Thursday, October 29, 2009

Ride the Wave? Reality Check...

Keeping up with this blog has been a challenge. I am back in season... that is transitioning from soccer season to wrestling season. Demands on time limit my opportunities to write the blog. However, that is no lack of observations on this end.

First and foremost, I have traded out of PQ... and traded back into to it the other day. The former garnered me a 300% + profit.... I have limits on all of my options as of now... and allowed this trade to execute. I entered back into to OTM calls on PQ now hoping that the few cents that I wagered will in fact role into a nice bankroll just in time for me to make another go at the housing market this spring.
I was also able to reap a 75% profit on CLF puts which I knew were in for a sell-off. Still though, LVS and a few other January puts could be what the doctor ordered.

I find it interesting that the market was selling off on interest rate worries yesterday, and today phony GDP numbers (laced with stimulus and cash for clunker dollars) paved the way for a 200 point rally. Maybe another component of the rally deals with increased demand for American products due to a weakened dollar. Regardless, this is the market we have... and it is the one we have to play.

Reality Check

If my wife and I are and indication, then Generation Xers are definitely living in a state of denial if not complete oblivion. My wife and I visited the STRS counselors on Wednesday evening. We are doing a bit of retirement planning... and retirement planning these days is like trying to catch a speeding bullet with your teeth. The counselor said that we are the youngest couple she has ever seen at one of these retirement meetings. If this is the case, then I will assume that most people really do not put much thought into retirement until it is too late. My wife and I are both kicking around small business ventures that will generate passive residual income, while not compromising our family life. My suggestion is that all followers of this blog should see a financial professional sometime int he future if for no other reason than to plot a future.

Sunday, October 11, 2009

Issue 3 and the License to Steal...

Issue 3 and the License to Steal...

I have always been one to enjoy a friendly wager. A football game here... a poker game there... all in the sport of playing the odds. It is, in its most basic form, a source of entertainment.

However, I do not like Issue 3 for Ohio. Maybe it has something to do with the fact that Ohioans have voted down casino interests on four... FOUR separate occasions. Maybe it is the fact that Ted Strickland and the state legislature attempted to do the old end-around and by-pass voters and legalize gambling in state racetracks through the legislative slide of hand. I know one thing for certain, that whoever wins in the casinos, the real loser is Ohio. Here are some reasons why Ohio should vote NO on Issue 3!!!!

Gambling increases crime, poverty, drug and alcohol abuse, child neglect, bankruptcy, divorce, and suicide. Quite a mouthful huh? Every entity that promotes gambling will fail to mention the human impact of casino gambling. According to one source, the state of Utah alone could have up to 88,000 problem gamblers in their state alone. "Dr. Michael Kalm, president of the Utah Psychiatric Association, believes that gambling can be as real an addiction as cocaine or alcohol." (1) Addictive behaviors suggest that the harmful effects of gambling can lead to compulsive and obsessive behaviors as well. Chances are that 1-2% of people who enter a casino become compulsive gamblers losing everything that they have. Will the casinos be there to pick these people up when they crap out?

To say gambling is good for the economy is like saying that a leech is good for your body. Casinos drain away precious economic resources from the daily lives of people. Chances are that gamblers who lose will be less likely to spend their money in a local establishment like a pizza parlor. Casino do not create any product. In the most basic form, casinos are involved in the transfer of wealth from patrons to casino operators. Casino operators see themselves as businessmen. However a local business like a grocery operates on a 5-6% profit margin... casinos are more along the lines of a 30-35% profit margin. They are nothing more than cash cows for those privileged few who own them. Rich and opportunistic millionaires trying to become billionaires on the public's dime.

Finally, and maybe the most troubling aspect of Issue 3 is the fact that the government is supporting casino interests. On four occasions Ohioans have voted against legalizing casinos in Ohio. Now, it appears that maybe people in our own state government are willing to cannibalize fellow Ohioans for a few bucks in tax revenue. Gambling makes losers out of people. Chances are that parents will not hold casinos up as the model to become a successful and productive human being. Why then would we allow the government to push these interests? (2) Quite simply, when the government stops looking out for the best interests of its people, and starts making sweetheart deals with those who would do us harm, then it is a government that must have lost its moral authority to rule by the people.

In closing, arguments abound as to why we should have gambling in Ohio. New York has it, Pennsylvania has it, West Virginia has it, Michigan has it, and Indiana has it... and we are losing billions of dollars in economic revenue. But I like to think along the lines of Warren Buffet who used the analogy of a dog that fouls up every one's yard. If gambling is fouling up everyone else's state, does it make sense to allow that institution to come to Ohio? I encourage all readers to vote No on Issue 3.


Saturday, October 10, 2009

College Football Selections...

