Thursday Flip-Flop: Now Goldman Sachs Says S&P 1,250 Is Target [View article]
Sorry about your lack of reading comprehension Tradeflow but I think we pretty clearly outlined our technically bullish but Fundamentally bearish attitude on 2/24: http://bit.ly/I9unvz
2008 was similar - as the S&P fell below 800, we began buying. Just because it went lower still doesn't mean it was a poor decision - with the S&P back at 1,400 - even you must understand that.
Thursday Flip-Flop: Now Goldman Sachs Says S&P 1,250 Is Target [View article]
Ouch indeed!
Of course, we play PCLN (ouch again) and CMG with rolling puts so, at this early stage, we actually WANT them to go higher as we're nowhere near a full position, nor are we at a strike we're happy with.
Since then, we've spent another $2 to roll up to the $560 puts but this is still our 1x round out of 4x so we haven't even gotten to the point where we double down yet.
TGIF - Stop The Rally, We Want To Get Off! [View article]
This is an interesting concept. I suppose then that we can also end the lunacy of exempting churches from taxes since not everyone wishes to support them. The money the states then collect from the previously exempt religious organizations could then be used to fund free abortion clinics and the schools in those states could dispense birth control pills like candy in the states that vote for it.
What will happen to pregnant women who cross state lines to get their abortions? Will you hunt them down and drag them home? I suppose we could resurrect all the old laws governing runaway slaves. And, once you capture them - what's the budget for forcing them to take the baby to term? Do you lock them in a room and force-feed them until they give birth? Who pays for that? Who pays for the birth? Births are more expensive than pills I believe...
Also, what happens after a baby is born to a mother who has no means to support it - do you support them both of just the baby or does the rule begin at conception and then, once the baby is born - it's back to survival of the fittest?
Will there be extradition treaties with the states that don't want to force their women to have unwanted children? Does a woman immediately lose her individual rights at the moment of conception or is there a waiting period?
This brilliant idea of not letting the crazies force us to pay for their crap can also be applied to the military - there's $1Tn a year we can knock off the budget too.
Top 1% Tuesday: $105,637 For Me, $80 For You! [View article]
It's interesting that recent comments in this post mirror our ongoing conversation in Member Chat. I will write a whole article about this one day but here's part of today's exchange on the subject of work and the middle class etc.
zeroxzero (premium)
Phil: I have always been intrigued by your notion that many, not to say most, people don't need to work. A kind of "Jetsons" world where machines scurry around taking care of most things [of course, they become conscious at some point and take over, but that's a bit down the road].
But what would they do? There's nothing more destructive than a bored monkey — I had one, trust me. These are not the "Denker und Dichter" of society — they are, or will be, the "Betas" of Brave New World. Given time — it's probably already taking place — this will take on a permanent genetic aspect. Perhaps that is, and has always been, evolution's path. But my guess is that it's not what you had in mind.
Phil
Bored monkeys/ZZ – That's just your own prejudice about what constitutes "worthwhile" pursuits. They had a similar problem in ancient Athens as a combination of military conquests, trading by sea and the beginnings of craft "workshops" powered by slaves left most of the population with nothing much to do other than supervise slaves. Since there was no regular work for young Athenians who didn't want to be in the army, the state paid one Drachma per day (a decent amount) for anyone who did anything which included being an artist or a musician or a philosopher or a teacher or a performer – you had to actually work but it was whatever you felt like doing and it was a golden age that led to a large percentage of humanity's cultural and technological advances up to that point.
Only because you don't value the common man do you not see the tremendous potential in simply letting millions of people pursue their own interest. People working on an assembly line or mopping floors 8 hours a day and getting paid only enough to make their minimum credit card payments are not very likely to solve the energy crisis but, as they say, if you give a million monkeys a million typewriters to play with – eventually you'll get all the works of Shakespeare out of them – we've devalued people and created an elitist society where only people who make money are perceived as having "value" – it's BS but it's going to be a long time before we can re-educate our population (look at you, you are turning your nose up as you read this!) to value "non-productive" pursuits like art, science, philosophy, education for it's own sake (not so you can learn to perform a function), etc.
flipspiceland (premium)
@Felipe We have had many disagreements about, mainly, politicians, but I have been writing and saying the same things for 20 years about exactly the point you are attempting to make that there just isn't enough work (that mankind has yet invented) for the people to do, at meaningful production. I know this because of my former life as an Exec Recruiter.
