Coming To A Market Near You...

It's amazing how NOBODY in America thinks this can happen here...

That is, if they are even remotely aware of what's befallen buy-and-hold, down-averagers in Japan since the late 1980s.

People just dump money, blindly, every month/quarter, into mutual funds and haven't a clue about what exactly they are *investing* in, and what risks are entailed.

But they don't want to know either. The idea that one can passively invest and get rich is just far too appealing. It's sort of like an omnivorous couch potato thinking that simply taking a Big Pharma pill will make him healthy.

Go to 30% cash, at least...

Bear Market Rally, Over?

It's hard to believe that these bankrupt, over-valued stocks have managed to rally for 4 EFFIN' YEARS...

Whatever.

It's going to the toilet where it belongs, price-wise.

How do I know?

Because I'm no longer short, not beyond a negligible position anyway. And I have no stomach for more puts on the banks and REITs.

I myself have moved on to my tutoring and educational website endeavor. In fact I'm all in on them these days and that explains the diminished blog output.

Let me just tell y'all, that the New York economy has lost steam and is about to nosedive. All it will take is another 1,000 points off the Dow....even if it doesn't come for several more months.

And I'm not exagerrating when I say that Wall Street has never been booming like this. It's been a four year skim-fest for stock, commodity, and bond *asset managers*. Almost everyone I know in finance is still cleaning up. So we have a long, long way to fall yet. All good things do come to an end...

Get flat at least.

Sell Everything!

I'll bet you don't know ANYONE who's moving their 401k to 100% cash these days. Some might be worried but their *action-plan* probably amounts to nothing more than crossed fingers.

And I'll bet you don't know ANYONE who bought gold under $400 an ounce ten years and 1,100 points ago either.

If only I had held the 4,000 ounces I bought, and vowed to never sell, at $270 or so!

If only I had held the cotton, sugar, coffee, and cocoa I invested in 4 years ago...

See - I Am Now Officially A Commodity Investor.

Getting back to stocks...

It is indeed hard to short the averages in the spring and summertime. I feel like whenever it's a warm and sunny day out in the Northeast the market just ratchets higher. Seriously. And I've never heard anyone else point this out.

Will the market blow off even higher, castrating the scant few bears left? Who really knows? - and that's a disclaimer I hear every bear promulgate these days. People are scared $hitless to short these days and why the bleep wouldn't they be after a 2 year downtick-less, reason-defying levitation? Heck in the old days, bears would short without fear and with only the disclaimer that if it goes higher....they'll gladly sell more!

I bought some more puts on Wells Fargo last week - January 22.5s for 1.90 or so. The stock is 29.50 today.

My puts? Well they don't expire until January of 2013!

The banks were bailed out not just by direct government handouts, but also by a surging stock market (after all, they are *skimmers* too), 4% mortgage rates, FHA absorbing all their new mortgages, a now since ceased re-fi boom, and the government-sanctioned license to lie about their balance sheets.

Now all that is done and much of it is unlikely to recur going forward save for the direct government handouts.

The stock, bond, and housing market bailouts were engineered to benefit the 'old coots'.

All of us young people are still screwed but dumping our investments here is at least one act of financial self-defense we can take. Stockpiling canned goods and ammo is probably not a bad idea either!

Learn From Buffett

So I see that silver hit $50 an ounce recently.

A lot of sages have been vindicated on that one - notably Jim Rogers who's long been saying that silver (and palladium) had better ROI prospects than gold.

Check out that chart. Do you see that low in the mid-late 90s?

Around $5 an ounce is where Warren Buffet dumped a ginormous silver investment. That was when breakthroughs in digital photography destroyed the old camera technology which had constituted huge industrial demand for silver. Recall Eastman Kodak's stock (a Dow Jones Industrial component) got absolutely crushed.

So what else is that *sage* doing now that we can learn from?

I say take a good look at Wells Fargo. Buffett, while a long-time investor, arrogantly added to this investment in the high 20s.

To be clear for a few Morons....I'm saying to short the stock just as I am via long-term puts. It's probably time for me to buy some more now that I think of it. (I just did today actually.)

