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hayekvonfriedman

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  • The Bottom Is In, But Dividend Investors Should Still Take Cover [View article]
    I've done very well at generating income with covered-calls and cash-covered puts, but even deep OTM puts placed me in the position of buying back at a loss or take a flyer on a declining stock market in the past two weeks.
    But again, that is what makes it a market and expected return high.
    Aug 30, 2015. 04:32 PM | Likes Like |Link to Comment
  • The Bottom Is In, But Dividend Investors Should Still Take Cover [View article]
    MM: Get a new broker. I am charged much less than that commission schedule at Fidelity.
    Aug 30, 2015. 04:28 PM | Likes Like |Link to Comment
  • This Is Not A Game The Federal Reserve Wants [View article]
    gio, can't agree more. Here is the latest example of speculation by the Fed at Jackson Hole:

    U.S. inflation will likely rebound as pressure from the dollar fades, allowing the Federal Reserve to raise interest rates gradually, Fed Vice Chairman Stanley Fischer said on Saturday in a speech careful not to overreact to a possible Chinese slowdown.

    The influential U.S. central banker was circumspect whether he would prefer to raise rates from near zero at a much-anticipated policy meeting on Sept. 16-17. But he said downward price pressure from the rising dollar, falling oil prices, and slack in the U.S. labor market is fading.

    The cautious confidence from Fischer, as well as from Bank of England Governor Mark Carney who spoke at a conference alongside him, suggests at least two major central banks are poised to look beyond a week of financial-market turmoil brought on by fears that China's economy is faltering.

    Read More › Protesters ask Fed to delay at Jackson Hole summit

    "Given the apparent stability of inflation expectations, there is good reason to believe that inflation will move higher as the forces holding down inflation dissipate further," Fischer told a central bankers' conference in Jackson Hole, Wyoming.

    "With inflation low, we can probably remove accommodation at a gradual pace," he added. "Yet, because monetary policy influences real activity with a substantial lag, we should not wait until inflation is back to 2 percent to begin tightening."

    Central banks and governments globally are bracing for the Fed decision, which could weaken foreign currencies and put even more pressure on emerging markets already reeling after the volatile global stocks selloff.

    At the same time, Fischer, Carney and other policymakers are wrestling with the world's stubbornly low levels of inflation, and recognizing that the rapid pace of globalization over the last quarter century may have made it harder for any individual country to move inflation higher.

    "There are profound secular and cyclical disinflationary forces at work in the global economy," Carney said, making it harder for central banks in London, Washington and elsewhere to reach the inflation targets they have set as a core policy goal.

    No China syndrome...yet



    Federal Reserve Vice Chairman Stanley Fischer speaks during an interview at the Federal Reserve Bank of Kansas City's annual Jackson Hole Economic Policy Symposium in Jackson Hole, Wyoming, August 28, 2015.
    Fed's Fischer: Too early to decide on Sept hike

    The Fed has said it wants to be reasonably confident that inflation, which has been stuck below its 2-percent target for a few years, will rebound in the medium term. The pickup in prices could stall, however, if a slowdown in China and falling commodity prices drag down the global economy.

    "At this moment, we are following developments in the Chinese economy and their actual and potential effects on other economies even more closely than usual," said Fischer, a close ally of Fed Chair Janet Yellen.

    The Fed's preferred measure of inflation slipped to 1.2 percent in July, the lowest in more than four years.

    Fischer said the dollar's year-long rise played a big role in that weakness, and it could restrain U.S. gross domestic product growth through 2016 and even into 2017 - all the more reason to "proceed cautiously" in raising rates, he said.

    Outside the conference on Friday, Fischer made an impromptu television appearance to say it was too early to say whether the Fed should in September hike rates for the first time in nearly a decade. Markets, on alert for any sign policymakers were ruling out a September liftoff, read Fischer's remarks as suggesting a tightening would at least come this year.

    While central banks in China, Japan, and Europe are ramping up monetary stimulus to fight off deflation or boost growth, the BoE, like the Fed, is plotting when to begin tightening policy.

    Carney said a slowdown in China could depress UK inflation further but it did not, for now, change his central bank's position on when and how it might raise rates.

    Economists predict the Bank of England is likely to start raising rates in the first quarter of next year.

