"Anonymous" made an excellent comment that I would like to expound upon.
While the DOW they believe will trend up they also believe the stocks will trend down.
As an investor you need to decide (even if this is managed money, the manager needs to understand your wishes)what you want to do. Obviously "Anonymous" is trading the market and trying to capture some movements. I have at times approached this way too. I have a neighbor that works for the SEC. His claim is that we have already dropped enough that he is interested in getting back in. I said I expect 5000 on the DOW before it is over. He calmly said to me, the DOW has already dropped enough that even if I am early it has still done 80% of the damage.
Now his risk of not being in the market when it runs is more over powering for him then the risk of a potential 10-20% more drop. Is he wrong? Not at all. In fact when I was rolling clients 401ks that they had no control of into income funds way back in May of '07 he stayed in until Aug of '07. If he gets back in now he is fine with this.
I use this only as a long response to what others are thinking in this market.
As anyone knows I am ultra conservative in my approach. That is my risk tolerance.
GE puts anyone? If you missed it, don't try it now.
Later
Friday, February 6, 2009
Thursday, February 5, 2009
GE-Puts
I do not know about anyone out there in the real world, but I will not sleep a wink until Geithner unveils his plan. By golly jees wiz guys a man that cant get turbo tax right is going to show little ol me just how this game of economics is played.
Is their any capitalists left? Are we a dying breed? Is the road to ruins paved in socialism our only way? Alright already I did mislead the post with GE.
Okay now Ge is imploding. 10.88 or so as I write. If it goes below 10 it will be a candidate to be excluded from the all boys club of the Dow industrial. So who cares they were taken off once before.
My point here is that GE is probably an okay run company other than a few over leveraged entities. They should weather the storm okay. Selling Mar. 7.50 puts for .37 is not all that bad considering that you will have to have about 4.00 for every option so that is not quite 10%. For those more aggressive, the 5-7.5 spread will cost 2.50 and is right at 10% and for those that have not listened to option trading and want to lock in a 10% dividend and sell the calls more power to you. The point is, this may be a good one.
Is their any capitalists left? Are we a dying breed? Is the road to ruins paved in socialism our only way? Alright already I did mislead the post with GE.
Okay now Ge is imploding. 10.88 or so as I write. If it goes below 10 it will be a candidate to be excluded from the all boys club of the Dow industrial. So who cares they were taken off once before.
My point here is that GE is probably an okay run company other than a few over leveraged entities. They should weather the storm okay. Selling Mar. 7.50 puts for .37 is not all that bad considering that you will have to have about 4.00 for every option so that is not quite 10%. For those more aggressive, the 5-7.5 spread will cost 2.50 and is right at 10% and for those that have not listened to option trading and want to lock in a 10% dividend and sell the calls more power to you. The point is, this may be a good one.
Tuesday, February 3, 2009
If not you then who?
Who is going to take control of your finances?
I hear it all the time. what should I have done? Well first off, if you think guys (some gals) that cannot even get their taxes right (Dodd, Daschle, Gunt...whatever) but are in charge of our nations trillions, are in the know, think again. This is just a glaring example of central planning. Both parties are guilty of this. I for one do not like either party. The republicans had control for 12 years and we still went the wrong way.
Why all the political junk in my post? Because if you do not take control, or at least have some one competent to do this, then you are going to be stuck with morons at the helm that either are corrupt(my personal view) or are so inept that they could not find their way out of a room with 500 doors.
You have a small window of opportunity that is closing very day to take advantage. Either you are in the financial crisis, or you are in the opportunities. If you do not want to understand and have no faith in the same old financial advice that 99% of planners give (remember your long term strategy, hold for the long term etc.) then park your assets in short term treasury money markets until this passes.
I hear it all the time. what should I have done? Well first off, if you think guys (some gals) that cannot even get their taxes right (Dodd, Daschle, Gunt...whatever) but are in charge of our nations trillions, are in the know, think again. This is just a glaring example of central planning. Both parties are guilty of this. I for one do not like either party. The republicans had control for 12 years and we still went the wrong way.
Why all the political junk in my post? Because if you do not take control, or at least have some one competent to do this, then you are going to be stuck with morons at the helm that either are corrupt(my personal view) or are so inept that they could not find their way out of a room with 500 doors.
