Case of the Mondays

I spent more than my usual share of time this weekend re-watching old movies on Comedy Central.

If you read yesterday's blog, "Market Crashers," you'd already know one of the movies. Despite what your mother may have said about how TV will kill your brain cells, I find it useful for creative inspiration. Besides, that's much easier than having to actually interact with anyone.

Although I have no doubt that I am beginning to lose some of those brain cells, I'll never pin it on my viewing habits. One of the really great things about starting to lose some of those brain cells is that regardless of how many times you see a movie or a show, somehow it still manages to surprise. I'm sure that I've written that before, but even then, it's still funny, in a poignant sort of way, to me.

See what I mean.

That was also the case watching the cult classic "Ofice Space," on Comedy Central, the cable station where commercial failures go for new life.

It probably works out that way because it's really hard to smoke weed in the movie theater during the first run of movies that go on to become cult classics. It's also hard to make it to the theater if you started smoking weed beforehand, thinking that the weed is way overpriced at the concession stand.

The cult, in case you didn't know, smokes lots of weed. There's no other plausible explanation for why the mere mention of "TPS Reports" elicits spasms of laughter.

Right.

As opposed to much of the world, and definitely the downtrodden characters in "Office Space," I always look forward to Mondays. In fact, even when I was a contributing member of society, I had nothing against Mondays.

These days, the only Mondays that I don't care for are the Federal holidays, with all due respect to dead Presidents, laborers and others deserving of retail sales events. It's all simply because the stock markets are closed.

Otherwise, Mondays are like a re-birth.

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With all Due Respect to Bernard Baruch

I know enough to know that when someone starts a sentence with the words "In all due respect...," there's no great love coming forward. You know the tone. The same one that's used right before you hear something like "in my humble opinion."

I tend not to use profanity, except when paying for sex, but when I hear either of those sets of words, my first response is "F**k you, will all due respect."

Sometimes, I may instead say "In my humble opinion, you can go and F**k yourself."

And then I stop listening to whatever it is that's about to be uttered, but I amuse myself with an internal giggle at their expense.

Many years ago, when I was first getting started in life and the greater world of investments, I was very fortunate to have received a cold call from a young man named Bob Shapiro.

To make a long story short, Bob was just starting out with E.F. Hutton, of E.F. Hutton fame and became my stock broker for the next 25 years.

How often have you known a cold call to work out?

I followed him to Smith Barney and then to UBS and to all of the corporate in-betweens and iterations after E.F. Hutton gave up its soul and life.

Sadly, Bob passed away about 4 years ago.

Although I told him that I had, I never did read any of the writings of Bernard Baruch. Bob had recommended that I do so.

If you read my blog on a regular basis, you'll know by the persistent presence of typos, I don't even read my own blog, much less the writings of a long dead legendary investor, whose mere mention of his name causes phlegm filled sputum to be hurled outward.

It's bad enough that there's an entire summer's worth of swatted flies on my computer monitor, I don't need any Baruch related detritus.

I'll never know whether Baruch had the same penchant for run-on sentences as I seem to have.

Anyway, Bob was a fan and being a man of structure and integrity, he ascribed to at least one one of Baruch's investing principles. That was to cut your losses once you've reached the 10% mark.

Bob practiced what he preached. He was consistent in his application of the rules and he was a good shepherd of my portfolio, using his discretion to trade.

Sometimes performance disappointed, but Bob never did.

In the intervening years, I still haven't read Baruch's works, but I've adopted Bob's belief in rules.

The only thing is that I don't buy into Baruch's "10% Rule."

For starters, I hate to take a loss, unless its being done for tax purposes.

Sometimes, though, I'll admit that I used "taxes" as an excuse to just get rid of a loser or what I think to be "dead money."  Invariably, those have been technology stocks. Other than Google, VMWare, Riverbed Technology, Apple and Microsoft, I've not had good luck with technology.

Actually, when I lay it out like that, the technology winners outnumber the losers. Dell, Hewlett-Packard and Research in Motion are my losers, but I hold grudges for a long time and human nature makes it easier to remember the dregs.

Part of the reason that I hate to take losses is that during my years with Bob, I saw many stocks recover from that 10% drop and often quite quickly. Beyond that, there were certainly many holdings that might have had paper losses approaching 10%, yet went on to recover and profit. Rio Tinto, a holding that I've had since 1994 was one such example.

In the meantime, though, I've had plenty of stocks that have had losses in excess of 10% but I've nursed them back to health.

Riverbed Technology is one example, but the most recent is Transocean, one of the bad boys of last year's Gulf Oil spill.

I own shares of British Petroleum, Halliburton and Transocean and I refer to them as my Evil Troika, yet I welcome them to my portfoklio.

My current batch of Transocean has a cost basis of about $58.50 and I've owned it since mid-July. After a late day surge, shares closed at $53.

Using that simple rule, I should have banished the shares, even after that promising surge in the final hour of trading.

I suppose that if I included the $0.79/share dividend, we'd be borderline.

Yet there they are. Still sitting there, with a nasty shade of red clearly indicating that its been a loser.

Before today's surge, I actually sold $52.50 calls expiring on Friday, for about $0.44 cents.

That seems like a pretty bad risk - reward, but as I looked at my history with Transocean going back to the most recent purchase in July, with the premium received today added to all of the other premiums, if assigned, I'll net a 0.7% profit.

Paltry, sure. But still a profit. Annualized, that's 2.8%, which is a lot better than the 1.6% S&P 500 deficit thus far this year.

Better yet, to compare apples to apples, during the period of ownership the S&P 500 has dropped from 1316 to Thursday's close of 1215, which happens to be a 7.6% loss.

I'll take 0.7% and forget about the annualization. Better yet, those particular shares are in a tax deferred account, so I have no concern about buying them back when they inevitably fall again, since the wash sales rule is moot.

In the past 6 weeks I've been up to New York twice to attend funerals and have had a chance to reflect a bit on the lives and memories of friends and family.

I also think about Bob fairly often, despite the fact that we only met a single time.

Strangely, I also end up thinking about Bernard Baruch, a man I'd never met and it's very unlikely that I ever will. I doubt that he believed in reincarnation and I'm not certain that he and I will end up in the same place when it's my time.

