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  • Greek Tragedy Rocks The Markets - What Next? [View article]
    Phil, I tend to agree with you. My observation is that the vast majority of articles (or whatever form of dissemination) is similar to reading a newspaper. Except, of course, the 'Letters to the Editor' are communicated almost instantly. So, all that really happens is that most people read through the 'daily paper' and fire off an ad hoc comment. And so, we end up with a blend of pseudo-journalism and arm-chair advice from Ann Landers.
    The world is full of Monday morning quaterbacks and rowdy spectators, but there are very, very few elite athletes. I admire people that cut the crap and let their game do the talking. But, then again, how many people are really good at this game, and how many are content to just sit in the bleachers?
    Jun 4, 2015. 04:07 PM | 2 Likes Like |Link to Comment
  • IMF calls on Fed to hold off on rate hikes [View news story]
    Let's suppose for a moment that the optimal strategy for anyone and everyone is to buy inverse ETFs. Now, everyone is ready for the inevitable-right? And, everyone makes a fortune.
    Are inverse ETFs simply a substitute for puts? Is volatility actually distorted by increased utilization of these inverse ETFs?
    Is there a scenario where the seemingly optimal strategy merely results in market stagnation? If everyone seeks to find the Nash Equilibria, (which assumes almost perfect knowledge), what happens?
    The market began to accelerate up in 2009, once the majority of players became convinced an infinite amount of liquidity would assure a one dimensional bet. What countervailing force could achieve the reverse direction with the same degree of assurance? The rational perspective would relate to net PV-where interest rate instruments trumped equities (adjusted for risk). And then, is there not an eventual equilibrium in this context?
    Ultimately, do we not have to assume that the majority of players are ignorant as to their optimal strategy-in order for our inverse ETF strategy to really pay off big? For if we now seek to exploit the 'time of fear' as opposed to the 'time of greed', do we not need a multitude of frightened little lambs to run to their mommies?
    It would be a bit easier to plan-if we confronted a true Darwinian world. But our sheep have struck a deal with the devil. And that renders Nash (RIP) perspectives a bit problematic.
    Solution: put ratio backspreads.
    Jun 4, 2015. 03:46 PM | 1 Like Like |Link to Comment
  • Friday Is Judgment Day In Crude Oil's Financial Cold War [View article]
    It's refreshing that you provide specific strategies-and take the risk/reward.
    I've changed tactics a bit over the last few weeks-although I still use USO/UCO and SCO.
    The odds of any significant/sustained direction at this point seem well below even money. Thus, I use a variety of spreads designed to capture option premium-not so much to play for directional gains.
    I would share the info, but the problem is that I may make minimal adjustments-or several-within a short time period. The good thing is that either short or long positions can be modified, and gains can be had in many ways. For instance, I sold some SCO puts at the last oil uptick-and that is looking good. I'm now thinking about selling some USO puts. If oil drops and I allow USO assignment, it's like buying a house that I can rent out for a week, month, year or longer.
    Jun 4, 2015. 12:24 PM | 1 Like Like |Link to Comment
  • The 'New Economic Era' Is Coming Sooner Rather Than Later [View article]
    Wait a minute! Stop right now!
    If consumer confidence is up, homebuilders are happy, buyers are coming out of the woodwork, the market is not really over-valued, companies can't find enough workers-and we can't raise interest rates by a teeny-weensy, paltry fraction of a fraction??
    Is there some logical inconsistency hidden just out of pre-frontal cognition? Or do we just keep singing "Don't Worry, Be Happy"?
    Or have we found inner peace and tranquility in this new equilibrium of wine and roses?
    Jun 2, 2015. 12:33 PM | 1 Like Like |Link to Comment
  • Why Zillow Is Still An Incredible Growth Machine After The Merger [View article]
    MLS is integrated with all agents. Agents have to be a member of their local MLS (that's what I'm told). What this means is that when you list a home with an agent, that agent immediately submits required data to MLS. All other agents (a buyer's agent, for example) will look for info on MLS-not Z. So, MLS data is the most timely and accurate. In fact, agents can be penalized if they don't stay on top of changes. Z, on the other hand, can have info that's YEARS old.
    In other words, MLS data is the unequivocal 'go to' information. Further, MLS has improved their service by allowing data integration by which to give accurate comps and real-time competitive information. The only way that can happen, is for real estate agents to submit that information to start with.
    So, if you're in a neighborhood of 300 homes-what are the relevant questions if you want to sell your house? What's it worth, of course.
    Access to MLS allows an agent to instantly determine what's sold, when, how much, how many square feet, etc. And, to also compare existing listings-how long on market, how many price reductions, etc. The software can actually provide a rudimentary appraisal of your house, given the existing data. Z is not even close to that capability.
    Finally, Z can't provide the peculiar local knowledge that is still so vitally important in dealing with real estate.
    If you over-price or under-price your house, you make a poor decision. If you don't handle the advertising correctly-you can lose sales opportunities. A good agent can negotiate price and deal with repair issues-not to mention dealing with contract forms and various addendums and exhibits.
    I always use an agent-just to have a buffer between me and the seller/buyer. Z just can't do a fraction of what's required in handling a real estate transaction.
    Jun 1, 2015. 09:47 PM | 2 Likes Like |Link to Comment
  • GDPhriday: QE Doesn't Work, Now What? [View article]
    Well, yes-I'm beginning to think that what we toss around as the 'middle class' may have been a fluke anyway. I suppose time will tell.

