I Hate Homework

I first started watching Jim Cramer when he was teamed with Larry Kudlow. Their show, interestingly enough called "Kudlow and Cramer" for a reason that has been lost to history, was an evocative blend of financial and political analyses.

I used to watch the show with Szelhamos. He really enjoyed Cramer. Partially that was due to the Lenin-like appearance and probably to some degree owed to the raw emotion and enthusiasm.

I think he also liked Cramer's teeth.Szelhamos judged everything by its teeth. Horses, people, watches.

He would have loved Mad Money, but never got the opportunity. I can actually just picture the look on his face had he ever had the privilege of watching a chair get flung across the studio.

Cramer blocks my tweets, probably due to a misinterpretation of the title of a blog entry "Why I No Longer Watch Jim Cramer."  Although it may also be related to the ill-advised combination of toilet paper and egg home decor that I provided one drunken morning when he got the booth I had my eyes on at The Olive Garden.

Because of that, I won't include the photo of me at what would go on to become the Mad Money studio set, when I auditioned for the part years ago. To see that, you'd have to actually click here.

In hindsight, I should have gone with the goatee, chucked the sports jacket and not sat down.

Regardless, his transition over to Mad Money came at a very critical time during my own investing development and subsequent plunge into managing my own portfolio after 25 years with a trusted broker.

I think that I learned a great many things during the years that I watched the show. In fact, as I used to travel quite a bit back in those days, I actually recorded shows to DVD to carry along with me.

There must be a word for that, but I'm not going to dig up Sugar Momma's copy of the most recent DSM-IV diagnostic terms.

Crazy is crazy.

Among the things that Cramer preached was doing your homework. He always recommended one hour per stock, per week. Because of that heavy time load, he also had a corollary recommendation that you shouldn't own more than 10 stocks at any time.

As he used to say, "What are you? A mutual fund?"

Point very well made.

But on deaf ears.

Even though I was always a good student, those deaf ears weren't really physically incapable, they just had a hard time listening.

You know the kind of person that I am.

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Point your Crosshairs to the Right

Warning.

I'm starting the week off with a rant of sort.

When I first got started with Twitter about 6 months ago, one of my earliest Tweets was about Sallie Mae.

I really don't remember what that Tweet was about, but I did get an eye opener in the process of trying to find just the right tone for my stock related Tweet.

Not really being familiar with the world of "hashtags" and not knowing that a stock was represented by the "$" sign, I searched for Sallie Mae Tweets.

I wanted to know how to do this Tweet thing properly, after all. I wanted to do my research, make certain that I had appropriate references and citations and be cogent and poignant within the contxt of 140 spaces.

Oh, and funny, too.

I certainly didn't want the Tweet to be frivolous or to waste anyone's precious time.

I was stunned to see the venom out there about one of my favorite stocks. There was nothing funny about Sallie Me in the eyes of people Tweeting about it.

To me, Sallie Mae was beautiful. I wasn't really prepared to learn just how ugly it was in the eyes of some many others.

I had owned shares, on and off, for about 3 years, always selling call options in the process.

During that time, I'd gone along for the ride from about $6 to $16. It wasn't straight line, but that's how I like things. So much better to make money raking in call options that way.

But people hated Sallie Mae. Not the stock, but the company.

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Put a Condom on your Portfolio

Nobody ever got giddy over practicing caution.

The other day I was looking through a "new feature" being offered by E*Trade, their "Online Advisor". It''s not terribly different from the myriad of other such tools in that essentially the same questions are asked, particularly with regard to your tolerance for risk, the number of years until retirement and other seemingly important questions.

Single ply or two ply, I believe is a proxy assessing your spending habits.

When it's all said and done, there's nothing more exciting than having "Fixed Income" recommended for your stage in life.

You know the stage. Respirators, catheters and orderlies that don't know how to use any of them.

Caution is pretty boring and I really don't want to be reminded that I'm at that stage of life.

I may be ready for Depends, but  I'll fight until the end to avoid those Fixed Income investments.

I had a friend in college who always thought that he was the desire of every woman's dreams. He used to proudly show me the condom that he kept in his wallet, as he always needed to carry "protection."

After a while, I recognized the crease in the foil of that condom and realized that for years he was showing off the very same one. he was taking the exercise of caution to an extreme that really wasn't terribly appealing, but he was behaving otherwise.

