The latest steps of US goverment trying to run, control & supervise US economy by bailing out financial institutions are anything but funny. They are as dubious as it gets.
Socialism in USSR fell apart in 1991. Capitalism in USA is falling apart right now.
How many more companies and financial institutions are going to get bailed out and why? Why do taxpayers – you and me – have to pay for some greedy or not-too-smart people and share with them our hard earned money? Why do we have to pay our mortgages & our bills, while those “delinquent” don’t? Why nobody bails me & you out of all the losing trades, while letting us keep all the trades making money?
This is a Decline and Fall of the American Empire.
I don’t know what is going to happen to the stock market tomorrow – Monday, September 8, 2008. Probably it will run. As I pointed out quite a while ago to one of my colleagues – “America is a country of happy idiots”. The more I am involved in the stock market, the stronger I am convinced in it.
I can’t otherwise explain the irrational stock market behavior in many instances. For example, last Friday the news came out that the number of foreclosures has dramatically increased AND unemployment rate surged to 5-year high of 6.1%. What would be the rational reaction to such news by the stock prices of homebuilders? More homes for sale + less buyers = less sales & less profit (if any). Yet, almost all the homebuilders have gained in price on September 5th:
KBH +$1.29
MTH +$0.65
DHI +$0.95
PHM +$1.07
TOL -$0.21
LEN +$1.48
BZH +$0.90
HOV +$0.25
CTX +$1.26
XHB +$1.23
I still hope that at least gold will go up on Monday, as expected $300,000 billions cost of Fannie Mae and Freddie Mac bailout can be only covered by the new printed money. Does anyone except for me understand this?
Filed under Trading news, Trading tips by 
On September 1st, 2008, I sent the following letter to Frederic Friedel – the co-founder of the chess news and database company ChessBase.com:
Dear Frederic,
Here is an open letter I’d like you to publish on ChessBase.com:
To the whole chess community:
Right now is a time of an awful injustice happening in front of everyone’s eyes, yet it looks like everyone is asleep or indifferent. 2008 Women’s World Chess Championship is boycotted by 9 players due to the proximity of the tournament venue to the war zone. Of course, I am also sympathetic to the organizers of the tournament, who prepared a wonderful opening ceremony and to the players who had this tournament in their schedule long before the start of Georgia – Russia war.
Still, I don’t understand that quietness of the chess players, arbiters, organizers and fans of the game. Does everyone act according to the famous Russian saying: “One’s shirt is closer to one’s body” or Ukrainian saying “My house is the last one in the row, so I have no knowledge of what’s going on”. Of course, all former Soviets will know exactly what I am talking about, for all others, the translation is – “I better be quiet, so I don’t get poisoned by polonium”.
Come-on, Guys and Gals, it is time to wake up! There was a legitimate reason for the 9 players not to show up in the war zone and it makes no sense to say “Heck with it”.
Here is my challenge to the world chess community – Wouldn’t it be fair to organize a separate chess tournament with the 9 players who have qualified to participate, yet didn’t come to the 2008 Women World Chess Championship for safety reasons? The winner of that tournament will play against the winner of the tournament in Nalchik for the title of 2008 Women World Chess Champion.
Can anyone step-in on a short notice and run this tournament? It’s enough that the whole chess history was disrupted by substituting historical qualifying cycles and matches with “Ilyumzhinovka” tournaments. Let’s not diminish the title any further.
Sincerely,
Woman Chess Grandmaster Anjelina Belakovskaia.
I was hoping that Frederic will publish the text, or at least the idea, as I do believe it is unfair to dismiss Georgian (and not only) players & the whole Georgian chess culture & history and run “World Championship” without top guns.
However, I am not surprised to see that my e-mail wasn’t published – it is an easy and comfortable solution in this situation. As such, I am publishing it here.
