Cara's Commentary & Community Chat, Thurs., May 14, 2009

Good morning.

There are NO Cara 100 Ratings Changes to report at this time.

Looking to reload on Suncor on the dip in prices, but I'm not sure how to take the upcoming merger. I like Suncor basically for the close to home oil access as opposed to other companies exposure to hurricane and world incidents. Will Suncor remain in the Cara 100 after the merger?

TN, there a number of different kinds of option spreads - calendar, collar, strangle, etc. - but I think Bill is referring to a bearish call spread wherein you simultaneously sell a call option at one strike (e.g, $5) and then buy a call option on the same underlying stock at a high strike (e.g., $10). You earn profit on the difference between the premium on the two options and protect yourself against an unforeseen spike in the price with the long option.

This site and others (like the CBOE) have a lot of good information on how option strategies work. One thing I will say is that you should understand the mechanics and theory of these instruments thoroughly before trading them.

You mean a move back to 100-105 in TLT, not TBT, right?

Oh, and I think your analysis is correct - the U.S. authorities will be desperate to keep interest rates low.

TN, options are a bit tough, even if the position moves in your favor, time decay/reduction in volatility etc could turn the position into a loss. So start with 1 contract and maybe even paper trade. Learn about the geeks first

TN, I'm a newbie so I won't deign to offer expert advice.

As an example of a bearish call (I think you call it that), I bought Sep SPY 99 call and sold Sep SPY 95 call. Sold at 4.40, bought at 2.99. Intent is to keep the difference. If called, the underlying is handed over at 95 + premium, so pretty well within distance of my hedge at 99, which would also be up and covering most of the cost of the sold call.

Unwound this call hedge as I am less certain that we won't shoot through SPY 1000 in September. If HB&B plays the same song and dance with the M2M ruling and pump the market come 2Q things could get complicated.

But that is a newbie's practical example.

IBM - estimates, target increased at Barclays to $109. Estimates also raised, following an upbeat analyst meeting. Equal-weight rating.

KO - estimates cut at UBS through 2010. Pension expenses and bottler inventory de-stocking are likely to hurt near-term results. Neutral rating and $48 price target.

WFMI - numbers raised at Citigroup to $23. Estimates also increased, to realize more stable comp sales. Hold rating.

Bill, you wrote this morning "We are also net long +5.0% in oil stocks, which are also beneficiaries of reflation".

I am trading SCO, which is up from a low of Tues 5/12 and an even lower low from yesterday morning. It seems to me we are awash in oil and gasoline use has not ramped up, the refineries are on reduced output and that has to cause oil to backup at terminals. UUP also seems to be ever so slowly creeping up. Do you see this as a short term phenomenon?

TOF- Congrats, SPNG seems to be soaking up some capital.

NYU, you made me think of my cousin who has just est. himself in NY. His job, divvying up the spoils of companies in bankruptcy. Only job I could see paying 14% more right now!
:)

but my dream job is to just manage my money full time. i have a number in my head for my balance. Once i get there I will cut the lines from the matrix.

I have no doubt you will get there Neo.

Great news, good luck with the steady income. I just had to say that, as a trader, the word steady takes on a whole new meaning. Anyway, you are one of the fortunate ones.

Just watching USO tip toe down and SCO tip toe up. UUP is not helping but I think the oversupply of oil is weighing on the price right now. Oil has had a big runup and it may have over shot a little.

Thanks for your input here Bill, for your DR, WIR and everything, all the help you provide. It makes a positive difference in peoples lives and that's something we can't buy.

Wassup dudes?

there appear to be 0 today at 1108. Don't know what that means, but someone does...or may have a theory why this is occurring. The market is positive.

What's a "nonse"? ;) Good, I try to watch where I step.

GS
Volume: 6,214,871
Avg Vol: 24,959,000

C
Volume: 138,742,082
Avg Vol: 531,212,000

BAC
Volume: 156,924,910
Avg Vol: 539,488,000

WFC
Volume: 37,022,776
Avg Vol: 183,919,000

XLF
Volume: 53,782,528
Avg Vol: 211,074,000

AMZN
Volume: 3,136,341
Avg Vol: 8,388,000

EBAY
Volume: 5,697,907
Avg Vol: 19,469,000

RIMM
Volume: 6,900,113
Avg Vol: 23,057,000

AAPL
Volume: 5,974,851
Avg Vol: 19,415,000

WMT
Volume: 9,797,429
Avg Vol: 21,247,000

GLD
Volume: 3,003,361
Avg Vol: 12,603,000

I will wait til 2pm to see which way the volume pushes.

