I took advantage of a nice, dull day to skip the wrap-up and catch up on 2 weeks worth of virtual portfolio reviews that were interrupted over the holiday.
In case any non-members are interested, we closed 132 positions for a 76% average gain and a 33% gain on cash as our pre-holiday strategy to sell heavy amounts of calls into the top of the 13,300 range has been a winner so far. At this point, we're pretty much coasting into the close of the year as Optrader summed up our holiday mood:
"Yes, taking some time-off is very good. And I have to thank you for this as I was totally fine not being able to trade, knowing that I was totally covered. In fact I am planning on trading less, or at least spend less time stuck to my computer."
Dday97 has also earned something more important than money – time!
"I just decided it was more important to take my son hunting/fishing/hockey and teaching my girls how to ride their new bikes. A proper virtual portfolio of course gives us that peace of mind and because of the techniques learned here I’m able to spend more time doing the important things in life."
That is mission accomplished from my perspective! Our mission statement on top of this page is "High Finance for Real People – Fun and Profits" and it's no accident that fun comes before profits. If we set the priorities correctly in our lives and remember what it is we're working for, profits will come – and not all profits are the kind you can put in your bank, that's the kind of statement you either understand or you probably won't…
As we spread the gospel of the Long-Term Virtual Portfolio far and wide this holiday season, it makes me very proud to know that we're having an actual effect on improving people's lives. The systems we use here were never meant to be a slot machine, it's a new way of handling the markets so that you control your virtual portfolio and not vice versa. Congratulations to our "graduate students" and welcome to many new members as we celebrate our fist year anniversary at PSW.
I am especially gratified to hear that some of the members are, in turn, helping out their friends and family. That makes me very happy because there's a limit to how many members we can accept yet there's a whole world out there that could be trading smarter! So thanks to all of you for making this past year extremely rewarding for me, hearing what I heard yesterday (there were many comments to this effect) makes me feel every hour I spend here is very well worth the effort!
Now how about those markets?
I didn't like yesterday's action because Paulson's little tap dance in the morning did little to really boost the financials and they were trading back down by the day's end. LEN sold MS (in some strange JV arrangement) $1.3Bn worth of land for $525M, that's a 60% discount! This calls my HOV play into question as I had assumed their assets were worth 1/2 of what they are booked at but if this is the trend, then there may be even more pain in store for the housing sector. Nonetheless, the move was seen as good for LEN and they closed up 2.5%, carrying on my theme from last week that acceptance is good for markets.
As I predicted in the morning post, Auto sales were NOT good for the market as GM's sales FELL 11% and Ford and Chrysler did nothing to offset it. Toyota was flat to last year but Honda jumped 4.7% and Nissan rose 6.1% as US automakers continue to tell Washington that Americans don't want to drive cars that get good mileage. An objective observer might get the idea that these guys are sabotaging their own industry but let's give them some credit for not being that stupid and assume they are being paid off by big oil. Better to go down in history as corrupt than incompetent right boys?
Speaking of corporate greed destroying our nation: There's a WSJ poll today asking "Do you support the Treasury's plan to freeze rates on some mortgages?" and 80% of the people (as of 8am) have voted NO! WTF Journal readers? Do you understand the repercussions of NOT doing something about this CRISIS? Surely you can't all be evil bankers holding foreclosure notices over the heads of the starving peasants can you?
Sometimes I am genuinely disgusted with this country!
Over in Asia, where they still believe that ALL men (not just the rich ones) are created equal, and that they are endowed by their Creator with certain unalienable Rights (the kind that became very alienable under the Patriot Act) , among which are Life, Liberty and the pursuit of Happiness. Actually, it may be interesting for WSJ readers to know that the original draft of the Declaration of Independence ended that line with the phrase: "Life, Liberty and the pursuit of Property" but Happiness was substituted as even the founding fathers knew that there were more important things in life than stuff! The Bill of Rights included property as a basic human right but, sadly, ever since the first land grab by the banks in the depression, no one in this country has ever been encouraged to own unencumbered land.
Now where was I? Oh yes, Asia! So over in Asia… The Hang Seng was up 221 points but that's a day off for them and the Nikkei took a nasty 148-point dip as exporters are becoming nervous about another rate cut further devaluing the dollar to the Yen. The dollar ran into heavy selling at 76 yesterday and a turn-down here will do nothing more than confirm a very nasty trend. The Chinese markets were driven by a rebound in banking and a rumor in the steel sector that several companies would band together to overpay for RTP. I continue to short RTP on these silly bounces…
In a strong break with the practices of US policy makers, China has decided to have an energy policy which oil traders think is bullish because they will be stockpiling oil but really isn't because (again, in a strong break with Washington) they intend to use their SPR to keep prices under control. They will also be stockpiling uranium and that always gives us the warm fuzzies doesn't it? China is just starting a major economic policy meeting where the top concerns seem to be inflation (again not like us at all) and their "overheating" economy. Japan's Q3 profits ended up lower for the first time in 5 years but global chip sales are up 5%.
NOK put the European markets in a bad mood as they reported weak US sales. This is the max fear factor for EU investors as their currency is crushing the ability of US consumers to afford their goods. Banking stocks got killed this morning with BCS, RBS and others hitting the 5% rule in early trading due to continuing concerns over SIVs, very bad for the financial sector! European markets are off a bit over 1% ahead of the US open. Bonds are rallying too, also not a good sign…
On the home front, the futures are well off from yesterday's close, which is fine with us as we've been short since 1:30 yesterday. Let's see how we handle our range and watch MRK, who gave disappointing guidance and should provide a huge Ka-ching from Thursday's Jan $60 puts! There's not much to do but watch our trading range and try to seperate the wheat from the chaff as we see how the individual stocks lead us up and down through this very wide channel we're in.