He had a business card that read something to this effect:

"My name is Harold. I want to sleep with you. If you want to do the same, please call my number. If not, please return the card, as I'm running low".

In this instance no names were changed to protect anyone.

He also used to talk about how he was going to go to the "free clinic to get "tested." It seemed that he needed to be tested everyweek. Whenever I would hint that I might want to go with him to get tested, he would always come up with a reason why he wasn't able to go at that particular time.

Somehow, I don't think he was quite as accomplished as he had been inferring. I don't think he really needed much protection, except perhaps from reality.

I made no such pretense and was never a big fan of "protection".

To be clear, I'm still talking about FIxed Income investments. I like protection in most other aspects of life.

Although I've never been a big fan of reckless behavior, especially when it comes to investments, I'm not a big believer in living a life of over-caution, either.

The problem is that when giddiness does set in, caution is thrown to the wind.

Certainly there has to be a graph somewhere that shows the association between alcohol and unwanted pregnancy, just as their has to be a graph someplace showing the association between a rapid rise in the stock market and stupid decisions. Greed will do that, as will the fear of missing out.

Unless you were in FIxed Incomes or in cash, which are essentially the same, you've been very happy the past couple of weeks. Surprisingly, that feeling would have alternated with having been very sad the previous few weeks.

So happy, that you probably think that everything is just going to keep going unchecked in the same direction. One of these days, the "this time it's going to be different" feeling is going to come true, but that's not likely to happen this time or the next.

And then, along come days like today.

After a couple of weeks when grasping at rumors of good news was all that it took to drive the market higher, today was the day that Germany's pessimism on an EU solution came back to haunt.

Pissing in the wind, punching a whole in a condom and buying high are all reckless behaviors. Pinning your hopes on a promise to resolve a crisis is probably not a good strategy.

But from my perspective, not having downside protection is every bit as reckless, especially when the market goes up and down in completely unexpected spasms.

Sure, I was saddened to see Halliburton drop $3 after announcing earnings before Monday's opening, but the $38 call options that I sold on Friday for $1.02, that happen to expire this coming Friday soften the pain.

Of course, the downside is pointed out by those that believe that stocks are all poised to make spectacular climbs at any given moment in time.

There's no shortage of examples where that's happened.

This year, I can look back at shares of Green Mountain Coffee Roasters and VIsa among others, that I'd lost to assignment after unexpected run-ups.

Those are easy to remember and hard to forget.

But I'll also remember that last week I didn't bank any option income on my downbeaten shares of Mosaic because there were rumors of a buy-out and I didn't want to get caught flat-footed.

I've thought of alternatives to selling covered calls, but that would require picking better stocks and making their purchase and sale at just the right time.

That solution would require effort and skill, so that makes it a "no go". Although I'd be willing to use insider information to help arrive at the same end point, I don't appear to yet have those kind of connections.

The reality is that there are very few surprise break-outs of a stock's price. For every Visa that gaps from $80 to $90, or very Green Mountain that goes form $45 to $60, there are a couple of thousand each day that don't.

Today, El Paso did, but space doesn't allow me the opportunity to list those that didn't.

The fear of missing out on one of those great moves is unfounded. They just don't happen that often.

What does happen often is that stocks go up, they go down and they go up again, right before going down and then up again.

After that has all happened, you can reliably predict that cycle will repeat itself.

On Monday, I started the day with cash coming from the assignment of British Petroleum, Freeport McMoRan and Alcoa and was looking for a quick bang for my investment buck. For the day, at least, I got it by picking up additional shares of Riverbed Technology, DuPont, Sallie Mae and ProShares UltraShort Silver ETF.

I immediately sold in the money calls on all three of those purchases. After all, when do you put protection on? After the proverbial horse has left the barn?

For my trouble of selling near the money and in the money calls expiring on this Friday, if assigned, I'll net a 3.4% return on the options income alone

Sometimes the protection is worth more than the asset it's protecting.

I'm not exactly certain how that same analogy can be applied to condoms, but at least in my world of investing, it seems to be true.

For the shares that I picked up today, I don't have very many high hopes of an El Paso like surge.

Whatever surge there may be will be restrained by the protection, but enjoyable nonetheless.

As the markets have been evolving I'm looking forward to even more variety in the protection available.

