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Friday, July 31, 2009

Freakish Monster Zucchini Invades Airelon's Garden ...

We have food coming out of our eyeballs! Take one look at these monsters we have coming out of our garden ...


I'm now a firm believer in 2 year old horse poop. :) Icius in the Ventrilo Voice Server thought we should start a "2 year old Horse Poop" futures contract. What do you guys think? Contract specifications could be 3 metric tons?

So come up with your own caption for these beasts! Comment below!

Thursday, July 30, 2009

State of the Economy: Where Are We At? (VIDEO)

"The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy." - Milton Friedman

When you talk about arriving at a conclusion based on a differential mathematical subset (economics) - you are dealing with variables that you can't control.

What is one of those variables? Well, we already discussed that the mainstream media (and to some extent, new media) can affect the psychological aspect of consumer confidence. Want to see an example of that? Look at the 'wonderful unemployment' numbers that were released.

Wonderful numbers? It was nothing more than a display that those who are no longer qualify for unemployment, are on the rolls to be counted.

But where exactly are we at?

Well, grab some popcorn, because this is a long one ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



So briefly put ...

  • We have a deflationary trap that has grabbed a hold of asset values, and the supply is trying to force real prices down.
  • We have a liquidity trap.
  • The Fed Prime Fund rate is at 0%.
  • We have asset inflation (stagflation) expectations displaying themselves.
  • The stock market is rallying like crazy, with zero volume, while future food prices are plummeting.
  • We have high unemployment (stagflation) rate with higher and higher jobless pool numbers.
It's like living in bizzaro economy world. Everything out there right now is upside down.

Regardless, you can still glean some interesting facts. Most producers are stating that they expect weak sales in the 3rd quarter, and that they are cutting production. Some by 15%, some by 20%, some as high as 30% and 40%.

That's GDP.

Now ... don't be surprised if GDP is not reported as bad as it really is. We have to face the facts objectively. They are obviously spinning the numbers. It's the Ministry of Truth. But perhaps, at some point ...

.... well, I'll get into those comments in a future entry

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Challenge Project Trade: GLD Put

Just in case you missed the Twitter update, I dumped out of my GLD and Gold short positions yesterday for the profit ...

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Tuesday, July 28, 2009

Challenge Project Summary: July 27, 2009

Previous Challenge Project Balances:

Investing Account Balance: $504.34
Stock / Futures Trading Balance: $1,464.14
Online Savings Balance: $100.06

The original video explanation of the Challenge Project is to be found here.

Some time ago I stated that I may split up Rule No. 2, into weekly segments; or, $25.00 a week. Rule No. 2 states that each month, we can divy up $100.00 as we wish ...

Well, I honestly was going to have a nice pretty little video for todays entry. Charts. Account Balances. Commentary.

Unfortunately, my utility provider DTE decided not to cooperate. As I was 'mid chat' in the Ventrilo voice server this afternoon with the guys, the power went out in the entire house. Therefore, I am typing out this entry from a Panera Bread restaurant, that's down the street from myself.

But, as yesterday was Monday, I figured I had best include an update regarding the Challenge Project.

First of all, the $25.00 weekly deposit went to the Investing Account. The investing account continues to hold on to that hedge option as well. I would love to have about $700.00 cash in that account come this November. We'll see how that turns out.

I'm not sure if you guys were checking out my Twitter updates today? But Gold took an enormous intraday dump this morning, whose range exceeded the previous five days of market action. Which works out great, since the Challenge Project Trading Account is holding an 89 GLD September Put option. Between that, and my personal accounts? Dan was doing a happy little dance around the house today.

So the account balances, at this point, read as follows:

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $503.19
  • 4.1064 shares of KO
  • 3.0301 shares of JNJ
  • 1 SPY 80 Put - September Hedge
  • Cash: $89.12
  • Additional $25.00 available from slush fund
Stock / Futures Trading Balance: $1,456.18
  • 1 GLD 89 Put - 56 days left to expiry
  • Additional $25.00 available from slush fund
Online Savings Balance: $100.06
  • $25.00 for a Slush fund / Drawdown Kill Switch fund
  • $50.06 for a base savings
  • $25.00 for Emergency Savings
We'll be back to the Challenge Project, next Monday ...

