Financial markets and trading

Originally Posted by Kui

Disappear??? Is it about that "thing" we discussed earlier? Good luck to ya and I hope everything comes out well Meesh.

Oh, thanks, my virtual friend :-)
I am back. Twas a success, the surgeon was good and managed to put the solid piece back onto its place. My head have been swelled and sore and now I feel fine. I cannot play my favorite game for a while though.

Kui, I will send you a link in PM about the stuff we talked about.

Yesterdays plunge and the 3 pm drop reminded me a lot of Oct. 19, 1989 crash. Glad to see that the technical issues didn't escalate into something bigger than what we saw at 3p.m. EST on Feb. 27th.

Do you think this drop is just a beginning of a large correction?
Several days ago I thought that the equity markets would start correcting sometime soon. IMO, we need to shave off 10-15% off SP500.

Posted a month and a half ago! D@mn I'm too good.
http://www.milanmania.com/forums/sho...9&postcount=54

Originally Posted by Kui

Sigh... Let me get with market forecasts for 2007. I'm banking on a trend that hasnt failed for about the last 20-25years.............. Perhaps in 2007 due to an over speculated market creating an exuberant environment? Its ripe time to thinning out the herd. My guess of course. I'm looking perhaps in March or sometime August-October.

Not too bad by zero-ing in on it by a couple of days/weeks. Yesterday was the slaughter but today was the bloodfest as the sharks went for a feeding buying up knock-down investments. I kinda feel bad because I knew this would happen and it was just too hard to nail this within closer time frame. Nonetheless, people should have heeded the warning signs months ahead and made the proper safeguards for it. Of course... who would ever know this one would occur.
I'll talk a little bit more about it in another post.

Originally Posted by ukrainian_CA

Yesterdays plunge and the 3 pm drop reminded me a lot of Oct. 19, 1989 crash. Glad to see that the technical issues didn't escalate into something bigger than what we saw at 3p.m. EST on Feb. 27th.

Do you think this drop is just a beginning of a large correction?
Several days ago I thought that the equity markets would start correcting sometime soon. IMO, we need to shave off 10-15% off SP500.

Anyway... back online here. By setting myself up for this, me, my partners, and our clients did not get affected ny this hiccup at all. As I said in the previous post as well as the post made a month and a half ago, I was expecting this to happen and advised all concerned about this. Most heeded but those who I know invest through other means i.e. online brokerages etc, kinda took it in the rear. Perhaps and oppurtunity for me to change there ways.
On a personal level, so many people have been bombarding me with how well I handled in this little panic that occured Tuesday. So you all know... I happen to be on my typical personal day off and was teeing off at hole #3 at my usual golf haunt. LOL! Some other club member behind me was all in a tissy fit of panic wonderig what the heck was going on with his investments. Him not being anyone I do business with got a response by moi... "Excuse me... I'm trying to hit my tee shot here. Quiet PLEASE!". LOL!
Let see here... Monday morning I had a chattie with Debs on instant message. I had to cut our conversation short because I was closing portfolios of mine as well as some clients. She remembers it go ask her. I recall telling her I was having a really busy day as Mondays is my typical busy days. It is so because, and as a coincidence I always play golf at my country club on tuesdays. I dont like to hold many investments out there on days where I do not physically participate in trading. I can already see the red flags there if anyone in enforcement were to look. LOL! Well I got my alibi and it is legit. LOL!
And on now to Wednesday. Another day where I chose not to trade. Why the heck would I do that??!!! Granted it was a good day to buy and buy cheap. Personally I dont do that. Its not in my moral fiber to go and partake in the bloodfest with the sharks. Do I lose out? In some ways... perhaps, but really not at all. Its days like these where I am glad to be in no way part of this madness. Let the dogs and ***s play in the filth I say.
Hopefully no one here got it real bad on Tuesday. Actually at -400 something, it isnt really bad at all. Like I said... thinning out the herd happens occasionaly and is a good thing. We havent seen the bad happen yet Meesh. So to answer your question FINALLY... yes tuesday would've been one of those large corrections. From here, it would be up to the mood of the investor to where this wild horse will go. We already had this huge correction Tuesday. I suspect that the remaining correction will be a slow slip into a bear market. If not, and the bull is still in the mood to buck, watch out for the cowboys out there who will again make sure there is another LARGE CORRECTION, sometime in last quarter. Dont mark me on this but I always keep a steady eye on the first and last qrtrs for these things to happen.