As we begin selling derivatives on derivatives, such as options on the VIX or short options on the VIX, I'm looking forward to the inevitable appearance of some of those UltraSheer options to help make the experience that much more enjoyable.

And what investor wouldn't want to be long in UltraSheers? 

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

  

We're Number One !!

Here's something that we don't see very often.

A U.S. city, state capitol, no less, declaring bankruptcy.

That's almost as unheard of, as say, Athens declaring bankruptcy, except that the buildings in Harrisburg are in a greater date of disrepair.

That decision to do the unthinkable can't inspire too much confidence in municipal bonds, even though the city comptroller has indicated that they are still current on the General Obligation notes.

The cynic in me believes that the decision to declare bankruptcy isn't entirely coincidental.

With all of the world's attention focused on Greece and the EU, we're starting to feel a bit left out on this side of the pond, and if there's anything that we need, almost as much as oxygen itself, it's the spotlight.

I think that Harrisburg is looking toward Florida for its inspiration and wants that Andy Warhol moment in the sun.

Florida, as well as some other states, is challenging New Hampshire's hold on being the nation's first Presidential Primary state.

For some reason, it seems important for a state to be the first, probably because that's where the big campaign money goes, as serious candidates need to get their toehold early or fall into the abyss.

And that spending blitz isn't just restricted to media campaigns.

Take for example the tremendous boost just given to the New Hampshire hospitality industry as Mitt Romney, in return for an early endorsement, agreed to provide Governor Chrisite with an unlimited supply of McRIb sandwiches when it is re-introduced onto New Hampshire's McDonalds' menus.

FIrst out of the box has its benefits in most every competitive arena.

No doubt that Harrisburg didn't want Greece or Italy going first. You just know that when that first one goes, the rest will just domino.

Harrisburg simply didn't want to get left in the dust or ash heap that their $300 million trash incinerator bond had them headed.

Sure, those are quasi-nations within the framework of the European Union, but in an "America FIrst" sense of indignation, Harrisburg did what so many other municipalities around the countyr just didn't have the nerve to do.

No one strives to be #4.

Besides, how else does a relatively sleepy backwater state capitol get its share of attention and maybe eco-tourism, which is not to be confused with eco-tourism. Instead, think "Keynes to the City" as being an eco-tourists most favorite guided tour through bankrupt Harrisburg.

There's no special formula or way to predict who will demonstrate the nerve to take on the unknown. It obviously takes a crisp understanding of risk and reward ratios.

I'm sure that every X-Games participant goes through an extensively elaborate algorithm to determine the appropriateness of their next humanly implausible action.

Sometimes "nerve" can be a funny thing.

There was a time that I had the kind of nerve that didn't mind letting it all ride on a single horse race or spin of the roulette wheel. But during that same period of time, I would break out in tremors at the idea of executing a stock trade on my own, much less look at the paper losses.

But then something happened. I don't have any clue just what it was, but it all changed.

The entire risk-reward perspective had become turned on its head.

These days, I can't stomach the idea of losing even a quarter in a slot machine, but am not really moved by a six figure paper loss in a single day.

I've been functioning like that for quite a while, but today I seemed to take a step backward.

With the market continuing to climb for no real reason, here it was, mid-week, the time that I usually like to grab some remaining pennies on the table. I was still delighting in the fortuitous timing of Alcoa announcing another set of disappointing numbers only to have the disappointment well cushioned by a continuing euphoric market.

Well done, Klaus.

This time, despite the fact that there were a number of opportunities that I would have normally taken, I found myself selling only Goldman Sachs and Time-Warner calls.

I struggled with the decision to sell calls on Sallie Mae and Mosaic.

I mentioned Mosaic yesterday as it was the target of a potential takeover rumor.

Sallie Mae, on the other hand, has just showed some nice strength going into earnings next week.

Yet, I couldn't find it within me to make the sales..

I'm rarely undecided, but the "FOMO" hit again.

Fear of missing out. I was worried that I might miss a quick upside move in either and leave a lot on the table.

The other day I read a nice piece by Phil Pearlman, the resident staff psychologist at StockTwits.

His blog title, NetFlix is on Tilt, examined the tendency to overcompensate for stock losses, using a poker players' analogy.

Admittedly, I know knothing about poker, but I liked his take on "Tilt".

