Being like Bolivia

"An historical error."

That's how Bolivia's president, Evo Morales, described his nations's decision to be a signatory to a U.N. Resolution 50 years ago to eradicate the coca leaf within 25 years, as it was designated as an illegal drug in that resolution.

You may better recognize the coca leaf as the precursor to cocaine, crack and Cocoa Pebbles cereal.

Now Morales wants to legalize the coca leaf while at the same time seeking funding for helicoptors and aircraft to crack down on its illegal cultivation.

That previous sentence has a nuance in it, and no, it's not the use of the word "crack."

The nuance is in the definition of "illegal."

In fact, Morales renounced the resolution last year and coca leaf growing is legal in family plots and its use is legal if done so in traditional ways.

Nice. At least there's an operational definition for the "traditional family," as we see its definition undergoing many permutations in the United States.

A family of any size that grows its own coca leaf and uses it in a fashion from the past.

That works for me. There's no dogma. There's no misogyny and it's all inclusive, offering a big tent and welcoming all.

I believe in double dipping when it comes to taking in dividends and option premiums, but Morales has definitely put a new spin on the art of "Double Dipping." Make it legal, but give us the money to ensure that we can eradicate what is no longer an illegal activity.

I can certainly see great demand to bring back the "extended family" to fit into that big tent and adopt compound style living situations to get that family plot to a nice and healthy size to support those "traditional" uses that had previously not been widely divulged.

Forget about "Branch Davidians." Take it right down to the end unit, the "Leaf Davidians."

Certainly, some family units can proudly point to their traditional use of freebasing since the 1970's as a vibrant expression of their cultural heritage.

I know I do as I pray at the Pryor Altar.

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Back to Life

Fiction is great. Real life? Not as much

In the world of fiction, re-animation is real. Anything can come back to life, even things that never had a spark of life before.

How many years and through how many on-screen versions have we celebrated the life of Frankenstein, perhaps the most well known of the re-animated beings.

He's dead, he's alive, he's dead again. And so on.

In some versions he was never alive to begin with, then he's alive and evil and then becomes charming and sophisticated.

See? Fiction. Try it.

Vampires, talking broom sticks, dancing teacups and even mummies. You name it and they can breathe life into it or in the case of the gentle giant in "The Green Mile." summon some kind of energy to reverse death.

Fiction is easy.

Sometimes the re-animation is endearing, like the vision of Nat King Cole doing a duet with his daughter.

There are times when the re-animation is totally unnecessary, like the appearance of the late, not so great actress Dixie Carter continuing to appear in the Public Service Ad for Spasmodic Torticolis, two years after her death.

Creepy, but understandable, since there's probably not another D-List celebrity willing to front for that cause, worthy as it may be.

At other times the re-animation is the result of morbid curiousity, such as when sales of music skyrocket after a stars' unexpected, yet fully anticipated death.

The "death bounce" in sales is well established and is matched by the sudden appearance of an unending supply of lost studio tapes and recordings.

Even the most explored band in the history of manking, The Beatles, had lost recordings become unlost.

Death will do that. But without death you can't have re-animation.

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Selling a Kidney for Crack

I know that my short term memory is degraded, but I still remember what 2008 was like. It wasn't very good.

Even if I didn't remember, I could just dig up an old spreadsheet or look through my Quicken archives and would be reminded of the pain.

Every now and then, even though I don't pay too much attention to stock charts, I'll pull up 5 year charts just to see how low we coud sink when times get tough.

Stocks, like people, can sink to unimaginable depths.

Luckily, and totally serendipitously, that was the time that I started a strategy of aggressively selling covered call options and sticking to a relatively tightly controlled universe of stocks, so the pain wasn't as bad as it could have been. Always solid companies, never any speculative plays.

I've always thought of speculative stocks as being Zombies that could come back and devour its master if guard was ever let down.

Back then, though, I also worked for a living and actually made lots of money. In fact, by my estimation obscene amounts, particularly relative to my actual degree of effort.

I like to think of it in mathematical terms, except I'm reminded that the divisor can never be "zero".

Now, I sit and try to generate income from my holdings by selling and re-selling call options on the portfolio's holdings. It's been a really good alternative to the alternative.

As each monthly cycle begins I find myself in an optimistic frame of mind.

This past week, the beginning of the October cycle was no different. In fact, if anything, I was even more optimisitc after coming off an absolutely stunningly good last week of the September cycle.

During that week the market fought back from early day losses on a couple of days and rallied on other days in the face of no news, or even bad news.

Does it get any more bullish than that? Even more so when the markets appeared oversold in previous weeks. Like that wound up coil some people like to use in their attempts at imagery.

Funny how things work out.  I questioned my own sanity based upon last Friday's rally going into the weekend. There were so many open questions remaining in Europe, I never did understand where the optimism was coming from. Despite that, I was still looking forward to a great month coming and lots of new options income.

