Friday, January 18, 2008

Friday Musings

Blast from the past Uno: On August 25, 2007, I wrote this post titled, Recession Chatter.

In re-reading it, I feel like the entry still rings true. My estimation was that we would be in a full blown recession by Spring of 2008. I did get some flack from a reader. Are we in a recession? We'll not know with any certitude until at least six months after it has ended! At the very least, we are seeing some respected opinions saying that they believe we are in a recession or close to it. I think that the market has sniffed the corpse of our formerly robust economy and has voted with its feet running by running to the exits.

I've written here that I thought that commodities would be the last to fall. That is happening now. None of this has to do with certainty of a recession or a pronounced slowdown, but rather increasing probabilities. I think that it is safe to say that many are seeing increasing probabilities and are acting accordingly. Like our blog friend, K, I was early on expecting the financials to rebound. A small position in double inverses that are the obverse of current market direction can hurt one mightily.

Blast from the past Dos: On Nov 16, 2006 I wrote about Marty Zweig and his definitions of recessions and bear markets in this post On Recessions and Bear Markets...a Marty Zweig Perspective. I think that you will find this post most interesting.

Decoupling: John Murphy notes that the decoupling of global markets is a myth (you've heard me rail against that myth in this space). Here's a performance chart:

Stuff I've Done this Week: My spec account is just a sneeze over $19K. Sniffing. Dab left eye; dab right eye. My largest retirement account is only $500 down from it's all time high. Cheerful leaping. I've been swinging the bat at well timed and bought puts (which could have easily been ill-timed and bought!) and running to either first or second based. I've swung for the home runs in options, and I've struck out. By recognizing that there are always opportunities and the power of small successes in keeping one's psychology healthy (but not nefariously and dangerously over confident), I'm not beating myself up too much.

Today, I bought some puts on MDC (FEB 35). It's a homebuilder and financer. I cannot believe that the news will be good. Their last number had them losing almost $8 per share.

Stupid Stock Trick: You know that I like to share with you foolish stuff that I've done. It's all part of the heuristic value of this blog. The following isn't an egregious mistake, but it does highlight one of the things that I have to develop better.

Given all of the money that I've lost when I was reckless with option buying, I'm very careful about taking profits sooner rather than later. I was very prescient in buying SLB MAR 85 puts when the stock was at $93 on 01.15. (I looked at the chart and chose $85--felt it was a high probability hit). I bought them at $1.98 and sold them at $3.80. Not a bad return on a 2 day hold. Had I only hung on a couple of more days, I would have quintupled my gain. I could have sold them for $11.50. But that is rationalization in hindsight. Sure, I had plenty of time as they were MAR puts, but I'm also expecting some great announcement that will send the market into the stratosphere! A gain is a gain--but I tend to leave money on the table. With options, though, waiting too long can be deadly. That bird in hand thing and all that! I only had 5 options. If I had bought more, I would have apportioned my sale. At least this success is partial atonement for past sins.

I also took gains on my WLT and FCL puts. So I'm put-less except for the MDC puts (5 MAR 35's). One could argue that it is putting in a double bottom and the RSI is rising. Could be. But it could also be hitting the top of the channel. Technicals can only be confirmed in a rear view mirror too!

Insurance Stocks: Did you look at any of those? They all fell today. It will be interesting to see what these folks report in this upcoming earnings season.

Volunteerism: As usual, I will be carting dogs around tomorrow during the day. It is something that I really enjoy and look forward too. It's like meeting new friends who will do nothing less than adore you and love you--albeit for a brief time! Who can say no to that!?

One of my neighbors is having a poker game, so I'll be a poker widow tomorrow night. We are also expected to get some snow. I'm sure that I'll stay in and be comfy.

Resolutions Progress: I did want to update you on my resolutions. I put them on a mind map AND I've created a "To Do list" category for them. I cannot tell you what a difference it makes. "Scheduled Fun" is one of the categories. Now, I'm sure that you are going to laugh at me because I have a "To Do" item for that. Laugh away. I deserve it. I'm embarrassed to tell you how much fun I failed to have in my life because I didn't schedule it, and I let work take precedence. But I'm pleased to report that I've had a lunch and dinner engagement this week. I've also have lunch scheduled next week and the week after.

Regrettably I must admit that I've had greater success with the "Fun" resolution than I've had with my "Body" resolution (eating/exercise!). Here's is my mind map.

Don't they look like animal balloon figures? I've created a To Do list using this "Free Mind" program. For the categories, I've used those recommended by David Allen. They aren't like the very rigid ones that Covey uses. But rather, his categories make sense for the way that most normal people operate.

Let's Talk about YOU! If you have made a commitment to being better organized and find some of the systems commonly used not flexible or suitable for you, may I recommend that you try Allen's book: Stress Free Productivity. You can go to his website and get a feel for it. I had Allen come to my company and address our executive and senior management team in a day long seminar. His concepts are simple and they are powerful. You don't need to buy any special planners--you can operate out of a $1 notebook. I promise you this: If you follow his program you will be more organized, more productive and more stress free. BTW, I don't get anything for evangelizing his product other than the satisfaction of knowing that I've introduced you to something that will make your life easier. David is a really neat person--truly someone who is living his passion for helping others.

Closing Thought: Why don't you contact a friend of yours that you've not seen in a while and invite him/her out for some fun?

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