Passive Investing Misconceptions

Despite 10% (at least) unemployment, ubiquitous bankruptcies, and $100 a barrel oil the Dow hit a 30 month high or something today. When will this insanity end?

Probably soon, as my puts are almost all gone and I haven't any inclination to buy more. I just don't have any desire to have to pay attention to the Wall Street casino any longer - fifteen years of it was plenty!  I'm busy and excited trying to reinvent myself as a productive entrepreneur in the realm of education; I'm trying to become what I always should have been on track to become - had my life's script not been hijacked and written by devious third parties.

Remember, a high stock market is TERRIBLE for young people, TERRIBLE for corporate wage slaves.

The only people who benefit from high prices today are those 'old coot' plutocrats - buttholes that control our enslaving Big Government and 'old coot' retirees. Just take a sober look at what all the bailouts are explicitly designed for - to bailout property owners (not people with 25 years left on their mortgage!), to bailout government pensioners, to bailout 'old coot' entitlements, and to bail out stock and bond holders, I.E. WEALTHY OLD PEOPLE THAT DON'T WORK.

All y'all Morons could be buying the market with your monthly and annual retirement contributions at 8k instead of 12k...

I used to rib the plutogogues at Forbes about this all the time.

They would get all geeked up when the stock market upticked and I'd interrogate them, "Look, if you believe the market will be at 40k in 25 years or whatever...if you REALLY believe that then why don't you want stocks to go down? Why don't you want the market to dive so you can CONFIDENTLY buy more at better prices???"

They never had an answer for that not only because they were Morons of *little faith*, but because they were flacks for the monetarily wealthy.

Hope - A Get-Poor-Slowly Scheme

I was going through my *junk* recently and came across my tiny baseball/basketball card collection.

I never had much that was valuable, not being so into it, but I have always remembered that my David Robinson Rookie cards were worth something. I had thought they were worth $18 or so apiece. In fact, I had thought they were worth that right off the bat, twenty years ago when they first came out - or close to that time anyway.

So how much are they worth today?

Well, look above. $6 on Amazon!  What happened to my *investment*!?!?!?

This is what happens to a market when everyone piles in.

Baseball cards and whatnot were only valuable because NO ONE preserved/invested in them 50-70 years ago.

Sure, there's still some money to be made by savvy professionals who know how to procure autographs, flip collectibles, and whatnot.

But the passive profits from simply putting store-bought cards in plastic are over - and they've been over for 20-30 years.

The same goes for passive stock market investing.

The lumpen masses are lazy and prone to the propaganda of cherry-picked or *historical* stock returns.

I just read a nauseating post from some chick - a millionaire mommy - who thinks it prudent to assume a 10% ANNUALLY COMPOUNDED rate-of-return when making investments.

And the sad thing is....people really do want to believe her.

There's another side benefit to this no-work, no thought get-rich-slowly scheme.

That is, since one's financial outcome depends on outside factors....when things don't pan out they can simply blame their favorite bogeymen: socialists, capitalists, rich people, poor people, homeschoolers(!), et al.

Go ahead and ask anyone today what they are doing with or think about their investments.  I guarantee you that 95% of them will, in some way or another, simply convey *hope* as their current strategy.  With all that professional, licensed-and-certified advice....that's essentially the only thing being brokered.

Pointless Contrived Hindsight

Some guy has a post up that compares investments in Apple products - e.g. iPhone, iPod, Powerbooks,...- with what similarly timed investments in shares of Apple stock would have returned.

Obviously, it's a highly selective trough-to-peak comparison at the moment.

The only nice part about it, is that it essentially mocks those Apple-worshipping geeks who ran out and bought every new and slightly-tweaked product.

Of course, without that irrational consumerism....the stock wouldn't have risen 40-fold over the past seven years.

(Note the stock was dead money, flat, for the 16-year period 1988-2004. Don't be surprised if that trajectory re-emerges.)

BTW, contrived comparisons like this are nothing new. I remember reading somewhere, perhaps in The Millionaire Next Door, that if a married couple who had been smoking a combined 3 packs of cigarettes a day, for 50 years, had instead invested that money in Philip Morris....that they'd be retired happy and healthy, with a $2 million equity position.