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Sunday, July 26, 2009

Week In Review: Airelon (VIDEO)

"Debate is masculine, conversation is feminine." - Amos Bronson Alcott

I used to frequent forums, and blogs, and websites. Folks would see what I was doing, and send me comments, pm's, and then emails asking for help.

This blog is a way to communicate in a centralized, organized manner as to my thoughts - to folks who wanted my help; when they saw what I had done for myself. What I receive from time to time, are comments such as this one:

"You're living in a dream world. The problem is that you're playing by the rules of the system and the insiders are not and they're gonna leave you high and dry bro'. I used to be a stock broker for several years and trust me, no one at the firm I worked for knew anything about the real economy. So keep reading your stupid spread sheets and forecasts and keep listening to the economists that say everything will be fine."

Now multiply messages like that, by about 50 times. I discuss this, and the markets in the following "Week in Review" ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



This blog is an attempt to help others out in a centralized location. That's all.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Friday, July 24, 2009

State of the Economy: The Ministry of Truth (VIDEO)

"We do not destroy the heretic because he resists us: so long as he resists us we never destroy him. We convert him, we capture his inner mind, we reshape him. We burn all evil and all illusion out of him; we bring him over to our side, not in appearance, but genuinely, heart and soul. We make him one of ourselves before we kill him." - Obrien, 1984 by George Orwell

"The one thing the market will teach you is there is a massive amount of information to fit anybodies way of thinking" - Mr Plow from Our Ventrilo Voice Server


When you talk about arriving at a conclusion based on a differential mathematical subset (economics) - you are dealing with variables that you can't control.

What is one of those variables? That affects consumer confidence, which affects buying pressure? Is that of the media, which I discuss in the following entry ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



You may not like them. You may not agree with them. But these media sources are with us, like it or not, and you have to deal with 'what is'. They have a ton of power.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Thursday, July 23, 2009

A Conversation Regarding the State of the Economy (VIDEO)

"The economy depends about as much on economists as the weather does on weather forecasters."

What ... is going on?

What can you expect to see? Inflation? Deflation? Higher unemployment? Rising taxes? Higher stock prices? Lower Stock prices? Higher Gold prices? Lower Gold prices? I am going to be discussing that, in the following entries.

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



We will continue tomorrow with another video vlog regarding "New Media" vs. "Mainstream Media" and you better believe that has a great deal to do with economics.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Challenge Project Trade: Gold

Heyya all, just wanted to chime in very quickly, and for the public challenge projects, I bought one GLD put, 57 day theta in the trading account. Was filled for a couple of pennies less on the option than I was looking for as well, so that's always nice. :)

I also have a video coming out that is going to begin discussing where I see the economy for the next 12 months, and how I'm going to plan myself according. We're at a crossroads.

Again.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Tuesday, July 21, 2009

Challenge Project Summary: July 20, 2009 (VIDEO)

Previous Challenge Project Balances:

Investing Account Balance: $504.34
Stock / Futures Trading Balance: $1,464.14
Online Savings Balance: $75.06

The original video explanation of the Challenge Project is to be found here.

Some time ago I stated that I may split up Rule No. 2, into weekly segments; or, $25.00 a week. Rule No. 2 states that each month, we can divy up $100.00 as we wish ...

(Video Included. If you're seeing this entry elsewhere and cannot play the video? Click this link to go to the exact blogged vlog entry ...)



Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $504.34
  • 4.1064 shares of KO
  • 3.0301 shares of JNJ
  • 1 SPY 80 Put
  • Cash: $64.12
  • Additional $25.00 available from slush fund
Stock / Futures Trading Balance: $1,464.14
  • Additional $25.00 available from slush fund
Online Savings Balance: $100.06
  • $25.00 for a Slush fund / Drawdown Kill Switch fund
  • $50.06 for a base savings
  • $25.00 for Emergency Savings
We'll be back to the Challenge Project, next Monday ...