Thinking about what a different investing world it has become, with immediate access to information, bid-ask differences of a penny and significantly reduced transaction costs, I wonder what Bernard Baruch would teach us today?

In all likelihood, he would be going by the name "Barry Barch" and would be pushing whatever the intangible asset of the day happened to be.

In all likelihood, he'd be recommending sales of options on the VIX futures, which themselves are a measure of the implied neurotic tendancies of investors who are uncertain of what to do in the face of earning's season reports.

Bob, on the other hand, would probably not follow him in that direction.

In my humble opinion

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It's Getting Cold

What's in the Szelhamos Portfolio?

I'm glad I'm sitting indoors today.

Even Laszlo the Dog doesn't want to go outside. It's cold, dreary and the grass is wet after a record 13 inches of rain in September. I suppose that dachshund bellies are close enough to the wet grass that they'd rather take a respite from romping on days like today.

Laszlo is sharing the La-Z-Boy with me.

My thoughts are with my kids who are going to the Sunday Night Football game, seeing the Ravens versus the Jets. It's going to be very cold and with rain in the air. Not my kind of day or night.

Listening to the TV commentators repeat what great football weather it is, my thoughts turn in another direction:

Morons.

Lately, the weather down here has been good for only one thing. Growing mushrooms.

Watching Herman Cain jump out of a van and gather mushrooms from my lawn is a clear message that there's been more than enough moisture and that economic times are truly trying.

Imagine if that image was really true. The very idea of paying for my own personal lawn grown mushrooms on a Godfather's Mushroom Pizza is abhorrent to me, but not as abhorrent as eating a Godfather's Pizza. It's that same concept, that of paying a monthly fee for the right to use a debit card to spend your own money, that's beginning to rub lots of people the wrong way.

I guess that Bank of America had that same Herman Cain image in mind. After all, what better strategy than to follow in the footsteps of a winner.

In reality, Herman Cain, instead of gathering other people's mushrooms and offering them off for re-sale, is gathering votes in straw polls in Florida and Kansas, having just won the Kansas Women's GOP Straw Poll, probably the most prestigious of all of the Women's straw polls in the former dust bowl.

Bank of America.should consider using Godfather's Pizza's consulting firm. That firm is so out in front, they already have a fallback ad campaign if Cain falters.

In that event, look for life-sized posters of their new spokesperson, Chris Christie, who is already hunkered down in the Godfather's test kitchen, but is coyly resisting the coaxing to come out.

As the sun is setting early in the eveningI know, from having lived a lifetime on the east coast, that when the cold rainy days in October arrive, it's time to hunker down for the winter and resist the need to go out and face the elements.

Sure, there may be an occasional nice warm day, and sure, despite knowing better, there's always the hope that winter will skip coming around this year, but that's never the way it works out.

I keep thinking that when our youngest son finishes college in a couple of years, Sugar Momma and I will move to California, her home state.

But the other day she asked me what I would do if we moved to California. Would I still spend the entire day parked in front of the computer and the "annoying" people on CNBC?

The problem is that I don't think that they're annoying, by and large. I think Judge Judy is annoying, yet she doesn't.

The reality though, is that I'm glad that I'm sitting indoors everyday. I don't venture very far from my La-Z-Boy, especially during market hours. I don't think that would change very much even after a move to a sunnier and warmer climate, although I might be more apt to head outside to shake off a particularly bad trading session. Maybe a quick glance at the ocean's soothing shores or the sight of a drive by shooting would help to settle some frayed nerves.

This past Friday, after a particularly brutal week, where my "God's Bounty" portfolio of Freeport McMoran, Mosaic and Rio Tinto was emasculated by some other deity, I needed that kind of light hearted romp. Even the Lord's precious metals got swamped, but in hedging my bets, I went with Zoroaster, playing the short side of silver.

Turns out, the movie "Contagion" isn't very funny. It also turns out that this monotheism may be a seriously cramping  belief system.

But early on Sunday, there was potentially good news, maybe even market moving news, hearing that Ali Baba is interested in buying Yahoo!

I don't know what positions Malta or Estonia will take on a proposed buyout, but we need some good news soon.

As opposed to the upcoming winter, I know that spring is coming. I also know that despite global warming things won't change that drastically during my lifetime to substantively change the natural order of things.

With that said, the natural order of things clearly included Yahoo! become a laughing stock and Ali Baba being in a position to buy it, hook, line and sinker.

But when it comes to the stock market, it appears that there is less and less concordance, correlation and connection.

News has become largely irrelevant, at least in terms of predicting market reaction.

The old adage, "Sell in May and go away" had been largely written off for years, just like "Dogs of the Dow" hasn't worked terribly well of late.

But as we closed out the third quarter this past Friday, it seems that the old selling adage may have finally been a winner.

Does that mean "buy and hold" is coming back, too? Maybe Communist hunting is next.

I do know that "buy low and sell high" hasn't been working out lately. Maybe that one will be back in vogue soon. Maybe even sooner than spring's predictable blossoms.

Looking at the early Asian markets trading, right now it's not looking very promising, as we get ready to start a new quarter.

Despite the paper losses of the past few weeks, for me its been a good options premium period. With three more weeks left to go for the October cycle, I'm already ahead of the September cycle.

That's a small comfort, since September was the second worst month of the year, but I'm hopeful for some good opportunities.

Like some of the old stock market adages, it's hard to know when to let go of the optimism. But by the same token, you can't completely dismiss the optimism. Otherwise you'd have to face the dark side and become an avowed short seller.

I'm not going there. At least not yet, the deperation hasn't hit that level.

This coming week our weather forecast is for a couple of nice, very warm days. Maybe a little bit of movement in Europe, a little bit of merger and acquisition news and a little bit of global warming can all help get rid of this gloomy and cold overhang.

In the meantime I'm going to watch the football game safely in the warmth of my home and look for my kids in the stands.

I know that it's highly unlikely that I'll spot them, but if you hope and wish for enough unlikely things, sooner or later one of them is going to happen.

I just hope it's the right one.

Sorry kids. You're on your own on this one. Hope you're bundled up.

Invest like TheAcsMan

Option to Profit is available as either an eBook or 300+ paperback. Take a humorous look at a serious topic and learn how to make your portfolio finally go to work for you in bull and bear market environments.

