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  • Are The Markets Rigged? [View article]
    And if I have $100M in Fund A and $100M in Fund B, I can do wash sales all day, everyday-while fools and idiots debate the safety of the dividend. HFT and an assortment of other master minds don't need inside information-they CREATE their own inside information!
    What happened to silver when leverage rules were changed? I remember some befuddled pundits talking about 'fundamentals'. Leverage and technology are beyond the grasp of 99% of people that make comments and write articles. The market has always been rigged and manipulated. The modern difference is simply a dimension of incredible speed, and high-level game theory.
    Mar 24, 2013. 11:12 AM | 2 Likes Like |Link to Comment
  • Too Much Risk For Slowing Growth [View article]
    I'm always on the lookout for "Wile E Coyote' situations-remember when the infamous Coyote, always out- maneuvered by the Road Runner, would be caught with nothing but air underneath?
    He would look down, look back up, grimace, gulp and then after a few seconds of treading nothing but air, drop like an anchor and crash in the canyon below.
    "Beep Beep"-love that sound!
    Thanks for article and comment. I'll put this on my bear call list.
    Mar 23, 2013. 08:52 PM | Likes Like |Link to Comment
  • Hedging Against Government Confiscation [View article]
    Not a pretty picture. When I was sworn in one of the states (1980 I think), the judge made a comment I've never forgotten. He said "..Everyday you'll be confronted with two exams, one on the law and one on ethics...for God's sake, don't fail the one on ethics..."
    In talking to friends that are trial lawyers, the juror pools are assessed (assuming the stakes are high enough) by psychologists and psychiatrists. They are vehemently ridiculed, and strategies are utilized depending on the jury mix. No one with any money would want to risk a jury trial. The 'wisdom of the American people' has unfortunately become a horrible joke. That's a major part of the concern I previously expressed. It's ironic that Greenspan is on a committee to study the decline in American education.
    But if you can look for five seconds at the judicial farce programs and shows like 'cheater' Jerry Springer, etc., it's rather simple to see what's happening right in front of all humanity. And, it gets worse. There are programs on pawn shops, auto repossessions, bad tenants and killing wildlife. What the hell?
    Mar 23, 2013. 08:04 PM | Likes Like |Link to Comment
  • 5 Indicators That The Stock Market Rally Is Over [View article]
    Presumably man's best friend became too expensive. Not enough cash to feed poor Fido and buy beer and dorito's (not to mention lottery tickets and higher gas prices).
    Mar 23, 2013. 01:18 PM | 2 Likes Like |Link to Comment
  • Hedging Against Government Confiscation [View article]
    Yes, when we gaze into the mirror, the problem is manifestly clear. The legal system is a reflection of who and what we are. And, no doubt, the tort lawyers contribute substantially to elect and keep their financial interests intact. They are, of course, uniquely positioned to influence legislation.
    But, much the same can be said of the American Medical Association, the National Association of Realtors, America's farmers, and a host of unions and various other pacs. Throughout the system, we find lobbyists and professional fundraisers and public relations experts. Statesmen have headed for the coast.
    It is quite strange that in a world of instant media, with voluminous and 24/7 coverage, corruption has become so entrenched, that it has seeped into the national psyche.
    I agree that in most cases the fox is clearly in charge of the hen house. The tragedy, which is a reflection of a lack of average wisdom, is that the hens are totally oblivious to the fox.
    Corruption is not entirely new. Big oil and the rails controlled the US senate at the turn of the 20th century. Major cities were extremely corrupt, brazenly taking bribes and payola from organized crime.
    One of my concerns is whether the mythical guy (gal) on the street can get legal help in time of need? From a criminal law perspective, it seems that a higher than expected number of people get convicted of crimes that DNA later exonerates them from. On the civil side, society and government throw far more curve balls at people than ever before. Of course, here again, I submit that there's a couple of generations that have been short-changed in the common sense department. That seems to be borne out by various measurement methodologies. (Some schools even sought to protect their funding by fudging test scores).
    We used to think that utilizing maggots to treat wounds was both hideous and ineffectual. Yet, we now know that maggots attack only the dead flesh and 'clean' a wound. By pursuing their own instinctual self-interest, they convey a benefit to the 'host.' Is this a fitting metaphor?
    What concerns me more than the lawyers are the judges. Judges have to be responsible for putting a roadblock in front of absurd and frivolous lawsuits. They must be CEOs of the judiciary and the legal system. They can make all the difference for good or bad. I'm very concerned that the system exposes them to the same sorts of pressure that other politicians face. Perhaps, state judges should receive either certain duration appointments, or some other arrangement that keeps political pressure at bay.
    Wisdom does bring sorrow, if not cynicism. I'm reminded of what absolute power can do to a judiciary. Just watching "Judgment at Nuremberg" has to concern anyone with half a brain that, in the worst hour of a society, the arbiters of liberty turn a blind eye. Yes, there is a lot of rot and corruption within a democracy. The antidote is an educated populace, strong in intellect and vibrant in protecting and pursuing its honest dreams. As Jefferson said, "the price of liberty is eternal vigilance." It is that vigilance that needs to be re-ignited.
