Saturday, September 26, 2009

College Football

TN -22
Army +10
GA -12

Saturday, September 19, 2009

Stock Watch

Stock Watch
This time someone else got left holding the bag. I was able to dump shorts of FAZ and SRS at the beginning of the week thus, letting some other dope hold those worthless options. Unfortunately, I missed my opportunity to take profits on C, and was left with nothing on that one. But that's ok... Even Babe Ruth struck out a few times. The key will be to capitalize big on my hits just like the Babe did when he took those balls out of the park!!! Chances are that I may replay FAZ and FAS shorts again since it appears that this market will rip past 10,000 this coming week.

SLV continues to be the mainstay of my current portfolio. While it started off as a place to hold cash while I prepared more ways to short the market, it turned out to be a bit more of a hedge. I like GLD, but believe SLV has yet really made its move. I do however want to remind readers that SLV and GLD are no where near their all time levels of the 80s. We can remember when the Hunt Brothers made their move to corner the silver market... and almost lost the Kansas City Chiefs in the meantime. Adjusted for inflation... if you would have bought gold at the top of the market you still would be down over 50%.

I do not believe there is any type of a concerted effort to corner any of the precious metal markets these days. However, between advertisements about turning your gold into cash, and even better the bullion centers that will sell you Gold Eagles or bars I was prompted to take action. So I called these Bozos and asked two simple questions... How do I buy gold? (That was the easy question)... The real question I had was... How do people sell their gold once they buy it. That was a bit more of an uncomfortable question. This is where I was told about using a mailing service to mail in whatever gold bars I would have purchased... insured them... and hope that they arrive when gold's price is still up. There seemed to be enough hols in this guy's plan to sink a battleship.

I entered into 1/7.5s on PQ which was one of my darlings during the oil boom. I believe this one could be a home run as well due to the dual production of oil and natural gas. Plus, they are located off the coast of Texas and Louisiana and it thus far appears to have been a more mild hurricane season... I still look for a tightening of of production which will drive prices. Secondly, as the U.S. Dollar appears to be under more pressure, commodities are a natural defense.

I am considering a covered call strategy where I would actually purchase common share of the stock, and place my shares up for options. This is where many of the big dogs play. And, while I do not claim that I am in the same league as the big dogs, I do believe there is a portion of my portfolio that can be used for this strategy.

Call it irrational exuberance, or just plain dumb. Whatever it was, I noted the explosive movement of WYNN and LVS this week. The former could make a reasonable argument for its move through the spin-off of the Maccau operations coupled with a concerted effort in the United States to cater to the more affluent gambler. I am Sheldon Adelson's house is made of cards These stocks will continue to rise as long as the mirage of economic improvement persists. I am sure Vegas will be back on its feet in no time. One footnote is that HArrah's gaming purchased a dilapidated racetrack in North Randal, Ohio once the governor and legislature sold their souls to the devil on slot machines int eh race tracks. I am certain the sale is contingent upon the state winning the lawsuits against several conservative and pro family organizations in the Buckeye state.

Opps... College Football Selections...

Due to circumstances beyond my control the last blog did not publish in its entirety. I deleted it and will republish later...

College Football Selections:
Bowling Green -3 Marshall
Northwestern -3 Syracuse
B.C +6.5 Clemson

Saturday, September 12, 2009

Lessons from Standard Oil... Big Banks New Power... College Football... A Conservative from a Conservative State...

Lessons from Standard Oil...
Nearly a century ago, the oil fields of western Pennsylvania gushed think black crude oil. Derricks were placed almost on top of one another, and oil ran so thick that it flowed out into the streets and local streams. Boom towns like Titusville and Oil City sprang up over night. However, it took an Ohioan by the name of John D. Rockefeller to reign in the awesome power of oil by controlling the only aspect of production that truly mattered... refineries.

Rockefeller was able to mater the refinery business... and use almost every crude by-product imaginable. He was also master of pinching pennies. As the story goes, the hands-on leadership of Rockefeller had barrel makers experiment with the number of soldering drops used to seal a barrel. Rockefeller calculated that if two drops of solder could be saved on every barrel, he could amass a fortune in savings.

Trust-busters and other progressive candidates like Teddy Roosevelt claimed that Standard Oil had become too big and too powerful. Later, the Federal government broke up the Standard Oil Company for uncompetitive business practices under the Sherman Anti-Trust Act. This created a number of smaller oil companies including Exxon, ARCO, Conoco-Phillips, Standard Oil, and British Petroleum.

It is interesting how times have changed. We are currently witnessing the creating of trusts in the financial sector. Smaller local and regional banks are being squeezed out. Yet big banks like Citi, Goldman Sachs, PNC, Morgan Stanley, and Bank of America continue to get bigger. Yet, we are more focused on health care issues which while a major component of every day life, will pale in comparison to the power that is being wielded by big banks. Should this course hold true, banks will emerge from this crisis with new found powers, and more importantly added leverage on Capitol Hill. (2)

As I have reminded readers, Founding Fathers like Thomas Jefferson warned against bank interests claiming "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

Later, Andrew Jackson took the entire bank lobby to task. Even after he did not renew the charter of the Bank of the united States, Jackson claimed " I have always been afraid of banks." Not only did he fear the power of banks, and their ability to manipulate finances but more importantly, he knew that banks could also manipulate politicians and policies as well.