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Sunday, July 19, 2009

Week in Review: Bias vs Trading Entry

"But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions" - Alan Greenspan

Welcome to the 'Week in Review'.

Wow. What a rally. Yeah, I had the link to the Rally Monkey. I don't pull that out on days that the rally makes sense. I pull that out when the market has thrown all caution to the win, and we have an unreal, unbelievable, no one was expecting "crack induced rally".

So after our usual market review, we'll talk about that rally, and others in this week in review ...

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)



Click here to download this podcast.

The markets can start a feeding frenzy. When and where that feeding frenzy will begin? It's hard to tell, and thus hard to trade. Just remember, your bias, and your entries, should be two different things. Trade the tape, and be "Mr. Spock".

But remember in the background, the bias. Governments have taken on incredible debt, and unemployment is still through the roof. A deflationary trap has set itself up within the GDP of the United States. Much of the money supply in the form of credit is disappearing, and there is still and incredible 'debt black hole' out there.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

It's a Coming ...

I know, I know ... the Week in Review is a little late. Well, a lot late. I hope to have it up by tonight. Sorry about the delay, but it's been an insanely busy weekend. Everything is well. Just busy ...

Friday, July 17, 2009

It Pays, to Pay Attention ...

"Coincidence is the word we use when we can't see the levers and pulleys." - Emma Bull

I read this headline today on the BBC News:

"CIT, the troubled American bank, has said it is in talks with "potential lenders to secure financing".

Shares in the firm plunged on Thursday, as analysts warned investors should brace themselves for CIT's collapse"

Hmm. A just a few days back, on this blog on July 1st? We had this little tidbit:

"Edit Update: With due credit to Karl Denninger for catching the overnight lending action at the Fed? I'm not going to be shorting any metals (the metals, in this environment = fear), and I may be picking up some puts on equities.

Could be a lot of fear getting ready to hit the market."

Do I think there is a connection? Yes. Can I prove it? Of course not. Some of the anecdotal stories I could relate of people still getting loans from this bank would make the hair on the back of your neck rise. Do I think there was really any way to 'play' that profitably? In hindsight, no. It did save me from trying to short the metals any further.

I just think it's very, very profitable to keep your eyes on all of the pieces of data. It wouldn't make much sense, to try to play a game of chess, and ignore the opponents knights.

Edit: Also thinking of Index puts today, and possibly also for the Challenge Project ...

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Thursday, July 16, 2009

The Federal Reserve: Why Listen to a Middle Man? (And Profitable Bad Trades) (VIDEO)

"Don't be buffaloed by experts and elites. Experts often possess more data than judgment. Elites can become so inbred that they produce haemophiliacs who bleed to death as soon as they are nicked by the real world." - Colin Powell

You see it everywhere you turn. When you watch videos. When you listen to the news anchors on the television set. When you read a news article.

"The Federal Reserve reported that ..."

"The Federal Reserve reports that ..."

"The Federal Reserve has gone on record to say"

And then the blogger, news anchor or pundit then goes on to say what that "means". Or some analyst wants to put together a report as to what that "means".

Huh?

Some of the best advice I've received throughout my life? Is to go look at the data for yourself.

For example. I am a student of the Bible. I mean, the actual construction of the document. It's a science called 'textual criticism'. Now, while getting other textual critics and scholars thoughts regarding various papyri, vellum and manuscripts is interesting, and provides me with a different point of view? Why wouldn't I just go examine the papyri, the vellum and the manuscripts at universities for myself? Why wouldn't I have my own facsimile copies of all of ancient scrolls and parchments?

I discuss this phenomenon, as well as "bad trades with profits" in the following vlog entry ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



I ask people all the time:

"We live in the information age. All of the data is available to you. So why are you coming to me, with data from a middle man?"