As an options trader - I paper traded for 6 months prior to committing capital (6 years ago). The strategies are endless and I have had success simply doing "credit Spreads" which is what the others are talking about. I simply trade these spreads via the S&P 500 by either the E-Mini S&P Options through my commodity brokerage account or by the SPY options accessible through my TD Ameritrade account (I used to do the Big S&P, but electronic trading is so much better).

Recommendation - completely understand the risks, such as - if I sell 4 E Mini June 1000 Calls and buy 4 1050 Calls - this is a "credit spread." The 1000 calls are worth more (closer to index) and I get money that goes straight into the account. This is "selling" the spread. "Buying" the spread is just the reverse - meaning money would go out of your account if you bought the 1000 Calls and sold the 1050 calls (this strategy could be used if you thought the index is going up).

The maximum loss is 50 ES points per spread X $50 per point (on CME) = $2,500 per contract. My maximum loss is 4 spreads X 2,500 = 10,000. This loss would occur if the S&P closed at or above 1050 by June 20th. The maximum gain is the difference in price between the 1000 calls and 1050 calls less commission.

Always know your maximum loss (risk) and keep that proportionately less than your trading account.

The great thing about Mr Cara is he provides some insights on both stocks and overall economic conditions. While I follow many sites, I read Bill just about every day (but post very infrequently). Knowing where we are in the market helps develop your strategy.

Has taken a turn for the worse 24.65 -0.07

Long Call/Put Spread

Max Risk: The cost of the spread.
Max Reward: Distance between the strike bought and strike sold minus the cost of the spread.
Best Uses: Good strategy for a strong trending market. Dangerous/risky under other scenarios even though the risk is limited.
Greeks: Money is made by delta/ market direction.
Time Frame: Month-to-month/short term.
Perspective: These spreads are excellent for trending markets and are easy to understand for new traders.

QID now 38.79

typing in the ticker in google search. easier to copy/paste vs manually reading it on my streaming quotes.

Also on CNBC, i have been painfully watching on and off, and they are selling stocks today, "It's nice to see people coming back to nibble on the markets." OK buddy.

This might be the end of support for a while, might want to find an exit if you haven't already.

"Also on CNBC, i have been painfully watching on and off, and they are selling stocks today,"

Wonder why they weren't selling when the index's were rolling over last Friday?

booked profits many moons ago CP, although I don't have an immediate list of goodies to trade in and out of on a daily basis, so I forgot about CNB. Need to punch more tickers into my freestockchart.com portfolio.

I'm hopeless with Maths Jock, but I am holding a Sept $10 put on XLF which I purchased at .87 or $87. It is presently at $93 or 6.5% higher, despite have lost $13 on it today. A fairly swift decent on XLF would rapidly increase that profit.

If someone can explain the math relationship between the option and underlying, I'd be happy to hear it.

http://tinyurl.com/p4kaz3
Chrysler moves to eliminate 789 of 3,200 dealers
Chrysler files bankruptcy court motion to eliminate 789 of its 3,200 US dealerships
Tom Krisher and Dan Strumpf, AP Auto Writers
On Thursday May 14, 2009, 12:40 pm EDT

playing as well
in @24.95

off -0.08@24.64, if this week is a bottom, now is a time to show the cards!

PZ - I'm just watching for any break in USO/OIL, yesterday it seemed UUP made instant changes in SCO, now - not so much.

Go backwards - think of it as buying the option for .60 and selling it at 1.50. That is over 100% profit on the options. Just keep in mind that when Bill mentions using 15-20 Capital - that 100% profit is only the option profit and isn't the same percentage return on the overall portfolio.

Think of the option writer as the insurance company. They collect the premiums and hope there isn't a fire. In Bill's case, he is confident in desiring to own the stock (DEO) at $40.00. Instead of putting in a Good to Cancel order for buying DEO at $40.00 - he can write the puts and if the stock never goes to $40.00, he collects the premium. To mitigate risk - one could use a put "credit spread" - which would protect against further downside, have a known risk (loss), lower break even (by selling the bought puts), and own the stock at a great price.

Nothing like precise timing...

