Booga Booga

What’s in the Szelhamos Portfolio?








 


I don’t recall whether to credit comedian Robert Klein or David Steinberg for this one, but I still hold a grudge against Klein for participating in one of the worst Saturday Night Live skits on an episode that he hosted 30+ years ago.


The closing sketch, “Giant Lobsters Attack the Studio” was just the conclusion to that evening’s running “Attack of the Giant Lobsters” non-gag.


In fact, scratch “worst skit” and substitute “worst episode, ever”.


Don’t call me “petty” and don’t tell me that this is the season for forgiveness. It was truly a terrible thing that he did. In fact, the free marketplace bears me out on this  opinion, because Klein never professionally recovered from this horrible hit.


As a neighbor, back when we still lived in Westchester County, I couldn’t stand to be on the same side of the street. when he appeared. As far as everything else went, he was a funny, wonderful and warm person, but those attributes were trivial and still are.


So I’ll go with David Steinberg, who was among those comedic geniuses behind the Smothers Brothers Hour, including Steve Martin and Bob Einstein. Coincidentally enough, he and Robert Klein were part of The Second City troupe, together in the 60’s.


Booga BoogaBut the story went that when two people that have had extensive plastic surgery, nose jobs, braces, you name it, get together and have an incredibly hideous baby, it’s just God’s way of saying “Booga booga”.


The actual telling of the joke was much funnier than trying to write in down years later. Especially missing is the thumbs in the ear and outstretched fingers waving while saying “Booga Booga.”


You had to be there.


I know that here are a number of evangelical ministries that teach its disciples that “God wants you to be rich”, perhaps Joel Osteen, being the best known of those.


And what better way to find grace in God’s eyes than to enrich the coffers of Osteen’s church and therby Osteen himself.


I like that kind of theology. I think that everyone should be wealthy.


I also know that if wealth was to be equally distributed you would still have paupers within minutes of the distribution and some even wealthier citizens as a result.


Separating people from their money is just something deeply ingrained into our genome, but my Deity should be made of more heavenly stuff.


On this, one of the holiest days of the Jewish calendar, it’s clear to me that my God doesn’t want me to be rich.


Allowing me to watch a market that at one point was up 180 points and yet seeing my own positions falling fast, is cruel and unusual.


It may be God’s way of saying “Booga booga” to me.


Message received. Especially when the market gains evaporated and my losses mounted. But at least he allowed me to stick around long enough to witness my oldest son’s 25th Birthday today.


That was a nice gift, but seriously what’s with the other stuff?


God may have done the same to Robert Klein for deifying those incredibly delicious, yet dietary forbidden crustaceans. Banished from paradise.


Heaping more cruelty on Robert Klein is the fact that his greatest achievement of the past 30 years was receiving an award for having been a Bronx native.


But I certainly won’t blame higher authority for today. Higher authority did not command me to be over-weight in Mosaic, Freeport McMoran and Rio TInto. In my defense, I thought that by so doing I was paying respect and offering testament to the fine natural wonders that we have been given.


Of course, leave it to those Deity-less Chinese to elect to use less of your wondrous bounty, for some inexplicable reason.


Can I have an Amen?


But still, it may have been higher authority that so cruelly reversed price direction in Halliburton, ProShares UltraShort Silver ETF, Transocean, as well as Mosaic and Freeport McMoran, before I had a chance to sell last minute call contracts.


But why?


In the sad case of Robert Klein, he was never asked back to host SNL. They haven’t even let him watch the episodes for the past 33 years. Even more painful is that this talented man has had to endure the likes of Steven Seagal.hosting and the fact that Seagal is more likely to be invited back than he.


I’m hopeful that mine is not a vengeful God. I’m hoping that despite today’s lack of participation in what was a rally, at least until 2 PM, was just an expression of displeasure with me that can be erased.


That’s what the “Day of Atonement” is all about and it arrives in just a few short days.


But it’s probably not too early to begin the process of cleansing and asking for forgiveness.


I vow to lighten up my dependence on natural resources. Forgive me.


As soon as the first opportunity to take profits come along.


I vow to keep finding opportunities to poke fun at Ministries that seek to take advantage of Believers, unless they include me in their profit sharing program. Forgive me.


I vow to not be greedy and hedge my positions as soon as I open them, eschewing greater capital gains in return for the safety providing by believing in my tenets of managing portfolios. Forgive me.


It’s comforting to have a list of Commandments to live by


Those are the basic values that shouldn’t be altered. The big nose, the crooked teeth, the need to hedge investments and things like that.


Once you get away from the formula that got you to the Promised Land be prepared for Booga Boogas to come at you from any direction.


The late hour fades on Wednesday and Thursday are worrisome and I’ve heard enough heads mention “climbing that wall of worry.”


But I have faith, blind faith that despite the hideously ugly offspring produced by superficially altered human beings, who have lost their ways, that they too can thrive if the rules are followed.


To traveling the pious path and to profits.


Or at least one of those two.


Knowing that an all knowing Supreme Being reads this blog, I wasn’t surprised to see the market bounce back in the final 30 minutes.


For me, still a loser of a day, but Booga Booga right back to ya.


 








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Bouncy, Bouncy Bally

What’s in the Szelhamos Portfolio?








 


When I was younger, as kids, we were amazed by advances in technology.


OperationI can still remember when games like Hungry Hungry Hippo and Mousetrap came out. Those were just amazing. Who ever would have believed that a board game could have moving parts?


Easy Money, Careers, even Chutes and Ladders were consigned to the dust bin of gaming history.


Of course, then Operation hit the market. That blew us all away. Flashing lights and a buzzer, all hand controlled.


I can just picture a young Steve Jobs trying to figure out an even better hand held device to use in playing Operation.


Things were, I guess, a bit different back then.


Today came a much awaited new product introduction.


After it was all said and done, there really wasn’t any new technology unveiled. Just a new product line and lots of talk of synergistic markets.


And the cloud. There has to be discussion of cloud strategy.


But as he was making the product presentation, there was the faint thought that Amazon’s CEO, Jeff Bezos, was channeling just a little bit of Steve Jobs.


And that’s where the entire day was focused. Not just on the new Kindle line of products, the Kindle Touch and Kindle Fire, but just who gets impacted by the New Kid on the Block, whose CD’s coincidentally enough are avaiable both through Amazon and the iTunes store.


Who knew that I could so subtly do product placement?


The comparisons to the iPad were obligatory and obvious, but as I watched, it reminded me of the prevailing arguments back in my day.


Back then, in New York, stickball was a popular game. But stickball, as practiced in Brooklyn, was very different from that game which we played in The Bronx.


All they really had in common was the stickball bat, usually a broom handle. The playing fields were different, but most importantly, the ball of choice was different.


You were either a “Spalding” Stalwart or a “Pensy Pinky” Proponent.


Obviously, no one was actually called either of those. Poetic license didn’t translate well onto the stickball field, unless you liked getting the crap beat out of you.


You could never get the Brooklyn Pinkies to agree with the Spalding Bronx fans.


Once, I went to visit my friend, Sidney, whose family had moved from The Bronx to Brooklyn. I couldn’t believe that he had turned on his stickball roots, insisting that we play with that mushy Pensy Pinky. It had no bounce. None, at all. To this day, I can still feel it in my hand, like a rotting cantelope.


And we now know how dangerous cantelopes can be, but at least they bounce better than bean sprouts.


You couldn’t even find a Brooklyn store that carried the Spalding, as distribution of the balls must have been under mob control.