So I'm going to help ones out, as well as follow my own advice as I am a blogger. Here is a link to the minutes of the Federal Reserve meeting that was released yesterday. There are not only the interesting nuggets there, that I mentioned in the above video? But I also believe that there is a BOMBSHELL in the opening statements. Read the data for yourself, that the Federal Reserve supplies to everyone on a very public website. Start reading the Fed papers ... for yourself. There's a lot of data in there that could make for some very challenging discussions, rather than talking about what 'this guys reports', or 'that analyst says'.

I examine the data and numbers for myself. It's probably why, throughout this crisis? I really have yet to be wrong.

About anything.

And mind you? I'm the guy that doesn't like to get into the habit of prediction. Prediction, at least for humans, is an absolute impossibility. I just read the data in front of me.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Monday, July 13, 2009

Monday Challenge Project Summary: July 13, 2009 (VIDEO)

Previous Challenge Project Balances:

Investing Account Balance: $523.45
Stock / Futures Trading Balance: $1,464.14
Online Savings Balance: $50.06

The original video explanation of the Challenge Project is to be found here.

Some time ago I stated that I may split up Rule No. 2, into weekly segments; or, $25.00 a week. Rule No. 2 states that each month, we can divy up $100.00 as we wish ...

(Video Included. If you're seeing this entry elsewhere and cannot play the video? Click this link to go to the exact blogged vlog entry ...)



For some reason in the video audio portion, I keep saying: "Transfer portion of the slush fund to either the trading account or the savings account"

That should instead be:

"Transfer portion of the slush fund to either the trading account or the investing account"


Wouldn't make much sense to take it out of the same account, to put it in the same account. :)

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $528.07
  • 4.1064 shares of KO
  • 3.0301 shares of JNJ
  • Cash: $152.57
  • Additional $18.76 available from slush fund
Stock / Futures Trading Balance: $1,464.14
  • Additional $18.76 available from slush fund
Online Savings Balance: $75.06
  • $18.76 for a slush fund / Drawdown Kill Switch fund
  • $37.53 for a base savings
  • $18.77 for emergency savings
We'll be back to the Challenge Project, next Monday ...

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Saturday, July 11, 2009

Week in Review: It's a Question of Trust (PODCAST)

"If you once forfeit the confidence of your fellow citizens, you can never regain their respect and esteem. It is true that you may fool all of the people some of the time; you can even fool some of the people all of the time; but you can't fool all of the people all of the time." - Abraham Lincoln, 16th President of the United States of America

Welcome to the 'Week in Review'.

How did we get here?

How did we get to one of the worst financial and economic disasters in the history of the United States? How did this happen? Some people may want to point to what I see as symptoms. Some want to complain about the fiat currency system. Some want to complain about the markets themselves and blame speculators. But really? How did we get here.

We got here, to this point in the economy, through a lack of trust. Trust is the basis of all money. One of the topics I discuss, in the "Week in Review" podcast.

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)



Click here to download this podcast.

Here is the link to the PBS Series that is entitled: "The Ascent of Money".

They have an interesting portion of the first episode, something I was not aware of, on Europe's first wildly successful "Forex" traders.

For those who enjoy James Clavell novels, and the exploits of Dirk Struan? At the end of episode two, he tells the story of the real Dirk Struan. The Tai-Pan, William Jardine.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Friday, July 10, 2009

The Continuing Economic Crisis - Part II (VIDEO)

"Making a speech on economics is a bit like pissing down your leg. It seems hot to you but never to anyone else." - Lyndon B Johnson

Some time ago, after the Recession had already begun in earnest, I had a video called: "The Economic Crisis Simply Explained in Under 10 Minutes". That video explains the causes, and how the economic downturn began.

But where are we at today? Why hasn't the economy recovered? Is it recovering? My thoughts, are no. The following video explains a very simplified manner, the general outline of the problem the economy is facing at the current time.

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



I will be appearing tonight, on The Davian Letters "Happy Hour" show, at 6:30 pm tonight, and I will have a week in review tomorrow.