You heard it here first. Should Congress continue to press the Federal Reserve for an audit, there will be another financial panic... and you can take this one to the bank!

College Football

I kicked myself. Sure I went 1-2 with neither East Carolina nor Missouri covering. I was more disappointed with the fact that Missouri really should have been Boston College, as I wrote down the wrong selection for my reader. Regardless, I am currently at 4-2 for the season.

Jim Tressel played the last quarter of the game not to lost, as opposed to playing to win. I just knew that USC would score on the final drive... I have seen in happen too many times to teams like the Browns where one of John Elway's drives... an Ernest Byner fumble... a Brian Sipe interception to Lester Hayes... or whatever... My point is that the Browns are not the kind of comparisons I want to make to any team I follow unless you are the Bad News Bears.


College Football... Have We Learned Our Lesson? Liar...

College Football Selections
East Carolina +7.5
Michigan +5.5
Missouri -17

For the latest line (Click Here)

Have We Learned Our Lesson?
If the goal of the U.S. government in general and Wall Street in particular was to re-inflate the bubble, then it is working. Sure, the markets might have been overly beaten down last March. Sure, pessimism was at its highest in March. But what has really changed? Are we as a nation doing business any differently? Is Wall Street more cautious today than they were in March? We all know the answer to those questions.

However, after every recession and economic downturn there are always a clear list of winners and losers. Whether it was a successful business model. A great product. Pure innovation. Access to government officials. Or, quite simply a premonition that a major shakeout was on the horizon, one thing is for certain. There are a number of sectors and businesses that will emerge stronger and more efficient from this crisis. Yet, we know that a number of losing businesses were saved as well. Stupidity, excessive risk taking, and lobbying kept a good portion of companies that should have failed into the pits of bankruptcy. Trust me, no one wants to see American businesses succeed more than I do. However, we are reminded that aide and propping often times do more long-range good that bad. (See McKinley's tariffs on textile imports... when the business was on its way out of the United States.)

According to Tim Geithner, there is a major re-structuring of Wall Street that is in the works. Dare he say the word reform? However, I believe most of the proposed reforms will be phoo-phooed by the likes of Barney Frank, Chris Dodd and friends. In the end, the true reforms will be lost somewhere in the Congressional Offices in D.C..

In a recent Townhall Meeting, Representative Steve LaTourette suggested that the Healthcare Bill will have a provision which allows coverage for illegal immigrants. I believe LaTourette is telling the truth. And while the Democratic Party is currently running the table in D.C., it is likely they will have their way in ANY kind of legislation.

The question is should a Congressman call the President a "Liar" during an address to Congress? If we were in Great Britain where Parliament meets, I would say yes. (Click Here for a snap shot as to the way the Brits. run their government meetings.) However, we are Americans. The Republicans do not have the same access to media outlets as the Democrats. I am certain it is a source of frustration. There is desperate need for fairness (an ideal of any democracy prevails at all time.) Yet, if you agree with the President or not, there is a time and place for everything. The truth must be told... The 5-10% of Americans who actually pay attention to political debate... those digest legislation... and those who can make an informed decision must stay connected to these political debates.

Sunday, September 6, 2009

GMACs Candid Response to "The Rest of Us." ... China Syndrome... College Football Results...

GMACs Candid Response to "The Rest of Us."
Since our house is on the market, I thought it a good idea to call GMCA. This fine institution holds our mortgage. I was curious about our payoff figure if and when we sell our house. After that vital information was shared, I had a few questions I needed answered:

Question: If my house does not sell, am I privy to the government refinance programs?

GMAC's Answer: If you are referring to the Obama Loans (as we call them at GMAC), you must meet three criteria.

1. You must submit a letter requesting loan modification.

2. You must submit financial information which demonstrates economic hardship.

3. Our underwriters must agree that your unique financial situation qualifies for the Federal Loan Adjustment Program.

Should that be the case, there was little or no reason to carry this conversation any further. My credit score is in the 800s. While my income is not as high as some of the charlatans applying for the help for homeowners program, I was certain that I have no chance meeting the underwriting standards for loan modification. It seems as though the deadbeats are getting rewarded here, while they are in many cases keeping a home that they never should have bought in the first place... Go figure. Yet, I do see this as a plan aid banking and mortgage companies.

The China Syndrome
China became a bit more intriguing as the Communist country announced that there will a shut down of specialty elements. These are the same elements that are used in ceramics, cell phones, etc. Should China continue this degree of politics, you can rest-assured that this move will hurt China more than the rest of the world.

Since China is responsible for nearly 99% of rare earth mining, it does put those companies who specialize in those products subjects of interest. China will create pricing pressures on these materials. As a result, ceramics to cell phones will increase in price. Maybe it is time to consider a few companies which specialize in this mining area. As for the rest of China, FXI is probably the best way to short them. A "sluggish" growth prospect for the rest of the world means China will have to sop up their extra demand... or concentrate massive wealth reserves on infrastructure.

