Hope to Survive the Change


Although it’s highly likely that my post sedation delerium would turn out a daily entry far more coherent than usual, I turned to the kindness of guest bloggers to preclude the chance of typing out some long held family secret.

Today’s guest blogger, Tony Vahl, may be known to many as the co-founder of the popular DailySkew.com, no stranger to an irreverent look at events pretending to be serious. An accountant by day, he finds the time to put numbers aside and focuses on letters and punctuation marks to the delight of his readership. Follow Tony on Twitter and help support a life giving cause


I am not an Options Trader.  Never traded options in my life.  I hope some personal eyewitness testimony will suffice.

I come at this as someone who saw the Housing Bubble bursting back in 2006, and felt like a lone wolf crying in the wilderness.  Smiling real estate salesman kept telling me at the time, “Don’t worry.  The market will hold firm.  After
all, this is Florida.”

Don’t worry. Be happy. What could go wrong?

Yeah, right.

Catch a Falling KnifeTwo years later, I was told, “Buying a home now is like trying to catch a falling knife.” This time they were right.  Even a broken clock is right twice a day.  A $120k home I purchased four years ago is now worth half that. Unexpected medical bills have put an employed individual in a stable career and his family on the brink of foreclosure. 

Anyway, since I’m not a trader, I figured I’d share with you what I’m seeing on the ground.  What I see is change.  Not just loose change. 

I’m seeing stores going out business.  Take Payless Shoe Stores (TIcker PSS), for example.  They just can’t compete with Zappos, now wholly owned by Amazon. 

Isn’t it funny that Zappos has an issue with the security of the credit cards of their customers after Payless announces store closings?  It’s too late.  It’s like that scene in Star Trek II, when Khan started the Genesis Wave.  He hit the “Commit” button, and then there was no stopping it.  You couldn’t even switch stations, the force was that powerful.

Once you’re in danger of losing your credit card number you had on Zappos, you’re stuck.  There’s no turning back. All you can do is wait for the fallout and wonder where it will land. Just like the falling space debris that seems to becoming a regular occurence. There’s not much you can do besides hoping that it doesn’t land on your head.

Here’s the thing about change. We humans resist it.  We do not like change.  We want things to stay the same, but that’s just not happening.

If you’re among those resistant to change you can probably take some solace in knowing that the fact that it’s not happening won’t change.

I look at President Obama’s Hope and Change campaign from 2008 as an incomplete sentence.  I think what he really meant to say was, “Let’s hope we can deal with all the change that’s coming.”  Or, “I hope the pace of change slows down.”

That’s real hope, to deal with all the change.

Over the past year, I’ve noticed the aisles have become bigger at Wal-Mart.  While this may be ascetically pleasing (I know, Wal-Mart and ascetics is an oxymoron), I see the wider aisles and think, “Less products.”

There are shortages on occasion.  They are minor.  You can shrug your shoulders and move on, but sometimes you just can’t find a specific product.  You’ll run to Target, Publix, Walgreens, Dollar Tree, and you still can’t find it.  It’s
like there’s been a run on Borax or your favorite sliced ham.

It’s like just-in-time delivery has become we’ll-get-it-to-you-when-we-have-time.

I was reading a blog post by Jeff Jarvis written at Davos, where he was attending the World Economic Forum’s “1% camp.”  He concluded that with technology, you’ll see greater efficiency but fewer jobs.  So, the question becomes what are people going to be doing for a living?  I feel like this argument has been going on for awhile, but the pace of change has quickened.

Fewer jobs, jobless recovery, better economy, but the average Joe is not necessarily feel it.

Of course, I would argue there are plenty of new opportunities.  For example, in the publishing industry, authors are skipping the traditional route and going straight to Kindle with their missives.  If the masses like it, the author is
rewarded.  No middle man.

It’s a brave new world.  If you can build an audience, you can bypass the system.

Traditional jobs might be disappearing, but opportunities abound.

What does this mean for the Options trader?  No clue, directly.  Indirectly, I suppose this is like taking the temperature of a patient and using that data as a guide for how to proceed.  The good doctors now how to read the thermometer,
and the good trader knows how to read the change.