Did I mention "funny how things work out?"

Despite the terrible market in 2008, I never felt any desperation, even on a day when I may have lost the equivalent of 200 Color TV's (using 1964 Color TV Index).on paper. Having a job and employment income was probably a factor in maintaining a calm demeanor.

A few weeks ago, on the day the NYSE commemorated the tenth anniversary of the September 11th attacks, we had a 300 point drop, yet it was just an ordinary day as far as drops go. No stress and no worries.

Yesterday and Wednesday had very different feels to them. Sometimes it's not just about the magnitude, sometimes there's a qualitatively different feeling. Yesterday, in fact, it was the FOMC report, that led me to believe that they need to measure their words more carefully and perhaps consider "qualitative easing" for a change.

Adjectives can be really hurtful.

Gloom. That's the feeling. The same kind of feeling back in February 2009, which was the last time we'd had a week like this. It was just a couple of weeks later thatthe "Haines' Bottom" was called.

I actually shuddered to look at my largely unhedged positions today. Were it not for the plummet in silver and the subsequent rise in the ProShares UltraShort Silver ETF, which slowly has come to be about 9% of my portfolio, there really would have been some frightening numbers .

I actually have images of the short silver ETF's being my portfolio savior, if we can shave another $3-4 off the price of the metal.

And I don't really believe in saviors, but am willing to accept delivery from my misery. When I'm knocking on the door, I'll take all rites.

Just another form of hedging, that's all.

Unhedged, those shares were really easing the pain. Seems appropriate, as silver is also the antidote to a Zombie attack when forcefully thrust.

But one week into this 5 week options cycle, I was so woefully unhedged that the blows were all full body and the options premium income was much lower than I typically expect. Considering that September was the second worst income month of the year, I was feeling the pinch.

The other night we were watching some show on the National Geographic channel about cocaine. They profiled a Chicago addict who was going through a couple of hundred dollars each day.

Sugar Momma and I both wondered where he was getting the money from and then we found out, even though we both had a clue.

It was from that bad kind of crime that I covered in Wednesday's blog "7 Reasons Why Criminal Life is Great".

But sometimes you do what needs to be done. When faced with your personal stress test you do things that you may not be proud of.

So I looked at my babies and I do love them all and wondered which ones to sacrifice in order to generate some income.

Unfortunately, there weren't any really good prospects. In fact, the only promising position was the UltraShort Silver ETF. Just about everything else was deeply in the red.

Loving all of them equally, but loving the ETF most, it was a difficult decision, but Daddy needed some money.

Sigh. Like an addict going after that crack rock, I sold call options on about 30% of my ETF's. Almost like Abraham ready to sacrifice Isaac for a chance at the unknown.

However, instead of selling in the money or near the money calls, I sold the October 2011 $17 options, at a time when the ETF had already been up about $1.80 to $14.40

Sort of like Abraham using a magician's trick sword.

I've been confident that the metals would realize that gravity was an important contender and haven't been selling the covered calls in anticipation of that realization.

Until now.

I just needed that fix. It really did feel like selling your last remaining kidney for just one last crack rock.

Self-respect is pretty unimportant.

Dennis Gartman, that ubiquitous CNBC contributor must feel the same way, as he told people to "go out on the street and raise cash".

I think he was exhorting people to panhandle. I don't think Mayor Bloomberg is going to be a fan of that strategy. But at least that clears up the question of why Gartman spit on my windshield yesterday morning as I exited the Holland Tunnel.

To his credit, he was the only one out there with a magnetic credit card reader and a Skype connection.

Personally, despite my desperation, I am still the guardian of my dignity and would sooner sell apples or jump out my first floor window.

For a brief moment there was a 100 point climb off the lows when a FInancial Times report was misinterpreted. When the realization came that the report indicated that the European banks needed capitalization yesterday, those 100 points were gone in a flash.

I did take that opportunity to close out sold call option contracts on Transocean and DuPont, in anticipation of some kind of a bounce.

That may be overly optimisitc, as I don't expect the same kind of week closing rally as we had last week.

But at least I didn't take it quite to the lengths of the Greek banks.

The fact that Greek banks were offering lakeside villas for every new account deposit in excess of 50 Euros was not likely to create the kind of extra capital hordes that would be necessary to forestall collapse.

Can you imagine the size of the crack rock that it would take for Greece to pass that stress test?

Interestingly, the Greek banks may be in better shape than our very own Bank of America, where a new account deposit of $50 now gets you a major equity position, as shares have now fallen to a new all-time low point.

Moynihan, stop bogarting that crack pipe.

As bad as today was and as regrettable as the actions were, extending the metaphor, at least I can grow a kidney back.

We've all done it before and will likely all do it again.