The beauty of an Option ARM is that it usually has 3 options: You can make a principal and an interest payment, just an interest payment, or a minimum payment that increases the principal balance. Most of these loans also had low introductory teaser rates. The resets for these loans skyrocket in 2010 and 2011; payments will go up 50% to 80%. Most of these loans are already underwater.

Luckily, the Federal Reserve and Treasury cut the stress test off in 2010; the enormous bank losses we’ll see in 2011 -- which could affect firms from Bank of America (BAC) to Wells Fargo (WFC) to Citigroup (C) to JPMorgan (JPM) and beyond -- would have produced very different results.

http://tinyurl.com/q7m24j

you can buy an option contract for say $100 and have only $100 plus change for commissions in your account. then sell it for $200 and make 100%.
but try telling your broker you want to sell an option contract, say a put, (for whatever price) and that you don't have the money to almost cover the price if you are "served" by the expiration. the money your broker wants from you moves in tandem with that stock price and time to expiration. so you'll need way over $100 in your account just to sell an option. if you buy it back for $50, divide $50 by the avg amount needed to be kept in your acct just because you're short that option. it ain't 100%.

anyway, much ado about nothing, bill did a nice job. and yes, i think bill was only making a quick calculation on the option profit not overall roi.

RE:>The average home size in the US has increased from 1,000 square feet in 1950 to 2,400 square feet today - a 140% increase. The average household square footage per person has increased by 218%.

heck, no wonder you guys consume so much. The average size of the quintessential 4 room apartment in Switzerland is perhaps... wait for it:

300 sq. feet.

Admittedly the consumer makes an average of three purchases in their lives. An apartment like we have, a villa for a family, and then a return to an apartment for retirement.

We decided to cut out the cost of the villa and will buy a second smaller apartment for our kids when they're independent of us and which we can move into in retirement.

2'400 sq. feet. sheesh.

Joined you guys at 24.77 and at 24.47

At 300 sq. ft for 4 rooms = average 75 sq. ft. per room (approx. 8-1/2 by 8-1/2 rooms). A typical jail cell is what - 6 by 10? Maybe that's why you don't consume as much - no where to put things. 300 sq. ft. - Sheesh.

"all they really need is more control over WMDs..."

Yes, the public should take the risk while HB&B take the profit.

I jumped in after seeing the Gallery view on SCO.

24.19

Welcome to the wrong side of the trade. :')

TOL, BBY, YUM, RIG, LEN - in fact, all of XHB.
They popped early in the day along with SPX, but now, they're not moving at all even though SPX is advancing.
So if you're short these guys, you're not feeling any squeeze at all.

FD: I'm short these guys :)

Out @ 24.25 when UUP just hit -0.13 momentarily. My apologies to those who followed me in. UUP may be testing a bottom here. A 10 day chart has it looking possible...or its a cliff and it goes over the edge. Now UUP -0.14

"(or buying at 2.00 and selling at 4.50 - however your brain functions easiest)"

Man, there is more to this part then meets the eye!

"Survey: Economists see long road to recovery-"

This must be good news, as economists aren't traders and don't understand markets.

A post from this blog contained the following link http://tinyurl.com/pus2p2 which I saved. The article stated among other things "The storm that is threatening to break is the combined collapse of the bond market and the dollar, which are joined at the hip."

If the dollar and the bond market are joined at the hip, it must be a delayed action effect based on today's action. Today the US$ fell from 24.72 to 24.61 momentarily -0.11 and was -0.14 at one point. But, TLT seems not to have noticed and rose from Open $97.60 to $98.18 presently up +0.49.

I am unconvinced of the 'hip connection' analogy mentioned in the article.

David, I'm following the trade and will post any buys. Thanks.

Out with loss at 3.10. Should have sold this AM when I had a chance. Small time bet but losses stink regardless.

One extremely valuable habit I have learned on this blog is to cut losses quick and let the winners run. I am still working on selling at the right time. But keeping losses small is more important imho. Good decision PZ.

doubled my SKF position at $46.18. It doesn't look like XLF can break significantly above its previous high today at $11.80, so buying SKF now might be a reasonable entry. I am using a medium-size position now (instead of the small positions I was using when buying SKF on the way down) because, according to Bill (and today's price/volume action of XLF), the market environment is more favorable now to SKF rising. Placed a sell limit order at $51.18.