TheAcsMan Comments while strung out on something:

I can’t begin to wonder how Borax and ham ended up in the same thought process, but it will bother me until my dying day. No explanation will ever suffice, that is until I bothered to look up the association. It’s almost enough to make me sign up for “Kosher Camp.”

The wider aisles at Wal-Mart line of thought got me wondering whether you “Ascetics” or “esthetics.”  was actually the intent. Knowing the author’s sense of  “skew,” I could make a case for both being oxymorons in the Wal-Mart universe.

Personally, I think the wider aisles are there to accommodate fatter shoppers, but to mask paucity of supply with the appearance of plenty may be a plausible explanation.

The argument about technolgy and jobs has been going around for at least 50 years. The initial position was that technology, robotics, automation etc.. would never threaten jobs.


People being people, they repsond to external events. Family sizes will get even smaller if economics dictates that be a prudent thing to do. Eventually the work force contracts, as does the unemployment rate. Supply and demand is one of the very few inviolate things in the universe. You just have to live long enough to ride out the cycle.

What does this all mean for options traders? The first clue comes from the interpretation of the 2008 Presidential campaign theme of “Hope and change.” 

“I hope the pace of change slows down,” is an expression of the inherent calculus behind options pricing. A rate of change is a derivative, as are options. There is no tangible product. Just as hope is etheral, so too is an options contract.

I always think of the AIr Supply song from a generation ago when trading options.

“Making Money out of Nothing at All.”

The point is that change, just as pointed out, is always coming. In the world of stocks and options, you can count on change, you just can’t count on its direction at any moment in time. But, you can count on its bi-directional nature.

So you really don’t have to know how to read the thermometer to proceed. You just have to know that there’s change and its coming at you. Be prepared for it and the fat shopper plowing down the aisle for that last package of sale priced sliced ham.

A good lesson for life in general.


Check out Recent PortfolioTransactions and Transaction Performance 


Recent Trades Security Type Action Type
January 30, 2012 XLF Option STO Weekly
January 30, 2012 XLF Stock Buy
January 30, 2012 MS Option STO Weekly
January 30, 2012 FMCN Option STO Monthly
January 30, 2012 FMCN Stock Added
January 30, 2012 GS Option STO Weekly
January 30, 2012 GS Stock Buy
January 30, 2012 HAL Option STO Weekly
January 30, 2012 HAL Stock Buy
January 20, 2012 MOS Stock Buy
January 30, 2012 V Option STO Weekly
January 30, 2012 V Stock Buy
January 30, 2012 RVBD Option STO Monthly
January 30, 2012 RVBD Stock Added
January 28, 2012 HAL Option Assigned Weekly
January 28, 2012 GMCR Option Assigned Weekly
January 28, 2012 AAPL Option Asigned Weekly
January 28, 2012 MS Option Assigned Weekly
January 28, 2012 MOS Option Assigned Weekly
January 28, 2012 V Option Assigned Weekly
January 28, 2012 BP Option Expired Weekly
January 28, 2012 AXP Option Expired Weekly
January 28, 2012 GOOG Option STO Weekly
January 28, 2012 DE Option Expired Weekly
January 28, 2012 NFLX Option Expired Weekly
January 27, 2012 RVBD Option STO Monthly
January 27, 2012 RVBD Stock Bought
January 26, 2012 FMCN Option STO Monthly
January 26, 2012 FMCN Stock Added
January 26, 2012 MS Option STO* Weekly
January 26, 2012 MS Stock Added
January 25, 2012 ZSL Option STO Monthly
January 25, 2012 AXP Option STO Weekly
January 25, 2012 ZSL Stock Added





Empty Nest

I love the “empty nest.”

I don’t get all the people who bemoan the fact that their children have made lives for themselves. These days that isn’t terribly easy to do, so instead of being saddened, it seems that pride is called for when looking at the empty bedrooms.

And the cleaner house. And the lack of towels and socks strewn all over the place. And the discovery of unknown sleepover friends. And the milk returned to the refrigerator.

Ah, empty nest.

Literally within days of the second of our two boys leaving our home, my wife had his bedroom painted pink.

