Friday, October 28, 2011

Silver and Gold on the move.

Gold ended the week at $1747.20 per ounce while silver posted gains of 0.3% to finish at $35.29 per ounce.

On the week, gold rallied for approx $105 or 6.3%, while silver futures surged $3.65 or 11.5%.

Both metals had fallen over 30% during the recent market swoon but they are climbing back, silver especially has had an impressive move.

I remain bullish on both for the foreseeable future and i sell calls or puts on them as the market dictates.

Crude oil futures, closed at $93.32 per barrel.

Finally, Natural gas rallied for 4.1% to close at $3.92.
Natural gas Futures were aided by cold snap that has hit the east coast. I play nat gas with the ETF UNG, I believe natural gas it is a great multi-year play at these cheap prices. Out of all commodities natural gas might be the only one that hasn't rallied, until now that is.

Wednesday, October 26, 2011

Fall Reading and Cookbooks.

Tuesday, October 25, 2011

The cheapest diapers you can buy today.

Saving money, is the same as making some. If you have a baby, you know that money is hard to save.
I’ve checked and cross checked diapers everywhere, the best I can tell is Amazon has the best prices bar none!

They are cheaper than and way cheaper than babies r us.

There is one catch to getting the cheapest diapers in the known world at Amazon, you need to sign up for an ingenious little program that they have running.
Click on the diaper banner and sign up right now.

Amazon has a new program called “Subscribe & Save”.
All you need to do is enroll to receive a new shipment of items in the time interval you select. The discounts are pretty steep and once you set a schedule you never need to order those same items again.
You can adjust the number of items or the schedule as you need.

If you combine the suscribe and save program with the Amazon Mom membership you can save a ton on diapers and wipes. Both memberships are free and they will save you a ton of money. Sign up today.

With all of the discounts in place you can get diapers for .17 cents each. That is an unbeatable offer, with all of their coupons can’t compete.

*Amazon Mom is a free membership program aimed at helping parents and caregivers, from the prenatal days through the toddler years, use Amazon to find all the products their family needs. To join, simply sign into your Amazon account and tell us whether you are a Mom, Dad, or other caregivers of a child. By providing information about your family, you can help us personalize offers, e-mails, and product recommendations to help you find exactly what you need at just the right time. Amazon Mom members receive benefits such as 30% off diapers and wipes, exclusive offers, and FREE Two-Day Shipping with Amazon Prime.

First Netfilx, then Amazon, Apple is next.

Months ago i recommend purchasing way out of the money puts on all three.
Netflix and Amazon Puts that were 40 points out of the money went up, on average 400%.

Don't get me wrong, i love Amazon, it isn't going anywhere as a company but right now, the market is looking to smite these high flying stocks.

Get out of the way, DO NOT GO LONG- any of these stocks.
With consumer spending and sentiment in the toilet, we need to wait it out. The shorts aren't done with this one yet.

Wednesday, October 5, 2011

The death of Steve Jobs marks the end of American exceptionalism

The death of Steve Jobs marks the end of American capitalism.
The death of Steve Jobs marks the end of American consumerism.
The death of Steve Jobs marks the end of American innovation.

Make no mistake, he was a great man, an influential man, he wasn't perfect, but he didn't need to be.

When a man of his stature passes, it is a forceful reminder, a shock to the American collective- we are mortal, and our time will come.

Some are wondering why this news has hit them so forcefully and emotionally. We only need to look around us, at the depressing headlines to find the answer.
Americans will, and should shed tears for the loss of what Steve Jobs represented- what America once was.

We aren't the same nation we were when Jobs first rose to prominence, if we don't get our shit together, we will never get there again.

Jobs family's statement on death of Apple founder

Jobs family's statement on death of Apple founder

Steve Jobs' family today made the following statement regarding his death:

Steve died peacefully today surrounded by his family.

In his public life, Steve was known as a visionary; in his private life, he cherished his family. We are thankful to the many people who have shared their wishes and prayers during the last year of Steve's illness; a website will be provided for those who wish to offer tributes and memories.
We are grateful for the support and kindness of those who share our feelings for Steve. We know many of you will mourn with us, and we ask that you respect our privacy during our time of grief.