Everyone's Got A Story

There's no intellectual or academic subject more important than *history*.

So, how do homeschoolers, or at least many of us, approach it?

Answer - though biography.

Click here to read about one man's 30 year investment journey. I found it pretty interesting.

Good Luck To Today's Bulls

Fresh off the wire:

Investors have rediscovered their risk appetite and are putting cash reserves to work across the equity markets, according to the BofA Merrill Lynch Survey of Fund Managers for January.

For the first time since January 2006 the survey shows investors are taking above average risk, relative to their benchmark. A net 2 percent is taking "higher than normal" risk, compared with a net 7 percent taking "below normal risk" in December. These figures follow several months of investors displaying optimism about the economy but maintaining a more cautious risk and investment profile.

Average cash balances have fallen to 3.4 percent, the lowest reading since mid 2007 and down significantly from 4.0 percent in December. Appetite for equities is strong. A net 52 percent of asset allocators are overweight equities, up sharply from a net 37 percent in December.

Fewer investors are protecting themselves against a fall in equities. A net 55 percent have no protection against a fall in the next three months, compared with a net 48 percent in December. Investors have been moving into cyclical stocks, are positive about profits and are urging management teams to invest in growth.

"This survey is one of the more bullish we have seen and suggests that investors buy into the idea that this recovery has legs," said Gary Baker, head of European Equities strategy at BofA Merrill Lynch Global Research. "We are, however, seeing early signs that might alert contrarians looking for a selling opportunity - namely low cash allocations and possible complacency against a sell off in stocks," said Michael Hartnett, chief Global Equities strategist at BofA Merrill Lynch Global Research.

I wonder how obscenely high Gary Baker's salary is? I mean the Moron just said that *bullishness* is *bullish*!

As I said in the title....good luck to these *latecomers*.

Taxing Issues

Normally, a year of losses following a year of sizable *unrealized* gains would be easy to tax manage.

Except this year, I made a bunch of dough through March. See - Knocking The Ball Coverless! and An Aggressive Flattening - for *nostalgia*.

So this year was poised to turn out with a lot of realized capital gains and unrealized losses, again - at least until this past week when I rejiggered my portfolio.

I had to decide which losing positions to kill, and whether or not to re-build them in like instruments.

So last week, I took sizable losses on GS(short), EEV, QID, and FXP to offset my sizable realized gains on SRS, FAZ, WFC, etc. from last winter.

And, I bought Jan 2011 100-strike puts on Goldman Sachs and 30-strike puts on Wells Fargo, and a few more Jan 20 FAZ calls.

I've thought a lot about those levered ETFs over the past year and I still maintain that mathematically illiterate people have somewhat over-rated their decay. The problem wasn't decay so much as it was Bank of America going from 2.50 to near 20.00, Wells Fargo tripling, Goldman more than doubling, etc. Simple math said a 3X levered short would spiral to zero, and it did.

But for the moment, I am only shorting banks and REITs via long-dated puts. The high stock prices combined with relatively low premiums make this a no-brainer - at least versus dealing with the imperfection of leveraged ETFs. There's plenty of leverage in these bets, and I don't have to worry about path-dependency and some of the political risk of the ETFs. Click the first link above to see the outsized gains I made with out-month puts on Wells Fargo last year. And then contemplate the risk/reward profiles of today's banks' option prices for yourselves.

Here are my significant current positions in descending order of magnitude:

FAZ shares and Jan 20 calls

SRS shares

GE shares, short

SPG puts Jan(2011) 65-strike and Jan(2011) 50-strike

SWC shares

CDE shares

WFC Apr 24-strike puts, Jan(2011) 20-strike puts

JPM Jan(2011) 30-strike puts

GS Jan(2011) 100-strike puts

I've had some real extended trading woes over my 14 year career - but the past nine months rank up there with the worst of them.

Meanwhile, everything else in my life is blazing on all cylinders. So who the eff am I to complain? Life is darn good; and there's far more to it than money - even if I spent almost all of my life thinking(?) otherwise.



Though obviously, I am still hoping, and betting(!), that the *magazine jinx* is still regnant!