Yep, I can back Kui up, we did indeed chat a bit on Monday and he had to leave due to stuff he was working on. Wait, why am I vouching for this guy? He could be an insider trader for all I know and Feds will be after him!!

Kui, the Stock Market is like someone speaking in Greek to me. Is there cause to be concerned after that huge one-day drop? I ask b/c my Dad's got some stock or somethign in his retirement funds and that last big drop a few years ago hit him hard. Not only that, but my school's retirement thangie is stocks and bonds.

The term "large correction" always puzzled me and made me somewhat suspicious. Can you explain it in real simple terms??

BTW, you do realize, don't you, that it's a miracle I'm even posting in this topic? I don't understand this stuff....

Originally Posted by Debs

Yep, I can back Kui up, we did indeed chat a bit on Monday and he had to leave due to stuff he was working on. Wait, why am I vouching for this guy? He could be an insider trader for all I know and Feds will be after him!!

Trust me toots. I do things by the book... somewhat. LOL! All I'm saying is that I wasnt there for the riot cause I golf on those days(Tuesdays) I wasnt taken to the slaughter house cause I knew something like this would happen sometime this year; when I heard about it on the #3 Hole teebox, it didnt surprise me one bit. Dont forget I was only off by like a couple of days when I predicted March and/or August-Sept that this would happen. Besides this wasnt too bad. There will be days in the future where it gets so bad that the market as a mandate freeze all trading on such and such a day if there is a huge one day loss.

Originally Posted by Debs

Kui, the Stock Market is like someone speaking in Greek to me. Is there cause to be concerned after that huge one-day drop? I ask b/c my Dad's got some stock or somethign in his retirement funds and that last big drop a few years ago hit him hard. Not only that, but my school's retirement thangie is stocks and bonds.

To answer your question first off. No... there is no need to be concerned after this one day correction. Now the folks that need to hear this are the idiots who are trading in a fit of panic. I say so and believe it philosophically because only idiots like sheep would jump on the band wagon in droves leaping over a cliff to their doom. Sheep have been known to do this. The "wolves" didnt even start or engage in the chase. They merely watched from a hillside at the chaos and on Wednesday got a free meal at the bottom of the pit (and profited from it). I'm not one of those wolves, as I said... I played golf. LOL! That's what you and the world saw on tuesday. Keep in mind Debs, this may have been a good thing. Hint...hint... Too many sheep puts a detriment on the livelihood of the whole herd. I actually have a headache today, not because of the turmoil but because my eyes keep rolling back at hearing the nonsense reasons for Tuesday. Here's what I learned over the years. People hate it when I use these silly analogies all the time, but this is the best way I can explain it....

"Many people know how to swim and do so very well. What will get them into dire trouble is not understanding the waters they tread in." - Kui

You can apply this principle to just about anything out there. One may be very learned, but do they no how to teach? Many know how to enjoy food, but can they cook? Many can operate a vehicle, yet do we not see too many who do not know how to drive? Anyone can know how to play cards, throw dice, pull a slot machine lever, yet in no way should they ever run or work within a Casino! Them snots who live in Seattle drink a lot of coffee, yet I know these louts know nothing about growing and harvesting it but they truly believe themselves top be the "coffee experts". You see... too many people partake in things where in truth they're quite oblivious to the environments which they dwell in when partaking in it. A big one that irks me is the stock market, which includes many licensed security brokers who dont know their rear from their elbows. I had been one of those idiots years ago and I learned from it. You can quote me on this one as well! "Many continue to live the life of sheep instead of a shepherd."
For your pop's investment and for your school's/work retirement fund, "be sure not to put all your eggs in one basket". Remember that 'lil back and forth I gave you on IM? Hedge or diversify your money so that a loss in one sector is a gain for you in another. Heavily invested in a bank? Back it up with equity in gold in the case where a bank may fail. It can be as easy as groceries being to high... perhaps a small garden on your property. Them interest rates too high on your credit cards/loans? I say invest in those very institutions (other than borrowing) to reap dividends so that your interest rates are cut down to nil. Electric/heating for your home, gas for your auto to high??? Perhaps reciprocate that expense/loss with an investment/gain return in the energy and utility market Debs. There's one hometown company I have for you and it is doing me very well. PPL Corp (Allentown, PA) is an energy and utility holding company, that engages in the generation, transmission, and distribution of electricity primarily in the northeastern and western portions of the United States. PPL Corporation (NYSE: PPL) on Friday increased its common stock dividend by 11 percent. With this increase, the dividend will have risen 130 percent over the past five years. So you and your dad dont need to know Greek to inderstand what I'm getting at. There's a big difference between you and the idiot. The idiots believe because they know how to swim, they're experts in any environment(water) they tread in.