* * *

Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Tuesday, July 7, 2009

Avoid US Mainstream Media at All Costs

"And if all others accepted the lie which the Party imposed—if all records told the same tale—then the lie passed into history and became truth. 'Who controls the past' ran the Party slogan, 'controls the future: who controls the present controls the past." - George Orwell, 1984

I sometimes advise new traders and investors: "Whatever you do, stop listening to the U.S. mainstream media."

Why?

Well, I ran across this little "gem" today from the Washington Post, written by a Mr. Zachary A. Goldfarb that perfectly illustrates why I believe it's time to stop listening to U.S. mainstream media. The title of the article was, of all things: "CFTC Floats Rules Aimed at Speculation"

That title, by the way, is incorrect. That is not what the CFTC is doing, and therefore, the Washington Post has engaged in a bit of sloppy journalism. But what do we expect from the U.S. mainstream media? But more on that later.

The article starts, right out of the gate, by stating:

"The Commodity Futures Trading Commission will consider new measures to curb speculation in the markets for energy and other commodities, the agency is set to announce today."

Wrong.

Wrong wrong wrong wrong.

Here, let me fix that for you Mr. Goldfarb, since you are obviously writing about a subject you know NOTHING of ...

"The Commodity Futures Trading Commission will consider new measures to curb manipulation of future energy contract prices by limiting the sizes of the positions that hedge funds and other investment banks are allowed to hold, the agency is set to announce today."
- - Corrections mine

There. Fixed. First of all, it is impossible to speculate in the spot energy market. It can't be done. That was the first mistake by this article, and a mistake that was in the opening paragraph I might add. Speculators are engaged in the futures market. Futures. As in, 'hasn't-been-delivered-yet-and-wont-be-for-months'. The spot market is what is being agreed upon, right now, today, by buyers and sellers of crude oil. And there are no speculators in that market !!

The CFTC cannot 'limit speculation' in the futures market. To do so, would be to destroy those free markets, and the benefit they provide to the commercial interests that are trying to hedge their operating costs. Which, ironically, this very article goes on to admit in later paragraphs! More on that later.

It's already obvious, and we've progressed only a few paragraphs into the article, that the Washington Post wants a scapegoat. And they have decided to land on speculators. The problem there, is that their insinuations do not match the facts (Gee, remember the times when a journalist was a noble truth seeker?) The mainstream media acts as if speculators are actually determining the price of today's barrel of oil. They aren't.

Those guys you see on your television screen in bright colored jackets waving around pieces of paper? The aren't even participating in the futures energy markets. They are in a secondary markets of the options market, that is based on the futures energy markets, which is removed from the spot market. But isn't it interesting when someone from the mainstream media want to talk about blaming speculators? They flash that image on the screen? As if options traders in the energy pits are the guys actually trading the cost of today's barrel of oil?

The article continues:

"Concern over such deal-making reached a fever pitch last summer, when oil prices were sky high and people were feeling pain at the gas pump. CFTC data showed last year that a significant amount of trading in oil was concentrated in the hands of just a few speculators."

Ahhhh, now we come to the rub.

First of all, since I did the Washington Post the favor of fixing their first paragraph, I should probably also fix this one.

"Concern over such deal-making reached a fever pitch last summer, when oil prices were sky high and people were feeling pain at the gas pump. Much of this weakness was due to the fact that the Federal Reserve began cutting the Fed Fund Prime Rate at an ever quickening pace in an attempt to support and re-inflate market valuations. The negative side to this action is that it can be inflationary. This is because it leads to a weaker U.S. dollar. A weaker dollar translates into weaker purchasing power. In fact, the Federal Reserve was engaged in this action at a time of the year when Crude Oil usually comes under seasonal buying pressure. This means that the dollar could not purchase as much crude oil, and therefore high spot oil prices were the result, at the same time Crude Oil was already facing seasonal demand." - corrections mine.