    The developments "are unlikely to change the process of rate increases from limited and gradual to infinitesimal and inert," Carney told the conference, reiterating that the BoE's policy decision would become clearer "around the turn of the year."

    gio, couldn't agree more. Their forecasts for the past years have been so far off that it is almost a coherent strategy to speculate against them.
    Aug 30, 2015. 10:29 AM | Likes Like |Link to Comment
  • This Is Not A Game The Federal Reserve Wants [View article]
    While a political animal with multiple agenda that transcend its dual mandate ignore the Fed at your own peril. Now that begs the question of what effect their "data dependent" (LOL) decisions will have on the macro-economy as well as financial markets, but it still must be recognized as a major shaper of public opinion among the masses.
    Aug 30, 2015. 10:17 AM | Likes Like |Link to Comment
  • What Are The Costs Of Fearing Volatility? [View article]
    I was 70% cash going into three weeks ago so thought sell way OTM puts. I did not want to buy the underlying in that type of a market late last week so bought back the puts at a price that was much higher than what I sold for. It had been a good strategy for several years for me, but the market can move faster and further than is implied by "the Greeks." Caveat emptor.
    Aug 30, 2015. 09:57 AM | Likes Like |Link to Comment
  • What Are The Costs Of Fearing Volatility? [View article]
    Animal metaphors aside much of one's perspective on volatility depends on your stage of life-cycle investing. I am two years out from retirement and will not be beguiled with market folk-lore and myth that says that staying fully invested at all times and embracing volatility is the winning strategy and any other way to look at it is a sucker's game.
    Aug 29, 2015. 05:29 PM | 2 Likes Like |Link to Comment
  • The Importance Of Your Time Horizon [View article]
    Best to all of us "aging folks" as time keeps on ticking.
    Aug 29, 2015. 05:19 PM | Likes Like |Link to Comment
  • Stock Market Forecasts Better Economists [View article]
    I can't afford to be wrong on the long side, so I am out of the market at this point. If I am wrong I don't make money, if I am right I avoid a big loss. Risk management is a necessary part of any successful investing program.
    As one who has been investing for thirty years, know that you don't have to be fully invested at all times. In fact there are only a few highly profitable trades usually per year, so I may miss the bottom and the top but I look for a good pivot point to turn into a confirmed trend and catch the bulk of the move.
    Excellent point that most of the financial advising industry makes money when they keep you fully invested and churn your account.
    Aug 29, 2015. 04:59 PM | 4 Likes Like |Link to Comment
  • The Importance Of Your Time Horizon [View article]
    Good article.
    As one within two years of beginning retirement I could not sit a week ago Thursday and Friday and risk my portfolio cut approximately in half again as it did in 2000 and 2008. Yes, they came back, but I still had time to benefit from an eventual recovery. I don't have that luxury now.
    BTW, my selling wasn't great as I was already 70% in cash.
    I always make my most probable case very conservative and look at extremes which is why I had about 90% of that cash in short cash-covered deep OTM puts. I still got took out. Learning is the gift of such teaching moments. I will be even more conservative with wider ranges in my ex-ante analysis.
    Aug 29, 2015. 04:44 PM | 2 Likes Like |Link to Comment
  • GDP Stronger Than Expected [View article]
    The market rebounded on Fed comments at Jackson Hole late in the week, so I disagree that the Fed hasn't propped the markets up once again and the GDP number while positive is actually weak.
    Aug 29, 2015. 10:36 AM | 3 Likes Like |Link to Comment
  • The Stock Market Speaks - We Learn Irrationality Isn't Always Associated With 'Exuberance' And 'Euphoria' [View article]
    I made the mistake of selling what I thought were far OTM Puts to increase income on my 90% cash holdings. I got took out and bought them back at a loss except for those I was willing to have exercised. Another lesson at the strict school of investment.
    What are those lessons: if you are going to go to cash, then go to cash, don't fool around picking up nickels and dimes in front of a paving machine and the market can move much further much faster than probabilities suggest.
    Aug 29, 2015. 10:28 AM | 4 Likes Like |Link to Comment
  • Good Economic News May Not Curb Market Turbulence [View article]
    Agreed.
    Aug 28, 2015. 06:22 AM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: The Start Of Something Big? [View article]
    U.S. stock futures dropped in early trade late Sunday following the worst week for stocks in four years. Futures for the Dow Jones Industrial Average dropped 139 points, or 0.8%, to 16328, while futures for the S&P 500 [ESU5] lost 17 points, or 0.8%, to 1955. Volume is light. Investors are debating whether will deter the Federal Reserve from raising interest rates in September. The new week includes reports on durable goods and consumer confidence, among other items. In a note to clients last week, Jeffrey Saut, chief investment strategist at Raymond James, noted.
    http://bit.ly/1I5U3nr
    Aug 23, 2015. 07:57 PM | Likes Like |Link to Comment
  • Stocks: Perspectives On The Selloff [View article]
    Stocks may go up from here or they may go down, but like Jesse Livermore I will wait for a confirmation of a trend before going either way. Don't be afraid to be out of the market entirely for a time, and for me that time is now.
    By the way, the one who doesn't know anything is the one that dismisses others searching as unworthy.
    Aug 23, 2015. 07:50 PM | 7 Likes Like |Link to Comment
  • Are Stocks Cheaper Today Than Yesterday? Or More Expensive Than Tomorrow? [View article]
    Hope is not a strategy but I hope that you are right.
    Aug 23, 2015. 07:28 PM | Likes Like |Link to Comment
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