See a sneak preview of Chapter 1.  hoco blogs

More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.

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Booga Booga

What's in the Szelhamos Portfolio?

I don't recall whether to credit comedian Robert Klein or David Steinberg for this one, but I still hold a grudge against Klein for participating in one of the worst Saturday Night Live skits on an episode that he hosted 30+ years ago.

The closing sketch, "Giant Lobsters Attack the Studio" was just the conclusion to that evening's running "Attack of the Giant Lobsters" non-gag.

In fact, scratch "worst skit" and substitute "worst episode, ever".

Don't call me "petty" and don't tell me that this is the season for forgiveness. It was truly a terrible thing that he did. In fact, the free marketplace bears me out on this  opinion, because Klein never professionally recovered from this horrible hit.

As a neighbor, back when we still lived in Westchester County, I couldn't stand to be on the same side of the street. when he appeared. As far as everything else went, he was a funny, wonderful and warm person, but those attributes were trivial and still are.

So I'll go with David Steinberg, who was among those comedic geniuses behind the Smothers Brothers Hour, including Steve Martin and Bob Einstein. Coincidentally enough, he and Robert Klein were part of The Second City troupe, together in the 60's.

But the story went that when two people that have had extensive plastic surgery, nose jobs, braces, you name it, get together and have an incredibly hideous baby, it's just God's way of saying "Booga booga".

The actual telling of the joke was much funnier than trying to write in down years later. Especially missing is the thumbs in the ear and outstretched fingers waving while saying "Booga Booga."

You had to be there.

I know that here are a number of evangelical ministries that teach its disciples that "God wants you to be rich", perhaps Joel Osteen, being the best known of those.

And what better way to find grace in God's eyes than to enrich the coffers of Osteen's church and therby Osteen himself.

I like that kind of theology. I think that everyone should be wealthy.

I also know that if wealth was to be equally distributed you would still have paupers within minutes of the distribution and some even wealthier citizens as a result.

Separating people from their money is just something deeply ingrained into our genome, but my Deity should be made of more heavenly stuff.

On this, one of the holiest days of the Jewish calendar, it's clear to me that my God doesn't want me to be rich.

Allowing me to watch a market that at one point was up 180 points and yet seeing my own positions falling fast, is cruel and unusual.

It may be God's way of saying "Booga booga" to me.

Message received. Especially when the market gains evaporated and my losses mounted. But at least he allowed me to stick around long enough to witness my oldest son's 25th Birthday today.

That was a nice gift, but seriously what's with the other stuff?

God may have done the same to Robert Klein for deifying those incredibly delicious, yet dietary forbidden crustaceans. Banished from paradise.

Heaping more cruelty on Robert Klein is the fact that his greatest achievement of the past 30 years was receiving an award for having been a Bronx native.

But I certainly won't blame higher authority for today. Higher authority did not command me to be over-weight in Mosaic, Freeport McMoran and Rio TInto. In my defense, I thought that by so doing I was paying respect and offering testament to the fine natural wonders that we have been given.

Of course, leave it to those Deity-less Chinese to elect to use less of your wondrous bounty, for some inexplicable reason.

Can I have an Amen?

But still, it may have been higher authority that so cruelly reversed price direction in Halliburton, ProShares UltraShort Silver ETF, Transocean, as well as Mosaic and Freeport McMoran, before I had a chance to sell last minute call contracts.

But why?

In the sad case of Robert Klein, he was never asked back to host SNL. They haven't even let him watch the episodes for the past 33 years. Even more painful is that this talented man has had to endure the likes of Steven Seagal.hosting and the fact that Seagal is more likely to be invited back than he.

I'm hopeful that mine is not a vengeful God. I'm hoping that despite today's lack of participation in what was a rally, at least until 2 PM, was just an expression of displeasure with me that can be erased.

That's what the "Day of Atonement" is all about and it arrives in just a few short days.

But it's probably not too early to begin the process of cleansing and asking for forgiveness.

I vow to lighten up my dependence on natural resources. Forgive me.

As soon as the first opportunity to take profits come along.

I vow to keep finding opportunities to poke fun at Ministries that seek to take advantage of Believers, unless they include me in their profit sharing program. Forgive me.

I vow to not be greedy and hedge my positions as soon as I open them, eschewing greater capital gains in return for the safety providing by believing in my tenets of managing portfolios. Forgive me.

It's comforting to have a list of Commandments to live by

Those are the basic values that shouldn't be altered. The big nose, the crooked teeth, the need to hedge investments and things like that.

Once you get away from the formula that got you to the Promised Land be prepared for Booga Boogas to come at you from any direction.

The late hour fades on Wednesday and Thursday are worrisome and I've heard enough heads mention "climbing that wall of worry."

But I have faith, blind faith that despite the hideously ugly offspring produced by superficially altered human beings, who have lost their ways, that they too can thrive if the rules are followed.

To traveling the pious path and to profits.

Or at least one of those two.

Knowing that an all knowing Supreme Being reads this blog, I wasn't surprised to see the market bounce back in the final 30 minutes.

For me, still a loser of a day, but Booga Booga right back to ya.

Invest like TheAcsMan

Option to Profit is available as either an eBook or 300+ paperback. Take a humorous look at a serious topic and learn how to make your portfolio finally go to work for you in bull and bear market environments.

See a sneak preview of Chapter 1.  hoco blogs

More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.

Find  OTP Book at Amazon, B&N or now you can also Order direct  from publisher. Use 10% Discount Code P4S2ZD8H

  

Wasted Optimism

My Sugar Momma keeps complaining that I tell the same stories over and over again.

My Sugar Momma keeps complaining that I tell the same stories over and over again.

Get the idea?

There are a lot of things that change after more than a quarter a century of marriage. Reflexive laughter at a spouse's stories and jokes is but one of them. The others will be discussed in my adults only webpage section exclusively for annual plan paid subscribers. I don't play blue for non-paying audiences.

So it should come as no surprise that the most difficult thing to do with a blog is to find inspiration and new material day in and day out. That's especially true since I've made a habit of recycling stocks as I do stories. I rarely add a new one, maybe one new stock each month.