I'm gonna bet we get a program buy into the close.

"Obama administration to expand housing plan"

Yes Mr. Obama, as people default on their home loans, banks begin to take large losses. When banks begin to take large losses, they stop lending. When banks stop lending, businesses cannot function and must lay off workers. When workers are laid off, they cannot afford consumables and cannot make mortgage payments.

Of course I wouldn't expect any of this to be immediately apparent to Wall Street or the Beltway Criminals because if their revenues fall, good 'ol boy's club logic dictates that higher taxes and interest rates will compensate.

THE PLAN:

"In the beginning, there was the Plan. And then came the Assumptions. And the Assumptions were without form, And the Plan was without substance. And darkness was upon the face of the Workers. And they spoke among themselves, saying, “It is a crock of @#$% and it stinketh.”

And the Workers went into their Supervisors and said, “It is a pail of dung and none may abide the odor thereof.” And the Supervisors went unto their Managers, saying, “It is a container of excrement and it is very strong, such that none may abide by it.”

And the Managers went unto their Directors, saying, “It is a vessel of fertilizer and none may abide it’s strength.” And the Directors spoke amongst themselves, saying one to another, “It contains that which aids plant growth and it is very strong.”

And the Directors went unto the Vice President, saying, “It promotes growth and it is very powerful.” And the Vice Presidents went unto the President, saying, “This new Plan will actively promote the growth and vigor of the company with powerful effects.”

And the President looked upon the Plan and saw that it was good. And the Plan became Policy. This is how @#$% Happens."

Perhaps the part they overlooked is that the federal reserve system is a leveraged system?

ALL YOUR BEST THINKING GOT US HERE!!!!

Holding QID and SCO overnight too.

Missed my KGC stink bid this AM by 1 cent today.....go figure

David,
I think it will go down to 840 range in a zig zag fashion. This is a tough market to trade, one has to be either selling premium or scalping.....

A lot of the stuff I was following DID have some serious short covering. The home builders and the retailers were up pretty big early on - maybe 6-7%, for some of them. Then they faded and stopped following SPX and they ended the day only up 2-3%.

Johnny and CP,

I read the link earlier this week. As I am heavily into Ts I read a lot of opinions concerning them. Generally I have been a trader (over months usually), but now I'm in mutuals.

Clive Maund is a gold bug whose opinions there have been spotty as to accuracy. His comment, "The storm that is threatening to break is the combined collapse of the bond market..." is, of course common wisdom these days and is at least partly due to the writings of Bernanke (prior to becoming Fed chair) about deflation being his biggest worry and how he planned to monetize it away.

I, for one, have doubts he can do it. Since he outlined his plan in early 2000 something, the economy has become so touchy that he's also got to keep from strangling it with outrageous inflation. Mostly he's been playing word games with a cooperative and gullible media and a clueless (for the most part) congress.

Since I am only expressing a "belief" I am watching the 10-year rates very closely and sell a portion from time to time and then buy it back later. It has been OK since last October when I started doing it.

Mostly I'm just playing defense while collecting a bit of interest and an occasional cap gain.

SEC sets sights on surprise audits for post-Madoff world
http://bit.ly/17P5cz

Thanks for the "NoScript" suggestion Quasi.

Thanks, optionoracle -

Bill's put writing returns have indeed been excellent this month.

My question arises from having been stung on several open put sales, when the underlying suddenly dived way below the strike price as, for example, MGM has done over the last couple of days. (In this case, I was actually LONG MGM puts but sold out too early with only a third the potential profit!). Options aren't easy unless the market trends reliably in your direction until you can buy back at a profit.

When you sell puts, I think the only way of defining your capital at risk as less than the full strike price of the underlying stock is always to buy an offsetting way-out-of-the-money option to cap risk. It doesn't cost much (if you've taken in a rich option premium) and it avoids "black swan" bites.

I've made this "policy"; it also has the benefit of forcing me to define and deal with my precise risk and reward on each trade.

FWIW

If some shorts were indeed punished in the morning but then the short squeeze stopped later in the day and even reversed, then we should not have another short squeeze tomorrow -- the buyers ran out of ammunition today (or so it looks).

camelback - I need your input on these subjects, thanks for your posts. It's not that I know anything about the subject, because I don't, maybe some of it will sink in by osmosis. ;)

May 14th

"NEW YORK (Reuters) - Longtime technical analyst Robert Prechter, who forecast the 1987 stock market crash, predicted this week that U.S. equities may plunge to half their lows hit in March as a deflationary depression bites.