There was no mistaking the message, yet she’s the sentimental one and the one with the parental instinct. I would have chosen nature’s way and just eaten the young before they had the opportunity to suck all life out of us.

This past Saturday evening we went to the house of some friends for a “planning session.” We’re traveling together to Europe in September, literally minutes after their nest becomes seasonally empty.

They have the right idea.

Don’t get me wrong. I love my kids and am very happy when they come for a visit, have dinner with us or call.

I’m also happy when they leave.

There are lots of other things that make me a bad person. Those feelings will just have to stand in line.

When I see Facebook postings, as I did this morning from my oldest son who is currently in Cambodia, I’m glad that he’s not here for me to look directly into his face.

“Got my first massage today. After around 45 minutes she told me to turn over and giggled. She then flipped on a TV and played me the last fifteen minutes of “Homeward Bound”. Incredible Happy Ending.”

At least this way, I don’t have to ask if the happy ending was related to the movie.

Sharing information like this so readily makes me appreciate how Facebook may end up being the $100 Billion IPO that Friday’s breaking news indicated. Getting that kind of information from Cambodia in real time is priceless, although the “happy ending” may have put my son back an extra few thousand Cambodian Riel.

At more than 4,000 Riel to a dollar that IPO is going to be immense to the man on the street in Phnom Penh.

The bottom line is that my kids are always welcome to come back home at any time and for any reason, even if there are guns blazing.

That’s life and it may be what ultimately distinguishes us from the animals. What other species has members of the younger generations returning to the fold?

Despite the fact that the Supreme Court has defined corporations as being indistinguishable from individuals, in the corporate world it really isn’t that easy to come back home.

About 4 years ago I wrote about Michael Dell’s return to take over the faltering enterprise.

From a shareholder’s perspective four years is long enough of a time to say that it hasn’t really worked out that well, unless you take the position that without the return of Michael Dell the company would be further engulfed in the cesspool that the computer commodity business has become.

I’m always amused when analysts suggest that it’s too early to tell how Dell’s second tenure is working out.

Dell has a special place in my heart because it is the very first stock that I sold at a loss after I had start6ed utilizing a covered call strategy. At some point it dawned on me that the number of option cycles necessary to make me who again may have exceeded my life expectancy.

That may be the true definition of “dead money.”

With Jerry Yang’s re-departure from Yahoo! that chapter has at least been been re-closed.

On the other hand, two notable exceptions, Charles Schwab and Howard Schultz do show that the return of a founding father sometimes is just the right tonic for a floundering business. Neither of those two relied on a strategy of lower pricing to regain market share, as Schwab is more expensive than its peers and Starbucks is in a class all by itself. Instead, they just restored the cache through inspired leadership.

A statistical analysis shows that a surname begininng with the letters “Sch” is highly correlated with a successful return to the helm once left behind. Maybe it has nothing to do with inspiration or vision.

When it comes to stocks, I’m always happy to welcome back home, other than for the few that are dead to me.


Just like people in your life, they bring you joy and then they can disappoint, as well. Hopefully, when it’s all said and done, the net result is enjoyment.

Barely a week ago, I had my shares of Riverbed Technology assigned. Riverbed is one of those companies that I have, more or less owned continually over the past four years, with the only respites coming due to assignment.

According to the Employee Benefits Research Institute, at my current age, the average person has as much saved up as RIverbed Technology has generated for me in options premiums since August 2008.

Normally, I would have expressed the number in terms of my “1964 Color TV Metric,” but I wanted to be a bit more obscure on this one. I doubt that any reader is going to do the minimal research to figure out how much that figure is, but RIverbed Technology has always left me with a “happy ending” even when taken away due to option exercise.

Like my son, I like “happy endings.”

I suppose that had my shares not been assigned last week, I’d instead be faced with disappointment upon learning of Riverbed’s plunge coming on expected earnings, but poor guidance and getting caught in the Juniper Networks bad news, just as it was caught up a month ago in Oracle’s bad guidance and statement that it was seeing a slowdown coming.

Sometimes it really is true when your parents told you not to hang out with certain people or groups because you’re likely to get into trouble.

Riverbed travels with a volatile crowd and gets carried along for the ride, especially when it’s a downward ride.