I roughly calculated that there is 1/4 of a job to be done by each of the 6-7 billion people on this planet. We theoretically could do ALL the work to be done with 3/4 less people. It's an exaggeration since that would mean full employment, everyone working, which realistically would never happen. But the point still remains.
There have to be people in government who recognize this and have for a very long time. There must be think tanks that can demonstrate the futility of an economy based solely on producing something in order to live, survive, and maybe even prosper. The mystery to me is why a loud mouthed politician like Ron Paul, for instance, won't tell this significant truth. He has nothing to lose. Everything to gain by saying it out loud: The U.S. Government— elected and appointed officials must begin the drumbeat for a different paradigm, figuring out a way to get into the hands of people what they need to live on, to have them NOT to enter the workforce, those that are not able to be trained, don't want to be trained in something they cannot do well, a hundred million people just in the United States eventually, that could be given vouchers, other currency, or means to live out their lives as they choose if they cannot meet the demands of production as it now stands.
In your next appearance on some TV program, maybe you could open up this Pandora's box once and for all to at least let loose those demons that need be tamed, the ones that say you must produce something in order to live.
We are in the post-work world and hundreds of millions of people do not seem to understand it.
Kurt Vonnegut was right.
Phil:
Wow Flips – I agree with you 100%. I think we should have this post bronzed. You're right, I should say something next time unemployment is an issue of we have some excuse for it. I have one daughter who wants to be an artist and one who wants to be an actress and both are pretty good and both are honors students but it would be nice if I could tell them that those were realistic pursuits that they can concentrate on since it makes them happy but we have to be "realistic" and make sure they have a career to fall back on – how sick is our society that being an artist or an actor is not a legitimate career (only for the top of the top, of course)?
Quotes from Vonnegut:
What should young people do with their lives today? Many things, obviously. But the most daring thing is to create stable communities in which the terrible disease of loneliness can be cured.
The feeling about a soldier is, when all is said and done, he wasn't really going to do very much with his life anyway. The example usually is: he wasn't going to compose Beethoven's Fifth.
Human beings will be happier – not when they cure cancer or get to Mars or eliminate racial prejudice or flush Lake Erie but when they find ways to inhabit primitive communities again. That's my utopia.
True terror is to wake up one morning and discover that your high school class is running the country.
Double Toppy Or Finally Poppy Tuesday? [View article]
LOL Bird-man!
On the puts, Founder, they pay us for SELLING the puts. That gives us +$28.50 and obligates us to buy AAPL for the $400 strike (if they are below it - otherwise the puts expire worthless). It's that $28.50 we use to buy the spread, which means the spread costs us net .50 and we still have an obligation to buy AAPL for $400.
Let's say AAPL was a $62,000 Mercedes and the dealer asked you if you would buy it for $40,000. If you REALLY want it, then you say "sure". And the dealer says, well I hope to sell all my Mercedes for more than $62,000 but, if I don't and if they go down in price, will you promise to buy one from me for $40,000 in exchange for $2,850?
You agree and the dealer gives you $2,850 now in exchange for a contract in which you promise to, whenever the dealer wants, buy the Mercedes for $40,000 between now and the expiration.
That $2,850 is yours, now, to spend. The only thing you have to worry about is having $40,000 set aside (can be bonds, cds, liquid stocks, cash) in case they deliver the car to you. If that's good for you, then the $2,850 is free money.
Since you REALLY like the Mercedes and you intend to buy it anyway, you use that money to buy your own option from someone else. The Jan $600 call option gives you the right to buy the Mercedes for $60,000 in January and the $665 call option sold gives you the right to sell the Mercedes for $66,500. That option costs $2,900 or $50 more than you got for selling the puts.
Now, if the Mercedes goes up in value, you will be covered for the first $6,500 move up in price. If it stays flat, you will get your $2,900 back, which is the money you got from the putter. If the Mercedes goes down in price, you lose the net $50 you spent on the call spread but you still have no additional obligation unless it falls all the way to $40,000, at which point you own it (happily, we assume) for net $40,050.
If you are NOT bullish on AAPL, then why be in the trade? You can just sell the puts to raise cash if you think AAPL is strong enough to hold $400 and play something else but the addition of the bull call spread is to play a bullish market under the assumption AAPL will continue to be one of it's leaders (and up $11 today is a good start!).
This is, of course, a very simple view of the kind of trade ideas we go over every day at PSW. There are infinite adjustments and combinations to be made on these trades and, once you learn how to use them, you'll find they are incredibly valuable tools to help you take control of your investments.