Oil and U.S. Treasury bonds are also locked in long term bear markets, while corporate bond prices will plunge precipitously by next year as broad economy, banking system and company earnings sustain more damage from a financial crisis that's akin to the Great Depression, he said.

The U.S. S&P 500 stock index's .SPX rebound by nearly 40 percent since it sagged to a 12-year closing low of 676 points on March 9 is not sustainable, Prechter said in an interview with Reuters."

http://uk.reuters.com/article/companyNewsMolt/idUK...

http://tinyurl.com/295zzz

Alright, it's the top eleven.

camelback,

"basta" is a german expression, no? Just curious...

And yes, you make perfect sense. If the margin required is 100% (not saying it is), then to write a $1 put with a $10 strike would mean I have to put up 10 x 100 = $1000 as collateral. And if they company goes bankrupt, stock is put to me at $10, goes to $0, broker takes my $1000 collateral. So really, if all goes well and stock isn't put to me before expiry, my profit was more like $10/1000 = 1%

I think :)

Yes I like the "NoScripts" add-on for FireFox. However I must warn you there is a bit of a learning curve for a few days or weeks as the system learns what you want to allow or not. I used the temporary permissions option quite a bit in the beginning. But after a while, all your regular sites are on the list and surfing is normal. The block list is site or page specific which makes it very handy, the normal FF option is either to allow or not globally which is not really much good. I also like the fact that it allows you to block a lot of ads which are script based.

The other main FireFox add-on I use is "AdBlock Plus" with the option of "EasyList USA" filter subscription. It works very well to block ads on most sites without problems, and you can add your own specific ads which are not already on the list easily.

I was reading a guest opinion in our local alternative rag (really a quality paper) when I thought I was hearing the words of our very own Kaimu. The only difference between the two is the cause of the social disorder. Here is a few excerpts:

" My own set of arrangements includes a rural property with moderate elevation, shallow water, deep soils and a close-to-the-land community of neighbors. I'm moving full-time to my two-acre rural property when the spring semester ends. I've got gardens to plant, a root cellar to dig and considerable catching up to do with my new neighbors.

Soon enough, paper money will have little or no value. Water, food, shelter and community, on the other hand, will become vital currency as we re-engage with the natural world and our neighbors."

A uncanny resembelance to Kaimu. Kaimu are you sure you are not a Zonie and the Hawaii flower salesmen bit is just a ruse to throw off the authorities.

Full article:
http://tinyurl.com/Kaimu-s-bro

In a pump and dump scheme, urgency of many financial institutions to complete their secondary public offerings of stock and debt as soon as possible. This urgency is a classic sign of a pump and dump scheme as it signifies that the rapid rise in current bank share prices have been built on zero fundamentals and is thus unsustainable. Now that the pump scheme is largely in play already or in some instances, has even been completed, get ready for phase II - the dump.
Now who are they going to charge for this fraud Fed/Treasurer/congress for help in M2M. Everybody in the world of finance has dirty hands?
CTIC-i am getting few email about this, something should happen in few month. any one has any information. I am Skeptical about CTIC

TARP beneficiary, Mark Patterson... "took advantage of Tim Geithner's TARP matching funds to buy Flagstar Bancorp in Michigan - he now owns 80pc of the shares and the US government under 10pc."

http://tinyurl.com/pjdvyn

“It’s a sham. The banks are insolvent. The US government is trying to sedate the public because they are down to the last $100bn of the $700bn TARP funds. They think they’re doing this for the greater good of society,” he said, speaking at the Qatar Global Investment Forum.

*

Re: Obama new
Submitted by Mark Barry (588 comments) on Thu, 05/14/2009 - 22:02 #27768 (in reply to #27619)

Craig,
Just saw this, as I was busy with those 300 sf bathrooms today.

"As I recall the air traffic controllers were bringing some pretty serious safety concerns, outdated obsolete/faulty/under equipped major airports, extended hours and under-staffing to our attention"

Absolutely. Frankly, the most dangerous example of prioritizing is with 911. Can you imagine if all of the 911 dispatchers decided to strike? I agreed with the controllers position at the time, but not their course of action. They had already made their point, and nothing that elaborate is going to be resolved over night.