For me, avoiding fear, greed and envy were always primary requirements for keeping your head above water. I always looked at those as raw human emotions, but "Tilt" didn't quite fit that category, but it was also worth avoiding. When asked, Pearlman confirmed for me that "Tilt" was not an emotion.

Still, I was left with the feeling that some kind of emotion has to be responsible for causing one to enter "tilt mode"

The tendency to do stupid things in order to erase other stupid actions isn't an emotion, it's just part of human DNA.

In my case, I had nothing stupid in my near past that needed to be compensated for, but I felt that if I went on with my usual modus operandi and sold the calls, I was going to be left out of the game. There's nothing worse than watching that big shiny ball roll down the playing surface and not being able to do anything to get back into play.

I understand that kind of "tilt", but I also get Pearlman's kind, as well.

Neither is good for long term survival.

By the time the market closed on Wednesday, half of the index gains were gone, and in hindsight, I should have made the sales.

Is "regret" an emotion? It's also just another one of our traits, but it is related to envy. Envious of what could have been or just regretful for what never was.

In the meantime, word came across that Slovakia pulled it together and its Parliament endorsed its role in the expansion of the rescue fund.

For another few days, Greece is spared from what everyone believes is the inevitable.

But it doesn't matter.

Thanks to Harrisburg, American pride is restored.

From a grateful nation, thank you for taking on an unnecessary municipal project, passing the blame onto a previous city administration's cronyism and faulting pressure applied from the State House for making the ill-fated decision.

Can you say "tilt"?

A real leader would have blamed it on the Greeks.

But at times like this, a grateful nation will take any winner as it own.

Here's to Harrisburg.

First in our defaults and first in our hearts.

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

  

Trading Places

Here it is, Sunday afternoon.

Watching football, having already gotten my week's fill of cholesterol in just one night and feeling pretty good.

Whenever I hear that phrase. "Feeling good", I always think of that great Eddie Murphy - Dan Aykroyd film, "Trading Places."

I can just hear the lines: "Looking Good, Biily Ray!" and in response,  ""Feeling good, Louis".

And what's not to feel good about? After all, Eddie Murphy is trading frequenting transvestite hookers for hosting the Academy Awards.

Life really is good.

And it's especially looking good for the United States, at least as far as our emotionally beaten down egos are concerned.

After a few years of the world thumbing its nose at us and deriding us for our dysfunctional political system and profligacy, it now seems that we've traded places with Europe.

On top of that word has just come out that Dominique Strauss-Kahn has admitted a "moral failing" with regard to his tryst with the hotel maid. As a result we may not need to feel terribly badly about an injustice being done to the ex-IMF leader and may be shielded from some overseas criticism of our justice system jumping to conclusions.

Imagine, it's been a few hundred years and they still can't cope with the little squirt of a brother growing up.

Not that I had felt terribly badly, anyway and not that things are running along entirely smootlhy on this side of the Atlantic. With the exception of baby kidnappings and other trampling of human rights, things still seem to be better with our Chinese "friends", who gve us a market lifting gift just by being part of the rumor that they might purchase Italian debt instruments.

I hope the Italians do better with the Chinese than they do with me.

I just received 5 mailings regarding traffic violations from a trip to Italy 3 years ago.

That was the same trip that the car rental agency tried to hit me with a $2,500 charge for damages.

Oh those whacky Italians. Wouldn't trade the experiences for anything.

But watching economic events in Europe unfold is the true definition of "schadenfreude." It's one thing to have the twp predominant political parties in the US act in a dysfunctional manner, buut when you have the EU's 27 member states trying to figure out how to divide the bill and who deserves how much vacation, you're talking some real dysfunction.

At least they're all agreed on retirement age and loan collateral.

It was funny hearing Treaury Secretary Geithner characterize his trip to Poland for the EU Finance Ministers meeting to be on the basis of an invitation, particularly since all news outlets reported that his "hosts" greeted him rather cooly.

European Finance Ministers apparently don't like to be told how to run their economies by a guy sipping directly from a box of red wine while dining on trout meuniere in his ripped boxers.

That may be a bit of an exaggeration, but so far I haven't seen or heard anything to contradict that characterization of events, so I'll stick with it. Given what could have happened on Geithner's watch and what didn't happen, maybe they should try the red wine instead of the Kool-Aid.

So with all of that as a backdrop, last week was a great week. Stocks traded places with precious metals. I own stocks and am short precious metals, so iy was a great week.