Top 1% Tuesday: $105,637 For Me, $80 For You! [View article]
Yes people cheat the system (very doubtful as many as you think). One way to fix this is to give MORE MONEY to the safety net to allow adequate staff to eliminate waste. By defunding Government, you create inefficiencies that are then used to justify defunding Government.
It's the same as cutting NASA's budget 12 years in a row and then saying "well, what do they ever accomplish?" Our military record sucks but we keep putting money into that for some reason...
If your test of whether something is worth doing is based on whether or not the system can be abused - then I'd say Capitalism in General must be stopped immediately and I very much doubt you need examples of abuse there.
Monday Musings: New Quarter Not So Shiny [View article]
Options my friend - plenty of puts available. Also, if you want to avoid premium, you can sell calls or sell spread to limit your exposure. Whenever you have trouble finding stock to short - check the options.
Monday Musings: New Quarter Not So Shiny [View article]
So you have 4 bad cards and maybe a jack in china (and we were discussing the bad news, not avoiding good news) and you want to go all in because Japan is doing a little better than they were in an earthquake?
Go ahead - we need the counterparties!
Since the point I was making above is that bluffing is a poor strategy in poker and you failed to grasp that, I won't assume you understand the rest of the stuff you read either...
Do you understand the difference between the two PMI reports or are you just spouting off? One is a broad-bases look at data throughout china gathered independently (like our ADP Repor) and the other is only a survey of large and predominantly state-owned manufacturers.
Top 1% Tuesday: $105,637 For Me, $80 For You! [View article]
That's why we need an expert like you to make it work! The trick is to break a job up into component parts and find the parts that can be done off-site and cheaply. If you can do a "final read" after the grunt work is completed for you - that could be good. Anyway, just an idea - no one likes to think they can be replaced by machines or outsourced but, if you can find a way to make 10 people like yourself 20% more productive by outsourcing or automating part of the job - then you have something of real value.
Top 1% Tuesday: $105,637 For Me, $80 For You! [View article]
LOL - You really think that? That's too funny. That's the false premise behind market valuations that lead to a crash. PCLN, for example, isn't worth $36Bn just because 1M shares traded for around $720 yesterday - that's just $720M and that was buying AND selling so the net imbalance, one way or the other is about 5% or $36M or 1/1,000th of the Market Cap.
Just because there are SOME idiots willing to pay $720 for the stock on any given day DOES NOT mean they can sell all 500M shares for $720 - it's paper profits. This is why we crashed in 2008 and this is why we'll crash again - there's not enough REAL money in the system to support the valuations of the stocks.
I wish I had time now but we've discussed this in posts before - the net cash flow into the markets over the past two years has been minimal but the PRICE of stocks has gone from $22Tn to over $40Tn - it's a BS valuation. Housing was the same problem bubble - that is not wealth creation - those are valuation imbalances and, sadly, you are not the only person who doesn't know the difference - I doubt many people in Congress get it either.
Monday Market Movement: Down For A Change [View article]
Wrapping Up A Great Week (For The Bears) [View article]
Thursday Flip-Flop: Now Goldman Sachs Says S&P 1,250 Is Target [View article]
2008 was similar - as the S&P fell below 800, we began buying. Just because it went lower still doesn't mean it was a poor decision - with the S&P back at 1,400 - even you must understand that.
Thursday Flip-Flop: Now Goldman Sachs Says S&P 1,250 Is Target [View article]
Thursday Flip-Flop: Now Goldman Sachs Says S&P 1,250 Is Target [View article]
Of course, we play PCLN (ouch again) and CMG with rolling puts so, at this early stage, we actually WANT them to go higher as we're nowhere near a full position, nor are we at a strike we're happy with.
I detailed part of our strategy last Thursday: http://bit.ly/HiJTqr
Since then, we've spent another $2 to roll up to the $560 puts but this is still our 1x round out of 4x so we haven't even gotten to the point where we double down yet.
TGIF - Stop The Rally, We Want To Get Off! [View article]
What will happen to pregnant women who cross state lines to get their abortions? Will you hunt them down and drag them home? I suppose we could resurrect all the old laws governing runaway slaves. And, once you capture them - what's the budget for forcing them to take the baby to term? Do you lock them in a room and force-feed them until they give birth? Who pays for that? Who pays for the birth? Births are more expensive than pills I believe...
Also, what happens after a baby is born to a mother who has no means to support it - do you support them both of just the baby or does the rule begin at conception and then, once the baby is born - it's back to survival of the fittest?