Thankfully, my short term memory is shot, so it's always new and fresh, as are the stories and anecdotes. That also explains how I can watch Comedy Central. The only things that seem familiar are the nightly news stories and the market's volatility.

Seen all of those before.

After all, why should I traipse into new territory? It's not like I've been married to everyone for 25+ years. And why stray from the stocks that got you to the party? Do you really think I'm going to watch that new Paul Reiser sit-com? I didn't even watch the one that ran for 10 years.

Today, my inspiration, for what it's worth, came from Paul Kedrosky. I don't really know if he has any discernible skills, but based on his Tweets, he is intellectually far flung, yet there seems to be a coherent and unifying thesis behind it all.

By the way, the annual plan subscribers will see the previous paragraph as : "Paul Kedrosky.....he is intellectually well hung...", so there's still time to sign up.

Borrowing from Rodney Dangerfield's classic "Back to School" movie, as Sam Kinison is yelling the day's lesson at him "Yeah, Kedrosky really has a unifying thesis. What that is, I have no clue".

Even though I've now repeated the following phrase about a dozen times to myself and it still sounds derogatory, it's not meant to be so. To me, "Kedrosky is like a Renaissance Man's savant". He may or may not have a readily identifiable and focused skill, but he is skilled across a broad canvases' broad canvas..

Anyway, in a brief Twitter dialogue he used the phrase of today's blog title. I asked for his permission and he said he had hundreds more. Actually, he said that he had hundreds more from where that came from, perhaps implying that they may have been purloined.

Look, have you ever seen the images that I use to illustrate the daily blog's theme? Do you think I really care if it was purloined, borrowed or rendered?

"Wasted Optimism". What a perfect expression.

I suppose that as an investor, or trader, everytime you purchase a stock and it fails to perform to your expectations, that becomes an instance of wasted optimism. Entrepreneurs and venture capitalists probably have boundless optimism and rarely look backward.

But I'd like to think that in his depth of thought, Kedrosky intended more.

Just 10 days ago you certainly would not have wasted your optimism by hoping that after an S&P downgrade of US debt the S&P 500 would be right back to its baseline.

That wouldn't be optimism. That would be stupidity, or perhaps well placed contarianism. Regardless, you would have been considered certifiable and would have had a great deal of difficulty getting anyone to buy into your optimism. Imagine trying to transfer your enthusiasm to get retail customers to buy stocks at such a time.

A few days ago I characterized myself as a cynic and short term pessimist, but long term optimist.

I don't really know what that means, but I've believed that for years, despite the lack of internal consistency.

When I was younger, after my first investing experience, I was convinced that I would be retired by age 30. That kind of short term optimism was unwarranted and didn't really work out as I'd envisioned.

Now, my long term horizon and short term outlook are beginning to converge. Not because I've undergone some intrinsic change in outlook, but because the clock keeps ticking.

Now, I'd like to think that I can retire sometime before death. Even though I don't work anymore, I look at the trading thing as my job. It would be great to hand that to my kids, once their parole officer finds them.

So in the meantime, I take my long term optimism and short term pessimism and just throw money at stocks and hope something makes sense. Long stocks, short calls. Long ultrashort ETF's, short on their calls, Long volatility index, short the call. What was that unifying hypothesis?

Today, I had the luxury of some cash as my shares of Caterpillar and Freeport McMoran were assigned. On my wish list were Deere, Chesapeake Energy, Microsoft, Rio Tinto and something else that I can't recall.

See the problem?

I am utterly convinced that by the time I meet my maker the market will have carried me to great riches. That's the optimist in me, even though the outcome is predicated somewhat on my death. That part is a bit of a downer.

This week? Eh, not so much.Not entirely convinced we're getting there without a stop, despite Monday's glorious market.

Despite the nice sustained climb in the markets from mid-week last week and on, I purchased Deere, Chesepeake Energy and more Freeport McMoran in the morning with the expectation that they would go down by week's end.

So with the optimistic sense that I was right about the pessimistic trend for the week, I sold a $75 option of Deere, purchased at $76 for $2.50 in the hope that it would be called away from me after trades close on Friday.

I did the same with Freeport, buying shares at $45.75 and selling the August $45 call option for $1.63. I did the same with Freeport last week. Same idea, maybe even the same shares in some sort of market recycling phenomenon, hopefully with the same outcome.

But in a show of short term optimism, I sold by Chesapeake calls at the $32 level, having picked up shares at $31.75 and receiving $0.60 for the contracts.

Go crazy.

I often think back to Alan Greenspan's famous and oft repeated comment about "unbridled enthusiasm".

No wait, that was Seinfeld. I think Greenspan said "irrational exuberance". I always get the two confused. I think Greenspan was the guy with big ears and glasses. Seinfeld was the one married to Andrea Mitchell.

Both though make a statement about optimism. Llike calling someone a "savant" those statements may be disparaging, even if that's not the intention.

My guess is that Greenspan meant to be disparaging. Seinfeld? Definitely disparaging.

Me? Again, not so much.

Optimism and pessimism are just parts of the sine curve that we keep cycling through in the markets. Lately, I hear many more people talking about "rho" or the correlation between events. Whether my optimism is well correlated with a rising market is irrelevant to me, as I am only optimistic that stocks will churn in one neighborhood, then move on to another neighborhood and just churn some more before moving on again and again.

Once you start getting so many people focusing on something, like correlation statistics, its bound to be passe. With everyone having their hands on the same data and interpreting it similarly that can only mean a decidedly opposite outcome.

Of that I'm certainly optimisitc. Long term. Short term.

And if I'm wrong, I won't be next time around.

Option to Profit - Make your Portfolio Work for You.

Now available at Amazon and other retailers

Option to Profit is available as either an eBook or 300+ paperback. Take a humorous look at a serious topic and learn how to make your portfolio finally go to work for you.

See a sneak preview of Chapter 1.  noco

More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.

Now you can Order direct  from publisher. Use 10% Discount Code P4S2ZD8H

  

Crisis du Jour

Every time my kids, niece and nephew get together at our house, I have a deeply rooted need to snap a picture.

Always in the same location, always the same pose. My nephew and niece have learned how to position themselves so as to make it difficult for me to PhotoShop them out of the picture.