Not tht the mob is involved here, but good luck trying to get one of the new Kindles. Talk about control. You’ll have to wait until November.


Or you could get one of those fine RIM Playbooks or H&P Tablets that are helping their companies achieve no lows, without a bounce anywhere on the horizon.


Although, to put a positive spin on things, I do plan to put together a new “Yesterday’s Technolgy ETF” and that should have some positive impact on RIMM and Hewlett Packard.


Of course, it’s still not clear to me how we’ll create the Yesterday’s Technology UltraShort ETF and what effect that may have on share price. We’re still deciding whether to use the Palo Alto Morning FIx or some byzantine algorithm.


Back when I was even younger and not quite up to the task of stickball, I can still remember playing with a Spalding and bouncing it on the sidewalk, while singing the nursery rhyme:


Bouncy, bouncy, bally.


I don’t remember the other lines, but I do remember that ball routinely bouncing over my head.


I used to love bouncing that ball, especially watching it soar so high, always recovering from its fall.


Maybe that explains why I enjoy the bounces in the markets and am always optimistic that if I can catch it after the bounce, the fun can start all over again.


Some bounces are better than others, though.


The bounce that I liked was one that let me resell those ProShares UltraShort Silver ETF’s that I bought back yesterday. I was able to do that because silver fell big today, just as it had gone up big yesterday, just after a series of big falls the days before.


Bouncy, bouncy. Buying the contracts back was just like catching it and selling it again was just like starting that whole bouncy process over again.


Then there’s the kind of bounce that if you’re not careful takes you right into oncoming traffic.


That was the bounce I didn’t like. The bounce took an up 100 market into one that closed down almost 200. All of the call contract sales I had been hoping to make just disappeared from view. Once the high of 100 points was hit, that ball may as well have been used for bowling, because there was no going up after that drop.


The news that ptresumably sent the market into a tailspin had nothing to do with an Apple – Amazon war, which may actually be much ado about nothing. The real losersare likely to be the usual suspects. See if you can guess.


Instead the suddenmarket drop was related to more fears that the EU may not be able to come to an agreement as quickly as we’d all like to help resolve the European banking crisis.


The rumors of good news and the rumors of bad news just keep alternating and playing our emotions. Just think of a crazed bouncing ball that somehow keeps escaping your grasp.


No matter. The joy is still there.


I don’t know if I’ll ever buy a new Kindle iPad Killer wannabe device. But somedays I’d like to take all of those  miracles of modern engineering and technology and see if they bounce. I hve just the concrete pad to try it on.


That would bring the fun right back equally in Brooklyn and The Bronx.


 


 


To learn how to put such a trading strategy into action consider purchasing the Option to Profit book





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Option to Profit is available as either an eBook or 300+ paperback. Take a humorous look at a serious topic and learn how to make your portfolio finally go to work for you in bull and bear market environments.


See a sneak preview of Chapter 1.  hoco blogs


More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.


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You Know what I Like

What’s in the Szelhamos Portfolio?








 


About a month ago, in honor of what would have been Buddy Holly’s 75th birthday a small tribute was paid in his honor in “What Buddy Holly Teaches Us“.


But Buddy Holly wasn’t alone on that fateful stormy night.


Some other time, we’ll get to RIchie Valens, once I get the translation module to function. But for now, I remember The Big Bopper and that great lead in line to his hit, Chantilly Lace”.


You don’t need Viagra to know what you like, but it does help you to remember why you liked it.


Obviously, I liked the 300 point gain.


I liked it less when 200 points of it evaporated in the last minutes of trading.


But still, 3 days in a row of gains is very likable and definitely reinforces for me why I like these big upward spikes in the morning.


More on that, later.


Since these days we’re all about rumor or absence of rumors, the late day drop came as the Financial Times reported that there was some discord among the EU members.


Yeah, I know. Hard to believe. But even more difficult to believe was the the discord all centered around which country’s Rosh Hashonah services the ECB commisioners should attend. There was not much support for Greece on that one.


Can’t say I blame them. The thought of feta based matzoh balls is repugnant to me.


We’ll see how that unforeseen little bump in the road works out. Sometimes being in a union means spending time with your partner’s loved ones.


When will Europe learn?


Since I’m not a very social person it’s not difficult to explain why I was such a late adopter of anything resembling Social Media.


I was so far removed from the scene, that I didn’t even know what Friendster was and couldn’t even bring myself to feign laughter at the jokes directed toward its status of being far removed from the scene.


But I like social media, even though my Google + circle is determined by just a single point.


Take that inviolable laws of Geometry.


Nigerian PrinceI’m still not very social, but I like the egalitraian nature of the network with which you can participate.


You can even choose not to have Nigerian Princes be part of your network.


Me? I would never turn a follower down.


Today I posted a query on StockTwits and Twitter regarding what I saw as a disconnect between Monday’s silver price action and the price of the UltraShort Silver ETF. Just a follow-up to the semi-rant in yesterday’s blog.


Bottom line, I spent more time in bilateral conversation with “Kid Dynamite” via 140 spaces at a time than I have with my Sugar Momma this past week.


The fact that she was on a fun filled trip to Chicago with her friend in birthday celebratory mode is not relevant.


I spend more time with the Kid. I p[icture him as being stooped over and quite elderly.


It was a combination of educational, philosophical, agreement, disagreement, interpretation and a mutually deep seated hatred of 16thy century colonialism.


At least that’s how I interpreted it, still upset with Europe’s role in unseating long established tribal governance, thereby resulting in a flood of poor and unemployed Nigerian Princes.


Regardless, it did introduce me to a new blog. I tend to like those written by people with an authoritative grasp on a topic, yet that write in a breezy and humorous fashion.


In my case, one out of three may even be a stretch.


Today though, despite the final 15 minutes, made it 3 out of 3.


By Meatloaf’s standards, that’s damn good.


Even though there’s still almost 4 weeks left in this option cycle and lots of opportunity for more upside, I took advantage of todays jump out of the box.


I was able to sell weekly calls on British Petroleum, JP Morgan Chase and PowerShares QQQ. I also sold some monthlies on Textron and Dow Chemical.


I was also trying to re-sell some Halliburton, Transocean and DuPont calls, but never got my prices. Too bad, because Transocean hit a rough patch late in the session when it got bitch slapped by the EPA.


I just love it when I can sell calls on my unholy troika of BP, Transocean and Halliburton. Maybe tomorrow.


As Kid Dynamite and I were exchanging Tweets and he was trying to school me, I bought back about 30% of my call options on ProShares UltraShort Silver, locking in a very nice 2 day profit, as silver recouped some of its losses.


Assuming that everything Kid Dynamite tried to transmit to my knowledge base was false, you’d be left wondering why the UltraShort ETF was down by 18%, whereas the SIlver ETF (SLV) was up by just 4.3%


2 to 1 correlation, my ass. At least they got the directions right today.


But for some bizarre reason I have a driving desire to know what time it is in London.


Apparently, it’s because I now know that the UltraShort Silver ETF share price is pegged to the morning “London Fix”


I miss the days when “London Fix” referred to what killed a punk rock drummer..


I still remember back about 30 years when the morning business report always started with the London Gold FIx. Back then I was young and foolish and thought that I would conquer the world one gold contract at a time.


Amazing how not much has changed.


In what can only be called an incredible coincidence, about a month ago, I mentioned the London Gold Market Fixing Ltd. Committee in “Did I Not get that Memo? ” and the blog entry also featured Eddie Murphy.