Will there be extradition treaties with the states that don't want to force their women to have unwanted children? Does a woman immediately lose her individual rights at the moment of conception or is there a waiting period?
This brilliant idea of not letting the crazies force us to pay for their crap can also be applied to the military - there's $1Tn a year we can knock off the budget too.
Top 1% Tuesday: $105,637 For Me, $80 For You! [View article]
zeroxzero (premium)
Phil: I have always been intrigued by your notion that many, not to say most, people don't need to work. A kind of "Jetsons" world where machines scurry around taking care of most things [of course, they become conscious at some point and take over, but that's a bit down the road].
But what would they do? There's nothing more destructive than a bored monkey — I had one, trust me. These are not the "Denker und Dichter" of society — they are, or will be, the "Betas" of Brave New World. Given time — it's probably already taking place — this will take on a permanent genetic aspect. Perhaps that is, and has always been, evolution's path. But my guess is that it's not what you had in mind.
Phil
Bored monkeys/ZZ – That's just your own prejudice about what constitutes "worthwhile" pursuits. They had a similar problem in ancient Athens as a combination of military conquests, trading by sea and the beginnings of craft "workshops" powered by slaves left most of the population with nothing much to do other than supervise slaves. Since there was no regular work for young Athenians who didn't want to be in the army, the state paid one Drachma per day (a decent amount) for anyone who did anything which included being an artist or a musician or a philosopher or a teacher or a performer – you had to actually work but it was whatever you felt like doing and it was a golden age that led to a large percentage of humanity's cultural and technological advances up to that point.
Only because you don't value the common man do you not see the tremendous potential in simply letting millions of people pursue their own interest. People working on an assembly line or mopping floors 8 hours a day and getting paid only enough to make their minimum credit card payments are not very likely to solve the energy crisis but, as they say, if you give a million monkeys a million typewriters to play with – eventually you'll get all the works of Shakespeare out of them – we've devalued people and created an elitist society where only people who make money are perceived as having "value" – it's BS but it's going to be a long time before we can re-educate our population (look at you, you are turning your nose up as you read this!) to value "non-productive" pursuits like art, science, philosophy, education for it's own sake (not so you can learn to perform a function), etc.
flipspiceland (premium)
@Felipe
We have had many disagreements about, mainly, politicians, but I have been writing and saying the same things for 20 years about exactly the point you are attempting to make that there just isn't enough work (that mankind has yet invented) for the people to do, at meaningful production. I know this because of my former life as an Exec Recruiter.
I roughly calculated that there is 1/4 of a job to be done by each of the 6-7 billion people on this planet. We theoretically could do ALL the work to be done with 3/4 less people. It's an exaggeration since that would mean full employment, everyone working, which realistically would never happen. But the point still remains.
There have to be people in government who recognize this and have for a very long time. There must be think tanks that can demonstrate the futility of an economy based solely on producing something in order to live, survive, and maybe even prosper.
The mystery to me is why a loud mouthed politician like Ron Paul, for instance, won't tell this significant truth. He has nothing to lose. Everything to gain by saying it out loud: The U.S. Government— elected and appointed officials must begin the drumbeat for a different paradigm, figuring out a way to get into the hands of people what they need to live on, to have them NOT to enter the workforce, those that are not able to be trained, don't want to be trained in something they cannot do well, a hundred million people just in the United States eventually, that could be given vouchers, other currency, or means to live out their lives as they choose if they cannot meet the demands of production as it now stands.
In your next appearance on some TV program, maybe you could open up this Pandora's box once and for all to at least let loose those demons that need be tamed, the ones that say you must produce something in order to live.
We are in the post-work world and hundreds of millions of people do not seem to understand it.
Kurt Vonnegut was right.
Phil:
Wow Flips – I agree with you 100%. I think we should have this post bronzed. You're right, I should say something next time unemployment is an issue of we have some excuse for it. I have one daughter who wants to be an artist and one who wants to be an actress and both are pretty good and both are honors students but it would be nice if I could tell them that those were realistic pursuits that they can concentrate on since it makes them happy but we have to be "realistic" and make sure they have a career to fall back on – how sick is our society that being an artist or an actor is not a legitimate career (only for the top of the top, of course)?
Quotes from Vonnegut:
What should young people do with their lives today? Many things, obviously. But the most daring thing is to create stable communities in which the terrible disease of loneliness can be cured.
The feeling about a soldier is, when all is said and done, he wasn't really going to do very much with his life anyway. The example usually is: he wasn't going to compose Beethoven's Fifth.