College Football Selections
S. Carolina -10 KY
West Virginia -10 Syracuse
Wisconsin +16 Ohio State

Tuesday, October 6, 2009

Economic Trends and Bends... Stock Watch... College Football Results...

Stock Market Trends and Bends...
Gold reached another 52 week high today, and silver moved in close concert. Metals in general have been on the move as more and more countries speculate on the death of the dollar. There is a concerted effort among several nations to stop using the dollar as the world's reserve currency. Oil of course would be the first item switched. This fear alone has caused a dramatic rise in oil and precious metals. But, I would like to warn readers that there is another part to this scenario. Let's just call it the "what if" scenario. What if the Federal Reserve decided to raise interest rates in a rapid succession... to give the dollar legs once again. What if, the world government's move to abandon the dollar goes afoul, and there is no other currency that can be used as effectively. What if the Fed, in some way, shape , or form is able to reign in inflation without leaving the debtor nations holding shopping bags full of useless American dollars. This is not so much a warning, but more or less an argument as the Devil's Advocate and why the dollar is... and still remains the world's reserve... and why gold could be ready for a correction.

But let's face it. There are a lot of problems the United States must work out before the dollar regains its good as gold status. To think that the like of FDR, and Truman worked like the Dickens to make the dollar the envy of every nation, only to let it crumble under the weight of excessive debts and entitlements that would make anyone dizzy... Congress as well as every American should be put on notice... This is not a good thing!!!

Several years ago I looked at a couple of rental properties. I liked the idea of owning a piece of land... having someone else pay ti off for you... and of course the tax write-offs. Yet, the more I looked at rentals, the more I noted that many of the "deals" that were out there would have me supplementing the renter's property. This is not good. I think the government is the only entity that has found supplementing someones property a good idea. And trust me, I don't have deep pockets like the government. If a rental deal was to be had, then I believed that the property had to (at the bare minimum) stand on its own two feet. It if could not meet that basic requirement, then it was not an investment nor and investment.

I bring up this anecdote because it appears that the government has embarked on a variety of programs. Each and everyone discourages people from standing one their own two feet. From TARP, TALF, Cash for Clunkers, stimulus packages, and health care public options... in almost every scenario we are heading down a path that discourages people to take care of themselves. Instead, we are creating more and more of a nanny state. My point is quite simple. At some point in time in the future the government will have to remove many of the stimulus programs. And the economy will have to stand on its own two feet... and if it is not able to do so, then we have in many ways caused a degree of our own long-range problems.

The super-rich... those who have $500,000,000.00 in assets or above are feeling a bit of discomfort these days as well. Before you start to laugh, he are reminded that America needs a rich class. the are often the course of financing and innovation that stimulates the rest of the economy. However, it appears that the rich are particularly worried about government intervention in the financial system in general, and the impending commercial real estate downturn. Many of these lovelies are thinking of playing it safe these days... thinking more like middle class people and not like the meat-eaters that created the original wealth. Regardless of whether you like this class of folk or not, we need them... their greed... and their innovation to keep capitalism alive and well in the united States.

Stock Watch

Let's start with the loser...

LVS is now down 20% from my original purchase price... yet as I expected the stock to get punished once again, I noted that the put options were unchanged today. This suggests that many other market players are looking for a sell-off between now and the end of the month.

PQ has been the story of the month thus far. In after-hour trading PQ breached the 7.00 mark driving the 1/7.5 calls toward grand-slam territory. The real question I may have is whether to make the money and run... milk the time-frame of the calls out a bit more... or even exercise on the options... If I choose the later, it will require a small fortune... and balls of steel to ride this one out. If... if this scenario were to playout, I wouldn't need a visit from Santa at Christmas... and rest assured, the Salvation Army would get a little gift from me in their kettle!!!

College Football...
2-1 is nothing to beat your chest on. However, after the pathetic run I have had, I will take it. This runs my current season record to 6-11... If I was in Vegas playing those games, I might be looking for the casino to give me a complimentary bowl of soup...

Saturday, October 3, 2009

College Football... Stock Trades...

College Football...

I am not sure if any reader at this juncture would/should follow my college football selections since I have have managed to go 0-6 the last two weeks. However, I will look toward vindication, as I have never had a losing season in football selections. This week I like:
S. Florida-6.5
C. Florida-7

Stock Trades...
I entered into 1/7.5s calls on PQ at .35... It was... was.. on a terror until the Purchasing managers report on Thursday left off a bit of steam. News that three more rigs will be on line soon. Couple this with a weaker dollar and this one should have a decent run.

I entered into LVS 11/13s puts... and was immediately rewarded with a 10% loss in the option value. However, I look for a rather bleak economic picture to take a bit of sap out of this tree.

NEOP reached a 52 week high of 1.40 before selling off a bit. Should make another run at 1.50