By the same token, sometimes it’s true when you told your parent that it really “wasn’t my fault.”

But I was more than happy to welcome RIverbed back into my empty nest.

After all of those years, there’s a place in my heart, even though this is all supposed to be an emotion free zone.

With shares down a bit more than 20% in the aftermath of the earnings release, it was time to re-open the doors.

Now if it was your child returning to the roost after a week you’d probably want to do everything you could to get them right back out the door and give it a real chance. That’s the advice you’re given when sending your kid off to school to be away from home for the first time. If every kid who moaned about wanting to come home after the first week of life in the dormitory, college campuses would be ghost towns.

But look, even a parent who always gives their child the benefit of the doubt gets wary at some point and takes steps to protect themselves and their interests.

For me, that some point was immediately, as that’s how long I waited to sell the monthly call options despite having still three weeks to go until expiration and further price appreciation.

Or decline.

I love Riverbed, but its unpredictability makes me appropriately wary.

Invcreasingly I’ve come to rely more on selling the weekly variety of options, but sadly, there aren’t any for Riverbed.

The monthly options make me feel more like a parent that’s looking down the road and seeing the empty nest still 20 years away. Those weekly options are just great for feeling the grip of servitude being eased in the very near future.

By the time the days’ trading settled out, my shares were already in the money.

No matter. Even if it all gets said and done tomorrow, it would end up as a 4.8% gain for the three weeks of putting up with the equivalent of dirty towels and hidden away beer cans.

ANd I know that someday, maybe someday soon, it will be time to say goodbye to RIverbed once again.

But we both know that we’ve gone through the motions before and we both know that there will always be room for an old friend that’s almost part of the family.

The empty nest is great, but the nest was pretty great, too.








A Test of Faith

You often hear stories about deathbed conversions or returns to faith near the moment when there’s not much left to lose by professing one’s faith.

So what if an unexpected profession of faith leaves your followers and fans behind in a world of even greater uncertainty?

Screw them. When you see the white light, it’s every man for himself and the adoption of the Captain Schettino rules applies, whereby woman and children have to fend for themselves while the captain of the ship trips his way past those pearly gates ahead of the rest.

Who knows, there may be limited seating.

A Test of FaithMany famous and infamous people have purportedly had deathbed conversions, including Darwin and Stalin, but the reports of other such conversions may just be wishful thinking or generated for proganda purposes alone.

Based on the appearance of the term “ProShares UltraShort Silver ETF” in the word cloud that accompanies this blog you might be lead to believe that I worship at the feet of some silver idol.

Not really, but you would be right to have that suspicion, as it does seem to appear with great frequency.

By the same token, the constant “God Damn” refrain doesn’t necessarily reflect belief in a diety.

I’m not particularly religious, although I don’t know if I’ll be one of those undergoing the end of life “seeing of the light” experience.

At the moment, there is a 24 hour “Yahrtzeit” candle burning in our household, as is the Jewish tradition to mark the anniversary of a close relative’s passing. Still, nothing really religious, just adherence to tradition and maybe trying to keep my options open in case “The Big Man” chooses to exercise an option over whether those last minute attempts to enter the Kingdom will be honored.

Szelhamos, who wasn’t particularly religious would probably be pleased that he’s remembered. In the slight chance that such a possibility exists, then “why not?”

My sister started a Facebook page for our elementary school, a Yeshivah in The Bronx.

If you’re not familiar with the term “Yeshivah,” apparently based upon the remembrances of those sharing on Facebook, it is alternatively a wonderful place of learning and a wonderful place for the expression of sadistic and irrational behavior by Rabbis.

I went to grade school when corporal punishment was still permitted and even encouraged by parents.

Other than one particular Rabbi in the third grade, whom I credit for teaching me to behave myself in class, I don’t really have the same kind of memories. I learned to behave because I valued not having my knuckles pounded by the edge of a wooden ruler.

My sister recently asked the group of about 100 alumni of the now defunct school a question regarding faith. She asked how they would currently describe themselves in that regard.

The response covered the gamut from atheist, to converted to orthodox.

Faith undulates, as well. Look at Bob Dylan. It can run hot or cold as the moment sees fit.

