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  • Why The Housing Market Is An Accident Waiting To Happen: Part One [View article]
    I thought you would also refer to the billions in credit lines extended to various funds to buy residential properties, and lease them back out. This is a data point that never existed historically.
    I've been short ITB for several months-just kept doubling down. Today I collected-big time.
    I suppose home activity might actually tick up a bit, as fence sitters sense higher mortgage rates coming. But, then again, median income and the job market is the worst I've ever noticed in my lifetime.
    Jun 20, 2013. 04:29 PM | 3 Likes Like |Link to Comment
  • Don't Be Fooled By The Fancy Name - Statistical Arbitrage Is A Simple Way To Profit [View article]
    The problem, though likely a low probability if supported by data, is that the trade can be double trouble. And, when markets sink, the trade can be essentially neutralized.
    Another consideration is to institute the pair trade using option spreads. With KO, you might sell a bull put spread and/or buy a bull call spread. With PEP, you might do the opposite. This ties up less capital, and can't get away from you irrespective of what happens. you can further refine the structure by utilizing a food and beverage index, again setting up a connective structure. Also, one can diversify by time, using longer-dated options.
    Or, you could just short gold and send a donation to the humane society.
    Jun 20, 2013. 04:03 PM | 1 Like Like |Link to Comment
  • Several Less-Publicized Macroeconomic And Market Data Points Suggest Stocks Vulnerable [View article]
    "A foolish consistency is the hobgoblin of little minds." RWE
    I'm not quite on board with the 'wave' group, but since the mid-90's I've jettisoned the CPA/financial school, and enrolled in the fractal/behavioral university. It's a more profitable degree.
    Beyond that, all systems have a certain evolution. This evolution is a function of limited capabilities and inherent human biases. The Fed is powerless to intervene in structural challenges, and those limitations yield actions which can only pacify superficial consequences. Policies 'appear' to work when 'measured' against a yardstick which itself took an historical point. But evolution cannot be properly measured. In that regard, Piet Hein said it best:
    "A bit beyond perception's reach
    I sometimes believe I see
    that Life is two locked boxes, each
    containing the other's key."
    We live in a world dominated by logic-chopping, faulty premises and infinite regress.
    The markets are nothing but a bounded, intrinsically irrational subsystem. Happy trading today!
    Jun 20, 2013. 09:01 AM | 5 Likes Like |Link to Comment
  • The Uncertainty Of Gold [View article]
    The price action of gold lays bare the inherent inadequacy of many small investors and their propensity to contemplate life in one dimension. That a move like yesterday could happen underscores that bias is extensive and pervasive, notwithstanding the relative ease of implementing simple hedging techniques.
    I have commented numerous times, going back several weeks that I was short gold via DUST. Specifically, I created a 'synthetic' long position by selling puts and using that premium to buy calls. That has worked extremely well, so I'm now selling 'de facto' calls against that position by selling NUGT puts. This is not rocket science, and is within the ability of almost anyone. But, I can see by the option chains that very few people are utilizing this strategy.
    Jun 20, 2013. 07:38 AM | 1 Like Like |Link to Comment
  • The Fed Is Between A Bubble And A Hard Place [View article]
    James, when you reference the period 2003-2007, it's not simply an act within a time period that we need to ponder. That history-its cause-effect dynamic-is now woven into the tapestry of this moment. To some extent, it's like starting a fire to extinguish the old flames. And, much like managing a forest fire, much depends on getting the weather to cooperate in order for the two fires to coalesce and thereby burn themselves out. Perhaps some would say two wrongs don't make a right. But, in any event, it's a tangled web.
    Jun 19, 2013. 10:38 AM | 1 Like Like |Link to Comment
  • The Physical Vs. Paper Fallacy Begins To Expose Itself [View article]
    Strippers, bartenders and walmart greeters. Fish, some of these folks do buy gold. For instance, most strippers have a gold ankle bracelet and rings, bartenders still sport gold chains around their necks, and walmart greeters have some gold teeth/crowns.
    Farther, there are millions of Americans that don't use banks-opting instead for the convenience of payday lenders and pawn shops. So, while I tend to agree with your overall assessment, note that you can't stereotype all strippers, bartenders and walmart greeters.
    Jun 19, 2013. 10:12 AM | 2 Likes Like |Link to Comment
  • Market Will Likely Challenge Earlier Highs This Week [View article]
    In some sense, it's very simple. There is enough firepower to blow the market much higher. In effect, we have a high-grade commercial air compressor plugged into a beach ball. Fundamentals? Technicals? Nope, we've entered another dimension. End result? Nobody knows-except maybe the Oracle at Delphi.
    Jun 18, 2013. 07:27 PM | 1 Like Like |Link to Comment
  • Aspen Group: How To Profit From The Federal Student Loan Collapse [View article]
    Well, I did quit (or retire). And, I did think about returning to academia as a college professor, but I'm content at the moment to play golf and manage my account. Of course, I suppose I could return and finish the doctorate work I started back in the late 70's (after finishing law school). Maybe I could create my own version of "Back to School." Problem is I tend to get up early and go to bed early these days, so I'd probably miss most of the social life. Also, the idea would probably get nixed rather quickly. Maybe if I said I wanted to write a sequel to "I Am Charlotte Simmons." Tom Wolfe shouldn't have all the fun.
    Jun 18, 2013. 07:19 PM | Likes Like |Link to Comment
  • Aspen Group: How To Profit From The Federal Student Loan Collapse [View article]
    Where is Aspen ranked in NCAA football pre-season polls? Does Udacity have a fight song?