BTW, new Cadets for the CHP are scheduled to make $107,000/year. 23 year old's. That might be a good start in prioritizing.

got this email today...

Absolutely the funniest joke ever......ON US !!!
• Let it sink in.
• Quietly we go like sheep to slaughter.
Does anybody out there have any memory of the reason given for the establishment of the DEPARTMENT OF ENERGY ...... during the Carter Administration?
• Anybody?
• Anything?
• No?
• Didn't think so !
Bottom line .. we've spent several hundred billion dollars in support of an agency ... the reason for which not one person who reads this can remember.
Ready???????
It was very simple .. and at the time everybody thought it very appropriate...
The 'Department of Energy' was instituted on
8- 04-1977
TO LESSEN OUR DEPENDENCE ON FOREIGN OIL.

Hey, pretty efficient, huh?????

AND NOW IT'S 2008,
31 YEARS LATER ...
AND THE BUDGET FOR THIS
•
NECESSARY DEPARTMENT IS AT $24.2 BILLION A YEAR

IT HAS
• 16,000 FEDERAL EMPLOYEES AND APPROXIMATELY
• 100,000 CONTRACT EMPLOYEES
o
o AND LOOK AT THE JOB IT HAS DONE!

THIS IS WHERE YOU SLAP YOUR FOREHEAD AND SAY
o 'WHAT WAS I THINKING?'
Ah, yes, good ole bureaucracy..

And NOW we are going to turn the Banking System, health care & the Auto Industry over to them?
God Help Us !!!

2nd......"the market is still attracting buyers. From a common sense point of view, that's just not right."

Yeah. As if common sense and the stock market had anything to do with each other...

Vinod...Nice sale of the DRYS earlier. Sometimes being forced by circumstance to hold a little while is a good thing. The best moves take what? A half hour to all day right?

Mark,....That is some funny stuff you posted. I should be working at the Dept of Energy eh?

Oh and the last time I spilled coke on my keyboard........ I wound up inhaling H,J,K,L and the semi colon:)

JUST kidding folks...JUUUUUUSSSTTT kidding.

Authorities probe insider trading at SEC: source
WASHINGTON (Reuters) – Two U.S. Securities and Exchange Commission employees are under investigation by federal criminal authorities for allegedly using insider information to trade stocks, a source familiar with the matter said on Thursday.
A report by the SEC's internal watchdog alleges that the two SEC lawyers traded in stock of a large financial services company despite being told by another SEC employee of ongoing investigations of that company, CBS News reported.
The SEC inspector general report said one SEC attorney under investigation works in the Office of the SEC's Chief Counsel and has access to a tremendous amount of nonpublic information, CBS News said.
An SEC spokesman said: "We take seriously even the suggestion that any SEC employee would engage in insider trading. We note that the inspector general report neither accuses any SEC employee of insider trading nor concludes that any such conduct took place."
Calls to the SEC's inspector general and Federal Bureau of Investigation were not immediately returned.
The SEC is in charge of policing markets and protecting investors. Ferreting out individuals who use nonpublic material information to profit on a company's stock has been a priority for the SEC.
The SEC spokesman said the agency has been taking additional steps to enhance its protections against the potential for improper conduct.

Most homeowners -- 74 percent -- believe their home will not decline in value in the coming six months, effectively calling a bottom to their own home's housing slide, Zillow said.

"While homeowners are now more realistic when looking backward, they are still pretty starry-eyed when looking forward, with three out of four homeowners believing that their own homes' prices will increase or be flat over the next six months. Unfortunately, there are few markets we expect to perform this well," he said.

http://www.reuters.com/article/ousiv/idUSN13394094...

Are these people smoking something funny?

I think unemployment will exceed 10% by the June numbers reported in early July. Imagine the consequences of GM and its suppliers shutting down for a few months...

Mark - Have you dumped your FTWR yet? I'm not sure where that one's going, have heard folks say they're counting on being bought out.... The earnings party seems to have faded?

ALOHA !!

The official SEC website publishes info about what the SEC does and its history. Here is the reason the SEC exists according to the SEC.

"The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

As more and more first-time investors turn to the markets to help secure their futures, pay for homes, and send children to college, our investor protection mission is more compelling than ever.

As our nation's securities exchanges mature into global for-profit competitors, there is even greater need for sound market regulation.