    May 31, 2015. 11:23 PM | Likes Like |Link to Comment
  • U.S. Households Under Pressure: Stagnant Incomes, Rising Basic Expenses [View article]
    Wait a minute-I'm totally confused. The experts at the University of Michigan reckoned that the consumer confidence index was up, and virtually all the real estate experts are predicting that home prices are getting ready to go to the moon.
    Riddle me this: if median income is declining, how do home prices go up?
    And why are males aged x to 54 losing traction in the job market? Does this represent a decision to just let their girlfriends bring home the caviar? Just a few years ago, it was the male that brought home the bacon. Have males decided to watch ESPN 24/7? I was never that smart.
    I suppose that if I had to open a small business, I would open a pet boutique, hire a few millennial chicks, and stay in the back office trading options.

    Well, I thought about it, but just didn't want the liability of millennials drinking wine on the job. So, I'll just continue to donate to the humane society and trade options from the veranda.
    Advice to male millennials: work on your golf game-Rory and Ricky are doing fine.
    May 31, 2015. 10:36 PM | Likes Like |Link to Comment
  • How Uber's Autonomous Cars Will Reshape The Economy By 2025 [View article]
    What about the traffic snarl disaster scenario in virtually all major cities? It doesn't matter if a vehicle is remote controlled or not.
    Why can't we get a flying car-that idea has been around since "Flubber." Or why can't we just fly like "The Flying Nun"?
    And do we replace Nascar with unmanned cars? I can't wait to see a remote powered Indy car.
    If I'm a plaintiff's lawyer, I'm salivating out of control. As soon as the first hacker creates a mass disaster, some company will be brought to their knees. Remember, juries will still consist of real people-perhaps the pissed off folks that lost their jobs.
    And, BTW, what happened to the grand idea of working from home-wasn't that another great promise of the internet -to reduce emissions, traffic, etc? If employees work from home, why would we need so many cars anyway?
    May 31, 2015. 10:08 PM | Likes Like |Link to Comment
  • 3 ETFs To Gain On 9-Year High Pending Home Sales [View article]
    Wait a minute-ITB and PKB are 'hold'/high risk. Yet, the title of the article suggests otherwise??

    Never mind-for a moment I was expecting some degree of logical consistency.

    So, what do I suggest? Well, if you check my comments, you'll find that I've indicated that one should Short ITB at 27.50-and double-down if it exceeds >28.