    Mar 23, 2013. 01:10 PM | Likes Like |Link to Comment
  • Why Shorting Stocks Is The Worst Investment Strategy Ever [View article]
    Thanks 5bandit5-I have my moments (but alas, not many)-
    Mar 23, 2013. 12:00 PM | 1 Like Like |Link to Comment
  • Hedging Against Government Confiscation [View article]
    As to lawyers and the legal system, are we litigious because it's a reflection of society, or do lawyers unduly influence society? Lawyers would no doubt argue that they stand between the selfish and corrupt institutions. Corporate defendants, of course, would have a different perspective.
    To what extent has the sheer number of lawyers impacted a system once considered the envy of the world? Has advertising created or enhanced an increasing adversarial society?
    Certainly, judicial intervention post WWll has been considerable. Some would applaud an activist judiciary, others decry the loss of state rights. Over some unknown time period, does the pendulum shift?
    There seems to be some effort to limit the more fantastic jury awards, and to penalize frivolous lawsuits. That move is in an infant stage, and will likely move at a snail's pace.
    Of course, all of this begs a more fundamental question about professionalism-both among lawyers and among the people that manage large and powerful institutions. Another factor is simply the relationship of changes in technology to society. As technology pushes the envelope (nuclear power, stem cell applications, silicon chips, etc.), rules, regulations and new governmental departments are created. This in turn creates more rules and regulations, administrative procedures, etc.
    What is missing on a macro scale is the ethics that Kant contemplated, and the self-reliance that Emerson wrote about. My opinion is that we are not fully prepared for the brave new world-which we see only through a fog at the moment-and we need extraordinary education to make ourselves better prepared.
    The lack of ethics and integrity within governmental and corporate institutions is played out daily. An affair here that compromises national security, a lack of oversight there that causes an ocean to become diluted with oil- clearly indicate that many will pursue their own interests, without regard to appropriate standards.
    So, we could call for a pox on all their houses, except we must all breathe the same air. Balance, wisdom and personal integrity are the solution. To the extent that we fail in this regard as individuals and as a society, we can expect corresponding behavior. As an example, take the 60 Minutes report that came out just a couple of weeks ago. studies indicate that well over 40% of all credit reports contain errors. Thus, some folks are getting charged too much interest or being wrongly denied for loans, etc. When questioned, it seemed that the credit reporting companies would rather pay up than fix the system. And, just the other day, CNBC indicated that some type of checking account system was used by banks/creditors, and that system was full of errors. So, if I'm a plaintiff's lawyer, it would seem that error-laden credit reports would constitute the next BP-except much larger. Why are there so many errors, and why won't a responsible adult fix the problem?
    Disclosure:Licensed to practice in three states (practice limited to worthless golf tips).
    Mar 23, 2013. 10:26 AM | Likes Like |Link to Comment
  • Why Shorting Stocks Is The Worst Investment Strategy Ever [View article]
    yes, stately bird of yore, I concur evermore.
    Mar 23, 2013. 09:30 AM | 1 Like Like |Link to Comment
  • Inverse VIX ETFs: Reversal Coming After Over 100% Rally? [View article]
    Head and shoulders for a vix related product?
    Mar 22, 2013. 07:26 PM | 6 Likes Like |Link to Comment
  • Risk Update For 3 Coal Companies [View article]
    ACI has long been one of my favorite trading stocks. Of late, it has been 'stable'-seems to have been hit with everything including the Whitehouse kitchen sink.
    I've sold some 6 and 7 dollar puts-also have some ATM short call spreads and some OTM. I tend to trade the OTM on dips (sell on uptick/close with down tick)-this is tedious, but I know the stock and price action. I plan to hold the short put spreads-some are in the green- until expiration. And, yes, I sell and add to short puts on downtick.
    At some indeterminable point, the stock will begin to resume a more normal life. It's definitely worth selling a few puts if you're a long-only type. It can't go below naught.
    Mar 21, 2013. 08:46 PM | Likes Like |Link to Comment
  • Short-Term Pleasure, Long-Term Pain [View article]
    That seems reasonable- the ranges you suggest. I generally don't care what the market does, as long as there are up days and down days. But, it does seem that we approach some type of inflection point. It's no secret that the average person is worse now, or at least no better off, and, perhaps more importantly, their prospects are dim (relative to any time post WWll).
    The central bank experiments in managing fiat money are destined to be something that future historians will ponder for a long time. But a crack addict lives a life of perpetual denial. Just one more fix and things will be better. So, it's a crap shoot as to the point in time when the masquerade must come to an end.
    I shorted airlines and homebuilders yesterday, hopefully at a high-it was certainly at a 52 week high. It looked like a good move today, but a couple more days of gains and I'll probably sell a few put spreads. I just can't make myself take a decided directional stance. Again, I've had a hot hand just collecting option premium by fading both bulls and bears.
    But, beyond gaming the market, the fundamental point is that something is 'rotten in Denmark,' and most pundits are holding their noses and covering their eyes. I've never been a fan of gold, but perhaps, just maybe, some long LEAPs might be timely.