Click graphic to enlarge.

S&P Going To 200?

Watch the two videos on this post - Kneale Abuse.

Book Rec - When Genius Failed

Even though I lived/traded through the Long Term Capital stock mini-crash in 1998, the details of what happened never prompted my interest.

All I knew was that some big hedge fund imploded and it/*its counterparties*/*its investors* essentially got bailed out by the Fed - or so I thought. [And that my trading account got hammered at the time.]

Anyway, having recently met a family member of one of the protagonists, my curiosity in this subject was piqued. I procured Roger Lowenstein's book and must say that it's a great story, a great read, and more importantly an insightful window into today's markets, ravaged by leverage and credit crunches.

Wall Street really hasn't changed in 100 years - and it's probably unlikely to do so over the next 100 as well.

Avuncular Marginalization

A few months ago, I got word that my uncle had bought some General Motors. I think the stock was a lofty $6 or $7 per share. (It hit 1.27 last week.)

Why did he buy it? Who knows?

I do know that he consulted my sister (his niece) that works for GM.

What next? Ask Ken Lewis if his company is a good buy?

He DID NOT consult me as I would never have endorsed that move. (Last May I shorted this turd at 17.73 and made 3 points. Should have held it!)

Let me tell y'all something about CaptiousNut - that I'm sure I've mentioned before.

When I meet a plumber, I take that opportunity to ask him about pipe issues I may be having.

When I'm socializing with a car person (mechanic, truck driver, etc) I lay the problems of my clunkers on them.

When I'm around real estate people, I ask them about real estate. (Then I usually enlighten THEM.)

When I meet someone in a business I've know little about, I fire all sorts of questions at them; I pick their brains to edify myself.

When I hang out with teachers, I ask them how to educate kids.

.
.
.
.

Alright, I admit the last one was a JOKE.

But you catch my drift.

If you had a nephew who traded stocks professionally for 13 years, wouldn't you, ever, ask for a consult?

My uncle has never once asked me anything about the markets. Of course he has a *financial adviser* who's convinced him to dump money in mutual funds EVERY MONTH.

Now, my uncle is bright man - he'll even tell you himself. I'll bet y'all never knew that 40 years ago, his alma mater Holy Cross was as good a school as Harvard. (Then they went coed....)

Furthermore, he's a doctor, a neurologist.

The more I thought about his little knife-catch of GM, the more it irked me.

What kills me, is that whenever I have a medical issue, personally or in my family, he's the first one I call. I can't tell you how many times over the years I've called him late at night to ask about some ailment.

[By the way, if I meet you socially and will only broach mundane subjects like sports and the weather....that means I've deemed you a fount of *nothing*.]

Marginalizing Ken Fisher - An Unapologetic OPM Loser

Today, while treating myself to a fantastic, well-earned, solitary lunch, I was flabbergasted, shocked, and awed by the stones of Forbes' Ken Fisher and his latest column - Anticipate the V.

For those of y'all unaware, this perma-bull's perma-bull got his (investors') clock cleaned last year. He didn't just recommend stocks that *underperformed* - he picked tickers that essentially zeroed out!

In this early year issue of Forbes, it was his turn to visit the confessional and to publish his 2008 *performance*. And let's just say he undertook the task with less contrition than O.J. Simpson!



He writes:

This year has gotten off to a bad start, with the S&P 500 (as of Jan. 20) down 10.7% to 805. This just makes me more determined in my bullishness. I like stocks for 2009 precisely because they did so badly in 2008.

There is such a thing as legitimate *contrarianism*, BUT what we have here is a classic case of *denial*.

This is the type of illogic Morons use in offering *government failure* as an argument for *more government*!

Did we hit absolute bottom Nov. 20? Maybe, but I can't be sure; no one can be sure when a bear market is really over. Those who think they have some formula for precisely calling bottoms are fools. What I am pretty sure of is this: When the market rebounds, a lot of its gains will take place in a very short span (like two months or less), and people who are too cautious will miss most of these gains.

Bottom-callers? Who are these strawmen exactly?

This is really just cover for Ken to trot out the stock money-manager BS sales pitch....