Seriously, why would I want to look at them everyday?

But they're very bright and have long ago figured me out. They know that I'm not likely to do it if it takes too much energy, so they choose their positions carefully. They no longer sit next to one another at the ends. As a result, my PhotoShop skills have really waned, whereas had I had the motivation I could have actually expanded those skills significantly.

One of their favorite sayings, always following some lack of common sense action of mine is "Uncle George, you went to Harvard?"

Jokes on them. I'm not really their uncle.

Although the dogs come and go, the kids stay the same, other than the fact that they're not kids anymore, with the youngest soon to leave her teenage years behind. Sort of like an option's expiration, only with a much better future.

What made me very happy yesterday, in adddition to the fact that it was the best picture ever in the series and only required a single take, was that my niece requested the photo opportunity. I didn't have to beg, nor did I need to cajole and I was able to stop payment on the checks.

WIn - win, especially since my bank doesn't assess me a stop payment fee.

It's funny how, as you get older, you find yourself spouting the same aphorisms that your parents regaled you with when you were too young to appreciate any one else's experience. In this case it's how quickly time passes by.

Someday, I'll probably assemble the shots taken over the years just to depress myself about the passage of time, but that would take motivation and effort, both in short supply. Instead, I'll just stare at the gray hairs lining the floor after haircuts.

As quickly as those years seem to have gone, some other things tranpsire so painfully slowly.

Take August, for example. Although nearly each and everyday has been a rollercoaster ride, the kind that I never tire of, as long as the ups and downs are in equal measure, it has just crawled along.

Although the month was filled with happy and sad moments, a graduation and a funeral (I probably dont need to add, "respectively" here), the month still dragged entirely because it happened to be one of those 5 week options cycles.

Man I hate those.

I don't mind the over-emphasis on the market's down movements, but what I do mind is that extra week. I mind that even more than the grocery store "special" offering an extra 20% product  in the shampoo bottle, but having to pay 30% more.

Although we have just that one final week to go, I wish it would have ended already. Not to ease the pain, because that really hasn't been too bad, but to get my hands on more options premiums. I can't wait for the August contracts to expire. That's still true even though since this past August still has a chance to be the best options premium month I've ever had.

Isn't volatility wonderful?

With an additional week to sell some options, I'm within reach of my personal monthly best, without worry that an asterisk will need to be placed in my spreedsheet. Having shrivelled genitalia is a small price to pay for all of that income and since I use only generic steriods, my expenses are low.

It all goes to the bottom line.

Once the weekly contracts became more common, I really gravitated to them, now looking increasingly for those opportunities. Unfortunately, some of my favorite stocks, although highly liquid, such as Dow Chemical and DuPont, don't yet have weekly options, whereas "drek" like Harbin Energy does.

So my trading still comes at a flurry on the first Monday and Tuesday of each cycle and then markedly slows down, other than for the few weeklies. Shares like Freeport McMoran, JP Morgan, Goldman Sachs and others keep the income rolling in through the month, but it's still heavily concentrated to the cycle's beginning,

On Monday, I'll need to replace Caterpillar and Freeport McMoran. At the moment, I'm leaning toward Deere, Chesapeake Energy, Rio Tinto and maybe even Microsoft, which goes ex-dividend on Tuesday. If I'm able to get any of those at just the right prices, meaning right near a strike price, the near the money or in the money options premiums will take the month to new highs.

As I type away, the early reports are of positive opens in Australia and Singapore, but that doesn't translate very well here, unless there's something cataclysmic happening. Since most of my remaining August options are still out of the money I'd like to see a nice higher opening, even if it means paying a higher price for the items on my wish list.

As the September cycle approaches, I'm carefully looking at the more favorable premiums as the volatility has risen and wondering whether it's time to adopt an earlier strategy.

Back during the market bottom in 2008 and 2009, I was actually selling out of the money calls, hoping to capture greater stock capital gains. I could do that since the options premiums, even for the out of the money positions were really very good, owing to that volatility. That strategy was right for the times, but was replaced by an in the money strategy as the market started on its sustained upward climb in 2009.

Given the options, and by that I mean choices, I think that I would rather not go back in time. Even though the grey hairs and the aging kids are making me increasingly forlorn, I think I'd rather stay grey. I've learned alot over the years and don't think I'd want to tarade any of that back.

I think I'd also like to stay with the current in the money strategy. I like it at these higher levels.

The air is actually much better at 12,000 than it was at Dow 11,000 even though the premiums are much sweeter closer and closer to hell.

As the kids are getting older, I know that the photo opportunities are going to get less and less likely. Although I'm sure that if properly motivated I could computer age them appropriately on the exisitng photo collection, that's probably not as likely to give me the same satisfaction as the reral thing has over the years.

In the meantime, I'll just have to get my satisfaction from knowing that with each month comes along a new option cycle and some great memories of cycles past

I just wish that time would go by much faster.

Did anyone say Daily Options?

I ended yesterday's blog with the phrase "metaphor du Jour"

And here we are today and it's "Crisis du Jour".

The only thing that I can think of is that I've become a Franco-phile ever since the Dominique Strauss-Kahn incident. I won't tell you if that began as the allegations flew or when the allegations sank.

And I have a soft spot for Szarkozy, too. He's so far from the US stereotype of a French leader and, of course, he has that Hungarian lineage that has helped to somewhat dampen the bad taste still left over from Esterhazy, more than a century ago.

I only started paying attention to the world economy about 25 years ago or so and unfortunately, my memory has started deteriorating since then, so the recollections may be a bit spotty.

But for whatever memory that remains there seems to be a pattern of ever developing world crises and threats of default.

I vaguely remember Brazil and Latin America of the '80's. I recall all of the talk about the kind of horrible exposure Citibank had in Brazil's economic woes. And then there was the IMF, as well, but that's not real money. I have no clue where their funds come from, but no doubt, now as then, it's probably disproportionately from the US. I could be wrong about that, but I don't really care about accuracy. In that way, I'm just like the elected officials discussed a couple of paragraphs below.

Man, but look at Brazil now.

All that had to be done was to simply press the "Default Button" and all was well again.

