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  • The Downside Of Buying Stocks On Sale Through Selling Puts [View article]

    There are so many problems with your gross mischaracterization of my article, I hardly know where to begin. Additionally, you provide absolutely nothing new in your article (I referenced all your points directly or indirectly), so I am confused as to why you even wrote your article. But before I address all that, it is important to also point out your lack of understanding for basic options terminology:

    In your paragraph that begins, “A further risk of this strategy is early execution of the SPY put contract” you reference a writer of an options contract being assigned shares early. The word “execution” means to be filled on a buy or sell order. Option writers (sellers) can be assigned on shares. Option buyers have the right to exercise shares.

    Next, I made it crystal clear in my article that the purpose of this strategy was for people who have decided they want to buy stocks to put themselves in a position to get assigned on the shares. More specifically, I said, “The strategy I would like to describe concerns selling in-the-money put options with the hope of those puts not expiring worthless. Instead, you want to be assigned shares.” I even put the part about wanting to be assigned shares in italics. You appear to have missed that. Yes, when buying a financial security, there is the risk of that security going lower. And each investor, on his or her own, will need to determine if taking that risk is appropriate. When an investor has decided it is appropriate to buy stocks (whether for emotional reasons I hinted at in my article) or because they believe what I think is a bunch of analysts speaking nonsense about the market being cheap, then those investors might also be interested in a different strategy (the one I presented).

    On another note, I am the one who pointed out the dividend/premium issue you brought up. Instead, you present it as if it is an original thought of yours. When the crux of an article you write is about someone else’s article, you should not take other writers’ work (for example, the dividend/premium issue) and present it in a way whereby readers will infer that I (the author of the article you reference) didn’t address that issue. That is entirely inappropriate.

    Regarding your conclusion: “As a result, the question of whether to buy stocks at current prices is not circumvented by a strategy that sacrifices return in order to lower cost-basis. If you want to own the SPY for the price where it is currently trading it may be more desirable to simply purchase it directly or to wait for a suitable pullback.” My article was tagged as a “Portfolio Strategy & Asset Allocation” article. I explained what I wanted to accomplish with my article when I said, “I wanted to demonstrate the strategy across multiple ETFs representing broad-market indices, and, at the same time, provide an idea for those investors who may have missed the incredible rally certain indices have had and are about to capitulate (and buy stocks at today’s prices).”

    I also stated: “I have had the idea for this article for quite some time but saved it for today because I imagine a lot of people are getting very close to capitulating and buying stocks after the relentless rally we’ve had.” This statement further points out that my article was meant for people who, on their own, will make up their minds that it is time to buy stocks. I even gave multiple examples of other indices in the article, so as to further drive home the point that my article was about strategy and not about SPY. And just to make it absolutely crystal clear that my article was about strategy and not about telling people to execute (proper use of the word execute) the strategy on any specific security or at any specific strike price, I also said the following: “I hope you find this strategy useful should the time ever come that you simply cannot wait any longer for a pullback and feel like you have to buy.”

    Moreover, I did not recommend anything in the article (contrary to what you claim). Instead, I offered an idea for a strategy that investors who already made up their minds to buy stocks might consider. Your statement, “An SPY $180 Jan-2015 put was recommended” is a gross mischaracterization of what I did. I used the $180 strike as an example (and clearly said this). Additionally, just in case a reader didn’t catch that it was an example and not a recommendation, I also said the following: “It is important to remember that the specific numbers mentioned in this article are less relevant than the strategy itself.”

    Furthermore, you state this about my article: “This article does not imply that the market will rise that much, instead it simply notes that two years is a long period of time and historically the odds are a good deal higher than many appreciate at first glance.” In fact, I did nothing of the sort. For those who carefully read my article in its entirety, I did, however, leave a subtle hint as to what I think is going to happen with stocks in the future. You apparently did not find it. Only people who carefully read the article in its entirety will have picked up on it.

    Although I did not recommend anything specific in my article (instead I presented a strategy that can be used across a variety of securities for investors to consider), I will make a few recommendations now:

    1. If you are going to respond to an article of mine in the future, I recommend understanding it. Understanding is a level beyond simply reading it. Your article demonstrates you did not take the time to understand what I wrote.

    2. When commenting on a subject (like options), spend some time learning the terminology (especially the most basic of terms).

    3. When responding to another’s writing, don’t take an idea from that person’s article and present it in yours in a way readers might infer was your original thought. Your presentation of the dividend/low premium issue is essentially identical to mine. And you present it in a way that might make readers think I did not address it. You certainly had the right to publish it (it was not plagiarism, but it was a means of tricking your readers into making them think you thought of an important issue, when in fact you didn’t). But having the right to do something does not make it an appropriate thing to do.