"Just keep buying, every month, so that I have predictable skim revenues. Just keep dreaming thinking about the long run. In fact, don't even look at your statements. Thanks."

By the way, a mere month after the ink on this column dried, both the Dow and the S&P 500 have breached their November 20th lows.

Bear markets have been typically followed by bull markets in a V-shaped pattern. The steeper and bigger the decline, the sharper and bigger the subsequent bull move. The few exceptions to this pattern in the past century have involved the emergence of completely different bad forces than the ones that created and contributed to the bear market.

Errrrr, what about Japan?



First of all, Ken predicted a year ago, that "America should do well in 2008". Read his 2008 forecast - We're Too Gloomy and recall that the market dropped a whopping 38.5% last year.

Secondly, Ken, after getting his *forecast* totally wrong, displayed a complete ignorance of why the market fell apart. For example, he recommended Citgroup at 25.00 which promptly imploded (now 1.50); then with the banking sector's problems even better advertised, he STILL pumped Bank of America at 34.00 late in the year. (BAC traded 2.51 two weeks ago!).

So even though he couldn't foresee or even identify last year's *bad forces* while they were smacking him in the face, Ken arrogantly brushes off the risk of any new ones coming down the road. He's unbelievably self-unconscious!

How were my results last year? In line with the market's--which is to say, not good. Starting with 1996, Forbes' statistics department has prepared an annual accounting of each stock-picking columnist's picks versus the S&P 500. Over those 13 years my column has lagged the S&P 500 three times, and 2008 was one of them. The others were 1997 and 2002.

His long term record? I thought this column was about his 2008 *performance*?

Watch, the hair-splitting has only just begun:

During 2008 I recommended 57 stocks. Equal money in each of my picks when first published less a 1% haircut for transaction costs would have lagged equal amounts in the S&P 500 by 1.1 percentage points (without a commission haircut).

So what exactly was that percentage-return that he lagged by a mere 1.1% return?

Of course he won't say. You see, due to the way Forbes calculates this number (i.e. equal amounts invested in the S&P 500), his gross percentage return could have been even grosser than the 38.5% annual drop in the S&P 500 index (a benchmark number which he conveniently leaves entirely out of his column). I'm sure if it was better, he'd have mentioned it three times - at least. Note John Rogers posted the full data in his mea culpa.



More hair-splitting:

That lag came from the first column (Jan. 28), which had my two worst stocks. AIG collapsed 97% because of losses on credit default swaps at a time when accounting standards demanded quicker recognition of such losses. Brazil's Aracruz Cellulose lost 84% as demand for its pulp shrank in the face of recession.

My picks were a hair ahead of the S&P until Dec. 29, when Rohm & Haas shriveled amid fears (unfounded, it now seems) that Dow Chemical (nyse: DOW - news - people ) might not complete its takeover of this company. Despite this setback, Rohm & Haas was my best pick, up 36%. Other double-digit winners for me last year were NTT Docomo, the Japanese phone company; Logitech International (nasdaq: LOGI - news - people ), a maker of cordless pc devices in Switzerland; Repsol, the Spanish oil company; and Travelers, Wal-Mart (nyse: WMT - news - people ) and John Wiley & Sons.

In an overall down-40% year, he wants to highlight his double-digit winners? Is he freakin' sick? Does he think his readers and investors are Morons?

And, how about him using the expression *a hair ahead*?

Hah! I guess even he admits to the hair-splitting.

So IF you ignore his first worst pick - AIG - and IF you ignore a DECEMBER 29TH DOWNTICK in ROH, but one of HIS 57(!) REC's.....then he would have gained a full percent back and.....[drum roll].....tracked the market!!!

Is that what he's paid to do? Track the market????

Ken, down 38.5% or 40%....WTF is the difference?

You bloody-well killed your investors!

The very least you can do is admit YOU were wrong - and apologize.

I also mentioned Ken Fisher back in November in - Yee Haw!!! - Riding the Wall Street Bull.

If I Had....

If I had a nickel for every time in the past couple of months I've heard:

Well, I don't even want to look at my retirement account statement....

I'd be a multi-thousandaire!