Then in the late '90's it was Russia. Once they started locking up the "oligarchs" and squashing political freedom in the name of democracy things improved substantially, although you do also have to give some credit to $150 oil. They also save a lot of money by rotating the Presidency between just two people.

At this point, my short term memory really gets fuzzy, because the crises started coming more fast and furious over the past decade. In fact, sometimes it's hard to keep track of which came first, the boom or the bust.

When was it that Ireland was the economic wonder of Europe? Wasn't Iceland just another way to say paradise? Come on, you really didn't expect that much from Portugal, did you?

It is getting hard to keep track of all of the players these days. Germany is once again all powerful. I know that much, but we have a succession of Greece, Spain and now Italy to capture our attention.

Oh yeah, and then there's the United States. Remember just a couple of months ago when S&P scared the b'jeezus out of the markets? Not to mention the fact that there's all of this talk of US debt default if the ceiling isn't raised.

For purpose of this blog, I'll just conveniently forget about our own financial meltdown of 2008.

Years ago there was a movie, "Don't Raise the Bridge, Lower the River". Interestingly, the parties in the Jerry Lewis shennagins were Arab and Portugese.

How prescient. But probably reasonable advice, although it probably wouldn't be a bad idea to do a little of both with this new invention, that I believe is called "compromise".

As I was watching CNBC over the past couple of days and listening to our elected officials from both sides of the aisle playing loosely with the facts, it occured to me trhat we would be so much better off if the perjury rules that Roger Clemens is facing over his congressional testimony were applied to members of congress.

They should always be under oath. After all, with every public pronouncement, aren't they just electioneering for votes? These days being a congressman is akin to being a robot whose only skill is to create new identical robots sharing the same skill.

Since it's all about the re-election, everytime they, shall we say, stretch the truth to fit their needs, they are lying to the electorate.

Perhaps the only one telling the truth, or at least he thinks he is, is Rep. Ron Paul and he's a lunatic. Now that he's announced that he won't be seeking re-election, we'll see what sort of increasingly unfiltered things spout from his brain.

I think the best way to play all of these crises is to stay in bed or at the very least mute the TV and wonder why there's so much red rolling by on the ticker.

Another approach is to do what I do when I get very frustrated with a misbehaving software product, app, code or hardware. Just press the "reset" button or go back to "Default" settings.

Sometimes it's really that easy and spares you from wasting lots of time.

Sure, there's not that much gratification from giving up rather than struggling through to try and come up with a solution, but after a while, enough is enough and you have to let those costs sink away.

Not that long ago, perhaps two years or so, the "experts" told us that Italian debt was very different from that of must other countries. The distinguishing factor we were told, which made the Italian situation non-explosive was that its debt was predominantly owed to Italian nationals. Very different even from the United States situation, where we are mortagaged to the Chinese, who assumed the landlord position from the Japanese of the '80's.

Remember them?

With each day, comes a new crisis and then a new slew of analysts and talking heads who alternate between telling us that it's either "risk on" or "risk off" trading.

These things really mean nothing to me. Sure I understand the concept, but I could just as easily stand there and make this stuff up and then just as easily change my take on things the next day.

I don't know if these pundits receive report cards, but if they do, they are probably curved similar to the way weather forecasters are assessed.

On a positive note, yesterday morning the Dow Futures would have had the market opening down 150 points. In the absence of any really tangible news, it all turned around and the market just stayed flat all day.

I started going for pennies again and sold some JP Morgan $41 calls expiring this Friday for $0.25.Not much, but if I get exercised, I've already gotten the quarterly dividend and a couple of weekly options premiums on this one. As pointed out in the recent blog, those pennies do add up.

I certainly don't mind the scratch singles. I don't have any pride. I don't even mind getting on base by error.

Unfortunately, I saw no other opportunities today. In the absence of any news known to the greater investing world I marvelled at how Dow Chemical, a sizeable holding, got smacked down 3.5%. Not that I pretend to be a technician, but there certainly wasn't any technical reason and I doubt it was related to the Italian banking crisis.

No matter. That crisis will be like yesterday's fish and Dow will bounce back

I think tomorrow, I may try the Spanish economy or maybe even one of the daily specials.

As Groupon and LivingSocial try to distinguish themselves, this may be their next area of opportunity. The Daily Default Deal might be very attractive  to investors. A 24 hour window to buy bonds at great discounts. Unfortunately, the discounts are likely to get even higher after the offer expires on some of these.

But still, the very thought of being able to get laser hair removal and discounted bonds all at the same time is just too great to pass up. The thrill of the Deal du Jour itself may just be the opiate that we need to forget about the Crisis du Jour.

Can't wait for tomorrow.

CORRECTION: A previous version of this blog post inappropriately referred to Brazil as having defaulted on it's loans. In fact, during the 1980's it was Argentina that defaulted, while Brazil approved new lax sodomy laws. Thank you to @Wolfrum for bringing a portion of the correction to my attention.

Why I Love the Modern World

What's in the Szelhamos Portfolio?

Today is a perfect example of everything that's right with the modern world.

Normally, I'm pretty much of a stay at home schlub. I'm not even sure if that's really a Yiddish word or not, but I can't describe myself as a stay at home dad, now that my kids are out of the house.

Fortunately, they haven't figured out that a locksmith could help them get back in.

But that's not the point.

Today is one of those days that I will be out of the house most all day. No, not because it's Cinco de Mayo. I have no idea what that celebrates, except I know that it's not something that I celebrate.

Although I may be a schlub, I do make most of our family income by trading, while I sit and stare at the computer and the TV screen. At least I'm not a worthless schlub and I have taken on more of the cooking chores, because I feel my Sugar Momma deserves some culinary delights.

But ever since we got Caller ID on the TV screen, I don't even have to turn my head anymore. If only La-Z-Boy would finally put a chamode in their recliners, then I'd be really poised to suspend most voluntary body functions. At least until the closing bell.

Just to be clear, there are some things about the modern world that I don't like. The very idea that there will never be another new episode of Green Acres starring the original cast is just inexcusable.

Yet somehow, we manage to go on.

I also miss some of my childhood candies, such as Bonomo Bars, that have had 50 years to make their return, but have not.

Although my teeth are probably grateful for that, the rest of me remembers the joys of trying to devour the razor sharp pieces.