Surprisingly, perhaps surprisingly only for me, Friday was yet another up day in the markets given that there really wasn't any encouraging news coming out of Europe. In fact, if anything, even though the news raised prospects of a breakdown in the agreements necessary to temporarily rescue Greece, our markets shrugged it off.

Gold and silver on the other hand reacted precisely the way you would have expected in the face of uncertainty and the potential for a Greek default heightened. Earlier in the week, they also reacted according to script and had dramatic moves downward as an agreement appeared to be in the works.

No matter, so what if people felt confident going into the weekend holding large positions?

But I was happy.

Most of all and best of all, for me, a devoted call contract seller, Monday starts the October options cycle.

In that regard, September was nothing to remember. It was the second worst option premium month this year, fresh on the heels of the second best options month I'd ever had. Still, using my patented 1964 Color TV metric, I needed to find room for 39 new TV's.

But as a good sign, despite the feeble option income stream for the Septmber cycle,  I'll have plenty of opportunity to redeploy funds form assignments. Almost half of my holdings will be turned over, with most of them closing Friday within 1% of their strike prices.

When that happens, I love to see a down open on the first Monday of the cycle. There's nothing better than getting those same shares back at less than their previous strike prices. But beyond that, there's nothing like selling call options during a market peak. Grab those higher premiums, then close the lopp and start again.

I lost portions of my Bank of New York, Textron, Dow Chemical, DuPont, Williams Sonoma, British Petroeum, Deere, Home Depot and Transocean shares

If the past is any indicator, I'll probably end up getting some of those shares back.while I also look at opportunities in Sallie Mae, Mosaic, SPDR 500 and adding to poisitions in JP Morgan and Chesapeake Energy.

With that much to spend, I'll try to control my investing equivalent of premature ejaculation, but that's always been difficult.

I was going to say "but that hasn't always been hard," but then it would have been unclear whether I was referring to investing behavior or the metaphoric equivalent.

On a sad note, I'll be working tomorrow.

But that sadness is quickly replaced with the knowledge that I have only 2 more work days scheduled in 2011.

The work thing tomorrow does potentially interfere with the trading thing, but I've never let responsibility get in the way before, so I don't really think I'll be starting tomorrow. It may, however, help control the need to spend by keeping me otherwise occupied.

But still, that possibility is tempered by the fact that if I had to work, it couldn't be for a better cause. I'll be trading places with my friend tomorrow, who is on a golfing trip with his father.

I'd love to have the chance to have one of those trips with Szelhamos, but then I'm reminded that the most athletic thing I'd ever see him do was to bpwl one time.

As an 8 or 9 year old, I don't think I'd ever seen anyone roll the ball as fast and ghard as he did and barely ever hit a pin.

Still wouldn't trade that memory for all of the perfect 300 games on China.

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

  

What a Difference a Day Makes

Unless I'm missing the obvious, any consecutive two days in the markets these days would qualify for being the impetus for today's blog title.

It's becoming a truism that no two days are alike, unless you consider diametric opposition to be the sincerest form of flattery. A truism that's repeated almost as consistently as hearing parents tell you just how incredibly different their children are in all aspects of their lives.

Wednesday was an absolute yawner. The fact that I was napping during the last hour of the trading session and missed that 60 point drop just means that it never really existed for me. When I woke up, nothing was really any different.

Today? Where do you start with decribing today?

Well, you probably need to start with some sort of baseline. What represents the world's greatest change from one day to the next?

Some would argue that the dropping of the bomb on Hiroshima was such an event that so markedly distinguished between before and after.

Others might point to the assasination of John F. Kennedy, the day that an entire nation lost its innocence and left Camelot, never to return.

I think that Ted Williams, the man with the golden voice, best describes the transition that can be seen from one day to the next.

The photo that you're looking at is not the cryogenically gone bad head of the baseball Ted Williams. If your memory fails you, that's the picture on the day he was spotted at the intersection off ramp.

Here's what he looked like after you blinked your eyes just a few times:

Quite a difference, no?

Well how does yesterday's market action stack up next to Ted Williams?

It certainly was no flash crash and we've certainly seen volatility in the markets before. But today was at the very least not like the day that preceded it.

Obviously, I'm not prone to hyperbole.In fact, no one is less prone to hyperbole than me.