Look at me.

Even among the Amish, there’s an expectation that thre will be a time to explore and to question the path set out for their lives. The ultimate expectation is that they flock will return home and forever stay on the righteous path.

Which gets me back to silver, the lesser of the precious metals.

Remember, no one of any repute staked his life and reputation on trying to turn lead into silver. The Golden Calf was gold, wasn’t it?

Right now, despite the relatively small position that silver has in my portfolio, in the form of an inversely leveraged ETF. it’s taken an unduly prominent position in my writing and fretting.

Silver has been like the devil or the snake in the Garden of Eden.

One of my very basic tenets has always been to avoid speculation. Nothing defines speculation like precious metals and leveraging on top of that.

Yet, Silver has also tested my other core tenet.

Avoid greed.

All throughout history the precious metals have done that to mankind.

In the case of the ProShares UltraShort Silver ETF, the rich call option premiums are snake-like enticing and have been part of a core strategy for me the past 6 months.

Just grab those premiums and sit back in the faith that silver will undulate.

But over the past two weeks my faith has been tested as silver keeps going up and up and the ETF, as result, keeps going down and down. That’s in real distinction to its pattern over those previous six months when it was up and down and then up and down againa nad again.

That’s a pattern that I could live with.

So while the market has been doing very well in 2012, I’m finding myself in an uncharacteristic position ever since I adopted the aggressive call option writing stratgey so beautifully described in wannabe Award winning book, Option to Profit.

That position is one that’s trailing the S&P 500’s performance for the past three weeks.

That will cause a crisis in faith.Scratch that. Ha caused. Make that “has caused.”

As anyone who follows trends and popular opinion, you will know that once something appears on the radar screen, that tends to be the kiss of death.

In the case of precious metals, everytime a gold bar has found its way onto the front cover of TIME magazine, that spelled the end of the bull market.

Crocs? Same.

Last years’ winning mutual fund sector is pretty much always this years’ dog, and not in a good way.

In the case of the covered call writing strategy, the proclamation by Barrons Magazine that it was the only winning strategy may have just been the kiss of death.

The problem with getting older is that it’s a bad time to lose faith, especially if you are by nature one who sees a role for faith in all aspects of life.

The difficulty comes in the fact that it’s hard to put faith into something new, unless you happen to be a at death’s door, in which case there’s not that much time to mull over the options.

So it’s very distressing to think that an aggressive covered call strategy has run its course, or is just not the right strategy for the moment.I’ve always understood “I want a new drug,” but not “I want a new faith.”

Mind you, questioning faith is not a very good thing to do while enrolled in Yeshivah or any other religious organization.

Faith requires faith.

Not questions and certainly not doubt.

As far as the covered call strategy goes, the potential for underperformance during an unbridled bull market isn’t surprising. That’s just the trade off that you make for accepting the options premiums. You have to give up something, especially if you;’re selling near the money options.

I get that and that can’t shake my faith. Despite the fact that the premiums may be the Devil, a dalliance doesn’t undermine faith. It may actually enhance it.

But still….

It is about the money and the bottom line.

In the case of the ProShares UltraShort Silver ETF the problem really hasn’t been its sustained drop. Sure, its been distressing, but it hasn’t been the root cause, because there have been plenty of sustained drops over the past few years and those have been weathered pretty well.

The problem has been that since the new option cycle began this past Monday its done nothing but go down and I haven’t found the opportunity to hedge the positions.

The last time I owned a naked stock for more than a day or two was during circumcision and maybe during college streaking days.

How convenient. I can blame timing and circumstance for the failing and concurrently help to sustain my faith.

But in reality, it was greed that came into play.

Yesterday, before the Ben Bernanke press conference, both gold and silver were giving back some of their gains and I was getting ready to sell call options on a portion of my shares, which were all purchased at varying price points.

But greed convinced me to wait for an even greater drop in silver prices before making the hedges come to life.

Greed is the Devil. The time never came.

Greed is what destroys faith, if allowed.

The only way to fight evil is with faith and in this case, avoiding the use of margin by usury loving bastards.

Check and check.

Crisis averted.