In case you’re wondering, I’m neither a transvestite, nor do I currently have a restraining order out against me.


Whatever, it’s still an issue of those colonizing bastards.


Financial Times. London Fix. They’re all wagging our tails, but then again, maybe that’s the Viagra.


 


To learn how to put such a trading strategy into action consider purchasing the Option to Profit book





Hop SIng and Paw Blaze a New PathAmerican Tower ChartMake you Portfolio Work for You!


Invest like TheAcsMan


Option to Profit is available as either an eBook or 300+ paperback. Take a humorous look at a serious topic and learn how to make your portfolio finally go to work for you in bull and bear market environments.


See a sneak preview of Chapter 1.  hoco blogs


More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.


Find  OTP Book at Amazon, B&N or now you can also Order direct  from publisher. Use 10% Discount Code P4S2ZD8H


 


  

 





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What Does it All Mean

What’s in the Szelhamos Portfolio?








 


I’m not really sure what exacty happened on Monday, but I’m not about to complain. Not when the Dow goes up 275 points.


What's it all Mean?Here’s to anarchy. Sometimes it’s just pointless to try and figure out what it all means. Just go with. Remember the courtroom scene in Animal House? “Don’t stop him. He’s on a roll.”


The general theme today was one of disconnects. Sometimes my lack of understanding and sophisitcation is the source of perceived disconnects.


Not today.


The day started with the futures pointing toward a 100 point climb at the opening bell, probably based on the absence of a European meltdown over the weekend and an orderly start to their Monday morning markets.


So far, so good.


When the bell rang the S&P 500 just jack-rabbited out of the gate. But in the meantime, the Dow was barely up a single point. Not to overly simplify, but everything else being equal, there’s generally an 8 to 1 ratio between S&P 500 moves and the Dow. Obviously on days when a Dow component, such as Hewlett Packard crashes, that ratio is off, or if trading in a specific stock is delayed, the ratio may be temporarily imbalanced.


But today, there was no great standout in either direction. Just a 90 to 1 ratio.


You could tell that Jim Cramer and Melissa Lee, on the NYSE floor at the time were perplexed, but it took a while before anyone said anything about the seeming discrepancy. No one likes to look stupid or not in command of what’s going on around them.


Finally Cramer, who’s not terribly shy about opining, correctly ventured that something was wrong with the price reporting going into the calculation of the index.


Disconnect #1. But that was resolved within 15 minutes and before you knew it, the Dow Jones was up 90 points, putting it right in line with the S&P 500, which was about 11 points at the time.


Before trading, the morning started out with what I like to refer to as the “You’re paying me alot of money to give you good information based on solid research, so here’s the bad information” Disconnect.


Research firm, Sanford C.Bernstein, based on its in-depth and proprietary research, analysis and information came out and lowered its price target on poor Goldman Sachs to $185, down from about $230.


That’s a huge drop.


But still, it’s about double Goldman’s current price.


I should mention that in it’s own humble opinion the Sanford C. Bernstein Research firm, referring to itself in the third person, claims that “Sanford C. Bernstein is widely recognized as Wall Street’s premier sell-side research firm.”


If they can help me sell Goldman Sachs for $185 right now, they’re really everything they say they are.


That’s what I call sell side.


The next disconnect is an everyday kind of occurrence, the kind that is often referred to as the “What you talking about, Willis?” Disconnect.


That occurs when seemingly intelligent people look at the same information and come up with wildly different interpretations.


Today it was the announcement that the world’s greatest value investor, Warren Buffett, seems to believe that his own Berkshire Hathaway shares are inappropriately priced.


He proposed a large buyback of his Class A and B shares.


I owned the Baby Berkshire shares when the first appeared a couple of years ago. Held them through a couple of options cycles and picked up some decent premiums, but never found the reason to repurchase shares once they were assigned from me. That’s not typical for the way I manage my holdings. I like buying shares back, albeit at lower prices.


The controversy comes as one school of thought chimes in that Berkshire must be a roaring buy now that Buffett has put out the buyback plan and demonstrates confidence in his company, which itself is just a mirror of our own economy.


The other school thinks that this is a really bad sign, since it means that the famed value investor isn’t seeing any other good values out there.


Initially ignored were the two caveats. Shares would not be purchased at a price greater than 10% of Berkshire’s book value and no repurchases would take place if cash on hand fell below $20 billion.


Also overlooked was that the last time Buffett announced a buyback about 11 years ago, there was no buyback.


He did get shares to move up nicely today, though.


Corollary disconnect? Sure, some people can nuance the truth and not be called on the carpet for misleading others.


On the international scene much ado was made of the fact that the royal Housee of Saud, the ruling family of Saudi Arabia announced that women will be given the right to vote and run for elective office.


What they didn’t say was that there was still no way for them to get to the polling place, unless their husbands provided appoval and transportation.


Also, women can’t run for King.


Disconnect between expectations and reality. Have you seen that one before.


For me, the biggest disconnect was a very pragmatic one and has me as perplexed as those on the floor of the NYSE were at the opening bell.


For yet another day, gold and silver were brutalized. Gold had another of those $100 round trips today.


Remember when gold and silver were so easy to understand? Remember when they obeyed that inviolate 35 to 1 ratio?


No more. They more in opposte directions all the time and that ratio is a thing of the very distant past.


If you’ve been reading the blog, you know that I hold shares of the ProShares UltaShort Silver ETF (ZSL). The one that moves inversely to the price of silver and is leveraged to boot, at about 2 to 1.


A month ago, I started to wonder if the price of silver were to soar would the relationship between the Silver tracking ETF (SLV), which actually holds silver bullion,  and the UltraShort breakdown. Afterall, the price can’t get less than zero for the UltraShort, while the metal can keep soaring forever.


Funny thing. That didn’t happen.


Instead today, as silver fell, a reasonable personwould have expected ZSL to move in the opposte direction and by twice the amount.


Instead, there was a little  disconnect between SLV & ZSL pricing. By little, I mean big. SLV went down 0.7%, and ZSL went down 5.1%.


Wait that must be a typo. I must have meant that ZSL went up by 1.4%


If only it was that easy. Whatever happened to perfect pricing?


I posed the question on Twitter and one responded that it was related to the hike in margin requirements that was announced this past Friday.


Sounded good, until I check back to May 2011, the last time the margin requirement was increased. On that day the moves were big, but perfectly in line with the script. Silver fell big and ZSL climbed even bigger.


But the day’s trading had even more examples.


Eddy Elfenbein, of Crossing Wall Street, pointed out that at one point in the trading day the VIX, a measure of volatility that rises as the market falls, was rising, even as the S&P 500 was soaring.I don’t recall the precise text, but his usual tone is one of humor and fact, a nice, but rare combination.


Also known as a disconnect.


Of course you can have Disconnect #3 applied to that disconnect. All you need is to find an analyst who recognized the incongruity between a rising VIX and rising S&P and state that he believes that the VIX is a more reliable measure.


And you know, that wasn’t hard to do, because people will say anything to get air time, especally knowing that no on remembers anything said more than a fruit flies half-life ago.


“I’ll go with the VIX’, after which point the S&P nearly doubled and the VIX decided it was the mixed up one and finally corrected its course to close down nearly 5%.


Helping to restore my faith in correlation was the market’s action upon hearing news that the EU and ECB were diligently working on the European debt crisis.


Upon release of that news, the market showed the VIX who was Queen for a Day.


Of course, the market’s reaction to that news would indicate that the fact that they were working diligently on a solution, was in itself a surprise.