Originally Posted by Debs

The term "large correction" always puzzled me and made me somewhat suspicious. Can you explain it in real simple terms??

LOL! Let me take my LDS priesthood hat off and now just don the securities hat on. You'll get this large correction when there is an exuberant market. What is an exuberant market??? There are a number of factors. Again with my analogies! $16. for a bottle of Budweiser is quite exuberant isnt it? Well that's what is going on in the market so to say. People unaware of the true environment, being oblivious to the true worth/situation of "stuff". $10 for a Bud is exuberant enough but if it can go up to $16, you'll have and cant blame people engaging in these sort of trades. You can now see that at some time you will get a correction in the market. I always use the term "thinning out the herd". Take a given market for example.... another analogy. I have a bigcat who's a big mover and shaker with buku $$$. This bigcat has buku xxx amount of bud in his fridge that he initially got at $4 now up at $16. He wants more yet $16 is just too much for more. How can he go about getting more? At his initial buy of $4. he can dump half of his initial stock and offer his xxx amount to $8. per bottle/share. What has he done as an indicator? He let all suckers realize that what they have isnt worth $16. Thus... the fall and the confusion/panic of those who bought/held their shares at +$8.00. Should they hold or cash in? Those cashing in cause the prices to fall. Those who are holding are like guys finding it hard to leave the craps table after a huge gain followed by a string of losses. The panic/confusion is due not so much at a loss of initial $$$ but a loss in built up capital. However... the panic can potentially cause a loss of initial overhead. Call it wrong time, wrong place, wrong stuff to get themselves in. Was this simple to understand??? I'm not trying to stupify the reason. It was quite hard to come up and put it in this sort of example. I sure you got the drift now.

Originally Posted by Debs

BTW, you do realize, don't you, that it's a miracle I'm even posting in this topic? I don't understand this stuff....

At least I know you look up all posts and messages Debs. I'm sure you have got a clearer picture now than before.

End note... sorry for all the typos and all redundancies. The theirs/there's/they're, an/and, no/know, new/knew, is/are, aint/isnt/arent, by/buy, who's/whose, and so forth.

Well... here we go again. Another day of plunging investment coming from Asia. I wonder how it will reflect at the NYSE (Wall Street) this morning in about 2 hrs time? I guess I should stay away and not trade at all. We shall see huh?

A good rally this morning! Mondays are always the best day to trade IMO. What's even better is on Tuesday, I go golfing. Historically Tuesdays have been more bear market days than bull market days.

Originally Posted by Kui

A good rally this morning! Mondays are always the best day to trade IMO. What's even better is on Tuesday, I go golfing. Historically Tuesdays have been more bear market days than bull market days.

I plan to keep selling just-out-of-the-money (Jan 08 and other long-term kinds) calls against my future lrcx long positions (employee stock purchase and stock unit grants). Those positions will also be trimmed, sold the same day at 35-50% gains, by roughly 20% to keep only the number of shares divisible by 100.
This way I have about 20% down-side protection and some 20-25% (annual rate) upside. I cannot figure out if I need more down-side protection or higher Rate-of-Return on these, so I picked them the same (ca.20%). I am not too greedy with 20%, I am getting more risk-averse I guess. Too soon to become risk-averse at 37, but I cannot help it. What do you think, guys?
P.S. I am also holding a large-number-of-share option (well in the money) grant.

P.S.S. If I sell futher out-of-money calls, the RoR will be higher (30-50%) but the downside protection takes a dive to 10% and below. I feel that risk/reward is too high for this stock. Debating writing (selling) in-the-money
calls with even higher protection and forfeiting the tax benefit of12 month holding rule (to get to long-term capital gain) .

Originally Posted by ukrainian_CA

I plan to keep selling just-out-of-the-money (Jan 08 and other long-term kinds) calls against my future lrcx long positions (employee stock purchase and stock unit grants). Those positions will also be trimmed, sold the same day at 35-50% gains, by roughly 20% to keep only the number of shares divisible by 100.
This way I have about 20% down-side protection and some 20-25% (annual rate) upside. I cannot figure out if I need more down-side protection or higher Rate-of-Return on these, so I picked them the same (ca.20%). I am not too greedy with 20%, I am getting more risk-averse I guess. Too soon to become risk-averse at 37, but I cannot help it. What do you think, guys?
P.S. I am also holding a large-number-of-share option (well in the money) grant.

