Another Day?

After the failed bailout, I was told by economists and what all that we would be destroyed, the sky would fall etc. I went into my bunker and hunkered down. But then I heard some birds chirping this morning. Opened the door and I could not believe we actually survived the night.

So goes the socialists and their central planning. Glad to see common sense rule for once. Now lets not stop when a new watered down version comes along. The gang of 3 will not stop with this defeat.

Mr. Market will get where he wants regardless of how much money you or I or the feds pump into to the contrary. Let the banks that gambled go down. A stronger bank will takes its place.

Now if we can just stop the FDIC from its grabbing tactics. Just because a bank has a run on its money, does not mean they have to force a sale in order to place the bank off the endangered species list. What the FDIC has done the last week is a crime. This is all so that they do not have to tap into the reserves and make it look like the FDIC is solvent when in reality we need 125 billion to cover the losses that will come.

We won a great battle, but free markets are still be assailed.

Long gold....

And Now WAMU

JP Morgan bought Washington Mutual after the FDIC seized them. Morgan it is estimated has 30-1 leverage of their own. My guess is that Morgan will be the next victim of the investment bankers. they can only buy so much of the counter party that they sold to.

This is getting interesting to say the least. If you wanted to play a pretty good idea, you might look to selling a call spread on Morgan 6 months out and 10% above its price. However wait until the big rally today once the WAMU news jumps Morgan.

Here is the fundamentals as I see them. We are setting up the largest drop in the dollar to happen. The next big bust is bonds as interest rates go up regardless of what the reserve does. They will almost certainly have to raise to keep up with market pressure.

I mentioned inverse ETF's and that has backfired. With the SEC banning short selling, many of these instruments had to stop trading since they could not sell short. If they were set up with puts, then they were not effected.

It is tough to have any degree of confidence when they change the rules on you. Many are sitting on the sidelines and that can be a position too, I think the gold,oil,etc. game is just fine in these times for me anyways

Where do we go from here?

It looks like many in Washington are not going along with the bailout. Good for them.
So the markets should continue to drop and the natural resources should continue to go up. Nothing has changed. what we will see though is much more back door policy. since the reserve can do whatever they want in the disguise of "Emergency", they will place billions upon billions of dollars into the economy forcing inflation higher. I noticed yesterday that the reserve placed 30 billion of my money into foreign money markets.

Any question where this is going?

Short selling

We are witnessing an attempted price control on stocks. These idiots some refer to as the gang of 3 should be prosecuted. To blame short sellers really shows the ignorance running rampant.

Here is some thing to think about. The last time this was done was in the great depression. That didn't solve the problem either back then.

Bailing out their fellow buddies with taxpayer dollars should be a crime not a justifiable necessity.

Short sellers are risk takers and should be rewarded for their risk. Not penalized. If they wanted to do this, however misguided it is, then at least give traders a chance to unwind the positions not change the rules on them forcing a false rally as they covered the short position thus making an unsuspecting public jump into stocks that are basically insolvent anyways.

Hang on here...this ride is getting wild.

Nov options

Most of my positions did not trade on the November cycle. As a result, we needed Sept to expire before Nov would trade (the next two months trade on options now). Well just because they start to trade does not mean the market makers are on top and allow for those options to trade. By this I mean for example XLE did not have any stikes above 71 and the etf traded into 72 yesterday. It was frustrating. Any how, we did get a nice fill to day on the 74 strike netting 1.27 (which most of you right now could get a better fill. Such is my timing)

You have to take what the market gives you and if they do not change the rules mid stream, you can usually wait for the trade to come your way.

I also rolled out to Nov on my TLT trade for an over 10% which as you all know I try to get each and every month on each and every trade. Some times much more as in the XLE roll some times less. I do have some GTC rolls on GDX. EWZ is not where near where I would like. We need several more good days before I can get a good roll. This one may just have to let the Oct expire and then look to see form there where to go. As for DBA, I am long way into 2010 so I can wait for this one to come back and begin to sell short months again.