Check out Recent PortfolioTransactions and Transaction Performance 


Recent Trades Security Type Action Type
January 26, 2012 FMCN Option STO Monthly
January 26, 2012 FMCN Stock Added
January 26, 2012 MS Option STO* Weekly
January 26, 2012 MS Stock Added
January 25, 2012 ZSL Option STO Monthly
January 25, 2012 AXP Option STO Weekly
January 25, 2012 ZSL Stock Added





What the Hell? (Part 2)

“What the Hell (Part 2)” bears no relationship to “What the Hell” from October 2011, except for maybe the sense of misplaced umbrage..

Most people go through two stages of life when they really like certainty and predictable patterns.

Really young kids and really old people. Both tend to get very cranky when their schedules are thrown off or they don’t get what they were expecting when they were expecting.

I’m neither of those demographics, being uncomfortably in-between, but I do need the predictability in life to keep my balance intact.

I, too, can get cranky.

What the Hell?For as long as I can remember, ever since I’ve been interested in the release of the  “Federal Open Market Committee” (FOMC) statement on those Wednesdays, they have one of their eight annually scheduled meetings, the statement has been released at 2:17 PM.

The regularity of the timing led me to scoff at the reports that would cite the release as being anticipated at 2:15 PM.


I never particularly cared why they chose an odd time, perhaps because it is a prime number and, after all these are economists and numbers wonks, but that was the routine.

By contrast, I do care why Comedy Central starts many of their shows at bizarre times, yet I’ve never been able to uncover an answer. I doubt that the prime number theory applies. Math is frequently not a strong suit for those in the entertainment end of the entertainment business.

In fact, I’ve always been so attuned to the FOMC announcement that it became a reason for regular party giving with a countdown to 2:17 PM among me and my many friends and admirers, although most of the time it was just me.

And by most of the time, I mean “always.”

Comfortably seated at 12:28 PM, the characteristic voice of CNBC’s Hampton Pearson cut in with a reading of the statement.

My first thought was that Pearson had gone rogue and decided to flip the middle finger to the embargo on the statement and  decided that he alone would control the markets.

I thought we’d hear doppler like screams coming from Hampton Pearson as he was being hauled away by SEC security people further away from the microphones.

But no.

How did I not get this message? The Cheetos aren’t going to eat themselves now that the sense of party had been replaced by the sense of outrage and feeling of betrayal.

The announcement came with no unusual fanfare, just the usual post-release commentary, which hasn’t been especially insightful for the past year or so, as nothing changes.

With today’s report, the expectation is that there will be continued “no change” until 2014.

What did change were the prices of gold and silver which had opened the day with a long overdue drop, albeit small. That mad me happy, as I have a significant position in the ProShares UltraShort Silver ETF and that’s been getting brutalized recently. Even worse, I’v had only very limited success in writing the richly priced call options on portions of those positions.

Sadly, that early afternoon reversal was really stunning.

But still, the academic question is “what the hell?”

My personal belief is that the FOMC got spooked by the recent CNBC series on CNBC where Steve Liesman so capably concurrently portrays the Federal Reserve chairman, a dovish and a hawkish member of the committee.

Probably wanting to undercut Liesman’s growing influence and popularity with the spot on portrayals, right down to the obligatory hawkish bow tie, they took pre-emptive actions. Although, the purely fictional basis of the meeting as portrayed by Liesman was made clear by the lack of a well trimmed beard on his Federal Reserve Chairman figure.

So we’ll never know if the character was based on anyone of importance. My guess is that it could have been Ben Bernanke, especially since Liesman didn’t don a toupe.

With lots of hopeful eyes, including my own, focused on the market this morning in anticipation of a strong open following Apple’s great after hours price pop, there was just a prevailing yawn.

That changed after the FOMC announcement.

What didn’t change was the Google drop. For some inexplicable reason it was very weak today. The only news out was that it was planning to add more emphasis on Google+ in its search results. Apparently, that uncovered some critics who believe that will clutter the results with less relevant information that may have come from, say, Twitter, instead.

That and some Privacy Policy stuff. If that leads you to switch to Bing or Yahoo!, then Google probably didn’t really need your business, anyway.