    I expect more from fellow Seeking Alpha contributors. If you have questions about a subject in an article of mine, please just ask. If you have questions about how you should interpret something in an article of mine, please just ask.
    Apr 15, 2013. 12:21 PM | 20 Likes Like |Link to Comment
  • The Coming Decade Of Stocks [View article]
    Hi Arne,

    Just wondering if you can clarify a few things:

    "Rather than own stocks, investors are pouring money into money market funds that pay near-zero yields."

    I'm not seeing this in the FRB: H.6 release. In fact, the opposite is true as money market balances have absolutely plunged over the past 3 years. Just looking at the past past year-and-a-half, retail balances are down "only" 4.4% and institutional balances are down 9.5%. Where did you get your data from?

    "The two prime ingredients for a secular bull market are firmly in place: Extreme pessimism coincident with material undervaluation."

    Regarding the "material undervaluation," what's your opinion on why the CAPE is indicating equities are at valuations massively higher than previous secular bear market bottoms? I'm not asking whether you like the CAPE as a predictor, but rather why it is that the CAPE has always shown certain valuations at large bottoms, and we aren't even close to it now.

    "The smart analyst views extreme periods for what they are: outliers."

    Do you believe that the 1982 - 2000 as a whole was not an outlier? If so, why? If you strip out that period from equity market history, well, I think everyone knows what that does to returns.

    "The worst thing you can do as an investor is to extrapolate non-normal conditions (again, whether it is good or bad) in a linear fashion into the future."

    Again, regarding the 1982 - 2000 bull market. During that period, we had massively expanding credit, huge job growth, and falling interest rates which helped drive the economy, and, in turn helped the stock market. We also had what is perhaps the greatest invention in modern human history go mainstream and change the world (internet), driving all sorts of massive growth. Does that fall under your definition of "normal," and, if so, how do we get that back?

    Thank you for writing the article and for any responses you can provide!
    Nov 30, 2011. 12:05 PM | 8 Likes Like |Link to Comment
  • A Canary In Real Estate's Coal Mine [View article]
    Left Banker,

    A couple of points:

    First, AIA may be interested in your claim that its index is not predictive. I would love for you to let me know AIA's response.

    Second, as I clearly state in the article, it was a sharp two month drop, not a one month drop as you mention in your comment.

    Third, perhaps we have different definitions of alarmist. I don't think my article was anything near alarmist. Reread the last sentence, which sums up my stance. What is alarmist about being "more vigilant and cautious for the time being"?

    Fourth, where in my article did I imply the canary stopped singing? In fact, I clearly stated that it was not necessarily time to "abandon ship." I think some readers are getting hung up on the title. As I noted in a previous comment, I wrote the article to make investors aware of a lesser known index about which many may not have been aware, and to point out that it did something a bit unusual in recent months. A canary in a coal mine can simply refer to something that is used to help make people aware of a possible dangerous/difficult/less than ideal situation (the canary would be the thing that provides the alert). That's what I was referring to in the title regarding the index.

    The ABI is a different data point that I've enjoyed following because it moves in trends (examine that "noisy" chart very closely) and has been correlated with the stock market (and usually leads it by a few weeks). If you are not interested in such an index, that is certainly your right.
    May 25, 2013. 12:59 AM | 5 Likes Like |Link to Comment
  • Coal Bonds Provide Clues For Equity Investors [View article]
    One place you can find details on individual bonds is on FINRA's website. From FINRA's home page, choose "Investors." Then, on the left side of the screen, under "Market Data," choose "Bonds." Next, in the "Quick Bond Search" box, you can type an equity symbol, choose "Corporate," click "Search," and all the bonds for a particular company should appear. Furthermore, if you click on a link in the "Issuer Name" column for a bond you are interested in, you will be directed to a screen that provides more details on that particular bond, including the CUSIP.

    Here is a link to the page with the "Quick Bond Search" box:


    May 9, 2012. 08:42 AM | 5 Likes Like |Link to Comment
  • Apple Already Puts Its Cash To Work [View article]
    "There MAY be two or three people that read your well written, thorough article that did not know that Apple's "cash" holdings were actually not cash. I hope not many more than that."

    Thank you for the compliment on the writing itself. My take, as I alluded to below in a comment, is that there are so many people who will take literally the articles that talk about $100 billion in cash, as if it's just cash sitting around doing nothing, that I thought it was necessary to defend Apple. I think the company's doing a great job and shouldn't be bullied into making changes with its investments if it doesn't want to.
    Jan 27, 2012. 08:30 PM | 4 Likes Like |Link to Comment
  • Bank Of America - New Preferred Stock Issuance [View article]
    Here's a link to the final term sheet:

    The dividend rate is 6.50%.
    Jan 21, 2015. 09:18 PM | 3 Likes Like |Link to Comment
  • A Canary In Real Estate's Coal Mine [View article]

    I agree that if an author is writing an article that recommends getting long or short a stock, it is nice to see that he or she is also long or short that stock. But that, in no way, would convince me one way or the other of the merits of the author's case. Moreover, I recognize that there may be legitimate reasons why an author might not be long or short a stock about which he or she wrote an article.