Today's action reminded me of speed dating, that is, if I did that sort of thing. We got to see a little of everything and exaggerated reactions to just about everything. There was also plenty of opportunity to make bad situational decisions.

Bad employment numbers, more Greek worries, less Greek worries, release of strategic oil reserves, resolution of Greek crisis, capture of Whitey Bulger and visions of Barney Frank and Ron Paul toking on a big one in a congressional hot tub.

These are a few of my favorite things.

I know that I'm not very smart when it comes to micro and macro-economic issues, but I'm still having a really hard time understanding the plunge in crude oil futures based on the graduated release of 60 million barrels of oil.

Oh, I see. A few days of reserves, over a few months.

Sure, that should tip the markets upside down. The fact that the Saudis had no great opposition to the symbolic move and the little bit of a squeeze it may theoretically place on Iran and Venezuela makes it all worthwhile.

Besides, now that I've had to modify my diet in response to the sludge like cholesterol induced blood that I have, I've cut out at least that much oil from my deep fryers in less time.

Maybe I'm just not following the right people on Twitter.

The only one that made the case that the reaction to the strategic oil reserve release was ridiculously overblown was Dennis Kneale from FOX News and FOX Business.

I'd say "Bravo", but that's an NBC property and they might take litigation against me for using that word in a direction laudatory of Dennis Kneale.

At least I can still say "WINNING" without hesitancy.

But maybe it was something Bernanke said in the after press conference party that got people worried. Do you think that maybe after a few kirs, he started spouting that not even QE 12 was going to get the economy out of the "Loo"?

Somehow, I have a hard time seeing that possibility. I know with great certitude, that the Federal Reserve Chairman would have used the word "crapper", owing to his southern heritage.

I also know with great certitude that I never used the word "certitude" prior to last week.

Whatever the cause, the volatility was there today. One measure, the ProShares Short-term VIX ETF was all over the place today. It traded in an 8% range today, finishing just pennies off its lows. It's June 2011 options were equally volatile, although that probably shouldn't be overly surprising, should it?

Like Riverbed Technology and Home Depot, the VIX ETF was still up all day. I only mention the latter two, because I had mentioned this past Friday that I was planning to purchase shares in both.

As I further mentioned on Monday, I didn't, having instead added shares in Halliburton, Freeport McMoran and Sallie Mae, instead. I'm not sure why I bother making those kind of disclosures.

Well, there's always tomorrow. After all, isn't that the theme?

In today's trading, it seemed as if there were really two transformative events, or non-events.

The oil reserve release and the reported Greek financial crisis resolution.

A tale of two absurdities.

The belief that a cultural way of life enjoyed by Greek citizens will be abolished by decree and banking fiat is probably not terribly realistic. Just more of the same. Kicking it down the road.

The fact that the per capita debt of the United States is actually $1,000 more than that of Greek citizens can't have too much relevance. Otherwise, we'd be doing something about it now, instead of tomorrow.

From my perspective, I don't care if our injudicious and wreckless fiscal actions effect my great-great-great granchildren. My reasoning is that I'm not very likely to have that strong of an emotional connection to them to be worried about how they've been left holding the bag for our frivolous ways and neither will my own kids.

So let's just do what we need to do today, to make tomorrow just another day of great denial.

Not denial of things that we value, like things, just denial of things that are irrelevent, like the concepts of truth and facts.

I guess in that way today and tomorrow don't really need to be that different.

From Ashes Arose the Phoenix

What's in the Szelhamos Portfolio?

My least favorite subjects in high school were English and what used to be called Social Studies. Given that I attended a high school that was internationally known for its emphasis on science and math, I'm not even certain why the non-science classes were taught. There's really not that much in life that can be achieved with the written word.

Fast forward a generation and both of my kids are fascinated with history and have relatively little use for math and science. Fortunately though. they still have some use for me. The youngest one was able to make his first real phone call from basic training yesterday and it was a special Father's Day treat.

My oldest son came over for a Father's Day visit and did the barbecueing, which is something that I really dislike doing. It was great.

We also independently paid our visits to Selhamos. Father's Day and Mother's Day are sad days to visit cemetaries, especially when you see so many young kids there.

And there were.

Death is also not one of my favorite topics, even though I do love the obituary pages. I do, however, like the concept of resurrection, just not necessarily in a religious context, despite the fact that I spent 4 years in a Jesuit college.