And the common interest of all Americans in a growing economy that produces jobs, improves our standard of living, and protects the value of our savings means that all of the SEC's actions must be taken with an eye toward promoting the capital formation that is necessary to sustain economic growth.

The world of investing is fascinating and complex, and it can be very fruitful. But unlike the banking world, where deposits are guaranteed by the federal government, stocks, bonds and other securities can lose value. There are no guarantees. That's why investing is not a spectator sport. By far the best way for investors to protect the money they put into the securities markets is to do research and ask questions."END

WOW ... does anyone here on this blog feel "protected" by the SEC? HA!!

Now lets look at who was the first SEC Chairman appointed by FDR in 1934 ...

"Monitoring the securities industry requires a highly coordinated effort. Congress established the Securities and Exchange Commission in 1934 to enforce the newly-passed securities laws, to promote stability in the markets and, most importantly, to protect investors. President Franklin Delano Roosevelt appointed Joseph P. Kennedy, President John F. Kennedy's father, to serve as the first Chairman of the SEC."

JOSEPH P KENNEDY

Here are some briefs I compiled about Kennedy so that we may establish his impeccable credentials for policing WALL STREET.

"In 1919, he joined the prominent stock brokerage firm of Hayden, Stone & Co. where he became an expert in dealing in the unregulated stock market of the day, engaging in tactics that would later be labeled insider trading and market manipulation. In 1923 he left, and set up his own investment company, becoming a multi-millionaire during the bull market of the 1920s."END

Now lets see how he played the stock market during the ROARING TWENTIES and how he fared during the Great Depression.

"Kennedy formed alliances with several other Irish-Catholic money men, including Charles E. Mitchell, Michael J. Meehan and Bernard Smith. He helped establish the Libby-Owens-Ford stock pool, an arrangement in which Kennedy and colleagues created a scarcity of Libby-Owens-Ford stock to drive up the value of their own holdings in the stock, using inside information and the public's lack of knowledge. Pool operators would bribe journalists to present information in the most advantageous manner. Attempts to corner stocks were made that would cause the price to go up, and bear raids could cause the price to collapse downward.

Kennedy later claimed he knew the rampant stock speculation of the late 1920s would lead to a crash. It is said that he knew it was time to get out of the market when he received stock tips from a shoe-shine boy.

It has been noted that during the Depression Kennedy vastly increased his financial fortune by investing most of his fortune in real estate. In 1929 Kennedy's fortune was estimated to be $4 million. By 1935, his wealth had increased to $180 million. According to Time Magazine, Kennedy survived the crash “because he possessed a passion for facts, a complete lack of sentiment and a marvelous sense of timing."END

So this is the SEC that we all know and love and is the steward of instilling confidence in WALL STREET, the premier place to "invest". Hummmm ... okay?

So really nothing has changed ... This country has been rewarding scum and low life for many decades now. I mean ... how does a tax cheat get to head the US TREASURY? TIMMY?

The C WORD cometh ...

ALOHA !!

Here direct from the SEC website is the SEC recommendation for investing. Why should the SEC steer potential investors? Why is it they are only promoting WALL STREET investments?

Investment Choices
* Account Info
* Basics
* Bonds
* Brokers & Advisers
* CDs
* Futures
* International Investing
* Investment Clubs
* Mutual Funds
* Options
* Stocks
* Trading Strategies
* U.S. Treasuries
* Variable Annuities

I do not see any mention of physical gold or silver, which has been one of the best places for my money since 2000. I'm up 320% on gold and I'm up 315% on silver. Whats the S&P up since 2000? The DOW? NASDAQ?

I'm up 400% since 1998 on Hawaii "farmland"!

I won't even get into art except to say that even my modest buys are up over 600% after all this "deflation" has taken its toll ... NOT!

Then there is a really GREAT investment that I made a long time ago called PAYING OFF DEBT!

SEC?

The SEC is as big a joke as the US FED ...

"is not budging at all. Wondering if this is all a bear trap, hv to watch VIX closely in the coming days"

That may be the case because the Big Boyz are not planning to hold their shares and are not buying puts for protection (it is the increasing demand for puts that moves the VIX up). They are simply getting ready to sell the shares.

ALOHA !!

This is what the US FED Chairman Arthur Burns said about the intelligence of the US investors back in 1978. This was recorded in a FOMC meeting dated Jan 17, 1978.