P.S.S. If I sell futher out-of-money calls, the RoR will be higher (30-50%) but the downside protection takes a dive to 10% and below. I feel that risk/reward is too high for this stock. Debating writing (selling) in-the-money
calls with even higher protection and forfeiting the tax benefit of12 month holding rule (to get to long-term capital gain) .

Sorry for neglecting your post here Meesh. Besides this, try to invest also against your company's costs and liabilities. I'm for sure that Lam is doing this themselves. While you're at it, also invest against your personal costs and liabilities. With gas being the highest in California and the Energy sector making huge profit, it would be wise to get some return on that with an energy portfolio. The greater your personal wealth gets, it isnt bad to also getting in the govt bonds, especially when there is a high chance of a bear market or a major one day drop.

Originally Posted by Kui

Sorry for neglecting your post here Meesh. Besides this, try to invest also against your company's costs and liabilities. I'm for sure that Lam is doing this themselves. While you're at it, also invest against your personal costs and liabilities. With gas being the highest in California and the Energy sector making huge profit, it would be wise to get some return on that with an energy portfolio. The greater your personal wealth gets, it isnt bad to also getting in the govt bonds, especially when there is a high chance of a bear market or a major one day drop.

I have not noticed being ignored - too busy to notice anything here.
Well, as soon as I reduced my risks and got decent protection we started to correct as I thought it would.
My plans are generating enough protection to the future cash-flows for some remodelling for the future rental in Russia.
As you may know Moscow elite real estate has been blazing hot for as long as oil and gas prices remained high and as long as the dollar weakens.
The trend on the dollar seemed to have no end due to the US trade and budget inbalances. So there is no point for me to go long on energy, since I am already long gas and oil via RE in the middle of gas-oil center (there is plenty of petrodollars flowing in and noone wants to hold either the US greenback or the deflating rouble).

Goverment Bonds ... emmm, I decided that I am too young to invest in low-risk stuff. When I need low-risk investments - I pay down my RE (rental and primary in the US) debts. While I understand the difference between saving and investing in "fixed-income" things. After April 17th, the payment day, I tried to explain my spouse the difference between saving and earning.
Saving 1 buck is close to making 2 bucks before taxes in here. Still, no clear picture in her mind. She thinks like Pele - "We will score (earn) twice as many goals (dough) as we concede (spend)". For gods sake, could you save to the future of your kids and their education?

I cant determine if being out of the market game was a good thig or bad thing.
Since on mission I've not watched or care to watch what was going on in the markets. I knew this was going to happen as it always does in this 2 term election period.
I'll just have to wait another 8 years for another oppurtunity to gain on a panic market.

Originally Posted by Kui

I cant determine if being out of the market game was a good thig or bad thing.
Since on mission I've not watched or care to watch what was going on in the markets. I knew this was going to happen as it always does in this 2 term election period.
I'll just have to wait another 8 years for another oppurtunity to gain on a panic market.

That is so true, this was bond to happen sooner or later!!

My estimate... DOW Industrials will plummet to mid 4000 pts. I hope those with portfolios can hold on to it til that time. Then double up and match your existing investments with more capital.
Wait for the DOW to hit the 4000 mark (important!) than play in which ever market some of you invest in be it FTSE, DAX, Hang Sheng, Tokyo etc etc.

I pay no attention to Dow index. S&P500 is a good representation.
Not sure where the bottom will be, there will be many locals ones for several years. The nearest one is around 700 for SP500, I like "golden ratio", 61% below
the top looks like a golden ratio to me. Japan's index in 89-early 90th had a similar drop.
BTW, do you know that the golden ratio is also a ration of two large subsequent Fibonacci numbers (the ones that start as 1,1,2,3,5,8,13,21)
it is x=(sqrt(5)+1)/2, which can be derived from 1/(x-1)=x how funny is that,
even Da Vincci knew this one in his drawings.

One another note, what a bloody Oct... and August I have had, Volatility was higher that the implied one on the options...
Over all, by the year's end I gotta have a good number, i hope the thing behaves well in December and no more surprises to any sides
, which is not unheard of.
I have never seen anything so volatile as LRCX in October:
from under 18 to 25 to 15 and back to 21 all within 5 weeks.

How are you doing, Kui? How is the family?
I hope all is well.
My life is busy and fun, kids continue to bring sunshine into our house.