Best of trades out there. This is some wild stuff.

We humans never learn

It took The soviet Union a complete meltdown, It took Rome a complete meltdown and now the US of A a complete meltdown.

No economist over the weekend read doubted the need, no politician doubted the need, even great investors such as Buffet did not doubt the need, yet here we are down again today.

Never fool with Mr. Market. It is always right no matter how much you or I or the feds pump into it, ultimately it is always right. Leave trading to traders and politics to idiots.

If you have had the courage to stay this course, we are sitting in the cat bird seat once again. You will probably not see such draw downs as you have this past month trading this way. These come along very rarely compared to traditional trading but it does occur.

I am looking to roll out to Nov. Not there yet but in the next day or so I will put in some GTC's

Side note here, do not let AIG scare you from otherwise good insurance. Every portfolio should have insurance.

I still doubt my abilities to take just a straight call in these extraordinary times. Logically I know that this method will far out pace the strategy you all have come to know I like best. But 30 years of watching the markets do what cant possibly happen I am reluctant to go straight calls. Those of you that can my hat is off to you. These times will make for some very good rewards. Maybe I will dip a toe or two in the water so to speak.

What a difference a day makes

We were certain the trend in commodities had changed. MSNBC proclaimed it therefor it was. The masters of the universe proclaimed it therefore it was. They stole my money and pumped it into the system therefore it had to work. Yet we are still going down.

Central planners will be burning the midnight oil this weekend I am told. To finalize a game plan. Once the proclamation was made the edict pronounced, it was so. Now the details just have to be hammered out. Details like how much for a bridge to nowhere. How much longer to extend unemployment benefits etc. Not no never mind the market will do what the market will do. I don't care how much of my money they are going to throw at it.

One thing is certain. Mr market is always right no matter how long it takes and how stupid we reject it, ultimately Mr. Market always wins. Even if we forbid the speculator from shorting and making Mr. Market work more effectively, Mr. Market will still find the true value. Even if we postpone Mr. Market from trading (as in Russia), sooner or later when we do finally open the doors, Mr. Market will be right.

A month or so ago one of my many readings (otherwise I would give credit) the point was made that if the government does nothing, this mess will take about 2 years to clean up. If the government gets involved, it will take 5-10 years.

Now as most of you know I am a very conservative speculator. But times like these call for action. I have not seen such an opportunity for wealth creation by trading in 30 years. You will see me offer straight calls and puts. This is because as phase 2 of this great bull run in commodities takes hold, we will want to leverage all we can out of this. This is the phase where all out gains are made.

For this reason I will shock many including myself. But the gains are just too large to be made to ignore. So instead of all calendar and diagonal spreads, we will be using many long calls. Should make for some very large gains over the next 2-3 years.

Strong stomach

It has been a gut wrenching month to say the least. As was noted a few times, some times a severe enough correction can make it look as if a trend has changed. It takes courage to stay the course.

I think golds 100 dollar rally the last few days should put any one's mind at ease as to where things stand. Oil is now becoming a hedge against inflation once again and the price is running up again.

If you have any funds left to use, now is a good time to add to our ideas. If not, let the prices rise back up and continue to roll out.

One stop shopping

My retirement was taken care of before I was born with Social insecurity. We all know how that has turned out. Now I can go to the feds for not only retirement, but now I can get a home loan through them as well as(of today) any insurance needs.

Who needs a Free and orderly market. Just let the feds handle it. I never thought I would see my beloved home land become a socialists Paradise. But here we are.

Now the gov gets to determine who lives and who dies. Why wasn't Lehman important enough to live yet AIG, Bear, Fannie etc. When you get central planners isn't this what happens? Not my choice, but they decide who survives and who doesn't. Start the lobbying now because if I want to survive I had better get on the good side of these Central planners.

I read where I am a snotty nosed immature thinking of free markets at this time. We need the gov to step in I am told. Heaven help this mentality.