    And, so how many times has this been actionable advice? Look it up-my dog is calling.
    May 30, 2015. 10:37 AM | 1 Like Like |Link to Comment
  • GDPhriday: QE Doesn't Work, Now What? [View article]
    QE has only served to expose the rot, greed and corruption associated with monolithic institutions. What seems to be beyond the realm of understanding for armchair pundits, is that the 'need' for QE stems from a pre-existing malady-a bloated system infused with mutant DNA.
    It's beyond pathetic that the logic to support the non sequitur rational for QE is: golly gee whiz, just imagine what would have happened without QE!
    So, pray tell, at what age does one conclude that the tooth fairy didn't really leave that pocket change under one's pillow?
    If the true blueprint of capitalism and free enterprise embraces a concomitant evolution of free will and a natural, restless spirit to hitch our wagon to a star-do we not surrender that of which we should be most proud? Have we become 'men without chests'-a nation of clueless sheep, running from the mere shadow of the wolf?
    And so, according to my clock, it's now approaching EIGHT YEARS into this glorious experiment of rewarding those least deserving, while hastening the demise of the noble and celebrated middle-class. Now, perhaps the middle class is something of an historical one-off: a product of the Great Depression and the challenges of WWll-mixed with the technology of the time. A cursory reading of history reveals a virtually incessant struggle between rich and poor. At times, of course, the poor and down-trodden decided to storm the Bastille. Suppose though, that the French peasants had free cable TV? Still have to eat, you say? OK-free cable TV and a daily Happy Meal.
    May 30, 2015. 10:23 AM | 1 Like Like |Link to Comment
  • The Stock Market: A Picture Of Excess [View article]
    Your concluding remarks are interesting, and certainly many continue to be perplexed at the market viz: the economy. What comes to mind, by way of metaphor, is the existence and causes of riptide currents. But, for sure, riptides are not readily discernible-particularly by those actually in the water!
    If we examine the economies of the world, and overlay the prevailing culture, I think it's fair to say that free enterprise-as portrayed in basic macro economics-has been universally rejected. No doubt, most western economies pay some degree of lip service to the tenants of capitalism, but the observable infrastructure and patently obvious domestic configurations, reveal a decidedly socialistic result.
    So, it is within these tumultuous currents that reality points to a rather confused citizenry, and governments that are increasingly quick to embrace appeasement. Indeed, the historical parallels between now and the 1930's-particularly in Europe-seems all too familiar. But then, can a leopard really change its spots? Perhaps, the illusion of a united Europe-united only by a common currency-was hopelessly flawed ab initio. It was a Faustian bargain just waiting for the ultimate exposure to recessionary stress.
    Of course, the historical breach of true capitalism came in the guise of such things as TOO BIG TO FAIL. Born of chaos, our central planners gave us 'shovel ready', 'cash for clunkers', 'first-time homebuyer credits,' "HAMP', and of course, selected credits and guaranteed loans for 'green projects.' It has been a great time to be a big banker, a big car maker and a big bureaucracy of any lineage. Thus, the very fabric and soul of Main Street was adjudicated as worthless-despite the movement of so many lips that proclaimed undying allegiance to small business- the engine of growth.
    But, you see, there are no neat charts to depict the angst of those that didn't get their bailout or cheap loan. Joe the butcher wasn't given the slick wherewithal to arbitrage interest rates to 'replenish' his balance sheet. It's doubtful, that even now, Joe even fully realizes the inherent viciousness of his impending demise.
    Well, let's just go ahead and officially proclaim that we can't embrace a pure form of the 'invisible hand.' Free enterprise is now a relic- still good for public relations- but now relegated to the dustbin of history. It seemed a noble idea. The Protestant Ethic, the right to pursue one's livelihood-a certain freedom of will to both believe and participate in a meaningful way-the now quaint ritual of hard work equated to a reasonable return-now a curious oddity.
    But for those of you that seek only to be the master magician: I suggest a blend of put ratio back-spreads. If the Armageddon du jour fails to show, just collect the small premium and re-set the traps. The thing is that in this brave new world, the central planners abhor upsetting their benefactors. This provides a certain stability to an otherwise fractal system. Granted, this stability is a bit sterile in nature-but we're all in this giant test-tube together. And, at least for now, the 'appearances' of a valid game still appeal to those not otherwise inclined to peer behind the curtain. And, as Moses said, in contemplating the legions getting ready to take leave of Ramses: "God, there are so many of them..."
    May 28, 2015. 12:43 PM | 4 Likes Like |Link to Comment
  • The Battle Of The Bulge [View article]
    Right on! A song I lived by-until....
    May 26, 2015. 06:25 PM | Likes Like |Link to Comment
  • An Open Letter To Nationstar Shareholders [View article]
    I'm told by lawyers that NSM has purchased notes/mortgages from WFC (still holding old First Union/Wachovia baggage), which should have been resolved or written off years ago. A lot of this is worthless. But, from a legal liability standpoint, apparently some files were 'resolved' yet appropriate paperwork wasn't prepared or effectuated by either Wachovia or WFC.
    Numerous files were audited by the Fed, and many homeowners received $500 checks to 'settle' all issues. It's a lingering mess.
    May 26, 2015. 04:21 PM | 1 Like Like |Link to Comment
  • Book Review: The Complete Book Of Option Spreads And Combinations [View article]
    Using options is analogous to many activities that demand years of arduous study and practice. There are millions of golfers on the planet, but only a handful are professional. And, of the professionals, only a fraction are among the elite.
    Same with piano players and chess aficionados.
    So, there is no magic in a certain golf club, or in a single book.
    The additional factor or challenge with options in general is that one must be prepared to peel away all the 'investment wisdom' learned from one-dimensional and ill-informed gurus.
    May 25, 2015. 12:49 PM | Likes Like |Link to Comment
  • Wall Street R.I.P - The Bubble Is Dying At The Zero Bound [View article]
    Fear that isn't connected with physical violence, or some concern for one's health, is mostly a fear engendered by ignorance. If you "fear" the uncertainty associated with the stock market, it simply means that you lack the knowledge or skill to insure your position. The fact is that the market can fluctuate within a matrix of collective ignorance. A simple thought experiment will prove the point: suppose that every long stock allocation automatically included appropriate put coverage. The cost of insurance would be de minimus. Thus, if one can't suffer a loss, fear subsides and dissipates. This strikes me as one of the greatest of all paradoxes- especially in a world where non-stop "advice" is shouted out 24/7.
    It's actually the collective fear and ignorance of the masses that allow people like me, and bigger fish like John Paulson, to make excellent returns during times of fear.
    But the real role of the Fed is to fight fear. Their job is to circumvent panic- pure and simple. A society distracted by fear is also a national security issue. Throughout history, cultures and societies consumed by constant terror rendered them vulnerable to chaos. So, in our modern setting, central planners must continually calibrate the role of animal spirits with the darker side of basic human behavior. In Ancient Rome, the masses were appeased by the coliseum. I submit that we aren't too far removed from our modern day divergences- one of which is the high priests that provide the music by which so many bit players dance their little jigs. Again, should every utterance from these priests regarding the shift of already paltry interest rates trigger such a massive convulsion of electrons? Do we hang by such a thin thread of absurdity? And where is it that these wizards of financial alchemy wish humanity to go? Anywhere in particular? Or is it sufficient to simply circle the Emerald City in some indeterminate and redundant path?
    May 24, 2015. 12:52 PM | 3 Likes Like |Link to Comment