So what does this all mean?


To me it means that the individual investor is just as likely to read the market correctly as the guys from Bernstein. The difference is that the individual investor cares more and is more tentative in making decsions and taking actions, because for them, it’s not play money. It’s the real thing and it’s theirs.


Today I just took the opportunity to pick up more shares of Freeport McMoran and Halliburton. I also sold call contracts on some of my Freeport, Textron and Sallie Mae shares.


Then I used the premiums to pick up more Sallie Mae shares and promptly sold calls on those, as well.


That’s the real meaning of all of this, making Einstein’s observation that the greatest miracle in life is that of compounding.


Amidst the confusion and the lack of rational thought, some things are just universally true.


 


 


 









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Twitter and Nepal





 


NepalI’m not really certain which Tweet it was, but I got my first website hit from Nepal, as a result of Twitter on Sunday.


For no meaningful reason I check my various sites analytic reports to see where visitors are coming from, how long they stay and whether they return to the site.


I don’t have great aspirations for selling tons of Option to Profit copies in Nepal, but I love seeing the website visits, especially when people linger and come back


Seeing the Nepalese flag icon appear on the analytic report was veryTweetdaeck Icon inspiring to me. In fact, in my completely incapable of detecting similarities in shapes portion of my mind, one of the Nepalese flag symbols looks just like the TweetDeck icon.


It’s that kind of difficulty in interpretaion of visual cues that excuses Eddie Murphy’s solicitation of LA transvestites.


Honest mistake.


Also explains the difficulty I have with those on-line IQ tests.


Back when I ran the original iteration of the Szelhamos Rules blog in 2007-8, I had a daily dedicated reader from Vietnam.


The very idea always amazed me. What was it that the reader could possibly find interesting enough to come back day after day. I felt a very tiny pang of guilt when on the first anniversary of the blog, I ceased its publication.


But not too big of a pang. My final blog re-directed readers to a new site called “Csokolj meg a seggem,” which was a Hungarian expression that was one of Szelhamos’ favorites. If you’re too lazy to try a translation program, you can visit the “Rebus Puzzle” page.


Now, in its second iteration, that Vietnamese reader hasn’t returned.


Is he still alive? Has his life changed? Maybe for the better? I’ll never know.


But now, in the second iteration, I also hold you, the dear reader in higher esteem.


Not high, just higher.


I also don’t know if the Nepalese reader will be back, but I’ll try to make the blog more Nepalese centric. More and more each day would be my aim, but don’t worry, I’m used to failed expectations.


It’s also amazing where inspiration can come from. Ultimately, if your eyes are open widely enough and you suspend rational thought processes, inspiration can come from anywhere.


Coming off a horrible week in the markets, with the worst weekly loss since late in 2008, I received inspiration from an unlikely source.


Silver.


Back in 1978 or so, a friend had convinced me to buy a silver bar, just prior to what would become an incredible rise in price that eventually bought an ounce up to $50, back when the Hunt Brothers tried to corner the market.


That bar sits somewhere in the basement, I suppose, unseen for the past 30 years.


Following a brief time playing with commodity futures in the very early 80’s, I’ve completely ignored metals, not wishing to repeat some costly mistakes.


But for some reason, probably because I remembered the hysteria of 30 years ago, I was in disbelief of gold and silver prices. But that disbelief just kept getting discredited.


In fact, my oldest son took my advice and sold 3 of his five gold coins that he received as his collegfe graduation gift. The advice was a bit premature at about $1500 an ounce, but it’s hard to let a 70% profit ride on irrational pricing. Still, there was that pang of guilt again.


My disbelief finally manifested in buying those leveraged silver short ETF’s.


The first iteration of those were at about $17 and had 12% options premiums. I was assigned when silver went down to about $35 and the ETF went to $20 back in May or June.


Since then, as silver started its bizarre and unwarranted climb back, I’ve been slowly re-assembling the ETF holding. So much so, that very quietly it became nearly 10% of my portfolio. Given that I typically own about 20 stocks, a 10% share is a little out of proportion, especially since this one is more than a bit speculative.


And I don’t like to speculate.


Normally, I buy and sell shares of stocks with conviction and arrogance.


All at once.


That’s often not a good idea, but I like spending my money and limiting the number of different holdings to about 20.


But the short silver ETF was different. Everytime I got some extra options income, I just plowed it into more shares of the ETF. When I got some more Option to Profit royalties? Same thing, more ETF shares, as silver just kept rising.


So after this week, as the market and metals both plummeted, I am still breathing, thanks to the metals that I swore to eschew years ago. Although I didn’t take profits, instead selling enriched call options, it was like getting a big royalty payment.


I guess that being short, and leveraging to boot, is consistent with the earlier stance.


Come Monday, instead of being shell shocked, I’m ready to do battle, thanks to the anti-silver, almost like Kryptonite, except that anti-silver stopped evil.


Instead of writer’s block, I have inspiration from an unknown reader in Nepal.


Well, that’s all fine and good for yesterday, but we’ll just have to see what will bring inspiration in time for tomorrow’s blog.


Like an addict needing more and more to get the same effect, I may need something a lot more exotic than Nepal.


Maybe something like getting Paul Kedrosky or Jane Wells to follow me on Twitter, or even write a guest blog when I’m away.


But then what?


And that’s exactly the problem. That’s the human condition. Maybe if I went to Nepal and hiked up some lofty mountain to seek spiritual meaning, I might find some. I might find that inspiration comes from within and that we don’t need to enslave our souls by seeking inspiration outside of our souls.


Spirituality sounds great.


Nah.


My guess is that upon meeting my spiritual mentor wannabe and being proposed the deeper benefits of meditation, I’ll be pleased to find that my specially chosen mantric phrase is “Csokolj meg a seggem”


Thank you Twitter.


 


 









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7 Reasons why Criminal Life is Great


Following Wednesday’s Moodys downgrades of Wells Fargo and Bank of America, fresh off the heels of a downgrade of Italian debt on Monday, it was not going to be a good day. The only hope was that maybe our Bernanke led Federal Reserve would pull an incredible rabbit out of its hat and just turn things around.


But for the most part, everyone was just waiting for the anticipated “Operation Twist” and its details before commiting one way or another.


Once those details came from the FOMC, which was uncharacteristically following Obama time for release of its statement, the market didn’t like the description of our current economic state. Maybe it just couldn’t deal with the fact that there were three dissenting votes


In a couple of blinks we went from being up 14 points to down 283.


Just another day at the office, dear. Just a little bit of dissent in the ranks.


Surprisingly, I don’t feel like talking about stocks today, as I took another, largely unhedged pummeling, getting only two call sales made, both on beaten down RIverbed Technolgy, which was probably riding Hewlett Packard’s coat-tails up this afternoon, as Leo Apotheker, its CEO of almost 12 months was rumored to bedismembered by coyotes.


Instead, I need to come clean and this is a good time as any.


It’s not easy saying this, but at some point the truth needs to come out.


No, I’m not a virgin. A game of Twister, years ago, took care of that. And if I was, I don’t think that I would admit it.


Criminal Life is GoodBut as I sit and really think about it, the criminal life is great. The problem is that I’m not a criminal, but there’s still time to re-invent myself. In a society where so many occupations are disappearing, there will always be criminality. Some things can’t be entirely shipped offshore, even if the Nigerian princes are more authentic 10,000 miles away.


So then there’s the whole credibility issue.