    Regarding this article, I was writing to make investors aware of a lesser known index about which many may not have been aware, and to point out that it did something a bit unusual in recent months.

    Good luck with your article on USG.

    May 25, 2013. 12:33 AM | 3 Likes Like |Link to Comment
  • The Downside Of Buying Stocks On Sale Through Selling Puts [View article]

    The fact that SA published your article says nothing about whether it was a mischaracterization of mine. The editors' don't have time to read the articles we link to (especially not my 2,300 word article you linked to). And the fact yours was an Editors' Pick also says nothing about its quality. Some of the best articles I've ever read on SA were not Editors' Picks. And some of the worst were.

    Second, I do not provide advice unless specifically stated as such. I offer ideas. I presented an idea for people to consider. It may be suitable for some readers and may not be suitable for others. More specifically, I most certainly did not recommend the specific strike prices I used in my article (as you claim I did).

    The dividend issue gets back to the point that you said nothing new. I addressed the relevant points from your article in mine (published before yours). You wrote an article that specifically referenced my article and simply repeated what I said. But you did it in a way that, had I not responded, could have left readers with the impression that I failed to understand or address your points.

    You most certainly have every right to write about the topic. Had you done so without referencing my article, I would have never responded to your article. By mentioning and linking to my article, you invited a response. I'll leave things at that and let readers decide for themselves what to make of this.


    Apr 15, 2013. 07:25 PM | 3 Likes Like |Link to Comment
  • GLD ETF: 3 Red Flags To Consider [View article]
    Hi Christian,

    Thanks for the article. I especially like that you mentioned GVZ. A mention of gold volatility doesn't make most gold articles I come across.

    Regarding moving averages, make take is that the 150-day simple moving average is more important than the others. Just put it on a chart of GLD and you'll see why.

    I wrote about it earlier in the month in my article, "The Winds Are A Changin' For Gold"

    Also, in case you are interested, about a week ago I wrote a follow up to that article:


    Mar 29, 2012. 05:03 PM | 3 Likes Like |Link to Comment
  • Apple Already Puts Its Cash To Work [View article]
    I don't necessarily disagree with the "duh," although from the number of articles I read and people I see on business television unequivocally stating Apple has all this cash and that they don't do anything with it, I started to wonder whether a lot of people were simply repeating what they've heard, rather than actually looking at the 10-Q. I was trying to defend the company a bit with this article.

    Thanks for reading and for taking the time to comment!
    Jan 27, 2012. 08:27 PM | 3 Likes Like |Link to Comment
  • 'Twas The Weeks Before Christmas [View article]
    Thanks, everyone, for the kind words!
    Dec 10, 2011. 10:03 PM | 3 Likes Like |Link to Comment
  • 'Twas The Weeks Before Christmas [View article]
    Thank you! Merry Christmas and Happy New Year to you too.
    Dec 10, 2011. 06:50 PM | 3 Likes Like |Link to Comment
  • Living On The Edge: Selling Puts On 5 Stocks [View article]
    Of course QE had an effect. That pretty much goes for all stocks, commodities, etc. since March of 2009.
    Nov 22, 2011. 09:44 AM | 3 Likes Like |Link to Comment
  • Please Help Us Pick Outstanding Performance Award Winners For January [View article]
    While everyone else was running scared from Target (TGT) earlier this year because of the data breach, I wrote the article, "Buy Target While It's In The Penalty Box."

    I took my own advice, patiently waited for the stock to fall into the range I mentioned in the article, and built my position. As of today's 52-week high, my position is up over 34.11% (37.46% including dividends). I'm guessing SA readers who read the article and did what I did are quite happy with the market-crushing returns. And we didn't even have to buy a small-cap and/or speculative stock to get those fantastic returns!
    Dec 29, 2014. 12:30 PM | 2 Likes Like |Link to Comment
  • The Fed Is Not Pushing Stock Prices Higher [View article]
    Just an FYI that S&P 500 earnings peaked in Q2 2012 and have been declining ever since.

    Trailing 12-month operating earnings:
    Q1 2012 - $98.12
    Q2 2012 - $98.69
    Q3 2012 - $97.40
    Q4 2012 - $96.83
    Q1 2013 - TBD...Estimate of $98.08 (we'll soon see if this proves correct)

    Since the time earnings peaked, the S&P 500 rose 15% on declining earnings. Of course, analysts kept their forward projections quite rosy, and, as usual, will likely end up wrong (I address this in my article "One Thing I Wish I Could Short"

    It's certainly acceptable if you believe the recent rise in the S&P 500 is justified. Let's just be honest about what's causing it. It isn't actual earnings growth. It is, at best, the hope for better earnings growth.


    Apr 3, 2013. 10:03 PM | 2 Likes Like |Link to Comment