But there's no reason to dwell in the past, reliving such things as having Green Mountain Coffee shares exercised from me $25 ago.

Instead, let's focus on what's great about the modern world.

The fact that I could write this blog while stuck in traffic is one of the pretty cool things. Although when you enter into my state, you are greeted with traffic signs warning drivers aginst texting, it says nothing about blogging.

But better yet, during the day, even going from meeting to meeting, I'll be able to make trades just by going to that wonderful Droid my sons convinced me to get.

I may, however, cut down on my superfluous Tweets tomorrow.  Luckily, they also convinced me that the unlimited data plan was worth it, because it has been.

One thing about the modern world, before I go on, that I don't like, is the propensity to change the meanings of words. One prime example is "unlimited", as in "unlimited data". Putting a limit on  unlimited seems wrong. Although I do understand the concept of throttling. That's just like continually getting smaller and smaller portions when you go to the "All you Can Eat" deals at Applebees.

Who knows what kind of mammal has ribs that small?

But still, the good outweighs the bad, especially since I don't eat ribs.

Someday, this modern world will figure out a way to impant a cable TV receiving chip in my eyes so that I can always be connected, as I disconnect from the reality of the world that is trying to intrude on my preferred reality.

Not being glued to the screen robs the chance to get up to the second worthless news.

I also must admit, that in the 10 days or so that I've been on Twitter, I've grown to like the postings of a number of people, some of whom are really pretty funny. I will miss the constant real time updates, although I've pruned my "Following List" down by 50%.

Since I make it a strong rule to never use public restrooms, I'll have some difficulty keeping up with the Tweets.

One thing that I really like about the modern world is how fast everything moves. Specifically, I love how fast the stock markets moved.

Without dealing in percentages, imagine how many years it would have taken to double the Dow Jones in the 1950's. Imagine how long it used to take to recover from any kind of drop in prices. A generation is the answer, as that wa not a rhetorical question.

These days, you blink your eyes twice and your favorite stock has run through a couple of up and down cycles and then some.

I own shares in Mosaic, Rio Tinto and Freeport MacMoRan. Despite that heavy load, my portfolios are still well diversifed. But those stocks gyrate like wild, yet still manage to stay in a range.

Never would have happened that way when Arthur Burns was Chairman of the Federal Reserve.

Man that guy had great hair, but most will admit that things really picked up after a bald Volcker took the reins.

Since then, baldness has been the modern day version of hair.

My full headed mane speaks poorly of my keeping up with the times. I've been trying as hard as possible to increase my stress levels, thinking that may cause some exfoliation, but now that Bin Laden has started on his journey to meet his 72 virgins, I have less to worry about.

And it's a good thing, because I've been spending too much time worrying about these past few down days.

I know that it will soon change course, but what if the new modern world end up just like the old times?

At least Green Acres would be back.

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S&P's Mea Culpa

It seems as if Standard and Poors has been waiting a few years to try and figure out how to atone for its major lapses in the past.

While it was dutifully handing out Triple A ratings to the likes of Washington Mutual, CountryWide and Wachovia, Rome burned. Some of the flames may have permanently singed Angelo Mozilo's face. 

Certainly it would be wrong to ascribe all of the financial woes that we've experienced to S&P's lack of actually doing what they have been renowned for, by I'm not bound by any sense of fairness.

Let's just say that they were probably more than just an idle bystander. In the world of grades, they would have received considerably less than a "Gentleman's C" for their ratings of the players that likely belonged to the same clubs as the S&P big boys.

Allegedly.

So how do you make up for the incredible oversights that allowed the financial giants to play games of leverage that overwhelmed its basic support structures?

Simple.

You just attack the basic financial structures of the United States.

Their pronouncements couldn't really come as any great news to anyone. No one feels particularly good about the national debt and the vast amounts that are held by the Chinese.

As my parents would say whenever faced with any challenged that posed potentially distasteful outcomes, "What good can come of it?"

Imagine a doctor informing a patient that they have cancer. "Oh, and by the way, your hideously ugly as well".

Well that may be true, but it didn't really have to be said.

Being in Washington, the name of the game is spin. Often, policy activists and community organizers share a common strategy, and that is to use shame as a weapon.

So the spin is that S&P's comment was to shame the leading political opponents to come to the table and work things out.

Not likely. The Supreme Court may recognize corporations to be individuals, but they still haven't proven that they are capable of rational thought or caring and that goes for the elected officials, as well.

If they did, S&P wouldn't have told us that are debt is ugly.

I especially liked the new Presidential Press Secretary's response, saying that the political process will surprise S&P.

First of all, when did the President get a 12 year old press secretary? When did Jody Powell leave? But perhaps more importantly, whatever the dysfunctional political process must evolve into, it should have nothing to do with playing to S&P.

It should be fairly obvious what needs to be done, and that is for both sides to drop their ideology and learn that both sides have legitimate ideas.

In a word? Compromise, or as that one time Country King of Comedy used to say, "Get er done".

Using rosy colored glasses, people talk of how well Tip O'Neill and Ronald Reagan were able to work together and wonder why it can't happen that way now.

My guess is that in 30 years people will be looking back at today's era and fondly remembering how well John Boehner and Barack Obama collaborated when it was in the nation's best interests.

It's all about lowering the bar. Who needs Triple A ratings, anyway?

We do, obviously, but S&P's warning is for the possibility of a downgrade in a couple of years. To put that into perspective, it's like worrying about whether your unborn great-great-great grandchild will have acne.

Besides, there still must be some trust fund that can be raided.

If you're an unrequited bull you got past the S&P debacle and looked at today's plunge as a gift to pick up some shares on a relatively cheap basis.

Yesterday being the first day of the new options cycle, I had cash resulting from the assignments of Visa, American Tower, Rio Tinto and American Express.

I especially liked the American Towers money.

I didn't hold shares very long, as it was never a company that was on my radar screen, although Jim Cramer used to mention it with frequency during his early Mad Money days.

But with the announcement of the planned AT&T buyout of Deutsche Telecom's T-Mobile unit all of the "Talking Heads" were in unison spouting about how bad that would be for American Towers as there would be no need for AT&T to lease as much space on those ubiquitous towers.

So of course, AMT did a drastic plunge on the news.