Apple's Board of Directors said Wednesday in a statement.

"We are deeply saddened to announce that Steve Jobs passed away today," "Steve’s brilliance, passion and energy were the source of countless innovations that enrich and improve all of our lives. The world is immeasurably better because of Steve."

Apple founder Steve Jobs dead at age 56

Here are some words of wisdom from Steve Jobs, an American icon.

this speech is poignant, and sad.

Here are the facts on Obamacare.

Wait! If you don’t need medical coverage, don't ignore this message, I’m serious.
Even if you don't need it today, you will tomorrow, or someone in your family will.

The GOP (the tea party in particular) has succeeded in scaring the crap out of average citizens when it comes to Obamacare.
We need a frank and fact based discussion that people can follow and learn from.

The truth is- most Americans don’t understand how pathetic and expensive the current state of health care and health insurance is in this country.
It isn’t until one gets sick, or someone tries to decode the convoluted web that is health insurance that you begin to decipher a system that is byzantine in its bureaucracy and indefensible in its costs that are unaffordable for most. Healthcare is a basic human right, without it, we suffer needless loss of life and dignity.

I need to preface this discussion with a few facts:
The young and the lucky just go for regular checkups and pay a nominal co pay, they think all is well, until the unfortunate happens.
I am relatively young and healthy, it is only recently that my family and I have begun to use healthcare in earnest.
Many with insurance need to file for bankruptcy if they are diagnosed with cancer because of the exorbitant costs that are tied with treatments.
I am no expert in Obamacare, I can only provide what I think are bipartisan facts.
Please feel free to correct me if I am wrong.

1- Most of Obamacare doesn’t go into full effect until 2014
2- Obamacare allows young adults to remain on parents' policies until they turn 26.
3- Insurance For Pre-Existing Conditions must be given
4- Insurance For Pre-Existing Conditions is expensive
5- Under Obamacare all Americans will be forced to purchase insurance or they will be fined.
6- For those that think forced insurance is unconstitutional or impractical- think car insurance.
7- Obamacare will force employers to provide insurance or pay a fine of 2000 per employee.

1-employer-paid insurance, reported an increase of 9 percent, up from 3 percent last year.
2-annual premiums for a family of four climbed to $15,000 this year.

Annual employee contributions now total more $4,100 on average. That's more than 130 percent higher than back in 2000. The survey also found that, to cut costs, more employers are enrolling in high-deductible policies that cut annual premiums, but require employees to pay more out of pocket for medical care.

Watch the full episode. See more PBS NewsHour.

Watch the full episode. See more PBS NewsHour.

Questions and solutions:

The theory goes: if everyone is insured, premiums collected will increase and the price of health coverage should go down.
This would be the ideal solution but, if it happens to lower premiums is a very large unknown at this point.

For many employers, a 2000 fine is less than they currently pay for insurance per employee. Will some unscrupulous employers drop costly insurance and choose to pay the fine in lieu of providing coverage?

Will fines for a lack of insurance become an unbearable burden on American citizens?

Will expensive insurance policies coupled with huge deductibles impoverish an already weakened middle class?

Why is a for profit healthcare system so damned expensive? It isn’t just the costs of record keeping and unneeded tests that jack the prices up. The tests cost too damn much, but so does everything else.
To suggest that digitizing records will be a panacea is a joke, and it should be treated as such to anyone who brings it up as a solution to medical costs. That isn’t to suggest that it shouldn’t be done, and it certainly will bring costs down, but it is akin to treating a gaping hole in a patients chest with a Band-Aid.

There is an underlying rot to healthcare costs in this country, and it is the most pressing issue imaginable.

Part of that ROT belongs to people like Herman Cain; he willingly obfuscates what Obamacare does or does not do for personal gain. He is a rich man, and as a rich man he can afford the best possible insurance imaginable. Obamacare wouldn't affect the treatments he is able to pay for or the outcome of that expensive care in any way.