Filed under World news by
Let’s summarize my trading activity last week:
08/22/2008 15:42:03 Sold Short … PHM @ 13.68
08/26/2008 15:59:46 Bought … OIL @ 69.25
08/27/2008 16:08:03 Bought … VIXJX @ 2.5
As you can see, I had a chance to get out with some profit within a few days of getting into positions, but I chose not to.
PHM advance is worrying me, as I don’t know the reason for it. Could that be that some piece of news skipped my attention or is it simple taking profit by other traders or are there buyers on the market who think the housing slump is over?
The price of crude oil unexpectedly dropped on Thursday and didn’t recover on Friday, even though Monday is closed for trading – Labor Day – and hurricane Gustav is coming straight into the Gulf Coast. I hope Gustav is not going to be as bad as hurricane Katrina, but I personally wouldn’t feel comfortable to keep short position in crude oil over the long weekend.
Volatility Index Oct 22.5 Call Options look quite attractive to me – I don’t believe in that miraculous GDP grows at times when unemployment is rising, banks defaulting, companies declare bankruptcies, home values falling and spending is contracting. The figures might reflect weakened dollar and increased prices, but to me that’s not something to be cheerful of.
Filed under Trading news, Trading tips by
Call it lucky, call it smart, but my OIL trade did pay off. To be completely fair, it caused me a few worrisome days and some strenuous moments with my husband and kids.
Buying OIL at $70.55 on August 6, 2008 was like shooting a bird in the sky (look at my post – “OIL has dropped 20% – time to buy?”. It was a little bit of a gamble and I had to sit in the position for over a week, watching OIL fall as low as $66.32, before it finally stabilized.
This was a good moment to buy more and though I generally don’t like to double my position this way, I felt it was quite secure to buy another chunk of shares at $67.15 on August 19th. My biggest concern was my investment in OIL represented about 40% of my portfolio. I couldn’t take it easy anymore and spend trading time playing with kids. I had to watch my position. It doesn’t matter where the market would move, this had to be a very short term trade.
Preferably just a day trade.
Luckily, my timing was great this time around and OIL closed higher – at $68.62. Watching the whole trading session, I once again felt that the support has been reached and OIL has a potential to move even higher. So, I decided to keep it overnight.
From the trading viewpoint, it might have been a good decision, but from the family perspective, it was not. On Wednesday, August 20th, EIA Petroleum Status Report was due at 10:35 a.m. EST (7:35 a.m. MST). August 20th was also the first day of school for our 4-year-old.
School starts at 9 a.m., kids wake up around 6 a.m. So, between 6 a.m. and 9 a.m. we have to go through the usual routine of: brushing teeth, making beds, doing morning exercises, eating breakfast, getting dressed and finally driving to school. Meanwhile, just after we finished breakfast, I noticed that OIL started to fall in price. Fearing some bad news, I got glued to my laptop, hastily scrolling through Ameritrade’s news headlines. At the same time both kids went berserk and my husband snapped at me for “my crazy behavior.”
Geez, I have to be crazy in the first place, to be a Trading Mom and truly believe I can be a successful one.
Well, by the time I got the kids dressed and came back to my laptop, OIL had sunk over $2.5 from the high of $69.62 to the low of $67.02. My heart sunk with it. That was probably the worst moment of my trading in quite a while. I had enough – there was no way I would leave the house (and my laptop). Lawrence had to drive Brian to school.
The fall lasted 55 minutes and had an plausible explanation – the Energy Information Administration (EIA) Petroleum Status Report showed a huge boost in the petroleum inventories in the U.S. of 9.4 M barrels weekly change.
To my surprise, however, OIL stopped its rapid fall right there and crawled back up to $69+. That was a good sign, so I unloaded half of my position at $69, bringing it back in size to the original bet. And instead, shorted twice as many shares of UUP – a much less volatile PowerShares DB US Dollar Index Bullish.
The next day – August 21st was fun – OIL has opened over $2 higher and I sold the rest of the shares at $72.05.
Today I watched OIL sink over $4 and close at $68.20….luckily, without me.