I suppose that everyone is a criminal by some definition. Depends on your society and your own personal values and especially how those values may be at odds with others, especially those with power. The guy who “pied” Rupert Murdoch during the Parliamentary hearings is a criminal, although most people watching the proceedings were probably equally criminal, at least in intent.


Years ago, when Jimmy Carter was running for the Presidency, during a Playboy interview he admitted to having “lusted in his heart”. Nothing really criminal about that, but had he said that 20 years earlier he would have been condemned as a godless pariah and cast to the bottom of the heap with the other low lives.


Even Mother Teresa had her detractors, so much so that some theologians, perhaps of dubious merit themselves, believe that she is consigned to eternal imprisonment in Hell.


As I’ve grown accustomed to sitting on my La-Z-Boy, watching TV and trying to trade stocks and options, I’ve started to wonder whether I’d squandered the first 30 years of my professional life by toeing the line. Working day and and out, not only paying bills on time, but actually paying and other things that now seem so arbitrary.


Growing up in The Bronx, I now realize that the old neighborhood was populated by Mob families. The fathers were always home, were always around to play stickball with their kids and even had their own little coffee shop with blackened windows. The shirts weren’t called “wife-beaters” back then, but I suppose they were.


Plus, the streets were always plowed and they had the best fireworks.


Can anyone say “Winning”?


My Sugar Momma and I have religiously watched COPS for about the last 20 years. Even though neither of us know more than the first line of the theme song, some things have become fairly obvious, besides the fact that some people can garner respect in a wife-beater, while others just can’t and never will.


But what we really learned is that there’s good criminal life and there’s bad criminal life. COPS always portrays the bad criminal life.


Stupid people drinking, fighting, stealing and lying. That’s bad criminal life. They seem to live in pretty squalid kinds of surroundings, have home-made tattoos and wear their pants down to their knees. They’re often very unattractive as well.


Smart people probably stick to just the stealing and lying part although you do catch glimpses of the smart kind that think that they’re smarter than those charged with keeping society safe, if you’re in the habit of  watching Dateline.


Those often commit the bad kind of crime sometimes while in pursuit of the spoils of the good kind of crime.


That’s a bad admixture. You can’t do good by doing bad.


But I now realize that there are lots of good reasons to lead a certain kind of criminal life.


 


1. You make people feel better about themselves


People are so often much too hard on themselves and often suffer from inferiority complexes. Some have the whole thing figured out and just hang out with even more pathetic people to look good by comparison.


Being subjected to the bad kind of criminal activity let’s those with a sense of inferiority know that there is someone even less deserving than they for our world’s limited resources. Unfortunately, that kind of activity is often associated with very unpleasant things.


Like violence.


But being subjected to the good kind of criminal activity spurs aspirations, the need and desire to improve their own lots in life by seeing that there is another way to break the chains. There’s nothing like a good example to spur people on to bigger and better things.


Seeing a hacker profiled on 60 Minutes makes most people believe in themselves.


If that moron could do it, so can I. And I won’t get caught, either.


Not only do you feel better about yourself, but you inject your entire defeatist personna with an air of much needed confidence.


Beyond that, if asked to “forgive” a criminal who has wronged them, what greater feeling can anyone have than the magnanimity to provide grace to those that have fallen?


 


2. There’s no time clock


The only thing you need to keep an eye on is your bank balance. That becomes your internal clock. Don’t feel like playing criminal with your buddies today? No problem, take the day off. Want to sleep in this morning? Guess what? No problem.


Raining outside? Hetl, I’m not getting my new Crocs wet if I don’t have to.


Shower? I don’t need no stinking shower.


Get the idea.


 


3. Society loves a successful white collar criminal


It’s true. They really do, unless they were directly effected. Most people admire the fact that people that can enrich themselves without really breaking a sweat.


The “Why didn’t I think of that” mentality is common to our species. Best of all, seeing just how easily it can be done leads others toward developing even better techniques to separate people from their assets.


That is the basis for how we advance aqs a society. Unfortunately, the Chinese seem to be outdoing us at the moment, especially when it comes to the integrity of the companies that they take public.


But then consider who you admire more? The person that inherited their wealth, the person that made others toil to an awful extreme and under terrible conditions on behalf of their bottom line, or one that just siphons off other people’s money?


Would you rather be America’s next successful white collar crime czar or a tele-marketer? Seriously, which one really belongs in jail?


Wouldn’t you rather see Bernie Madoff putting his skills to good use outside of jail and perhaps just cram 20 telemarketers into his cell instead?


 


4. You feel better about yourself


Not only can you check off “Other” or “Consultant” on those forms that ask about your job industry, but you can also choose any professional degree you like, any annual income and any net worth figure when completing surveys or polls.


Want to feel better than you did yesterday? Forget the Zoloft. No problem, just fill out a new form, maybe get yourself a nice new glitzy business card.


Watching your neighbor leave early in the morning for work and then getting home 12 hours later just reinforces that good feeling. That and the ability to hack into his unprotected wireless network while he’s gone.


 


5. Stronger Family Relationships


Study after study shows that the more time parents can spend with their children during formative years, the better the outcome.


Kids that are able to routinely eat dinner with their parents have been consistently shown to be less likely to abuse drugs or alcohol.


The kids that I grew up with, whose fathers were always at home? No doubt they went into the family business and are passing the lessons learned to their loved ones over a nice plate of pasta and mussels.


 


6. Expanded personal horizons


There’s nothing like a taste of success to move you toward seeking even more success. This is not your typical same old, same old 9 to 5. In the good kind of criminal life there’s incentive to do well and to reach for even greater rewards. As you do so and as your enterprises thrive, along with your professional credibility comes social responsibility.


Patron of the arts, supporter of worthwhile charitable causes and other activities that support society, particularly as government support dwindles, are all part of the successful navigation of a career in good crime.


During the process you also learn things that you never learned in school, including evolving talents to meet the needs of the moment. In no profession does necessity translate into invention quite as efficiently as in a life of crime.


 


7. Improved strategic planning


If you look at the data on retirement planning, it’s clear that we as Americans have no clue how to plan for the future.


Choose a life of crime and strategic planning becomes your middle name. Escape routes, alibis, Plan B, and so many more considerations before executing a plan. In essence, everything you do is lived out as if a three dimensional spreadsheet.


Those unprepared to deal with strategic planning are doomed to failure and may as well just work for a living.


 


These 7 reasons alone are compelling enough to get most people to start on their road toward change.


I haven’t even mentioned the popular trickle down theory and how all of society benefits from your creation of personal wealth. Money and the time to enjoy spending it benefits all of us. Restaurants, department stores, pasta and mussels delivery boy. Everyone gets their piece.


Beyond the obvious reasons to consider re-inventing yourself are purely financial incentives that are more than just icing on the cake.


Anyone that’s had a workplace 401k knows just how bad those are and how limited the investment choices can be. Together with contribution limitations, there’s no denying that the self-employment tax deferred plans are so much more favorable.


Of course the ability to itemize your business related tax deductions are only limited by your imagination.


Need well manicured nails to stay at the top of your safecracker game? Simply take you deduction on the clippers and file. Panty hose over your head? Deductible.


Where do I sign up?


Since this blog is required reading in many elementary school classrooms, I want to be certain that it’s clear that I’m not exhorting anyone to a life of “bad crime”, but serious thought should be given to being the best you can be at the “good” kind of crime.


It’s never too early to begin plotting your life of future plotting. 


Now if only there was a way to have all of these benefits without the laibility of prison.


How great would that be?


Wishful thinking.


By the way, what’s your PIN, again?.