If I could choose a resurrection for anyone that's died in the past 24 hours, no doubt that I would choose Clarence Clemons. I last saw him and the E Street Band 2 years ago. I still wear a T-Shirt from that concert tour at least once a week.

Even though "The Big Man" had to be lifted onto stage back then, man could he wail.

But resurrection was not the sort of thing they taught at my public high school anyway, which back in those days was predominantly Jewish. What they did sometimes teach, however, really taxed the imagination and my patience for learning.

Within my least favorite classes was a subset of least favorite topics.

That was Greek mythology. That stuff was about as believable as the concept of the Greeks readily accepting the fact that their economy may no longer support the right to retire by age 35. But when you think about it, the EU could just as easily been in a position to bail out the Phoenicians, but for some simple twists of fate.

Hated it. Just couldn't identify with any of the characters or gods, although that Oedipus fellow....Interesting.

So no one is more surprised that I am for the title of today's blog, ripped right from the mythological headlines.

What's somewhat fascinating is that I also once owned a Pontiac Phoenix.

It was one of the then new GM series X-Cars that was supposed to revolutionize the American automobile industry. Even then, I don't think I knew what exactly about that series of car was so spectacular, but Consumer Reports gave it glowing reviews in its inaugural year, only to do a complete about face by the next year.

My Pontiac Phoenix caught fire while I was driving it on I-95 in Rhode Island at about 4:30 AM enroute from Boston to New York. I recall driving on a pretty deserted and dark road when I saw someone flashing their brights in my rearview mirror.

That car then pulled alongside me and started honking wildly.

When I didn't respond as that driver thought I should, he turned his courtesy lights on so that I could see him and frantically made sweeping hand and arm gestures which I really can't recreate on paper.

Since I wasn't expecting to be playing Charades and was never very good at mime interpretation, I just kept on driving, ignoring the lunatic to my side as best I could.

As it turned out, the under-carriage of my car was on fire. At some point a combination of flames from the hood and smoke, on an otherwise smokless and flameless early morning, finally drove the point home.

Although I never did finish that drive home.

I'll spare you the details, because I'll probably end up using them for another blog, but in the days before cell phones, it took quite a while for help to arrive.

Ashes. Phoenix. There was no resurrection

And so we begin another new options cycle this morning in the aftermath of another miserable week and another miserable month. The June cycle may as well have all gone up in flames.

Oh wait. It did.

Sure, I know that the S&P 500 actually finished the week with a 0.1% gain, but most people still think of last week as having been the seventh losing week in a row.

I know that I do.

As much as I'd like to see Clarence Clemons resurrected for at least one more show, I've got no such hopes for June 2011.

The only thing that helped to make it less of a total loss of a month were some of those last minute options sales that were made in some pathetic combination of desperation and addiction. Those pulled in nearly as much as the previous three weeks.

Interestingly, it actually made me realize that there was an opportunity to return to the past. Back in the days when I ran a monthly service offering 4 or 5 trades in the 2 days before monthy options expiration. But I gave that up. Once a month was entirely too infrequent. But all of a sudden its become clear that the weekly options offered the opportunity to actually make those recommendations much more frequently.

So with that ever worsening ADHD I suppose that's the next venture. Re-establishing that newsletter and the market for it. Yet another pile of ashes, albeit self-imposed, ready for resurrection.

But first, it's July. Making something of the ashes left behind after 7 weeks of losses. Although those losses were mitigated a bit by the options sales, as I noted a few weeks ago, I was under-hedged, since I kept thinking that the market would reverse course.

It probably will come as a surprise to no one that was not the case.

Of those last minute call options that I sold in Mosaic, Microsoft, Hewlett Packard, Textron, DuPont and Dow, only the Microsoft and some of the H&P shares were assigned. I had been expecting and hoping for more and had planned on possibly picking up shares in Visa, Sallie Mae, Riverbed Technogy and Home Depot.

I actually bought Home Depot last Monday, just to pick up Tuesday's dividend and then sold a call option. That was a good series of trades and I still think Home Depot may be a good holding, even at a slightly higher price. So I will likely pick up replacements for my assigned shares.

Beyond using the phrase "From ashes rose the Phoenix" I really didn't do much research to see what the mythological context was or what lessons can be learned from the ancient tale. It just seemed like an apt thought.

That point was actually driven home as the new Szelhamos Rules blog just reached its 20.000th hit this Saturday.