With Google recently deciding to not pay for the Twitter API feed necessary to populate its results, they must have some reason to believe that Google+, even in its cranky infancy may be a reasonable proxy to the Tweet, at least enough so so satisfy the needs of people requiring 5 minute old information.

You know, the ind that has been tested, verified and validated.

Does anyone really believe that if there was an apparent adverse effect on the quality of search that Google wouldn’t toss out Google+ in a heartbeat or at least ante up the money to access the Twitter data? It hasn’t exactly shown allegiance to its own “forever in beta” offerings over the years, so it wouldn’t be unheard of to see them do an about face if it jeopardized the profitability of search.

It’s all about the search.

Now what I’ve spent the day doing is searching for “mea culpas” from any of the “talking heads” that yesterday warned about Apple’s typical large price drop after earnings were reported.

To distill their comments to its most basic essence, you would have to have been an unmitigated idiot to consider picking up shares in advance of earnings.

As I mentioned yesterday, the unanimity of those reports helped to scare me straight. They also helped me realize that I’m not quite the bad boy rebel contrarian that I thought I was, since that should have been a clear signal to buy more shares.

So it came as no surprise that my search turned up no results.

What the hell?

No one scratched their heads to offer up anything in response. “Yeah, I missed that one. My bad,” would have been sort of nice and refreshing.

Certainly an apology isn’t needed, because clearly, two well versed people can look at precisely the same information and come up with competely different conclusions.

The emphasis on the history of Apple’s share price plunging immediately after earnings release is more support for the blog from earlier this week that “Experience is Meaningless.”

Basing an opinion, however on the fact that over the past year Apple shares had plummeted each time after release of earnings, is akin to basing your betting strategy on the fact that the last four spins of the roulette wheel turned out to have been “black.”

The only lesson learned is that no one has really figured out a better way to put pants on, so until that time, don’t get scared straight from someone whose fly is down at least half the time.

What did make sense, although I didn’t do so, was a $420 straddle, with the contract expiring this Friday. Either way, as long as the movement was big, there’s a winner to be had, but I doubt that I would ever do that, since it’s not in my core DNA to buy calls or puts.

I may need to re-think that intransigence, especially when it comes to those companies that have a history of big moves in response to earnings.

But then again, why wait for quarterly earnings when I can go to a casino seven days a week?

At least there, I can be served a free drink to help soothe my crankiness and might even find some mistakenly tossed out voucher.

The odds of that happening is much better than picking up a gem from the “heads.”

Told you I get cranky.



Check out Recent PortfolioTransactions and Transaction Performance 


Recent Trades Security Type Action Type
January 25, 2012 ZSL Option STO Monthly
January 25, 2012 AXP Option STO Weekly
January 25, 2012 ZSL Stock Added





Scared Straight

Given the fact that we’ve never even been able to teach any of our puppies any trick at all, the saying “you can’t teach an old dog new tricks'” while perhaps not true in every situation, is definitely true in my household.

Maybe I can blame that on “Low T,” as it seems that just about everything else is being piled on its shoulders. Besides, that would make sense, especially if both trainer and trainee suffered from that malady.

In Laszlo’s case, his descent into “Low T” came fairly suddenly, so I do  wonder whether his reluctance to learn any tricks is just a manifestation of his passive-aggresive behavior.

Although I’m at the point that I’m not likely to learn much new anymore, I’m getting increasingly proud of my ability to adapt, if not learn.

I’ve certainly recognized my advancing limitations as I’ve completely given up on the idea of learning even the most simple of technical analyses.

I don’t even do cost averaging anymore, but I continue to be able to count by “fives.”

But over the past few years, I’ve noticed the ability to make some behavioral changes as push would come to shove.

Monday was a good example.

Armed with lots of cash due to the assignment of about 60% of my portfolio, in the past, I would have felt compelled to burn through all of the funds, regardless of where prices were headed on that day.

If they were heading down, that often was fine, as given the market’s behavior, there would be a predictable bounce upward sooner rather than later and then why not buy at a presumed bargain price?.

On the other hand, there really was no rationale reason to rifle through the money chasing rising share prices.

But I did, over and over again.

Not yesterday, though.

