WHAT WE DO? WE SELL OPTIONS FOR INCOME. WE USE THAT INCOME TO BUY DIVIDEND GROWTH STOCKS!
CHECK OUR TRADES ON OUR FACEBOOK PAGE OR HERE.


Posted by Martin June 18, 2014
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Remember


 




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Posted by Martin June 15, 2014
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The Fed Is The Great Deceiver

The Fed Is The Great Deceiver

Paul Craig Roberts and Dave Kranzler

Is the Fed “tapering”? Did the Fed really cut its bond purchases during the three month period November 2013 through January 2014? Apparently not if foreign holders of Treasuries are unloading them.

From November 2013 through January 2014 Belgium with a GDP of $480 billion purchased $141.2 billion of US Treasury bonds. Somehow Belgium came up with enough money to allocate during a 3-month period 29 percent of its annual GDP to the purchase of US Treasury bonds.

Certainly Belgium did not have a budget surplus of $141.2 billion. Was Belgium running a trade surplus during a 3-month period equal to 29 percent of Belgium GDP?

No, Belgium’s trade and current accounts are in deficit.

Did Belgium’s central bank print $141.2 billion worth of euros in order to make the purchase?

No, Belgium is a member of the euro system, and its central bank cannot increase the money supply.

So where did the $141.2 billion come from?

There is only one source. The money came from the US Federal Reserve, and the purchase was laundered through Belgium in order to hide the fact that actual Federal Reserve bond purchases during November 2013 through January 2014 were $112 billion per month.

In other words, during those 3 months there was a sharp rise in bond purchases by the Fed. The Fed’s actual bond purchases for those three months are $27 billion per month above the original $85 billion monthly purchase and $47 billion above the official $65 billion monthly purchase at that time. (In March 2014, official QE was tapered to $55 billion per month and to $45 billion for May.)

Why did the Federal Reserve have to purchase so many bonds above the announced amounts and why did the Fed have to launder and hide the purchase?

Some country or countries, unknown at this time, for reasons we do not know dumped $104 billion in Treasuries in one week.

Another curious aspect of the sale and purchase laundered through Belgium is that the sale was not executed and cleared via the Fed’s own National Book-Entry System (NBES), which was designed to facilitate the sale and ownership transfer of securities for Fed custodial customers. Instead, The foreign owner(s) of the Treasuries removed them from the Federal Reserve’s custodial holdings and sold them through the Euroclear securities clearing system, which is based in Brussels, Belgium.

We do not know why or who. We know that there was a withdrawal, a sale, a drop in the Federal Reserve’s “Securities held in Custody for Foreign Official and International Accounts,” an inexplicable rise in Belgium’s holdings, and then the bonds reappear in the Federal Reserve’s custodial accounts.

What are the reasons for this deception by the Federal Reserve?

The Fed realized that its policy of Quantitative Easing initiated in order to support the balance sheets of “banks too big to fail” and to lower the Treasury’s borrowing cost was putting pressure on the US dollar’s value. Tapering was a way of reassuring holders of dollars and dollar-denominated financial instruments that the Fed was going to reduce and eventually end the printing of new dollars with which to support financial markets.The image of foreign governments bailing out of Treasuries could unsettle the markets that the Fed was attempting to sooth by tapering.

A hundred billion dollar sale of US Treasuries is a big sale. If the seller was a big holder of Treasuries, the sale could signal the bond market that a big holder might be selling Treasuries in large chunks. The Fed would want to keep the fact and identity of such a seller secret in order to avoid a stampede out of Treasuries. Such a stampede would raise interest rates, collapse US financial markets, and raise the cost of financing the US debt. To avoid the rise in interest rates, the Fed would have to accept the risk to the dollar of purchasing all the bonds. This would be a no-win situation for the Fed, because a large increase in QE would unsettle the market for US dollars.

Washington’s power ultimately rests on the dollar as world reserve currency. This privilege, attained at Bretton Woods following World War 2, allows the US to pay its bills by issuing debt. The world currency role also gives the US the power to cut countries out of the international payments system and to impose sanctions.

As impelled as the Fed is to protect the large banks that sit on the board of directors of the NY Fed, the Fed has to protect the dollar. That the Fed believed that it could not buy the bonds outright but needed to disguise its purchase by laundering it through Belgium suggests that the Fed is concerned that the world is losing confidence in the dollar.

If the world loses confidence in the dollar, the cost of living in the US would rise sharply as the dollar drops in value. Economic hardship and poverty would worsen. Political instability would rise.

If the dollar lost substantial value, the dollar would lose its reserve currency status. Washington would not be able to issue new debt or new dollars in order to pay its bills.

Its wars and hundreds of overseas military bases could not be financed.

The withdrawal from unsustainable empire would begin. The rest of the world would see this as the silver lining in the collapse of the international monetary system brought on by the hubris and arrogance of Washington.