    The possibility that things get out of hand? Well, it seems that things are out of hand now-it's just that the distance between the cognition point and the market behavior is, as usual, up to the clowns. Therein, lies the challenge.
    Mar 21, 2013. 06:59 PM | Likes Like |Link to Comment
  • Short-Term Pleasure, Long-Term Pain [View article]
    I'm working on various scenario trading strategies, but what would be unexpected? In other words, history won't repeat exactly. Another important aspect is that it has taken two generations to arrive at where we are today. I don't want to be nostalgic, but if you want to take a 200 year perspective, we may have witnessed the honey and high cotton era.
    What I call the 'core system'-the legal and political framework- is deeply embedded. The administration of justice and the interrelationship of public/private institutions will likely continue in much the same form for at least another 100 years.
    So, the facilitation of sociological and demographic changes, while appearing disruptive and contentious at times, is mostly noise. Great debates and arguments might catch the attention of many, but, through it all, the reality is that you could pull a Rip Van Winkle 5 times over, and not miss much.
    It is an unexpected natural catastrophe that will damage the system far more than central bank machinations, and political insanity. So, I think the current strategy is to deploy sideways option selling, and collect premium. Although some naysayers believe that premium is too low to sell, my financial results would beg to differ. Several stocks and ETFs work for this particular strategy. Now, I fully expect large downdrafts, and the odds thereof increase as the S&P tops the 1600 number. I am looking at some ranges, and thinking about various percentage moves. Certainly the vix will spike within the next 6 months or so. Thus, I am establishing call ratio backspreads now, so that I don't have to scramble later.
    It will be interesting to see how the HFT crowd, as well as the wash sale guys, deal with a bit more instability. We know the johnny come-lately retailer will average down initially, then hit the panic button. A lot of mutual funds will do the same-ALTHOUGH those rascals have hired some decent talent to devise blackswan strategies as well-this is a new development, and that might foster a more orderly market decline. But, I don't know that anyone has factored in all the technological changes and proliferation of inverse ETFs that could buffer sustained large downdrafts.
    If anyone has any thoughts on this theme, please sound off.
    Mar 21, 2013. 03:40 PM | Likes Like |Link to Comment
  • Why Shorting Stocks Is The Worst Investment Strategy Ever [View article]
    On a wall in the office of my hedge fund, I had the following quote from Jesse Livermore:
    "It takes a man a long time to learn all the lessons of all his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side."
    And, "I was not, and I have never felt that I was, wedded indissolubly to one or the other side of the market. That a bull market has added to my bank account or a bear market has been particularly generous I do not consider sufficient reason for sticking to the bull or the bear side after I receive the get-out warning. A man does not swear eternal allegiance to either the bull or the bear side. His concern lies with being right."
    A big portion of my 2012 gains came from shorting BIDU (as well as other Chinese internet stocks) and shorting VXX. I also shorted coal stocks. But, generally my trading methodology is to sell both puts and calls, playing both sides against the middle, and against the clock.
    "Now ev'ry gambler knows that the secret to survivin'
    Is knowin' what to throw away and knowing what to keep.
    'Cause ev'ry hands a winner, and ev'ry hand's a loser."
    As the colorful coach Bum Philips once said of the legendary Bear Bryant: "He can take his team and beat your team, or he can take your team and beat his team."
    I don't expect the author to understand any of this-but hopefully a few readers might.
    Mar 20, 2013. 10:58 PM | 3 Likes Like |Link to Comment
  • Housing - Misguided Optimism Continues Unabated [View article]
    Your bio states that you are trained as a physicist-your language indicates the elusive thoughts of a bankster:
    '...too early, death knell, recovery, first inning, one day, good thing, very similar...' A bit ambiguous for a man of science?
    Wasn't it Wolfgang Pauli that said, upon his idea of the neutrino in 1930- "I have done a terrible thing, I have postulated a particle that cannot be detected."
    Mar 20, 2013. 10:29 AM | 1 Like Like |Link to Comment
  • Housing - Misguided Optimism Continues Unabated [View article]
    Median income is the most important determinant of a sustainable quality of life. Housing and other spending decisions are a function thereof.
    While I basically agree with the premise of the article, and the suggested historical amendments, the most telling chart is the decline in median income. The first decline in the post-war era will have many unanticipated repercussions. This will play out over many years, but the diminished wealth of the 'middle class' is beyond debate.
    My own opinion is that discussions relative to whether the housing market has 'recovered' or is 'showing signs of life' and so on and so forth, is a sophomoric masquerade. I saw a youngish pundit on TV extolling the housing recovery-he was so rabid that he was foaming at the mouth. I half expected his mother to come out, slap him, change his diapers and take him home. I normally control myself, but I just couldn't help but short several thousand shares of the tulips. made a quick $2,400 on the foray, but will establish more responsible short positions today. My agreement with the Cosmos is that all the money will go to the humane society. And, in that regard, riddle me this-if housing has recovered why is it that people are so desparate that they will abandon a helpless animal-in record numbers? Well?
    Mar 20, 2013. 08:53 AM | 4 Likes Like |Link to Comment