Thrilling Friday 15,000 Finish

Includes: SPY
by: Philip Davis

Someone robbed some ATMs for $45M - amateurs.

The BOJ devalued the Yen by 1% overnight and robbed the Japanese people of $300Bn overnight. Meanwhile, the bank robbers will go to jail while the lifetime savings robbers will probably get an award - or at least very cushy jobs in the private sector once they are done pillaging the people's money in the government sector.

In our member chat yesterday, we were discussing the fact that we should take Japanese Corporate earnings with a huge grain of salt as they are priced in Yen and the Yen is down (up) to 101.62 to the Dollar today, from (and I am not kidding) 80 at Thanksgiving. That's up (down) more than 25% in 6 months and 80 to the Dollar was about where the Yen was last year as well.

So think about it - if you are a Japanese citizen and you had 80M Yen in your retirement account in November, you had $1M US Dollars. As we know, Japanese banks pay 0.25% for deposits, so effectively zero so today, those 80M Yen would be worth just $787,246.60. How's that for theft. This is how our governments ultimately balance their books - on the backs of savers. The investing class is just fine, thank you very much, as the Nikkei has popped from 9,000 to 14,000 over the same period. That's up 55%. So the rich investors get much, much richer while those who try to save their hard-earned money get raped - and no arrests will be made!

25% of the Japanese people's wealth confiscated to give the top 1% a 55% boost in their portfolios. That's the way of the World folks. And don't go clucking your tongues at the Japanese folks, they are only trying their best to keep up with the US, whose Dollar Index (against a Global basket) is down from 120 in 2002 to 83 today - that's a 30% devaluation of our own savings in 10 years. Not just your savings, of course, anything you own that's priced in Dollars loses value unless it's inflation-proof and it's PRICE (not value) goes up faster than the Dollar falls.

The US markets are just now getting back to the PRICE they were at in 1999, but the Dollar is 30% lower so, if the market had the same VALUE, it would be PRICED 30% higher than it is now. This is not complicated stuff folks. I know it's hard to accept because A) it really sucks and B) most of you reading an investing newsletter haven't been affected - so it's kind of hard to care but it is important to recognize the reality of our situation and protect ourselves from what is now becoming a global frenzy of money printing - leaving us few good choices for protecting our own assets.

Yesterday, we discussed our follow-up to "5 Trade Ideas that Can Make 500%" and really, at the time (April 14th), I certainly didn't mean " 3 weeks" but there it is. The following week, I wrote "Five Inflation Fighters Set to Fly" and the premise was exactly what's happened since - more and more money printing is driving the markets higher and devaluing our cash so we HAVE to have some of our money invested in things that are, in theory, inflation-proof.

Our trade ideas from that post are now 19 days old and certainly we were not intending them to be quick plays but let's see how they are progressing:

  • 1,000 shares of F at $12.93, selling 10 2015 $12 puts and calls for $4.20 for a net entry of $8.73 and, if F is under $12 in Jan 2015, we would be forced to buy another 1,000 shares for $12 and our average would be $10.36 for 2,000. This we express for our members an F 2015 $12 buy/write at $8.73/10.36. After almost 3 weeks, F is at $14.20 and the 2015 $12 calls are $2.97 and the $12 puts are $1.21 so our current net is $10.02 - that's up 14.7% ($1,290 on 1,000 shares) in 3 weeks. 5% a week is enough to keep us ahead of US inflation - but it could be tight when trying to keep up with the BOJ's daily 1% declines in the Yen.

I already did so much explanation of the concept behind these trades and the strategies employed in these trades that it took two days of writing so PLEASE go there if you want all the details. Our other 4 trade ideas were:

  • 10 CLF 2015 $18 puts sold for $5.25 ($5,250), buying 6 2015 $15/25 bull call spreads for $3.45 ($2,070) for a net credit of $3,180, the puts are now $3.60 ($3,600) and the spread is $4.70 ($2,820) so, if you liquidate it today, you have to pay net $780 and you keep $2,400 in profits. So, without laying out a penny in cash, this trade made $2,400 in three weeks - let's call it 66% of the original $3,600 credit.
  • 1,000 shares of BAC at $11.66 ($11,660), selling 10 2015 calls for $2.81 ($2,810) and 10 of the 2015 $12 puts for $2.06 ($2,060) for net $6,790. BAC has climbed to $12.91 and the calls are $3.70 and the puts are $1.49 for net $7.72, a profit of $930 on 1,000 (13.6%).
  • ABX 2015 $20/30 bull call spread at $1.90, selling 2015 $15 puts for $2.65 for a net .75 credit, now +.88 so up $1.63 overall for a 217% gain in 3 weeks. That one will keep you ahead of almost any inflation. Our goal on this trade is 1,433% if ABX is at $30 in Jan 2015, so up 217% is basically "on track" for this one.
  • DBA 2015 $26 calls at $2.15, selling MCD 2015 $75 puts for $2.25 for a net .10 credit, now +.18 for a gain of 280% but calm down as it's only .28 in this case!

It is WRONG that people like us can make this kind of money sitting at home on our computers. Don't fool yourself, the money comes from somewhere. I'm not going to go on a rant about how we're robbing the poor to inflate our portfolio - it's almost the weekend so get ready for it, though. The point is, from the standpoint of my job as a guy who helps our members stay ahead of this wealth-grinding inflation, is that it's VERY EASY to make money like this in a mindless bull market so DON'T FEAR cashing out your winners and we'll have another list like this and another and another - but only when they are appropriate.

We don't KNOW when we're going to get these opportunities but, when we do, it's a damn shame not to take them. Yesterday I pointed out that ABX was still playable from our 500% Trade Ideas. A week later, in this portfolio, we had a better entry and that ABX set got away but the premise remains for both. Also, the DBA trade in this set is "only" up 280% but, as I pointed out, that's just .28 and there's no limit on what you can gain if we end up with spiking food prices.

Whatever the market does, I'm sure we'll find something to trade.

Have a great weekend,

- Phil

Disclosure: I am long TZA, ABX, AAPL, HMY, NAK, DBC, GLW, FCX, CLF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Positions as indicated but subject to change (fairly bearish mix of long and short positions - see previous posts for other trade ideas). Positions mentioned here have been previously discussed at - a paid membership site that teaches stock, options and futures trading, portfolio management skills and advanced income-producing strategies for investors.