(Source: Paul Craig Roberts, Institute for Political Economy)




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Posted by Martin June 14, 2014
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College Conspiracy – The Next Bubble


 




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Posted by Martin June 14, 2014
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Walmart: The High Cost Of Low Prices


 




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Posted by Martin June 13, 2014
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In Debt We Trust, America Before the Bubble Bursts


 

 




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Dreaming of my retirement


Many times I day dream of my retirement and how nice it would be when I have all my accounts up to speed and finally taking fruits out and spending it for my leisure (and bills).

I have two types of dreams – one is about what everything I want to do when I retire. I want to travel. There is plenty of places in the US I have never been and want to visit.

Today, I dreamed of having a double decker coach and traveling with my wife and kids around the country in a luxury mobile home. I even drew floor plans of both levels of the coach. It was a very nice dreaming.

 

Double Decker

My dream liner – double decker RV for traveling around the country.

 
The second dream is actually about what I would do once I save enough and be at the very beginning of my retirement. It is also nice dreaming, but slightly more practical.

As you may remember I plan on retiring early with little money than what advisors recommend relying more on trading for living rather than saving and then use those savings.

 

Trading room

This could be my trading room on the upper deck. What a nice dream!

 

But with trading for living, it may be more difficult. It may be stressful. If I plan on making, for example $5,000 monthly, it can be frustrating to trade and be correct every time and make $5k every month to pay the bills.

So, many times I was dreaming of how to avoid the stress and trade with ease and no rush. The solution is quite easy.

Well, in my dreams it was very easy. I will see in near future, how easy it is going to be in reality.

I plan to retire in 5 or 6 years. My assumption is that If I double my account every year, or every year and a half (as of today I shoot for every years), I should be able to retire in 5 years.

See the table below I saw in my dreams:
 

 

If that happens and I reach that dream, I should have enough money to trade for living. With $640,000 account balance and average 45% annual profit I should make $288k every year for living.

It sounds very nice, right?

I know… bear with me, I am still dreaming. I know there are a few huge IFs in the way. But hey, it may be a realistic goal.

So I was thinking, what IF I do not make 45% in one year? What if I make less than that? One bad year, crisis in the market, and all is in vain!? So I came with a plan in my dreams to trade and make money for the next year instead of the current year.

For example, IF I really reach that nice looking amount (note that big IF) in 2019, I will continue trading (and still spinning the wheel in a full time job) in 2020 making money for 2021 year.

Well and then it is a piece of cake. In 2021 I will be making money for 2022, in 2022 for 2023 until my death.

 

Living room

A quite luxury living room. I can see my family and myself spending time here on our family travels.

 

I also plan invest regularly 10% of all proceedings from options trading into dividend growth stocks and after I retire, I will leave 10% from proceeds (or more) to reinvest in the next year.

So if that happens, and in 2020 I make $288,000 trading options, I will invest $28,800 into dividend growth stocks, take $100,800 for taxes (in the worst case scenario), take out $100,000 for spending and let $58,400 to be reinvested in the next year.

Oh, what a nice dream!

So, let’s stop dreaming, back on earth.

Today markets retreated a lot due to weak data in retail sales. I wonder what the cause was today. A warm weather this time? The intraday trading was one big slump. On a longer trend this retreat can be seen as positive move. The trend of last month was very strong, so this pullback is a healthy move. The money flow into market is still very strong, the bulls are still holding tight although today’s move weakened them a bit. Let’s see tomorrows trading if this pullback is stronger or just a blip.

I expect the markets to be negative tomorrow (which is getting my account temporarily back below my “double the account every year” dream.

Are you dreaming too about your investments and retirement? What does it look like? Today I am OK with any, even crazy ideas!

Happy trading and investing!

 
 




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New Trade: Bull Put Spread: DEC14 TEVA

New Trade: Bull Put Spread: DEC14 TEVA

Today I opened a new trade against TEVA. The stock recently triggered a break out from a longer term squeeze and both indicators I watch are pointing for an uptrend move. Both indicators (Bollinger bands and Keltner channel) provide me with 70% chance that the stock movement direction will follow indicator’s direction.

And because I built up some free cash I broke my rules here and opened this trade although I wanted to increase cash to 30% reserves. Now, I am about to start over. I must keep my trading platform closed for the next two months after a few of my trades expire which would increase my cash reserves.

Trade Detail

I placed a following order today which should execute tomorrow:

STO -1 TEVA Dec19 14 50/40 put @ 2.60 CREDIT

The spread looks like the following:

SELL 1 TEVA Dec19 2014 50 strike puts and
BUY 1 TEVA Dec19 2014 40 strike puts

for LIMIT @ 2.60 CREDIT

 

Max Profit $273 Max profit occurs if TEVA is above 50 on expiration day, which is December 19.
Max Loss $727 Max loss occurs if TEVA is below 40 on expiration day, which is December 19.