I call this Arthur Burn's AVERAGE MAN speech ...

CHAIRMAN BURNS:
Next I must say that the spurt in consumer spending which has made some people happy has disturbed me. It is being financed in very large part by credit. We’re having something close to an explosion of credit in the consumer area. Installment credit and mortgage credit have been used in large part to finance consumer spending. I believe that the spurt will not continue and I certainly hope so. On home building, I’m with the staff or more optimistic than the staff. The significant point I think has been mentioned. You know, the American public, in contrast to some or many of our politicians--perhaps most of them--is very deeply concerned about inflation.

People all over the country have been asking themselves the question: What can I do to protect my family? What can I do to protect my children, my family, and myself against the ravages of inflation? And gradually the thought has evolved and is spreading rapidly that, on the negative side, putting money in the bank or a savings and loan account is no protection. Buying bonds, Treasury bonds or corporate bonds, is no protection. Buying common stocks is no protection. It used to be a major protection but it no longer is. Then what is left? Well, gold or paintings. But the average man cannot invest in gold; he doesn’t know how. It’s not something he’s accustomed to. Likewise with paintings. What will he turn to? Well, there is farm real estate, a remarkable record there. But the average man doesn’t know how to buy farm real estate. He realizes that location can make an enormous difference.

But there’s one thing the "average man" is capable of doing. If he doesn’t have a home, he can buy a home. If he already has a home, he can buy another. The average man is also capable of judging neighborhoods. All he has to do is get into an automobile or walk and he can locate areas where the prospect of maintaining good conditions in the neighborhood or some improvement are pretty good over the next ten years or twenty years. People can do that. And they’re doing it in increasing numbers. It’s surprising to me. I hear it from college professors; I hear it from young people; I hear it from my own children. The movement is spreading.

And the interest rate on mortgages? Yes, what Mr. Partee has said may well turn out to be right, but I don’t think people are going to be deterred by an increase in mortgage interest rates of one half of one percent or even a full one percent. And the money will be available at a somewhat higher interest rate. So, I believe that this will continue. Whether that is a cause for optimism or not is something else again. We may easily get ourselves into a condition of overbuilding in this area, such as we had in 1972-73, but in the year ahead we’ll have plenty of activity in this field.END

There you have it ... Proof conclusive that the AVERAGE MAN is an expert on "residential real estate"! I only wish Arthur were alive today to see the fruits of his labor!

IT IS WHAT IT IS ...

Healthcare is slighted to outweigh any magnitude of government spending like we've ever witnessed, Medicare part B is the unfunded 2000lb gorilla. They can't inflate future debt away, and that's what the social programs represent, future debt.

So let's step back and look at the big picture once more.... Where is value being created? It's all just paper shuffling without actual value creation.

http://www.nytimes.com/2009/05/17/magazine/17forec...

http://www.reuters.com/article/companyNews/idUSTRE...

...

Hey, I think you've uncovered the Current American Recovery Plan (CARP). When everyone will work for the government. (Hey, wasn't it supposed to be the other way around?)

Coming Soon at a Neighborhood Near YOU:

• DEPARTMENT OF LAWN MOWING
• DEPARTMENT OF CUSTOMER GREETING
• DEPARTMENT OF HANDY MEN
• DEPARTMENT OF DEPARTMENT PLANNING

CARP is appropriate since they get the CRAP at the bottom.

Cheapy,

"I think unemployment will exceed 10% by the June numbers reported in early July. Imagine the consequences of GM and its suppliers shutting down for a few months..."

I think you are right. One estimate I heard regarding the dealership closings at GM and Chrysler is 180,000 jobs lost. I'm unsure if that is only the people who worked at the dealer, but in our paper today the list of closings includes several small towns in our area. This will also be a devastating hit to everyone from the local cafe to barbers and dentists.

Our city of 150,000 (at 14% unemployment early this year) is losing three Chrysler dealers. There will be Fed dollars for retraining. To what, you may ask. Lawn mower repair? Auto repair instructor at the Jr College?

This old dog learned computer graphics at age 50 and still went out of business before Soc. Sec. eligibility. My cost of 15 years in the digital world was over $100,000 and hundreds of unbillable hours of constant learning new software upgrades.

Not to worry — Obama will create a couple million jobs over the next couple years.

...