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  • How Hedge Funds Influence Gold Markets [View article]
    To think not of gold as gold is the golden rule of trading.
    Jun 27, 2013. 10:51 PM | Likes Like |Link to Comment
  • Gold's (GLD -0.9%) tumbled to new bear market lows in the last few minutes, now just a few dollars above $1,200 per ounce. When all else fails, check with the technicians - one isn't seeing support until the $1,150 area. [View news story]
    If you're long, and only trade one way-there will be an opportunity to average down your basis.
    If you're short-don't get greedy.
    If you trade options, a limited spec play would be to use longer-dated bull call spreads on GLD (or a similar ETF). GLD also has mini-options for smaller number of shares. With 10 shares of GLD, one can sell a mini-call. If nothing else, it's a good way to learn about ccalls or "mini-ratio writes." (my terminology).
    Jun 27, 2013. 08:16 PM | Likes Like |Link to Comment
  • 3 Investments For When The Gold Sell-Off Ends [View article]
    Only ITM calls will provide a close correlation with DUST stock. While, OTM calls can work, the range of possibilities can be challenging. The better move would be to sell DUST puts, and use that cash to buy DUST calls.
    Of course, you can also sell calls against your NUGT positions. These tactics are not mutually exclusive-it depends on the nature of your gold positions.
    DUST option spreads are very wide, and should be factored in your strategy mix. I wouldn't rule out adding more NUGT on sell-offs (perhaps determining a basis objective), and selling calls on rallies.
    Additionally, selling LEAP puts might be considered as the method by which you add to NUGT. But again, so much depends on the size and nature of the initial position.
    Perhaps, the easiest hedge is to trade DUST stock in some percent of your NUGT holdings. The aim would be to slowly chip away at the collective basis. BUT, patience is essential. It might take several months to 'right the ship'.
    Jun 25, 2013. 07:51 AM | Likes Like |Link to Comment
  • Opportunities In Home Healthcare [View article]
    Interesting-would seem though that barriers to entry would be very minimal. Also, one of the first things to occur to me is the good ol' lawyers and malpractice issues-similar to the nursing home stories that make news from time to time.
    Jun 24, 2013. 10:52 PM | Likes Like |Link to Comment
  • The Fed's Money Mirage [View article]
    It's really simple. Returns to capital will dwarf returns to labor. Decreasing median income is the antithesis of capital's ability to leverage. One might work two or three jobs, but the returns vs capital are increasingly de minimis. It's a losing battle.
    As Interactive Brokers illustrates, $200,000 can be levered by a factor of five, for only 1.3%. This is for reasonably affluent retail investors. Hedge funds would laugh at that deal.
    But, the point is that the enormous amount of liquidity is a benefit only to those in a position to use it. This is the reality. Extraordinary-even unprecedented- leverage drives markets. Therefore, any decline in the S&P is simply a reduction in the amount of leverage deployed at a given point.
    And so it goes. Or as Macdonald Carey said so elegantly: "Like sands through the hour glass, so are the days of our lives."
    Jun 24, 2013. 09:54 PM | 2 Likes Like |Link to Comment
  • 10 Reasons To Beware This Market Both Short And Long-Term [View article]
    Interesting tidbit re Italian small business failures. Is this an international issue? Clearly, small business in the US (other than pawn shops and loan sharks) has not participated in the 'recovery.' I wonder if this phenomenon is a dimension of the economy that is underweighted in the scheme of things. Are there longer term societal implications? Not just for Italy and the US, but other economies as well?
    Jun 24, 2013. 07:46 AM | 3 Likes Like |Link to Comment
  • Is The Market Correction Over? [View article]
    It won't be over until the 'new normal' has reached an interim equilibrium point. Or, it won't be over until the fat lady sings. Or, it won't be over until it's over. Or, a 'correction' can never be 'over' because markets continuously overshoot and undershoot a mythical point. Or, all of the above/none of the above.
    Jun 24, 2013. 07:33 AM | 1 Like Like |Link to Comment
  • Gold: Falling Prices Not End Of The World [View article]
    No pot of gold at the end of the rainbow- and no Coup de Ville hiding at the bottom of a Cracker Jack box-you'll never find your gold on a sandy beach-but don't be sad-there's still time to short.
    DISCLOSURE: short gold, oil, emerging markets (Brazil, Thailand and Mexico specifically), an assortment of Chinese internet stocks, and short some bond funds. And, I'm perpetually short airlines and homebuilders (that's in my DNA and nothing I can do about it). Long via LEAP structures: rails, energy companies, biotech, pharma. Hold more complex structures on some tech stocks, such as AAPL and BBRY. Pair trades using VXX/SVXY/ FAS/FAZ (and similar but competing sponsor ETFs). Short and longer-term option strategies on ACI and WLT. My new puppy is 8 months old today!
    Jun 23, 2013. 10:14 AM | Likes Like |Link to Comment
  • Short The Market: It's Simpler Than You Think [View article]
    If everyone knew how to short the market, it would never drop very far. It would begin to resemble the hypothetical efficient market-essentially reflecting a consistent, bond-like temperament.
    Panic selling creates enormous short-selling profits. The simple reality is that these extraordinary (and often quick) gains, are created by the fear and ignorance of others. Fear, in my opinion, is but a manifestation of ignorance. If one is properly hedged, there is no reason to fear fluctuations. So, the extent of a decline is directly correlated to uninsured risk. The put/call ratio analysis is somewhat reflective of the degree to which a drop is likely.