 


 




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Selling a Kidney for Crack





 


 


I know that my short term memory is degraded, but I still remember what 2008 was like. It wasn’t very good.


Even if I didn’t remember, I could just dig up an old spreadsheet or look through my Quicken archives and would be reminded of the pain.


Every now and then, even though I don’t pay too much attention to stock charts, I’ll pull up 5 year charts just to see how low we coud sink when times get tough.


Stocks, like people, can sink to unimaginable depths.


Luckily, and totally serendipitously, that was the time that I started a strategy of aggressively selling covered call options and sticking to a relatively tightly controlled universe of stocks, so the pain wasn’t as bad as it could have been. Always solid companies, never any speculative plays.


I’ve always thought of speculative stocks as being Zombies that could come back and devour its master if guard was ever let down.


Back then, though, I also worked for a living and actually made lots of money. In fact, by my estimation obscene amounts, particularly relative to my actual degree of effort.


I like to think of it in mathematical terms, except I’m reminded that the divisor can never be “zero”.


Now, I sit and try to generate income from my holdings by selling and re-selling call options on the portfolio’s holdings. It’s been a really good alternative to the alternative.


As each monthly cycle begins I find myself in an optimistic frame of mind.


This past week, the beginning of the October cycle was no different. In fact, if anything, I was even more optimisitc after coming off an absolutely stunningly good last week of the September cycle.


During that week the market fought back from early day losses on a couple of days and rallied on other days in the face of no news, or even bad news.


Does it get any more bullish than that? Even more so when the markets appeared oversold in previous weeks. Like that wound up coil some people like to use in their attempts at imagery.


Funny how things work out.  I questioned my own sanity based upon last Friday’s rally going into the weekend. There were so many open questions remaining in Europe, I never did understand where the optimism was coming from. Despite that, I was still looking forward to a great month coming and lots of new options income.


Did I mention “funny how things work out?”


Despite the terrible market in 2008, I never felt any desperation, even on a day when I may have lost the equivalent of 200 Color TV’s (using 1964 Color TV Index).on paper. Having a job and employment income was probably a factor in maintaining a calm demeanor.


A few weeks ago, on the day the NYSE commemorated the tenth anniversary of the September 11th attacks, we had a 300 point drop, yet it was just an ordinary day as far as drops go. No stress and no worries.


Yesterday and Wednesday had very different feels to them. Sometimes it’s not just about the magnitude, sometimes there’s a qualitatively different feeling. Yesterday, in fact, it was the FOMC report, that led me to believe that they need to measure their words more carefully and perhaps consider “qualitative easing” for a change.


Adjectives can be really hurtful.


Gloom. That’s the feeling. The same kind of feeling back in February 2009, which was the last time we’d had a week like this. It was just a couple of weeks later thatthe “Haines’ Bottom” was called.


I actually shuddered to look at my largely unhedged positions today. Were it not for the plummet in silver and the subsequent rise in the ProShares UltraShort Silver ETF, which slowly has come to be about 9% of my portfolio, there really would have been some frightening numbers .


I actually have images of the short silver ETF’s being my portfolio savior, if we can shave another $3-4 off the price of the metal.


And I don’t really believe in saviors, but am willing to accept delivery from my misery. When I’m knocking on the door, I’ll take all rites.


Just another form of hedging, that’s all.


Unhedged, those shares were really easing the pain. Seems appropriate, as silver is also the antidote to a Zombie attack when forcefully thrust.


But one week into this 5 week options cycle, I was so woefully unhedged that the blows were all full body and the options premium income was much lower than I typically expect. Considering that September was the second worst income month of the year, I was feeling the pinch.


Crack, baby, CrackThe other night we were watching some show on the National Geographic channel about cocaine. They profiled a Chicago addict who was going through a couple of hundred dollars each day.


Sugar Momma and I both wondered where he was getting the money from and then we found out, even though we both had a clue.


It was from that bad kind of crime that I covered in Wednesday’s blog “7 Reasons Why Criminal Life is Great“.


But sometimes you do what needs to be done. When faced with your personal stress test you do things that you may not be proud of.


So I looked at my babies and I do love them all and wondered which ones to sacrifice in order to generate some income.


Unfortunately, there weren’t any really good prospects. In fact, the only promising position was the UltraShort Silver ETF. Just about everything else was deeply in the red.


Loving all of them equally, but loving the ETF most, it was a difficult decision, but Daddy needed some money.


Sigh. Like an addict going after that crack rock, I sold call options on about 30% of my ETF’s. Almost like Abraham ready to sacrifice Isaac for a chance at the unknown.


However, instead of selling in the money or near the money calls, I sold the October 2011 $17 options, at a time when the ETF had already been up about $1.80 to $14.40


Sort of like Abraham using a magician’s trick sword.


I’ve been confident that the metals would realize that gravity was an important contender and haven’t been selling the covered calls in anticipation of that realization.


Until now.


I just needed that fix. It really did feel like selling your last remaining kidney for just one last crack rock.


Self-respect is pretty unimportant.


Dennis Gartman, that ubiquitous CNBC contributor must feel the same way, as he told people to “go out on the street and raise cash”.


I think he was exhorting people to panhandle. I don’t think Mayor Bloomberg is going to be a fan of that strategy. But at least that clears up the question of why Gartman spit on my windshield yesterday morning as I exited the Holland Tunnel.


To his credit, he was the only one out there with a magnetic credit card reader and a Skype connection.


Personally, despite my desperation, I am still the guardian of my dignity and would sooner sell apples or jump out my first floor window.


For a brief moment there was a 100 point climb off the lows when a FInancial Times report was misinterpreted. When the realization came that the report indicated that the European banks needed capitalization yesterday, those 100 points were gone in a flash.


I did take that opportunity to close out sold call option contracts on Transocean and DuPont, in anticipation of some kind of a bounce.


That may be overly optimisitc, as I don’t expect the same kind of week closing rally as we had last week.


But at least I didn’t take it quite to the lengths of the Greek banks.


The fact that Greek banks were offering lakeside villas for every new account deposit in excess of 50 Euros was not likely to create the kind of extra capital hordes that would be necessary to forestall collapse.


Can you imagine the size of the crack rock that it would take for Greece to pass that stress test?


Interestingly, the Greek banks may be in better shape than our very own Bank of America, where a new account deposit of $50 now gets you a major equity position, as shares have now fallen to a new all-time low point.


Moynihan, stop bogarting that crack pipe.


As bad as today was and as regrettable as the actions were, extending the metaphor, at least I can grow a kidney back.


We’ve all done it before and will likely all do it again.


 





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Twister



 


The Federal Reserve is said to be ready to announce the implementation of “Operation Twist” some time on Wednesday.


Fueling speculation that something big was brewing, former Federal Reserve Chairman Greenspan was seen entering the building, albeit with Elvis. AS it turns out, he was there for a haircut and sometimes a haircut is just a haircut.


Ultimately, by exchanging its short term portfolio of holdings for longer range debt instruments “Operation Twist” is hoped to bend the yield curve.


Although I’ve seen the visuals many times over the years and can probably understand the concept behind “inverted yield curves”, it’s like “contango”. I know what it means, or at least am capable, but due to my disinterest in the topic, I choose to not clutter my mind with the meanings of those terms and phrases. I can’t begin to tell you how many times I’ve actually looked up the definition of “contango”, yet it still has never taken root. It’s almost as if the my future memory bank is more highly respected than its current state would give it the right to be.