Since I have never, ever seen any data by the CFTC to purport the claim that a "a significant amount of trading in oil was concentrated in the hands of just a few speculators." I will leave that sentence out completely. I'm not saying it's false. I am not one who comes to conclusions before all of the data is presented, legally. I've never personally seen any data to that effect. Trust me, if I had, I would be screaming about it. The CFTC always shows which group, holds what positions, in the COT (Commitment of Traders) report that is released each week. Now, admittedly, that report does not report who is holding what position. And I will agree that if the size of a position is concentrated in the hand of one or two firms, that this could adversely affect the future contract price of oil for a very short time. At times, the spot market may take notice of what the futures market is doing, only if it can be demonstrated that the premium spread on future contract months is intact, and at the same time, the net position of a few speculators was in excess of previous requirements.

But even if this were the case, that could in no way affect the spot markets price of oil for any length of time. The spot market flying sky high last year, was the direct result of the Federal Reserve cutting rates, and cutting rates, and cutting rates and .... oh ... let's cut the rate some more; at the exact same time that crude oil comes under seasonal buying pressure. There were no speculators in the spot market, as the dollar was falling. So how are speculators to blame? So if we're going to have an article that throws mud and tries to seek out blame? Let's throw that mud in the correct direction shall we?

"Mr" Goldfarb continues:

"Financial firms can affect the price of commodities such as oil and wheat by buying and selling futures, which are financial instruments traded on exchanges."

Prove it. You explain to me how that happens. I would love to hear an explanation of that statement.

"A future is a contract between two parties which agree to buy and sell a commodity at a certain price."

Again, wrong. Wrong wrong wrong. Again, let me fix that for you:

"A futures contract is a contract between two parties which agree to buy and sell a commodity at a certain price at a set time in the future; usually, two to four months in the future." - Corrections mine.

Come on! You can't even get a simple definition correct! And you write for a supposedly reputable newspaper in the United States of America? Or, is it that by providing an accurate definition, you just might, possibly show the truth of the matter, and may not be able to throw your mud at futures speculators?

What makes this even better, is that the next few sentences in this article actually demonstrates the need for speculators !

"For example, an airline that is worried about being hurt by rising fuel prices might try to lock in costs by buying oil futures. If the price of oil does rise, the futures the airline owns would also rise in value, offsetting the increased cost for fuel."

What you left out, Mr. Goldfarb, is the fact that the airline will not be able to make that deal, unless the speculator is willing to pick up the risk for the airline ! For every contract sold by the commercial interest, there MUST BE A BUYER! Otherwise, no one will pick it up, and the airline cannot hedge themselves. The speculator is critical to the both the liquidity, and the function of the futures contract markets. Has the last year taught you nothing as to what happens to a market when the liquidity disappears?

The article continues:

"The CFTC already has established position limits for some commodities, such as wheat. But it has also granted exemptions to these limits"

Ohh! Ohh! Now we come to it! In other words, the rules on the books, that were working just fine? And those rules were removed? Why? THERE is your story! This reminds me of other rules on the books that were removed. Rules regarding leverage that a Mr. Hank Paulson asked to have removed years ago. Those rules were removed as well. And here we are.

I'm a futures speculator, and I am sick to death of mud-flinging articles like the one above.

My solution?

Quit listening to the U.S. 'old-school' media. Period. I'm not saying you shouldn't turn on the television, or read what these clowns are saying. That's not what I mean. What I'm saying, is stop listening to the ideas they are trying to put inside your mind. The mainstream U.S. media simply fills peoples heads with ideas that are far removed from this little concept we call: reality. When you don't understand what's truly happening, it can lead to all sorts of financial problems for you as an individual.

You're going to get a heck of a lot more truth from guys like Karl Denninger, than you ever will by reading the Washington Post.

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Monday, July 6, 2009

Monday Challenge Project Summary: July 6, 2009 (VIDEO)

Previous Challenge Project Balances:

Investing Account Balance: $524.86
Stock / Futures Trading Balance: $1,464.14
Online Savings Balance: $25.06

The original video explanation of the Challenge Project is to be found here.

Some time ago I stated that I may split up Rule No. 2, into weekly segments; or, $25.00 a week. Rule No. 2 states that each month, we can divy up $100.00 as we wish ...

(Video Included. If you're seeing this entry elsewhere and cannot play the video? Click this link to go to the exact blogged vlog entry ...)