College Football
To those who followed my college football selections were treated to a 3-0 sweep.
Notre Dame was an easy cover. Connecticut did what it took to cover the spread against Ohio University. (Why does the MAC even have football?) And Army was an outright winner against Easter Michigan.

I hope to list three more complementary picks buy Friday.

Saturday, September 5, 2009

G20... The Spanish Armada...College Football

This weekend's G20 Summit will meet a background of recovery. After all, world markets have rallied off lows, unemployment in the U.S. seems to have peaked, and many are tauting the effects of economic stimulus. Not completely convinced that stimulus is completely working, leaders will be a bit squeamish to turn off the spigot as of yet. Still though, there will be mild cause for celebration.

However, the collective group will address bank capital requirements just in case this "era of good feeling" wears off as soon as the stimulus money is gone. Lena Komileva, head of G7 market economics at Tullett Prebon, said officials will unite over the need to keep fiscal and monetary stimulus going for now, and "coordinate exit strategies later." Some media reports indicated there is friction among officials on those points.

"Amid ongoing uncertainty about the sustainability of the current concerted global upturn, focus will revolve around proposals for higher capital standards for banks and curbs on executive pay and bonuses." (1)

One needs only to look towards Spain, the sick man of Europe for a dose of economic reality. Spain has seen wave after wve of stimulus packages that are designed to build bank credit, improve infrastructure, and revive their economy. However, it appears that nothing seems to work unless you are a financier playing the market. As one blurb from Marketwatch suggested "Judging by the amount of road work clogging up Spain's capital city currently, with Madrid practically being unearthed, you'd be forgiven for thinking you were in the midst of a dynamic and growing economy.

However, that's anything but the case. Public works programs have been going on across Spain under the government's so-called "PlanE" bid to stimulate the bleakest economy in Europe, where the jobless rate hit 18.5% in July and is expected to top 20% in 2010 as a decade of growth driven by the now-collapsed housing market painfully unwinds.

Spain is in its fourth straight quarter of recession, with output dropping a sharper-than-expected 1% in the second quarter. Future growth prognosis range from cautiously optimistic at Moody's Investors Service to the downright catastrophic: "Spain is a disaster waiting to happen," says a note from Variant Perception, an institutional research house based in London." (2)

Spain has not been right since 1588 when the Spanish Aramda attempted to invade England and replace Elizabeth I. A great empire ebbed away until even the United States in its colonial period whisked away Cuba and the Phillipenes. With 18% unemployment, see Spain for what it is... a patient on life support.

Could the U.S. be in the same boat? Probably not. However, let's not kid ourselves that everything is peaches and cream as well. Place new capital requirements on banks, and I can almost guarantee that a tightening in credit will continue. Yes, enjoy the enthusiasm of this market... date it... milk it for all that it is worth... but do not marry it.


College Football
Conn. -4 to Ohio
Army +5.5 to E. Michigan
Notre Dame -15 to Nevada

Wednesday, September 2, 2009


Sherlock Holmes does not work at the SEC. The questions is who does? Today a blistering report was released that pointed out how security regulators missed red flags. According to Inspector General David Kotz "Despite numerous credible and detailed complaints, the SEC never properly examined or investigated Madoff's trading and never took the necessary, but basic, steps to determine if Madoff was operating a Ponzi scheme." (1) Now investors and Wall Street alike are facing a government that may want to go into punishment mode, or use financiers as a election scape goat for their own political short-comings. Of course, the real concern should now be that the government would over-regulate... As of now, I believe government officials are afraid to touch Wall Street do to its volatility... so tongue lashings and grand standing may have to suffice in the near term... down the road many reforms may get conveniently swept under the rug.

Interesting that the market has reacted so poorly the last three trading days. Monday, it was speculation that the market has come too far too fast. I believe the Tuesday theme ran something along the lines of the ripple effects from an over-valued China. Today, worse than expected employment numbers coupled with lower than expected factory orders put the market on its heels once again. I find it interesting that no news was bad enough to stop the market rally from March to August. Now it appears a more rational approach is besetting the markets.

Downward pressure on the financials has influenced both by C 9/5 calls as well as FAZ puts. Should the employment numbers be within reason... or better than expected, we could see a sharp move up.

SRS I own common and have considered adding positions to this one since it is trading so low. I ran a hedge with puts as well and will need a meltdown reminiscent of Chernobyl to make this one work out. However, I will maintain the approach of calculated risks for calculated rewards.

I am looking for downward pressure on UNG, SLV, and a may even look at BAC should it breech $15.00. It is not that I am cracked up about the market right now. I am not. I do think that successful trades can me made, but only if due diligence is done and individual stocks can make a run. I am certain that SP 500 funds will be in a holding pattern for a while.

Shorts are starting to look more attractive again. WYNN is hitting resistence as is AMZN and FXI. Keep those birds on the radar screen.