I say "new" because the original version ran for precisely one year. After the first year, regular readers were redirected to a new site called "Csokoljmegasegem.com

You'll have to use Google Translate to figure out what that means. It was one of Szelhamos's favorite Hungarian expressions.

But from those ashes arose the new Szelhamos Rules, and as a Father's Day gift, my son has said that he will oversee an entire re-design of the site.

Told you. A great Father's Day.

I hope that you all had the same.

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Nothing Makes Sense

Don't get me wrong. I love Sallie Mae.

Obviously, no one really loves Sallie Mae if they are their student loan processor, but I'm well beyond that stage of my life and fortunately my kids didn't need to go that route.

But you have to love Sallie Mae if you're a trader. Even investors have to admire Sallie Mae, although the ride from $6 to $10 was bumpy, as it was from $12 to $14.

I have to credit Jim Cramer for first putting Sallie on my radar screen a few years ago. That was when Sallie was at about $6, recently up from about $3. Even with that kind of move, Cramer was convinced that Sallie was going higher.

You could have made your career on that gutsy call alone.

At that time, there was widespread belief that the Obama administration was going to dismantle Sallie Mae, so a trade in it was fraught with risk. Since I don't like risk and don’t like to speculate, I'm still amazed that this one caught my interest.

Remember cousins Freddie Mac and Fannie Mae?

The upside, though, especially if you were a covered call trader, was considerable. In those days, Sallie's volatility was high, but the share price always seemed to revert to a slowly increasing mean.

On top of that, the options premiums were in the 6-10% range for the near term strike and money price.

I had not owned shares for about 2 months, but then repurchased for the March 2011 options cycle, as Sallie kept testing the $15 mark, I was always happy when the cycle ended below $15.

Even though the options premium in the lower volatility environment was now in the 3-4% range, still not a bad monthly return.

On Monday I sold May $15 options and then bought them back on Wednesday, as Sallie fell prior to its earnings announcement.

So what happens?

Sallie announces earnings 25% less than it’s comparison quarter.

Bad news, right?

Oh, it also announced a pitifully small $300 million stock buyback.

And you guessed it. The stock surges by about 17%

Now I'm not complaining, because that gave the opportunity to sell new call options. even though Sallie now went well beyond $16, I still sold the $15 options, as I expect the price to fall down somewhat. Since my purchase price was about $14.50 and the cost basis now even less by a few months of options premiums, the in the money call option will give penny for penny profits if the stock price falls.

Now all of this happens on a day that GE, which is not the parent corporation of this blog, announces great earnings and another, albeit small, dividend increase.

Again, you guessed it. GE moves down, after a very nice pre-market move, testing $21. Not just down, but below $20.

In the first iteration of this blog, a few years ago, I thought that I had learned not to apply rational thinking to the market's moves.

Clearly, I haven't learned that lesson, as I'm still amazed at the irrational reactions.

It can’t be reading between the lines. There has to be something else at work here.

While I can't complain about Sallie Mae, I can about GE, as I still haven’t had an opportunity to sell call options. As it is, the GE shares are becoming the dreaded "dead money." Even Microsoft is performing better. At least I can get a decent options premium on those shares, which barely move outside of their tight range.

In the end, does it matter that nothing really makes sense?

Not really, but it's still very difficult to get a rational mind to think irrationally on a consistent basis.

Fortunately, as I'm getting older, the rational part of my mind seems to be diminishing in its relative strength, being replaced by the need to grow hair out of areas that never had hair before.

When you think of the divine nature theory of the creation of the universe and all creatures, you really have to wonder what was in the grand plan that called for hair to grow from your ears as you got older.

That really doesn't make sense.

Why couldn't the creator of the universe rest after creating the need for a rising waistline and a complimentary white belt?

I guess rational thought has never really had a place in the universe.

Sadly, tomorrow is a stock market holiday. I hate those days, with all due respect to dead Presidents, religious celebrants and laborers. It means that I'll have to actually do something less constructive, but it will give me the opportunity to ponder how I might implement irrational thought processes so that they operate in the background.

But if I did that, they I could never become a talking head or "contributor'"  because that would mean that I would correctly be predicting and analyzing the markets.

I wonder what I would say about the price of silver?

Maybe not making sense is really the way of the universe.

Go figure, but do so irrationally.

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

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