 
 

 

 

I hope you had a great day and wish you happy trading!

 
 




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Stocks retreat taking some break as I expected

Stocks retreat taking some break as I expected

Stocks retreated today. I didn’t have time to check why actually it was happening, but honestly, I do not care.

I look at the market trend and stocks trends from technical analysis perspective and trying to eliminate the noise media are creating every day.

What I see is an insignificant pullback on 1 year chart with a very strong uptrend move and inflow of money. The intraday chart was flat the whole day.

The market broke from a consolidation pattern in May 23 and since then strongly moving up. When looking at my indicators, we will most likely see a little more of an uptrend as the growth is not slowing down.

It may change of course. I am not an expert and do not have a crystal ball, but we may see some growth still.

This movement however made me to open a new trade against TEVA (bull put spread), which was a violation of my rules, money management, and increasing free cash reserves. Heck, I realized that I must keep my trading platform closed during the day as the temptation opening a new trade as soon as I have free cash in my account is very strong.

 




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I officially doubled my account today. TASR helped a lot.

I officially doubled my account today. TASR helped a lot.

I did it once before when I started trading options and I doubled my account from $4000 to $8000 couple of years ago (in 2011), but then I lost everything back down to $2000; $1914.70 to be exact.

That was my wakeup call and I started looking for a strategy, which would no longer be a losing game for me. I also needed to recover my losses once again. It looks like I found that strategy.

I still had losses from 2006 – 2010 years of my trading career. I had no strategy, didn’t know how to invest and I lost quite a lot of money. The first account doubling was a great achievement to me and I started celebrating what a great trader I was. Yea, only until I erased everything again.

I hope this time it is different and I keep the money I made so far and I hope I won’t do anything stupid to give them back. I will defend them as strongly as possible to keep them and make more in my quest of doubling my account every year.

I ended year 2013 with $10,072.35 account value (note, that this is my TD Ameritrade account only, it doesn’t include ROTH, 401k, or Motif Investing accounts).

Today I closed at $20,274.69 value.

Of course, the game isn’t over yet. I still have many open trades which can shake this number and I expect it to fluctuate. But I hope, it will have growing tendency as we will be getting closer to the end of the year.

The biggest help came from TASR, which was beaten up a lot recently. It lost 60% of its value and I was in that trade. I was forced to roll my trade all the way from 18 strike price down to 13. I was ready to continue rolling it lower to 12 strike, but today the company said that Google Maps co-creator and former Facebook chief technology officer Bret Taylor would join TASER’s international board of directors, lending his expertise in technology toward advancing the stun-gun’s product lineup.

The stock shot up from $13.4 to $14.28 a share. It boosted my income today by nice $880. I still have almost $2000 in this play so if my options contracts end up worthless, I will get even juicier revenue.

I am expecting some pullback tomorrow or even in a few more days, but overall, the account looks promising.

I wish you good luck and happy trading!
 




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Keeping cash reserves is crucial to survival

Keeping cash reserves is crucial to survival

It all depends on your trading style, plan and strategy. If you are a long term investor buying dividend stocks for a long haul, it probably doesn’t matter if you use all your available cash.

If you use margin however or trade options, I learned that it is a very important thing to maintain some free cash in your account. That free cash or buying power protects you and allows you to make adjustments to your trades.

I learned this the hard way during stocks sell off a couple of weeks ago, when TASR suddenly dropped significantly down, my tiny cash reserves (around 3% only) quickly evaporated due to constantly changing maintenance and I had no chance to adjust my trades to get out of the mess. I also faced a margin call.

A margin call puts you into involuntary trading where you are doing what others want and not what you want or should do. You are completely exposed to a mercy of the market. And your broker.

Fortunately, I had a few winning trades which I could close to raise cash and avoid a complete disaster. But I failed to learn from it and yet again I opened new trades sending my cash reserves to 1% level.

Very irresponsible playing with fire. If the market strikes again I will be caught with my pants down unable to react. I know the rule and advice of many experienced options traders about keeping free cash in reserves, but I failed to follow that rule.

It’s time to change it and increase cash at 30% (my very original rule) and keep it in there and trade with the rest. I even started tracking it and I added it to my options evaluation spreadsheet to see that I cannot open new trades when I am below 30% threshold. That 30% free cash can only be used for trades adjustments and no new trades at all.

As of this writing I raised my free cash to 5.27%

I know, way below and long way to go to raise it up above 30%. It’s time to fix my finances in my trading account. A money management is a very important party of any trader. So I should not neglect it.

What about you? Do you keep some cash in reserves for great opportunity which may show up or for repairing disasters? If so, how much cash do you hold?




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