OIL – iPath S&P GSCI Crude Oil Total Return (NYSE)
UUP – PowerShares DB US Dollar Index Bullish (AMEX)
Filed under Trading news, Trading tips by
Ok, I must admit the last week-and-a-half was awful.
First, both boys got a virus and even though they recovered quickly, I managed to catch it as well. Whatever the heck it is, I don’t have energy to move straight, even less so to concentrate on anything of importance. Today, I finally went to the doctor and got some prescription. Hopefully it will work sooner rather than later.
All my positions have moved against me.
- Both gold and oil kept falling. My theory about rising inflation and US troubles has been beaten by the incredibly strong negative correlation of gold and oil prices to the strength of US dollar.
- CPTC fell as well, so instead of taking 8 cents profit on $1.20+ stock, I am now losing 10 cents.
- GM profit of about 15% (I bought GM on August 13 @ $10.24) has almost disappeared.
- Builders are going up, as if they suddenly got some business, though I still don’t see any huge number of buyers diving into real estate.
- Yet, the only position I unloaded – my short in Wachovia ( I bought the stock back on August 15 @ $16.22) is now falling in price without me.
In the next few days I have to either close all the positions, get a break and start from the beginning, or at least create some exit strategy – it is not much of a trading in simply watching as chunk of my profit disappears.
It looks like I am still struggling to find my game after 3-week long vacation. I probably have jumped back in way too early, but what if I am wrong in my assumptions?
Filed under Trading news by
Being across the ocean, it would be foolish of me to take any categorical pro-Georgian or pro-Russian position in this conflict.
As a kid, growing up in USSR and playing chess – one of the most popular sports – I had an awesome time traveling to the Caucasian region. All three capitals – Tbilisi (Georgia), Yerevan (Armenia) and Baku (Azerbaijan) remain in my memory as sunny places with friendly and hospitable people.
When I was about 15, I participated in the National Team competition in Nakhichevan City (another area of recent ethnic conflicts) – a wonderful and perfectly safe place back then. Even though most of the local women wore “paranja” (Russian for hijab), the traditional attire of the local Muslim women, I felt perfectly fine wearing sleeveless tops and short skirts, the fashionable attire of Russian and Ukrainian girls. No one came to me with any words of objection or hostility, rather I and other girls were treated with grace and admiration, as real “Sport Stars”. Locals stopped us in the city just to say “hello,” to ask for an autograph, to wish us a good luck in the next round and even to give us flowers.
I have the same pleasant memories about the USSR Young Masters Championship in Tbilisi – with great Georgian food and awesome hospitality – which I happened to win. I can talk more about my past experiences, but unfortunately it is time to talk about the present.
The war between Georgia and Russia began on Friday, August 8, 2008. This is the war of a small country, fighting for its territory, freedom and independence against an enormous one, overfed on oil dollars, run by former KGB operatives and determined to reestablish itself as a world super-power. Knowing the hot Georgian temperament, I can easily believe that Georgians were provoked by the Russians, to the point they started the offensive on South Ossetia on the day of the opening of Olympic Games.
Each side has reasons for this war. Georgia wants to get back its territory once and forever. After all, if one assumes that every region has the right to declare its autonomy, then “China Town” in New York City can claim autonomy as a satellite province of China. Likewise for “Little Italy” as an Italian territory and Brighton Beach a.k.a. “Little Odessa” as a Ukrainian (or Great Russian) territory.
Sadly, the joke about Great Russia is not a joke. For Russia this war is not only to gain control over the important geopolitical territory near the Caspian Sea and seize control over the oil delivery route, it’s also the way, to once again, oppose United States and show its muscle. Russian pride got humiliated with the fall of USSR and most of the Russians support the strong government. With Russian history school books being re-written countless times, many young Russians have very little understanding of the tragedy of Stalin times.
This is a “must read” book for anyone who wants to understand Putin and its regime.