If you cannot see the inflationary pressures, then you should turn your money over to one of these institutions. 140 billion pumped into the markets this week not including the 85 billion rescue of AIG. Yet we cant even pay our bills but we spend more and more.

I will ride out this correction. As long as we have the established mentality we do, we are destined for hyperinflation. The only investments I know that can withstand this assault is commodities.

Best of luck to everyone, these are trying times of our very existence of free markets.

Another Sunday

Well Lehman could not get the needed funding. It will file for BK today. Wonder if they had fessed up earlier and got the needed bail out before Bear or would it have mattered not because Bear had better lobbying. No one will know. Just another weekend from a corrupt government.

They even opened for an emergency trading session. Let me explain. You just got screwed again!!! What level playing field??

Will Merrill trade against Goldman, how about Bank of America against JP Morgan?? Not likely. They are all in this game the same. What the emergency trading is really about, is taking out stops that were placed Friday. Forcing you and I as speculators to regret our positions.

Hold on tight because this emergency trading is nothing more than a fleecing. What pensions and IRA's are going to get hit on this one? What banks that are not invited to this special trading will not be able to sell their pie of Lehman?

Glad my positions are where they are. These corrupt guys are not even hiding the stealing.

Glad we have Obama or McCain to save us....get real here folks. Wake up. The real power is showing you right now. We have allowed ourselves to be controlled by institutions we cannot even vote on.

Now that the cheers are over

We begin the terrible dissection of what just happened Sunday. I am a bit surprised that 300 million taxpayers putting 5 trillion into this only saw a 300 point rally in the dow. This is an example of things to come.

So where do we go from here? There is no argument that housing loans will now get cheaper. In fact housing loans have been the cheapest in a lifetime most of this decade. So that is not new. What most are missing here is that just because loans are going to be cheap, who is going to make the loans?

It is like every time I make a trade, someone on the other side has to take the opposing view for the trade to go through. For every loan, there has to be someone buying the paper. Just because the feds are going to be there artificially buying these things does not has not will not change the fact that Real Estate is still going down. Homes are still in record foreclosures, housing inventory is still million in surplus and getting larger. So as an investor, once I come down off my cheap credit fix I will be once again looking for the next high. What part of our freedom are we going to give up to make our junkie habit feel good again. When will it stop? After the auto industry, the airline industry, etc. Once we all become shareholders who or what is left?

Once again after the dust settles and we begin to understand what we just did, the only stored wealth will be gold, silver, oil etc.

It sounds like a record, but as long as the feds keep with the same tunes the same tunes for investors hold true.

As option traders we need to focus on the trend and buy out far enough to not get trapped in the violent swing these knuckleheads in Washington cause. Then as the trend continues we are there. But we have to remember that time is eroding our value each day. To compensate for this we sell closer options to collect time decay in our favor while we wait for the trend to do its thing. Often times corrections appear to be trend changes. Most of the time the talking heads can make us feel that we are wrong. Do not listen to them after all they are for entertainment value and to make the masses feel good about the investments they have made. We all know how the masses come out in the end.

THE bailout

Certainly everyone has heard...Is this American free enterprise or is this old school European style socialism?

This was supposed to bring confidence back yadda yadda. What it did was bring up more questions. What do you do with a bankrupt company? Yes, the only reason this is done is because these two are bankrupt. What does this say about the housing industry? What is happening to all of these banks holding these notes as assets now?

We as taxpayers now own 1/2 the U.S. real estate. We all know how good a job the gov does running things. But the big fear that only one I have seen to far reading about addresses, we have just doubled our treasury debt on one weekend. Think you taxes are high now....Forget about Obama or Mccain, concentrate one Paulson and Bernanke.

Buy treasuries? No thank you I like gold please and more quantities please. But make it on the sly, last time this happened it became illegal to own the stuff. So be careful who you tell you are buying. If you are aggressive like we try to be, buy gold companies those seem to avoid the hording un american blame game since they do employ people