What a great time to buy, but just in case, I hedged and got a nice premium of $1.25 and a capital gain of $0.83 on the underlying shares that had a basis of $47.17.

Had I been greedy, I would have sold something higher than the $48 calls, because the over-riding AMT thesis wa wrong and quickly demonstrated as such.

Anyway, I felt like a little kid in a candy store. Everything looked so good yesterday and best of all, I had money in my hand.

By the time it was done, I picked up additional shares of Sallie Mae, Freeport McMoRan and British Petroleum. I bought new shares in Textron and Williams Sonoma, two of my past favorites and replaced my Rio Tinto Shares.

Best of all, with the market coming back from down 220 to down 140, all of the newly purchased shares were already in the black.

Barely, but in the black, although nowhere near enough to offset the other shares that I owned. But still....

I came close to buying Google shares again, but just couldn't pull the trigger, even though Google always seems to recover from its post-earnings blues fairly quickly. I just thought that there were some better opportunities over the next month, as that is always my time frame. What can these shares do for me during the current options cycle?

Plain and simple.

I suppose that I should be thanking Standard and Poors for creating the opportunity, but I'm still having difficulty with that concept.

If someone calls your sister a "whore" it's hard to forget that fact, even if there's some truth behind the comment.

If S&P had been a really good friend, I'm certain that a couple of really nice up days in the market could help to ease some of the bad feelings. Maybe if it took my sister out to dinner, showed her a nice time, I'd be willing to let bygones be bygones.

But let's face it, S&P hasn't been good to anyone lately.

By the way, apologies to my sister. She's not anywhere near the whore that Standard and Poors can be.

Geithner, Goldman and Google

What's in the Szelhamos Portfolio?

Not as catchy as Abraham, Martin and John, but much more alliterative.

Unfortunately, Dion had to throw in the name "Bobby" after the title was already a done deal.

So, throw General Motors in there too, but pronounce in the way they do south of the border or, if you.re a fan of the obscure, the Balkans..

I don't currently own GM, but I agreed with the $50 B bailout.

What I don.t agree with is the announcement that the federal government will be selling their remaining stake, at what will amount to a large loss, all in the name of political expediency.

Szelhamos used to believe that you should never talk about sex, politics, religion or money, when in proper company. So he did so on a regular basis, as do his offspring, since he also taught us to never keep proper company.

Although I voted for this administration, and only the third time that I correctly chose the winner in a presidential election since 1972, I'm having a harder and harder time supporting some of their economic and fiscal policies.

But, the other side isn't very good. In fact, I think they.re even worse on the economic side of things. Compassionate conservatives, my ass.

Nonetheless, to divest because they want to wash their hands of the auto business before the election, as has been the reason attributed to the announcement, once again puts politics ahead of rational thought.

Not to mention the public good.

Of course, if I were a shareholder, I would also be pretty upset that they are once again tipping their hand on a market moving and disruptive kind of transaction.

I suppose you could make the case that divestiture would raise money to put toward deficit reduction. Additionally, potential capital gains by those purchasing shares in a secondary offering would increase tax revenues, but still, treat it like an investment.

I think that if Timothy Geithner, who along with Ben Bernanke, have been very good at funneling money back to the federal government was left to his own resources, he wouldn’t be giving up the shares so quickly.

Although Geithner is never at ease on camera, he appeared even more so during this mornings' CNBC interview, as he tried to calm the international markets on the quality of US debt.

Unfortunately, politics gets in the way and the Treasury, too, will be held hostage by the children that we have elected to serve our interests.

While Geithner was speaking, Goldman Sachs was basking in its earnings report. The stock was up more than $4 during the pre-open. By noon, and one downgrade later, it was down more than $2.

Of course, that downgrade was from Dick Bove, who after bouncing around is at a firm that everyone seems to mispronounce. Rochdale, as in Rockdale.

Remember, Bove is the guy who appeared on a near daily basis on CNBC as he steadfastlt defended Chuck Prince's CitiGroup as it kept falling and falling.

"The dividend is absolutely safe".

Remember that?

What happened? They're still the smartest guys and now they've unloaded those expensive preferred shares held by Warren Buffett.

That can only be good for Goldman, but now comes the worry that with the retirement of those shares, so too are the principals of Goldman relieved of some of their obligations, such as not to sell their shares and not to retire.

Would it really be that bad if the likes of Blankfein faded away?

Certainly, Senator Levin (D-Michigan) would be able to find a new whipping boy, but some of the considerable heat would be off.

The Goldman bench is deep enough, even 2 levels down, that they could seemlessly continue operations, yet claim that those newly in charge had nothing to do with the questionable practices that fueled the financial crisis.

Win- win.

Since I own quite a few shares of Goldman, I would like to see a win-win outcome.

David Viniar, the CFO, was a past high school classmate of mine. I didn't really know him, but do remember his 70's hairstyle, which is very different from what he now sports.

Unfortunately, he didn't get good grades at today's conference call and was thought to be evasive.

People like answers.

Now that leaves me with Google, to complete the alliterative theme.

Actually, I have nothing new on Google. Still weak today, but finding a floor at $520. What frightened me from picking shares yesterday during the bargain hours, was that it looked as if Google still had downside potential to $500, when I looked at its chart. Based on its previous action following large earnings related drops, I don't expect that to happen.

But still.

I did have the chance to sell call options on Dow Chemical, Riverbed Technology, Textron, Freeport McMoran, Sallie Mae and Mosaic today and am still hoping to close a trade on Rio Tinto, while awaiting decent opportunities on all of the rest.

Freeport reports earnings tomorrow. I think they'll be good, but I’m concerned that guidance will drive stock down. In return for that fear, I got $1.91 on a $52 call, when the stock was at $51.20

Sallie Mae also reports tomorrow. The stock price started inching up in the last hour today. I took that opportunity to sell 79 call contracts. Why not 80?

3 PM, I think the day's outcome is already sealed and the trend is trickling upward. Now sit back and wait for IBM, Intel and some other company that I can’t recall, but don't own, to report earnings after the closing bell.

Oh yeah. Our benefactor, Yahoo!

At least that'll give me time to come up with lyrics to Geithner, Goldman and Google

Invest like TheAcsMan

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