Scary, but the U.S. seems to be blind to the current developments. They never seem to understand Russians (and other Slavic nations) politically, nor economically. To many “Soviets” living in the US it is obvious that “friend Putin” is not a friend. He is an enemy. An aggressive, smart and cruel enemy. He has jailed Mikhail Khodorkovsky (the wealthiest man in Russia and 16th wealthiest man in the world in 2004), he pretty much confiscated BP’s interest in TNK-BP, he killed Alexander Litvinenko (former officer of Russian Federal Security Service, who escaped to UK), he is currently bombing Georgia. If nobody stops him now, the next victims will be Ukraine and Estonia, after that it won’t take long to establish Great Russia.
While George Bush is playing beach volleyball and posing for photos with the US Women’s Olympic Team in China and the U.N. Security Council can’t come up with anything to stop the Russians, thousands of people are losing their life in this crazy and inhumane war.
Filed under World news by
In the last year or so, I was contemplating an idea of buying oil. Why was I sitting on my hands, rather than acting on it?
Oil went up to $100 at first (from below $70 in August of 2007), than bounced back twice giving me a chance to get in at about $88. I didn’t feel comfortable – to me the price was still near its all time high.
I ended up watching crude oil going all way up to $147, before it suddenly collapsed to $118 or so. Unfortunately, I can’t say that I see any big support level at this price range – my usual guide for getting in. Buying OIL – iPath S&P GSCI Crude Oil Total Rtrn Indx at $70.55 – is rather an intuitive gamble (another choice was DBO – PowerShares DB Oil Fund.)
On the technical side, I see a big drop and I am looking for OIL to bounce back to at least $130+ range (create a “shoulder”). On the fundamental side, I see some reasons that might help this technical move:
- the possibility of aggressive sanctions against Iran over its refusal to suspend uranium enrichment program;
- another round of disagreements between US and Russia, as well as any new abrasive changes in Russia’s energy policy;
- the beginning of hurricane season and possible strike of weather in the Gulf of Mexico:
I am sure that oil traders took into current price consideration the following info:
and the last, but not least,
- continuing problems in the housing and financial areas and Fed’s stubborn interest rate position can fuel inflation and weaken US dollar, affecting two forces contributing to the price of oil.
OIL – iPath S&P GSCI Crude Oil Total Return (NYSE)
DBO – PowerShares DB Oil Fund (AMEX)
Filed under Trading news, Trading tips by
When Ben Bernanke assumed his new position as Chairman of the Board of Governors of the Federal Reserve, finally replacing everlasting Alan Greenspan, I thought he would focus on economics instead of politics.
Greenspan, “The Marionette,” was too tied up by the political strings to think economics. He was the one who created multiple bubbles and is responsible for the current collapse of the US financial system.
Yet, it looks like Bernanke didn’t learn from the mistakes of his predecessor. Cheap money is like a drug and until everything in the house is destroyed by the fire, the drug addict won’t lift finger to fight the fire.
Either influenced by Bush and the upcoming election (oh, that “election year effect”), bowing to the overwhelming power of stock market, or panicking under the pressure of practical problems, Ben Bernanke is creating two monsters in place of one. By lowering the Fed’s benchmark interest rate to 2 percent in April of 2008 (the Fed reduced the rate seven times from 5.25 in September of 2007) and keeping it there, Bernanke is navigating the “US economy” ship right into the strait between Scilla and Haribda (two mountain-crushing ships in Homer’s Odyssey) – slowing economy and rising inflation.
For my taste, I’d prefer to fight with one enemy at a time. Moreover, fast surgery and afterwards recovery of the cancerous economy also looks preferable to a slow chemical and radiation treatment, chosen by Ben.
Of course, one might say that I don’t have the credentials he has. Well, I do have B.S. in Economics (my USSR education) and M.S. in Mathematics in Finance (American edition). In addition to it, I have a very strong intuition, which was summarized by my NYU professor:
QUOTE
“I am often astounded how Anjelina always arrives at the correct answer, through peculiar methods.”