Update: Sold off the FAZ in the personal accounts today at $5.23, and in the Challenge Project, around $5.25

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $524.86
Stock / Futures Trading Balance: $1,464.14
Online Savings Balance: $50.06

We'll be back to the Challenge Project, next Monday ...

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Friday, July 3, 2009

Week in Review: The Day of Economic Reckoning Is Still Coming (PODCAST)

"What I say to you, I say to all. Keep on the Watch" - Jesus, the Christ, Mark 13:37

Welcome to the 'Week in Review'.

The job, or employment numbers came out. And they were beyond dismal.

What is interesting to me? Is that the U.S. Media seems to examine the unemployment and jobless numbers? As if they are complete stand alone numbers. As if people being out of work, which is horrendous, is the extent of tragedy of those numbers.

They are not.

Taxes, affect employment numbers.

When unemployment increases? That affects the governments ability to gather taxes. People aren't working. People who aren't working, don't pay a heck of a lot of taxes. The higher the unemployment goes, the less money the government gathers to pay back the massive debt that it has taken on in recent months.

This is an economic law. You cannot raise taxes to increase tax revenues. Especially on business. It cannot happen. It has never worked. Ever.

I discuss this, and the implications of the employment numbers, on what is coming down the road to this economy, in the following podcast. Just press play!

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)



Click here to download this podcast.

This is a chart of the current "DOW Jones" Industrial Average, demonstrating the "Head and Shoulders" pattern:


The above is what is known as a "Head and Shoulders Pattern". In this pattern, the straight line at the bottom is known as the "Neckline". Or, on the DOW Jones, with consistent trading below the 8170 region. When these breaks occur? Then the market usually pulls back up to the neckline, before they continue further down.

Here's a picture of the Bond Curve, as it existed a few weeks ago:


Here's a picture of the Bond Curve, as it exists now:


It is ever so slightening, right before what is seasonally a huge bond rally. Cheaper rates can't delay what's coming. But it might possibly 'delay' it.

Update: You know, it's funny. I had those comments within the podcast on Saturday regarding the Chinese. And what comes out today in the news? This. Please, remember that in the system that we live in? Business is an adversarial game.

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

Wednesday, July 1, 2009

Airelon's Investing and Trading Thoughts: July 2009 (Chop, Chop, Chop) (VIDEO)

Challenge Project Accounts:

Investing Account Balance: $520.81
Stock / Futures Trading Balance: $1,464.14
Online Savings Balance: $25.06

Here it is. My "outlook" vlog entry for the month of July

Near the beginning of every month, I have an "outlook" entry in which I discuss what I have my eye on for the upcoming month. We're waiting for the moves. But when you're waiting for a move? You have a lot of chop. While you're waiting for the down move, we seem to be just chopping up ...

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click this link to view the entry ...)




Some time ago I said you should be ready for the buying opportunity of a lifetime. When will you know it's time? Well, that's the trick isn't it?

At the moment, the Treasury is trying to hide many of their toxic assets with what I call a 'fake' market. You can't 'fake' a market. When they realize they can't create a 'fake' market, and the banks truly start shedding those OTC derivatives? That's one way to know that the event is approaching.

Another, would be huge policy shifts. Such as the Fed reversing all previous models and policies when reality stares at them in the face. When the bailouts stop. When your CNBC clowns realize that there is no recovery, there never was any recovery. When people everywhere, will do anything to get away from the stock market. When you see them accepting huge tax losses, and completely liquidating their 401k's.

Then, wait. Wait, and watch all of the assets be puked up on the street for next to nothing. That's when I'll be buying.

Edit Update: With due credit to Karl Denninger for catching the overnight lending action at the Fed? I'm not going to be shorting any metals (the metals, in this environment = fear), and I may be picking up some puts on equities.

Could be a lot of fear getting ready to hit the market.

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Challenge Project Accounts:

Investing Account Balance: $520.81
Stock / Futures Trading Balance: $1,464.14
Online Savings Balance: $25.06

NOTE: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

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