading research, no matter, the retail investor can profit from these secret sauce patterns..
Well not so secret now, the main point is you do not have to climb Mount Everest to be called a mountain climber, there are many other hills to climb to make your mark. Just like stocks.
You do not have to battle with the high frequency traders to win in the markets, there are long and slow methods to do just as well.
News is traveling fast about the Corona Virus that originated in Wuhan, China. Two new confirmed cases in the US, one in Europe and hundreds in China. As we learn more about thispotential pandemic outbreak, we are learning that China did very little to contain this problem from the start. Now, quarantining two cities and trying to control the potential
outbreak, may become a futile effort.
In most of Asia, the Chinese New Year is already in full swing. Hong Kong, China, Singapore, Malaysia, India and a host of other countries are already starting to celebrate the 7 to 10 day long New Year. Millions of people have already traveled hundreds of thousands of miles to visit family...
It’s a good idea for investors to be aware of key indicators and inter-market relationships.
Perhaps it’s watching the US Dollar as an indicator for precious metals or emerging markets. Or watching interest rates for the economy. Experience, history, and relationships matter. And it’s good to simply add these to our tool-kit.
Today, we look at another relationship that has signaled numerous stock market tops and bottoms over the years, and especially the past several months, Crude Oil.
David Brin shares an excerpt from his new book on the relentless war against democracy and how we can fight back. You can also read the first, second and final chapters of Polemical Judo at David's blog Contrary Brin.
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...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site
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The positive earnings announcement by Wells Fargo on Wednesday was marred by a sell recommendation from Dick Bove and a lot of chatter about credit writedowns and mortgage servicing rights (MSRs). I wanted to add a few words about the report, MSRs, and bank stocks more generally.
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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