Jonathan Goodman, Professor of Mathematics, Courant Institute, NYU, Director of the M.S. Program in Mathematics in Finance in 1999-2000
As such, my preference to increase interest rates and restrain inflation, is in line with the Dallas Fed President Richard Fisher, who dissented for a fifth time this year. And believe me, this has nothing to do with his name being close to Robert Fischer (famous American 11th World Champion), but have everything to do with the reasons I described above.
Filed under Trading news, Trading tips by
With the US economy slowing, even largest corporations get affected. An easy, but overlooked by me target was GM – General Motors Corp.
I was so into shorting homebuilders and financial companies, that I didn’t pay close attention to other possibilities. Don’t get me wrong, I did come to the conclusion that with less home buyers on the market, there are less shoppers for washers, dryers, refrigerators and other large kitchen appliances. The same applied to new furniture and an easy local proof was Tucson “Furniture Row” on Fort Lowell, that lost at least half of its stores in the last 6 months.
In addition, record oil cost was killing airlines; though, with their recent history of bankruptcies, I didn’t find a single one to short. Probably, I could have gone after JetBlue, but by March their stock was already under $5. Moreover, it was the only airline company offering non-stop flight from Tucson to JFK. The route to fun, the route to life.
As for the cars, from the times I owned Ford Thunderbird and Buick, I never was crazy about American auto industry. I spent enough time in the auto repair shops to learn about multitude of issues with both models, in addition to hearing unfavorable comments about many others. Since then, I admire Toyota – an easy and comfortable car to drive with sophisticated electronics and awesome reliability. Even my new BMW – “Ultimate Driving Experience” – can’t compete with Lexus’s (a Division of Toyota Motor Sales) fabulous electronics.
Nevertheless, General Motors Corp – this corporate behemoth, founded in 1908 in Flint, Michigan, that sells products under the Chevrolet, Buick, Saab, GMC, Pontiac, Cadillac, Hummer, and Saturn, Opel, Vauxhall, Isuzu, Holden, and Daewoo brand names in Canada, Europe, Latin America, and Asia Pacific has always associated in my mind with the core of American business. Yet, its size might have just added to its inflexibility. At the time when spending on the large items plummeted like a stone, it doesn’t sound too favorable to have many brands, even less so to have Hummer among them.
Still, I wouldn’t follow the advice of Lehman strategists to buy GM put spreads. The stock is already so cheap, falling a number of times below $10 mark, that with its support level being closer than resistance, I would rather look for buying opportunities or wait until the stock hits the resistance for any short selling or put strategies.
Why should anyone spend money on puts on an oversold stock that is drifting in the midstream of the channel, not too far from the support level?
Filed under Trading news, Trading tips by
As if it was not enough for us to pull money out of Wachovia, I also shorted its stock @ $17.05. On one hand I was surprised that the short sale went through, as I thought SEC has protected big banks from the short sellers. On the other hand, I was disappointed to see that my shorting level was not perfect – the stock went up to $18.32, before being pulled down by the market to $17.27 closing price. Today it got even worse, with WB touching $19.11 high (so far). Both days I had a way out with some profit ($16.30 & $16.60 lows, accordingly), but the nightmare of getting out of a similar Lehman Brothers position a few months earlier prevented me from disposing this short.
It took LEH about 2 months to start falling toward a “panic level” of March 17th – $20.25 from the $45+ it rebounded to almost immediately afterwards. Slow, yet stable decline from May 16th to July 15th, brought Lehman Brothers stock to $12.02.
Wachovia panic level was $7.80. It rebounded to $19.55 almost immediately.
Two questions remain unanswered:
- Would Wachovia follow Lehman Brothers pass? If yes,
- How long would it take Wachovia to start moving toward the “panic level”?
After all, just look at the flyer I used to get in my Long Realty’s mail box every week until a few days ago:
How much in bad loans would Wachovia write-off in the third-quarter?
LEH – Lehman Brothers Holdings Inc.
WB – Wachovia Corporation.
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