    One of the great experiences for a young adult is to "attend" a great university-at least for a couple of years. The contacts and experiences will enhance one's life and establish life-long contacts and friendships.
    How can you have a keg party (or a toga party) at Coursera? Do they have any cheerleaders?
    Coursera vs Udacity OR Notre Dame vs Alabama?
    Jun 18, 2013. 09:22 AM | Likes Like |Link to Comment
  • Prepare To Profit From BlackBerry Q1 2014 Earnings [View article]
    I am short via the 6-22-13 14 call, and long via shorting the 1-17-15 12 put. The short call has a profit return of 67.2%, and the short puts are currently up 8.04%. The odds are that the short calls will return 90% or so by Friday. And, although the long position is less as a percentage, the premium amount is larger, so the actual dollar returns are almost similar. I will close the short calls, and use part of the profit to hedge the 2015 short puts. At this point, the position should now create a 'free' ride- no way to lose going forward-can only gain going forward.
    However, I will continue to sell calls on spikes, which will enhance the total profit. Bear in mind that the existing put spread will also serve as a hedge for any short calls. This is a strategy that can be deployed with any stock or index. It is free of bias and allows one to make nuanced adjustments to one or both sides, based on the emotionality of the majority of market participants. In other words, I refuse to accept the risk of being long or short-preferring instead to have the sands of time (and calculus), pay me a few bucks every day.
    Jun 17, 2013. 08:17 AM | 4 Likes Like |Link to Comment
  • Why The Fed Will Not Taper [View article]
    I would say that the 'shift' is more of a transformation or a metamorphosis. The 'cause' of the real estate 'collapse' (or whatever term one wishes to use), is part of the structural change. The financial problems (again a broad and vague perspective/term) are the ripple effect of changing world demographics, political dynamics, technological innovation and cultural/personal biases.
    An example of what I mean (and this is but a piece of a fractal puzzle) is that increased costs of education for the average family, combined with many years of stagnant wage growth yields or creates a need for one to seek additional sources of income/gain. Hence, the real estate rainbow appears as a solution (recall the TV programs where folks indicated they bought real estate to leverage their ability to obtain capital).
    In many respects, constrained opportunity via traditional methodology prompted many to avail themselves of a parallel opportunity. My take is a lot deeper and more 'fractal' in assessing cause-effect, and far too time consuming to elaborate.
    But just one more quick observation. The massive attention devoted to the Fed and its policies is symptomatic of complex structural and historically challenging problems. An appropriate metaphor is to think of policy makers and their preoccupation with adding another deck on the Titanic (and rearranging the proverbial deck chairs), while seemingly oblivious to the enormous gash in the ship's hull. But, all of this plays out in slow motion. And, while it's easy to play arm-chair quarterback, the tactics and strategies of central planning and manipulation of currency and markets will never satisfy or temper billions of restless souls. The Fed can number crunch and pontificate forever and a day-but, in the end, it's all a wing and a prayer- even if the complex cause and effect can be unraveled.
    Jun 15, 2013. 06:33 AM | Likes Like |Link to Comment
  • Gold Is Speculative But Hardly A Bubble [View article]
    Whether you like gold or not, it's still a major mistake to own more than 5% of your net worth in any instrument. And, if you're long a gold ETF, I would think selling calls would be an automatic play. Likewise for gold miners.
    Jun 14, 2013. 04:05 PM | Likes Like |Link to Comment
  • Taking Care Of Grandma's Money [View article]
    ..."not made soon enough"-That's right Doug. The newest 'lookback' period was extended to 5 years. Any transfers made within that window are questioned. I've seen and heard of too many seniors giving up their property just to die broke in the nursing home. That can and should be avoided by careful PLANNING.
    Jun 13, 2013. 09:58 AM | 4 Likes Like |Link to Comment
  • Taking Care Of Grandma's Money [View article]
    The first thing I would do is protect her assets from potential nursing home liens. If she owns real estate, as indicated, I see a tragedy waiting to happen. Rather than put a few dollars in the stock market, I suggest you visit a lawyer that specializes in trusts and protecting assets from creditors. Otherwise, the odds are that your efforts will benefit the Medicare/Medicaid system. OUCH!
    Jun 13, 2013. 09:31 AM | 10 Likes Like |Link to Comment
  • Time To Stress Test Your Resolve In The Gold Markets [View article]
    Well, people always seem to want 'buying opportunities'-just average down. And, what happened to 'buy and hold?'
    The good news is that 'metals' can't file bankruptcy. Mining companies can, of course.
    It totally escapes me how any rational person would fail to hedge an asset that has experienced a price increase. (Of course, all sorts of biases account for the fact that the inevitable isn't...well, inevitable).
    I've been short gold for several weeks via short puts/long calls on DUST. I've opened and closed various structures several times. I'm currently both long and short gold, owning long and short gold ETFs and selling time premium against both. I absolutely, unequivocally don't give a damn if gold goes up or down. I simply play the volatility and the inane biases associated with-not just gold- but any instrument that indicates a reasonable amount of volatility.
    So, how do I handle upset clients that are long either gold or gold stocks?
    There are some angles to pursue. One is to simply collar specific equities or ETFs. This will be a no- cost way of insuring against further downdrafts. By combining the holdings in a fund, the opportunity exists to utilize an assortment of call-selling strategies. And, I certainly would look at trading in and out of inverse ETFs. There will also come a time where prices turn around. It may seem like a long wait, but that point is just as inevitable as the recent decrease. However, rather than 'merely' waiting, the above strategies, combined with a rehab strategy, can shorten the time frame within which 'book losses' are an annoyance.
    Jun 13, 2013. 09:01 AM | Likes Like |Link to Comment