Human beings will be happier – not when they cure cancer or get to Mars or eliminate racial prejudice or flush Lake Erie but when they find ways to inhabit primitive communities again. That's my utopia.
True terror is to wake up one morning and discover that your high school class is running the country.
Double Toppy Or Finally Poppy Tuesday? [View article]
On the puts, Founder, they pay us for SELLING the puts. That gives us +$28.50 and obligates us to buy AAPL for the $400 strike (if they are below it - otherwise the puts expire worthless). It's that $28.50 we use to buy the spread, which means the spread costs us net .50 and we still have an obligation to buy AAPL for $400.
Let's say AAPL was a $62,000 Mercedes and the dealer asked you if you would buy it for $40,000. If you REALLY want it, then you say "sure". And the dealer says, well I hope to sell all my Mercedes for more than $62,000 but, if I don't and if they go down in price, will you promise to buy one from me for $40,000 in exchange for $2,850?
You agree and the dealer gives you $2,850 now in exchange for a contract in which you promise to, whenever the dealer wants, buy the Mercedes for $40,000 between now and the expiration.
That $2,850 is yours, now, to spend. The only thing you have to worry about is having $40,000 set aside (can be bonds, cds, liquid stocks, cash) in case they deliver the car to you. If that's good for you, then the $2,850 is free money.
Since you REALLY like the Mercedes and you intend to buy it anyway, you use that money to buy your own option from someone else. The Jan $600 call option gives you the right to buy the Mercedes for $60,000 in January and the $665 call option sold gives you the right to sell the Mercedes for $66,500. That option costs $2,900 or $50 more than you got for selling the puts.
Now, if the Mercedes goes up in value, you will be covered for the first $6,500 move up in price. If it stays flat, you will get your $2,900 back, which is the money you got from the putter. If the Mercedes goes down in price, you lose the net $50 you spent on the call spread but you still have no additional obligation unless it falls all the way to $40,000, at which point you own it (happily, we assume) for net $40,050.
If you are NOT bullish on AAPL, then why be in the trade? You can just sell the puts to raise cash if you think AAPL is strong enough to hold $400 and play something else but the addition of the bull call spread is to play a bullish market under the assumption AAPL will continue to be one of it's leaders (and up $11 today is a good start!).
This is, of course, a very simple view of the kind of trade ideas we go over every day at PSW. There are infinite adjustments and combinations to be made on these trades and, once you learn how to use them, you'll find they are incredibly valuable tools to help you take control of your investments.
Top 1% Tuesday: $105,637 For Me, $80 For You! [View article]
It's the same as cutting NASA's budget 12 years in a row and then saying "well, what do they ever accomplish?" Our military record sucks but we keep putting money into that for some reason...
If your test of whether something is worth doing is based on whether or not the system can be abused - then I'd say Capitalism in General must be stopped immediately and I very much doubt you need examples of abuse there.
Monday Musings: New Quarter Not So Shiny [View article]
Monday Musings: New Quarter Not So Shiny [View article]
Go ahead - we need the counterparties!
Since the point I was making above is that bluffing is a poor strategy in poker and you failed to grasp that, I won't assume you understand the rest of the stuff you read either...
Do you understand the difference between the two PMI reports or are you just spouting off? One is a broad-bases look at data throughout china gathered independently (like our ADP Repor) and the other is only a survey of large and predominantly state-owned manufacturers.
Top 1% Tuesday: $105,637 For Me, $80 For You! [View article]
Top 1% Tuesday: $105,637 For Me, $80 For You! [View article]
GDP Thursday: Don't Get Excited, It's Just A Revision [View article]
See yesterday's post for some of our value reasons for not believing in them. We were long a long time ago, now they are too expensive.
Top 1% Tuesday: $105,637 For Me, $80 For You! [View article]
Just because there are SOME idiots willing to pay $720 for the stock on any given day DOES NOT mean they can sell all 500M shares for $720 - it's paper profits. This is why we crashed in 2008 and this is why we'll crash again - there's not enough REAL money in the system to support the valuations of the stocks.
I wish I had time now but we've discussed this in posts before - the net cash flow into the markets over the past two years has been minimal but the PRICE of stocks has gone from $22Tn to over $40Tn - it's a BS valuation. Housing was the same problem bubble - that is not wealth creation - those are valuation imbalances and, sadly, you are not the only person who doesn't know the difference - I doubt many people in Congress get it either.