    Jun 23, 2013. 09:37 AM | 2 Likes Like |Link to Comment
  • Why I'm A Seller Of Volatility And VIX Products [View article]
    Event 'A' is not likely to occur, therefore implementing Strategy A1 is sub-optimal. However, if "A" does appear as a higher probability, then one should implement Strategy A1.
    IF a frog had wings....

    Event "A" is any act or articulation by the Fed which will cause the stock market to experience 'higher' volatility.
    Strategy "A1" is the set of tactics specifically designed to mitigate the consequences of Event "A".
    "IF" is the cosmological variable which establishes conditional premises, and generally allows a carbon-based life form to pontificate ad hoc, ad infinitum and ad nauseum. It is sometimes used with the word "only" as in "If only I could do it over again..."
    Jun 23, 2013. 09:20 AM | 2 Likes Like |Link to Comment
  • Now Everyone Knew The Gold Plunge Was Coming [View article]
    I've suggested, for several weeks now, that a short gold strategy can be implemented by selling DUST puts, and using the premium to buy the calls. It's a very cheap, but powerful way to replicate the action of the underlying.
    And, this doesn't have to be a trading or speculative position-it can be used to hedge one's long gold position. It's not too late to implement this (or a similar strategy)-but as gold drops, expect event driven days where gold will explode to the upside. That's a good time to hedge.
    Furthermore, if you own GLD (or a similar ETF), you can collar your position and prevent any further downside. You can also experiment with rehab strategies as well. But, I would urge those of you that have been kicked in the head with your one-dimensional long bias, to take a look at the chart of DUST.
    Inflation/deflation? Don't try to out-think the tape. Just listen!
    Jun 22, 2013. 06:41 PM | 1 Like Like |Link to Comment
  • The End Of An Era [View article]
    James, not that it matters, as we all use words and phrases to our liking-but I would characterize the 'wind down' of QE as the Post QE Phase.
    This phase would contemplate a short period of time (historically speaking), and I would use the term "era" to denote and encompass the advent of structured and interventionist capitalism. This philosophical change resulted from, not just the sub-prime and related debacles, but the exponential adoption and implementation of technology to replace labor. Hence, gains derived from productivity have accrued to multi-nationals, where the direct consequence was to render human or manual input increasingly marginal.
    So, I suppose we could talk about the era of the internet, as well as the importance of the silicon chip (with increased computing capability). Within this era, we would witness an assortment of revised governmental and political ideology, which would not be recognized by capitalists from the early 20th century.
    The ancillary issue, which tends to go unnoticed, is the manner in which the executive branch of government exerts undue influence over micro situations, and/or specific entities. Undermining and usurping bankruptcy actions or normal legal process is eerily reminiscent of failed republics. So, we live in an 'era' where the speed and capability of our mechanical surrogates challenges the very concept of having a productive 'job.' This is the I Robot era. And, thus far, neither the Fed nor the federal government, have demonstrated even the slightest understanding of same.
    I agree that we will witness enhanced volatility. Yet, the volatility is not related to whether one instrument is over/under valued-but rather a free-floating anxiety-a grudging recognition that the genius of man in some areas may sabotage the livelihood and expectations of others. How does society, thru its governments, applaud this genius on the one hand, and mitigate the obvious consequences on the other?
    All in all, perhaps this is the "Era of Pseudo- Capitalism."
    Jun 22, 2013. 06:01 PM | Likes Like |Link to Comment
  • SPY Has Another 5% To Fall [View article]
    Conviction has no purchase where actions are absent. You advocate a short position via VXX, but then personally claim that you don't follow you're own strategy?
    Jun 21, 2013. 08:23 AM | 1 Like Like |Link to Comment
  • Markets Revert To Common Sense [View article]
    True, but the perception of a 'problem' is relative. The same amount of adrenaline gushes forth in a minor fender-bender, as being caught in a thunderstorm. Or, facing a grizzly bear or a lion in the wild will elicit a comparable response.
    Further, after a prolonged exposure to a problem, one gets somewhat anethesized (provided no immediate physical harm is expected). This response is necessary for survival.
    History is all about problems and challenges. It is a constant backdrop to some undetermined destination. This is why I often find such terminology as buy/hold, speculate, trade, invest, daytrader, swing trader, etc, etc, disingenuous, if not trite. The best lessons are often from the very crux of our reliance upon nature for survival. These lessons are as old as man, and can be found throughout our most treasured teachings:
    "To everything there is a season, and a time to every purpose
    under the heaven:
    A time to be born, and a time to die: a time to plant, and a time to pick up that which is planted.....
    A time to get, and a time to lose; a time to keep, and a time to cast away;
    A time to rend, and a time to sew..."
    Jun 21, 2013. 07:17 AM | 1 Like Like |Link to Comment
  • Why The Housing Market Is An Accident Waiting To Happen: Part One [View article]
    It's a very complex set of inter-related transactions-going back to TARP, accounting rules changes, etc. The newest wrinkle is for the recipients of TARP funding and Fed arbitrage 'assistance' to extend credit facilities to entities like BLK. The bank can book a loan (obviously), but can also expect to have foreclosed property taken off their hands by their new-found borrowers. So, rather than make $100,000 individual loans to Jack and Jill, it's a lot easier to make a $500 Million loan to one entity. And, it moves the real estate assets off their balance sheets, at a much faster clip. It's a wheel within a wheel, where the usual players make the big bucks. That people can't see how much they're getting screwed is beyond belief.
    Jun 20, 2013. 06:42 PM | 7 Likes Like |Link to Comment