You have a small window of opportunity that is closing very day to take advantage. Either you are in the financial crisis, or you are in the opportunities. If you do not want to understand and have no faith in the same old financial advice that 99% of planners give (remember your long term strategy, hold for the long term etc.) then park your assets in short term treasury money markets until this passes.
Monday, February 2, 2009
Economic stimulus
Wasn't it just 4 months ago we were told that all they (central planners) needed 700 billion and all would be well? This is getting so absurd it reminds me of the part in the jerk where Steve Martin is walking out a broken man and saying "all I need is this phone, and this whatever it was, but as he was walking out it was more and more and more.
We are told now that a mere 900 billion (you see politicians have learned the sales skill. Do not ever round up, you know only 19.95, not 20 bucks) It would be much easier to call it 1 trillion but then that would be misleading of 100 billion somewhere. Not to worry, they will get there so we might as well start talking in trillions. Many pundits are throwing around numbers all over the place. The number I like is the 3 trillion for '09 deficit. Are we there yet? Have we finally gone bankrupt?
Then a read some knot head spouting off that the American consumer is saving more now but that is bad for the economy. It is stupidity like this that has us where we are. If I save a buck, it has to go somewhere. If it is in the bank the bank lends it out, if it is in a business it gives employment.
Why bring this up? Well if you look at bonds, they tanked the past week and prior weeks as well. This is simply too much debt and treasuries sloshing around out there and so supply and demand. This is telling me at least that more and more folks are cleaning up their debt. Something those idiots in DC should be doing but no....
What this does for investing means it will be a long time before the retail sector begins to rebound, or the building or the banking. However, have no fear. If we feel that these sectors have been hit hard enough, it just might be time to do some long calendars or selling puts if the price of the underlying is low enough i.e. UYG.
If I were to buy and hold these sectors, it could be a long time to get the reward I want. But by selling close month calls I can now collect premiums. In order to do this I need a large amount of capital sitting there gaining a pittance in interest. I can either buy the underlying thereby lessening the capital required, or buy a far away option to cover the sold close months.
On another note, Gold seems to have broken out. Did we miss it? I did, but then I usually miss the beginning on things. Not to worry, when it pulls back get in.
The dollar is sitting on a bounce here. Will it continue or will the multi year slide once again take over? I have no clue. Many analysts I respect are on differing sides on this. Time will tell. Once it does, I intend to get in using ETF's. See the Philadelphia stock exchange for the symbols for these
We are told now that a mere 900 billion (you see politicians have learned the sales skill. Do not ever round up, you know only 19.95, not 20 bucks) It would be much easier to call it 1 trillion but then that would be misleading of 100 billion somewhere. Not to worry, they will get there so we might as well start talking in trillions. Many pundits are throwing around numbers all over the place. The number I like is the 3 trillion for '09 deficit. Are we there yet? Have we finally gone bankrupt?
Then a read some knot head spouting off that the American consumer is saving more now but that is bad for the economy. It is stupidity like this that has us where we are. If I save a buck, it has to go somewhere. If it is in the bank the bank lends it out, if it is in a business it gives employment.
Why bring this up? Well if you look at bonds, they tanked the past week and prior weeks as well. This is simply too much debt and treasuries sloshing around out there and so supply and demand. This is telling me at least that more and more folks are cleaning up their debt. Something those idiots in DC should be doing but no....
What this does for investing means it will be a long time before the retail sector begins to rebound, or the building or the banking. However, have no fear. If we feel that these sectors have been hit hard enough, it just might be time to do some long calendars or selling puts if the price of the underlying is low enough i.e. UYG.
If I were to buy and hold these sectors, it could be a long time to get the reward I want. But by selling close month calls I can now collect premiums. In order to do this I need a large amount of capital sitting there gaining a pittance in interest. I can either buy the underlying thereby lessening the capital required, or buy a far away option to cover the sold close months.
On another note, Gold seems to have broken out. Did we miss it? I did, but then I usually miss the beginning on things. Not to worry, when it pulls back get in.
The dollar is sitting on a bounce here. Will it continue or will the multi year slide once again take over? I have no clue. Many analysts I respect are on differing sides on this. Time will tell. Once it does, I intend to get in using ETF's. See the Philadelphia stock exchange for the symbols for these
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