Monday, October 3, 2011

There is no such thing as diversification.

If you are Long anything you are at risk. Short is the only true diversification.

The investing mantra goes, In order to lower risk one needs investments that do not correlate to US equities. The theory goes a portfolio with non correlated investments won’t move in the same direction as US equity indices- in truth- when the US enters into a bear market, so does every single other asset class. There is no protection in foreign stocks, currencies, or even commodities- if an equity fund gets hit with a margin call, they will dump currencies or commodities en masse.
There is only one true way to diversify, it’s by owning inverse (short) ETF’s in your portfolio. No 401k or mutual funds hold inverse ETF’s managers don’t even go to cash- so there is zero downside protection in your retirement fund.

Buy gold!

With gold down 30% this year, take a good hard look at the precious metal.

I know, I know, some will say: its up so much, it’s a bubble, it will crash- etc etc.
Ignore this, buy gold, but, buy it wisely.

Here is a four step process for your gold investment.

1- Sell OTM gold puts in order to take advantage of sky high volatility.
2- Buy some cheap way out of the money puts to hedge.
3- Purchase a 2x inverse gold ETF to hedge some more.
4- Sell calls once the gold is put to you.

If the puts expire in the money- the gold will be yours. If not, sell more puts.

Do not sell your inverse ETF as this will hedge some of your downside.
Sell the long puts only if the price plummets.

Hedge Hedge Hedge.

During the most recent downturn the markets are down 20%, my portfolio is up 3% during the same time period. I wasn’t as aggressive with hedges this year as I was during the 2008 swoon. My long term hedges worked, but I wasn’t position heavily for the short term. Perhaps the most important move I made was to go to cash in my 401k during the debt ceiling debacle. If you listen to the talking heads they want you to invest and forget your portfolio, they say over the long haul you will do better than market timers. This is a complete and utter lie. While I do agree when things are going well you can pay less attention to your investments, when things are as bad as they are now, you need to watch and more importantly act before a bad situation turns worse.

We all knew the country was in trouble, we all knew that Europe was struggling. Wages are down, unemployment is up, debt is unsustainable, yet the talking heads, the mutual fund managers never caution, they never sell your retirement account to wait in cash just in case the markets drop precipitously. When things look as bad as they did during the debt ceiling fiasco you can’t afford to sit idly by. You need to act!

I’ve said it before and it must be said again. HEDGE!
If you can’t, or don’t know how- go to cash. To make up for your temporary move to cash you can increase the amount you contribute to your 401k to the max. Just in case things don’t fall off a cliff and if they do you are still averaging down with your weekly contribution.

You can’t hedge in your 401k account but you can open a regular IRA and purchase inverse ETF’s and Puts in that account.
First thing you need to do in order to hedge is find out what that fund you have really owns. Is it heavily weighted in technology, small caps, energy?
Once you find the breakdown, you can purchase an inverse ETF in order to manage risk. An inverse ETF is an ingenious way to short; they go up as the market sector they represent goes down. For example, if you own a mutal fund that has 30% financial stocks, you would purchase SKF, or FAZ to hedge in your
Always hedge your 401k in a standalone account. Do the homework, find out what you own and find a creative way to hedge it in another account.

This market, the world and government is too volatile to just “set and forget” your investments.
Don’t get complacent; don’t rush in to buy all at once just yet. If Europe defaults we could easily drop another 50% this year!

If you do go long, you guessed it- hedge!

As far as Europe goes, lets not panic just yet, all is not lost; if you are long cash- you may want to consider buying the S&P 500 at some point. Currently, it yields more than the 10-year Treasury note. This is a rare event in the investing world. Take note of this factoid, but don’t run out and purchase the SPY just yet.

Here is an idea on a hedging strategy.
Purchase way out of the money puts on high flying stocks.

My favorite hedge?
As I mentioned on my previous post, I am long way OTM puts on (AAPL) Apple, if the market swoons, its going to take AAPL along with it.