Contango. The word itself brings giggles to mind. I just can’t remember why. 


In an earlier blog, I admitted that “I don’t understand currencies“. I can just as easily say the same thing about debt instruments and bonds. I’ve never really tried to understand this very important aspect of investing. Sometimes its hard to know whether my disinterest in bonds and currencies comes from lack of intellect or just true lack of interest, as I perceive them as intangible and somewhat boring. I don’t worship at the feet of the PIMCO altar and I don’t find stamp collecting all that exciting.


I know that they are anything but, yet I can’t find anything persuassive about them to garner even faint interest. But there is probably hope, because last night I watched the premier episode of the new “Two and a Half Men”, never having been interested in the original version.


This “Operation Twister” though, has caught my interest.


During Jim Cramer’s interview of Treasury Secretary Tim Giethner last week, Cramer asked why such a strategy wasn’t being pursued. taking advanytage of historically low interest rates. At that point, the clever name hadn’t been publicly applied. It was just another conceptual approach to managing debt and markets and really meant nothing to me.


Cramer then seemed genuinely surprised and for a brief second seemed to be speechless as Geithner indicated that such a strategy might actually find its way into the arsenal.


You neither see that, nor the resultant silence from Cramer on very many occasions. It’s true when they say that silence speaks volumes.


The concept does seem to make sense, as long as there are buyers for the long term notes, but yet, it’s an untested strategy, at a time when the Federal Reserve seems to be running out of things in its quiver.


The problem with most ideas, whether they are economic issues or otherwise, is the occurence of unexpected consequences.


No one really knows what will happen if the yield curve is drastically altered. Certainly, no one buying a 30 or 40 year note has any clue as to what the rate environment will be at that time, much less next year. Hell, you don’t even know who the lead in Two and a Half Men is going to be.


I know that I wouldn’t be investing in a 30 year note during a period of all-time low interest rates.


Now flip the scene, and make believe that it’s 1979 and interest rates are 17%, then I might have a different opinion on locking into those kind of rates.


TwisterMy attraction to Operation Twister may be solely related to its namesake, the game “Twister”, which made its debut during my childhood.


Talk about unintended consequences.


I think my first sexual encounter may have been on a spin of blue, but it’s difficult to say who exactly the reciprocal party was.


Although “Don’t Ask, Don’t Tell” has officially gone into the sunset, I might be inclined to invoke it for that long ago game of Twister.


Since I don’t really understand the world of interest rates, I have no idea what the unexpected consequences might be, but drawing from the game, collapse is the end game.


Collapse is exactly what seemed to happen today and turned a 150 point gain into one 140 points less.


Instead of selling lots of call contracts as I had envisioned, I only sold a few and added to my shares of the ProShares UltraShort Silver ETF and Riverbed Technology.


From my perspective, there never was a 150 point gain, as I had one of the worst days ever, compared to the indices. It didn’t help that I was now more heavily reliant on the likes of Freeport McMoran and Mosaic than ever before.


The source of the collapse was said to be “The Troika” and its inability to come to some agreement that would have released the $8 billion traunche that Greece needed to help it further into the hole as it prepares for its inevitable default.


You know, the one that everyone seems to be happily ignoring because that can is maybe as far as 3 months down the road.


The so called “Troika” consists of the IMF, the EU and the European Central Bank. They hold the cards, but apparently can’t decide whether to deal in a clockwise or countere-clockwise direction.


As Operation Twister comes into play, some Troika members may regret treating Treasury Secretary Geithner so shabbily during his vist to their recent meeting in Poland. They could have listened to his wise and sagely advice and could have switched over to a spinner and let the cards fall where they may, as they could then watch the arrow determine Greek’s destiny.


Ultimately, it doesn’t matter whether you spin the wheel clockwise or counter-clockwise, so certain areas of dissent are immediately resolved.


The goundrules could be very simple and definitions readily agreed to.


Blue for no more government hiring


Red for increased retirement age and so on. They may even want to throw in that taxes should not just be levied, but they should be collected, as well.


But no matter what, every game of Twister does end the same. I don’t remember whether there was a “winning” scenario. Surely Twister was first popular long before Charlie Sheen, but even then the concept of “winning” must have existed.


Instead, every game ended with the inevitable collapse accompanied with lots of laughs and the feigning of embarrassment by some.


Some actually reached their peak maturity level in the pile.


In this case, I don’t think there’ll be any laughing. I doubt that there’ll be any embarrassment either, as certain egos, particularly those associated with politically appointed positions, don’t allow public displays of embarrassment.


They do allow for finger pointing, though.


No matter what, those fingers will probably point in our direction, as undoubtedly our banking crisis just greased the pole for southern Europe and Iceland, Ireland and others, as well.


Ultimately, only a winner take all game of Twister will be able to sort it out at the highest levels.


A repeat of the Berlusconi – Hillary Clinton match would be interesting. It’s just so unfortunate that Dominique Strauss-Kahn can no longer suit up (or down) in preparation for game match. You could probably get enough people to pay good money to see him in a good healthy game of full contact Twister to make a dent in the EU economic mess.


Happy to help.


 


 





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Fear of Missing Out





 


 


In polite company, you never refer to behavior as “dumb”. Instead, it’s simply inappropriate or unexplainable. Just like really wealthy people are never crazy. They’re eccentric.


There are lots of reasons for unexplainable behavior, that’s why they’re really not “unexplainable”. They’re just dumb.


If you watch shows like “Dateline” often enough, you’ve seen every bizarre act and the reasoning behind the act. You’ve also learned that there’s never a shortage of unexplainable behavior.


Television ratings seem to do particularly well when the reason behind the action is passion. When it comes to motives, greed is also a big favorite in the  gawker community.


We like hearing stories that have greed as an underlying factor.


Murder for insurance money is very popular, especially if unrequited passion was also involved. How great is it to watch an episode about a wife that allegedly killed her husband for the insurance money so that she and the cabana boy could retire to the Dominican Republic?


Greed is also a big factor in investing. People do really stupid things because of greed. But greed is nothing more than great passion for money or other items of value.


Everybody’s heard the axiom that “bulls and bears both make money, but pigs get slaughtered”, but when it comes to battling with human nature, axioms don’t stand a chance. It’s a lot easier to spout them than to heed them.


Another investing axiom, although not encased in such a short memorable saying, is that you don’t stay long going into the weekend if there’s uncertainty in the mix.


This past weekend was one of those that you would have expected smart investors to have been on the sidelines.


After all, the previous week saw gains every day, even though some of those came in the very last hour of trading. The rally was fueled by speculation that the European Union was closing in on at least a short term solution to averting a Greek default.


Stocks climbed and precious metals took big dives.


But on this Friday, one of those quadruple witching Fridays, even in the face of unsettling news on the EU front, th e market still went higher.


In the last hour of trading on Friday I posted on Twitter questioning my intelligence, as I would have expected a sell-off heading into the weekend. Least of all, the bad news that went counter to the rumors and hope should have put a damper on things. Add to that the 5 straight days of gains and it would seem that profit taking would be in the cards.


Sure, maybe the smart guys took their profits on Friday, but I sort of doubt it. Who then was behind what happened on Monday? Definitely not the little guys like me.


Of course, I had a vested interest in seeing some profit taking, as I stood to lose nearly 50% of my holdings to assignment unless the market reversed course.


It didn’t.


FOMOAs I wondered why it didn’t do the obvious, I learned of a new psychiatric disorder called FOMO – Fear of Missing Out.