But really, how the bleep is *not looking* going to be productive?

These people are the same lazy-@ss Morons who refused to *look* at historical real estate prices.

They refused to *look* at historical interest rates.

They refused to *look* carefully at how much money they'd need to pay the mortgage, their bills, and save for retirement in a future with no Social Security and no pensions.

They refused to *look* hard at the possibility of an interruption in personal income, i.e. a layoff or a pay cut.

And, they refused to *look* critically at the false gospel of mutual funds and *the long run* their financial adviser peddled to them.

By not *looking* at your statements, you are doing precisely what those hucksters at Fidelity want you to do! You're still their willing b*tch!

So, the next person who boasts of their reckless stupidity in front of me....

....is going to get a lecture instead of sympathy!

Yeah, that's too harsh. Sympathy will be offered - for a nickel.

Mark Cuban - Reminding Us He's Not A Total Dummy

A week ago, Mark Cuban asked his blog readers to post business plans that he would consider investing in. So far there are a whopping 1,418 comments - many of which take his bait and post their *best* business plan ideas.

Of course he listed 13 stipulations, and this clincher:

You must post your business plan here on my blog where I expect other people can and will comment on it. I also expect that other people will steal the idea and use it elsewhere. That is the idea. Call this an open source funding environment.

Now, what Moron, if they had a really good idea, why the heck would they advertise it to the entire world? Wouldn't an email be more appropriate?

So Mark is taking advantage of $$$$-dreaming kids. That post cost him nothing but a few minutes of time and now hundreds of ambitious Morons are sending him business ideas. Who's to say that if a really good one gets posted, that Mark himself won't steal it? Forget *other people* co-opting it!

Again, would you really want to invest in someone who's stupid enough to publish their plan? There's a bit of a conundrum for Mark.



But here's the best part that'll might blow y'all away.

Last year Mark Cuban wrote a decent post titled - The Best Equity is Sweat Equity:

The Rules of Success

As MicroSolutions became more and more successful, and as I paid attention to the common traits of businesses that I saw succeed and those I saw fail, I came to realize that there are “Rules of Success” that I saw in companies that excelled. Where companies failed to follow those rules, inevitably, they failed. I found myself checking with “My Rules” before I made decisions. When I traded stocks or considered investments in companies, I applied The Rules to their business before I made a decision.

The best businesses in recent entrepreneurial history are those that have been started with little or no money. Dell Computer, MicroSoft, Apple, HP and tens of thousands of others started in dorm rooms, tiny offices or garages. There weren’t 100 page long business plans. In all of my businesses, I started by putting together spreadsheets of my expenses, which allowed me to calculate how much revenue I needed to break even and keep the lights on in my office and my apartment. I wrote overviews of what I was selling, why I thought the business made sense, an overview of my competition and why my product and/or service would be important to my customers, and why they should buy or use it. All of it on a piece of yellow paper or in a word processing file, and none of it cost me more than the diet soda I was drinking while I was writing it up.

These investors, including myself, know what you don’t, and they are not telling you. The minute you ask for money, you are playing in their game, they aren’t playing in yours. You are at a huge disadvantage, and it’s only going to get worse if you take their money. The minute you take money, the leverage completely flips to the investor. They control the destiny of your dreams, not you.

Investors don’t care about your dreams and goals. They love that you have them. They love that they motivate you. Investors care about how they are going to get their money back and then some. Family cares about your dreams. Investors care about money. There is a reason why venture capitalists are often referred to as Vulture Capitalists.

There are only two reasonable sources of capital for startup entrepreneurs, your own pocket and your customers pockets. I personally would never even take money from a family member. Could you imagine the eternal grief and guilt from your mom, dad, uncle or aunt because you blew your nephews college money or the money for grandmas last vacation...I can't.

You shouldn’t have to take money from anyone. Businesses don’t have to start big. The best ones start small enough to suit the circumstances of their founders.

As much as you want to think that all things would change if you only had more cash available, they probably won’t.

The reality is that for most businesses, they don’t need more cash, they need more brains.

Now, the date on the post is incorrect. It says it was posted in June 2004; it was actually posted in October 23, 2008. I have a pretty good memory, BUT NOT THAT GOOD.