Restraint and judgment helped to start this morning with a decent amount to still play with, looking for what appeared to be bargains that weren’t there yesterday..

Had retraint not been there, I would have picked up shares of Deere at about $2 more than where they were purchased today.

Scared StraightI felt good about that, although that’s just a small step resuting in a small advantage. Mostly, I’m proud of that small step because I did it all on my own.

Learning how to exercise restraint to prevent premature speculation is a big achievement.

But sometimes you need others to help you and sometimes they have to take drastic actions to scare you straight.

In my case, I needed to be scared straight into inaction.

Do you remember that series of specials describing the seemingly drastic and harsh measures taken to deal with hardened bad boys. Lots of yelling, lots of crying and then success.

Okay, maybe a suicide or two, as well, but by the end of the episode, all we saw wa success.

There was probably a lot of bad breath, too. That would get even the most hardened to go straight.

Another “dead ender” rescued from a life or misery, crime and dependence on society, at least until the cameras were on.

By the way, I do feel a need to remind readers that the version of “Scared Straight” that I’m referring to is not the same as practiced by Marcus Bachmann.

But yeah. That’s me. Bad boy to the core. I needed the drastic kind of medicine.

In the past, I’ve written about how investors need to avoid the emotions of greed and fear. I’ve also thrown in “envy” and its derivative “fear of missing out.” Not really emotions, but they’re something.

But now I think it may be alright to be afraid.

All it took was being scared straight by what could have been disastrous results following some reckless behaviors taken during the last earning’s cycle in October 2011.

I’ve chronicled it before, but in quick succession I bought shares of three momentum stocks: Amazon, Netflix and Green Mountain Coffee Roasters.

By itself, that’s probably not a terrible thing to do, although doing it all at once is a little harder to justify.

In hindsight, looking at the charts, which I rarely do, they were hitting their peak levels, with the exception of Netflix, which had already come down by 50% or so.

I could probably rationalize those purchases as wanting to satisfy that small portion of me that still likes to speculate, as my remaining expression of living dangerously.

But the really stupid thing to have done was to have purchased those shares right before earnings were released. To be fair, they did seem like “screaming buys” at the time.

And people to respond to screams, sometimes even exiting their own behavioral DNA.

But you know how it is. The people that need to be scared straight are the ones that think they can take an easy ride to a good life, without paying the consequences.

Although the call options were great immediately before earnings, the reulting screaming free fall in the share’s prices made it a real uphill climb in using successive week’s option sales to try and cushion the drops.

Lesson learned.

So here I was this morning, with no one around to scream at me, no one to watch over me so that I don’t become one of those recidivist statistics.

The cash that remained wasn’t red hot, as I’ve learned that a level of restraint cools it off, bit it was still smoldering.

I looked at share prices of Apple and Amazon and so much wanted to add to the former position and re-establish the latter.

“Money, money, money.” That was the chant that I heard being screamed right at me.

That is until I realized that Apple was reporting its earnings after today’s close and Amazon just a few days later.

I hemmed, I hawed and then circled around the coffee table a few times, especially after salivating over the weeklycall premiums.

Then, to complicate things even more, every single commentator and analyst pointed out that over the past four quarters, at least, Apple has plummeted after announcing earnings.

Being the contrarian, to me that only mant that Apple would go up after announcing the latest numbers.

There they were. The proverbial angel and devil, one on each shoulder.

I wanted it so much, but I didn’t want to go back into the dark place.

Instead, I went for the “bargain” priced Deere and picked up more shares of Morgan Stanley, which also goes ex-dividend in a couple of days.

I don’t know what gave me the strength to resist the temptation this time around and only time will tell how long I can keep behaving in a judicious way.

Maybe it was a testosterone surge or maybe it was the fear.

Maybe I should try screaming at our dog and give him a shot ot testosterone



Check out Recent PortfolioTransactions and Transaction Performance 


Today’s Trades Security Type Action Type
Januaty 24, 2012 DE Option STO Weekly
January 24, 2012 V Option STO Weekly
January 24, 2012 FCX Stock Sold  
January 24, 2012 MS Option STO Weekly
January 24, 2012 MS Stock Added
January 24. 2012 DE Stock Buy