It actually refers to the need to be constantly plugged into social media. It helps to explain why people would risk their lives to text a meaningless message while driving. It also explains why I kept breaking into a cold sweat on Monday as it was again one of those infrequent days that I had to work outside of the house.


Bad enough that I was cut off from CNBC, but Twitter was nowhere near as ubiquitous as its become in my normal life. The need to responsibly attend to work saw to that.


All I knew was that the market opened down around 250 points.


From my perspective that was what I’d been hoping for. It gave me a chance to buy back shares of British Petroleum, Textron, Dow Chemical, DuPont and Triple Q’s at less than they had been assigned to me.


But why did the market go up on Friday when it seemed so obvious that it should have done just the opposite?


FOMO.


Fear of missing out on more irrational upward price movements. Given that most of last weeks’ price increases were based on rumor and hope, what reason would anyone have had to actually go against the flow? History and common sense were no match for unexplained price action. Axioms were meaningless when there was still the prospect of more inappropriate price climbs.


In this context FOMO is greed.


Otherwise smart people fall prey to FOMO all the time. I suppose that it’s really a normal reaction. I feel it every time I sell shares or every time I decide to buy shares in one company and not another.I definitely felt it Monday morning as I went on a wild shopping spree in the first 30 minutes of trading and then wondered whether I missed out on even better bargains because I didn’t wait longer to blow through the money.


It’s hard to imagine yourself being the only one with nothing to party about, so yougive in to the FOMO.


This morning I’m back at my usual perch and will be so for another month.


Twitter and CNBC will be fully engaged. I won’t miss out on a single opportunity to say something irrelevant in 140 spaces or less.


In the meantime, as the market reversed much of its downward trend in the last hour of trading on Monday I decided not to sell any call options.


Yet.


But I have no FOMO.


There’ll be plenty more opportunities to miss out on and there’ll never be a shortage of them, either.


Tweets and texts come and go but FOMO is here to stay.


 


 


 


 


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Trading Places



Here it is, Sunday afternoon.


Watching football, having already gotten my week’s fill of cholesterol in just one night and feeling pretty good.


Trading PlacesWhenever I hear that phrase. “Feeling good”, I always think of that great Eddie Murphy – Dan Aykroyd film, “Trading Places.”


I can just hear the lines: “Looking Good, Biily Ray!” and in response,  “”Feeling good, Louis”.


And what’s not to feel good about? After all, Eddie Murphy is trading frequenting transvestite hookers for hosting the Academy Awards.


Life really is good.


And it’s especially looking good for the United States, at least as far as our emotionally beaten down egos are concerned.


After a few years of the world thumbing its nose at us and deriding us for our dysfunctional political system and profligacy, it now seems that we’ve traded places with Europe.


On top of that word has just come out that Dominique Strauss-Kahn has admitted a “moral failing” with regard to his tryst with the hotel maid. As a result we may not need to feel terribly badly about an injustice being done to the ex-IMF leader and may be shielded from some overseas criticism of our justice system jumping to conclusions.


Imagine, it’s been a few hundred years and they still can’t cope with the little squirt of a brother growing up.


Not that I had felt terribly badly, anyway and not that things are running along entirely smootlhy on this side of the Atlantic. With the exception of baby kidnappings and other trampling of human rights, things still seem to be better with our Chinese “friends”, who gve us a market lifting gift just by being part of the rumor that they might purchase Italian debt instruments.


I hope the Italians do better with the Chinese than they do with me.


I just received 5 mailings regarding traffic violations from a trip to Italy 3 years ago.


That was the same trip that the car rental agency tried to hit me with a $2,500 charge for damages.


Oh those whacky Italians. Wouldn’t trade the experiences for anything.


But watching economic events in Europe unfold is the true definition of “schadenfreude.” It’s one thing to have the twp predominant political parties in the US act in a dysfunctional manner, buut when you have the EU’s 27 member states trying to figure out how to divide the bill and who deserves how much vacation, you’re talking some real dysfunction.


At least they’re all agreed on retirement age and loan collateral.


It was funny hearing Treaury Secretary Geithner characterize his trip to Poland for the EU Finance Ministers meeting to be on the basis of an invitation, particularly since all news outlets reported that his “hosts” greeted him rather cooly.


European Finance Ministers apparently don’t like to be told how to run their economies by a guy sipping directly from a box of red wine while dining on trout meuniere in his ripped boxers.


That may be a bit of an exaggeration, but so far I haven’t seen or heard anything to contradict that characterization of events, so I’ll stick with it. Given what could have happened on Geithner’s watch and what didn’t happen, maybe they should try the red wine instead of the Kool-Aid.


So with all of that as a backdrop, last week was a great week. Stocks traded places with precious metals. I own stocks and am short precious metals, so iy was a great week.


Surprisingly, perhaps surprisingly only for me, Friday was yet another up day in the markets given that there really wasn’t any encouraging news coming out of Europe. In fact, if anything, even though the news raised prospects of a breakdown in the agreements necessary to temporarily rescue Greece, our markets shrugged it off.


Gold and silver on the other hand reacted precisely the way you would have expected in the face of uncertainty and the potential for a Greek default heightened. Earlier in the week, they also reacted according to script and had dramatic moves downward as an agreement appeared to be in the works.


No matter, so what if people felt confident going into the weekend holding large positions?


But I was happy.


Most of all and best of all, for me, a devoted call contract seller, Monday starts the October options cycle.


In that regard, September was nothing to remember. It was the second worst option premium month this year, fresh on the heels of the second best options month I’d ever had. Still, using my patented 1964 Color TV metric, I needed to find room for 39 new TV’s.


But as a good sign, despite the feeble option income stream for the Septmber cycle,  I’ll have plenty of opportunity to redeploy funds form assignments. Almost half of my holdings will be turned over, with most of them closing Friday within 1% of their strike prices.


When that happens, I love to see a down open on the first Monday of the cycle. There’s nothing better than getting those same shares back at less than their previous strike prices. But beyond that, there’s nothing like selling call options during a market peak. Grab those higher premiums, then close the lopp and start again.


I lost portions of my Bank of New York, Textron, Dow Chemical, DuPont, Williams Sonoma, British Petroeum, Deere, Home Depot and Transocean shares


If the past is any indicator, I’ll probably end up getting some of those shares back.while I also look at opportunities in Sallie Mae, Mosaic, SPDR 500 and adding to poisitions in JP Morgan and Chesapeake Energy.


With that much to spend, I’ll try to control my investing equivalent of premature ejaculation, but that’s always been difficult.


I was going to say “but that hasn’t always been hard,” but then it would have been unclear whether I was referring to investing behavior or the metaphoric equivalent.


On a sad note, I’ll be working tomorrow.


But that sadness is quickly replaced with the knowledge that I have only 2 more work days scheduled in 2011.


The work thing tomorrow does potentially interfere with the trading thing, but I’ve never let responsibility get in the way before, so I don’t really think I’ll be starting tomorrow. It may, however, help control the need to spend by keeping me otherwise occupied.


But still, that possibility is tempered by the fact that if I had to work, it couldn’t be for a better cause. I’ll be trading places with my friend tomorrow, who is on a golfing trip with his father.


I’d love to have the chance to have one of those trips with Szelhamos, but then I’m reminded that the most athletic thing I’d ever see him do was to bpwl one time.


As an 8 or 9 year old, I don’t think I’d ever seen anyone roll the ball as fast and ghard as he did and barely ever hit a pin.


Still wouldn’t trade that memory for all of the perfect 300 games on China.


 


 


 






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