If you read my post too fast you'll miss its point.

On one hand, Mark says never to take an investor's money; that investors will give you false confidence and could potentially *steal your dreams*.

Then, on the other hand, or, six months later, Mark tells you to send him your best business ideas; that he'll be that very *vulture* to steal your dreams; that he'll be that guy to give your business plan unnecessary and dilutive capital.

As I've said before, Mark Cuban is intellectually incontinent, a hypocrite, and an incorrigible wealth-chaser - though at least he's great blog material!

See also I Don't Blame Mark Cuban, Mark Cuban, Trader, Marginalizing Mark Cuban, Again, and Marginalizing Mark Cuban.

Amassing Soon-To-Be-Worthless Dollars

My last trading update - Arctic Trading - was this past Thursday.

On Friday, as I mentioned in the comments of that post, I started buying the Ultrashort Real Estate ETF, again. I bought the SKF at 134.94 and 128.46.

I also whacked the NASDAQ-100 again on Friday - shorting the QQQQ at 31.46.

On Monday, as Goldman Sachs continued to squeeze me I bought even more *expensive* puts on it. I added some Feb 95 puts at 4.35 apiece.

Today, with the market dumping, I sold the GS Feb 90 puts for a loss. I was in at 5.20 (Thursday) and out at an average price of 4.35. Decay got the better of me as the stock was lower but so were my puts upon exit. This is the risk of buying *fat* front-month options.

[More - *days to expiration* dropped from 16 to 11 - so you can minimally, ceteris paribus, wipe out 27.7% of the OTM option's premium.]

And today I also dumped all of my SKF at 138.75, obviously a little too soon.

But I'm still plenty short as it stands.

I've still got EEV, SRS, SDS, and that short QQQQ position.

[And I've still got TBT, OIH, DXO, a smidge of DELL, and a smidge of GOOG.]

On Mike Shedlock, Mish

Mish's blog has really vaulted to the top of, not just my reading list, but that of most web-literate market savants. His posting is original, high-quality, and so frequent that one wonders if there's an ignored woman/life-partner in the background.

Yesterday's post Peter Schiff Was Wrong was a veritable fount of edification. Not only did I take the time to read his *most lengthy post ever* but I also meticulously read all 476 comments.

Now don't misunderstand. My praise for this post is not rooted in *piling on Peter Schiff*. I happen to disagree with Mish's verdict. Schiff was right for many years before he was terribly wrong last year. Everyone, except possibly Mish, who's in this business knows darn well that's how it goes. Buffett, Soros, Jim Rogers, Goldman Sachs,....even the savviest of all-time are occasionally spectacularly wrong - as Mish will (if he hasn't already) be one day soon enough.

After Mish rips apart Peter Schiff, he proceeds to toot his own horn; he brandishes his funds' ("Hedged Growth" and "Absolute Return") recent performance:





Yeah, that's right, a man with *over 20 years* in the business is touting his 3.5 year returns - returns he's only comparing to those of the S&P 500. And note that his returns only look *good* in the wake of 2008, an outlier year for the markets.

There ain't nothing like pumping short-term returns, against a low-hurdle benchmark, AND against a man like Peter Schiff who had a terrible 2008!

From my trader's perspective, Mish's *absolute* returns suck and scarcely warrant braggadocio.

He's acting like a third or fourth year trader who, from the perch of a *breakout year*, thinks they've finally commandeered all the nuance of fluctuating securities' prices.

See also my prior post Marginaling Mish.

A Friends And Family Bailout

Y'all just watch. They are going to *bailout* Bernard Madoff's investors victims...

They'll say that his $50 billion Ponzi scheme ripped off pensions, endowments, and charities.

You just watch the media spin on this one. Madoff's investors victims will be helped because they are the *right* people, if you know what I mean.

All Things Jim Rogers

Can be found on this blog.

Usually, I simply google "jim rogers" on Google News to see he's said anything lately.

It looks like that site keeps track of everything he utters so now my workload is a bit easier.

I spent 30 minutes last night reading up on Jim's thoughts and investments. If you have the time yourself it will be well spent.