Riding The Gravy Train: November 2008

Riding The Gravy Train

Beating the market is fun and profitable. This is how we do it.

Tuesday, November 18, 2008

selling BUD +11% in 6 weeks / +100% on puts, buying BTU

6 weeks ago we bought BUD shares and sold naked puts in addition.

Today we realize 11% gains on the stock in 6 weeks and 100% gains on the puts, as the takeover at $70 per share by InBev is completed.


We buy BTU, Peabody Engy Corp., last at $24.51

Yes we know President Obama plans to promote & fund "green" energy, yes we know that competing fuels natural gas and oil are getting cheaper daily, and yes we know that many are now calling for the markets to slide further.

We expect the markets to rise for the rest of the week, at which time we'll either take quick profits on the stock if we're so lucky to have substantial profits or we'll lower our cost basis by selling covered calls against the equity position. If the stock drops, we'll still sell the covered calls possibly as soon as Monday.



We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or mentioning them in this blog. If we hold existing positions we divulge the fact, otherwise we generally buy and sell as diarized here. This blog itself is merely a diarizing of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated :
Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we, nor have we ever sent anything other than update notices for this blog to our mailing list. We only send update notifications when a trade idea is diarized, not if an update only contains general market commentary.

Saturday, November 15, 2008

Credit where due.

Who says economics isn't fun? Check some of the stock quotes on these older clips for a great laugh.

Kudos to you Mr. Schiff, for speaking the truth while the clueless discredit themselves and try to interrupt and silence you.










Thanks to readers who send us such good humor.

Wednesday, November 12, 2008

covering JAS +24% in 1 month, buying NOV and selling covered calls against it.

We've been enjoying some vacation time, and today we are in a hurry and hope readers will forgive the terse tone.


- Our overall outlook remains unchanged. Deflation and markets that can, and indeed seem like they will, go much lower.


- The bailout scams continue worldwide, and continue to be exposed as the malfeasant blundering & theft they truly are. Much better covereage on these elsewhere, for those who care to know how blatantly and irresponsibly their money is being wasted and how frivolously their children are being put into debt. Read our recent posts for more on the above.


- The tragic comedy continues with many arguing that General Motors be bailed out, and recently many "top analysts" rating GM a sell. Finally. We reiterate our commentary on GM and such analysts which we originally posted in late June of this year :

We note with amusement that finally analysts at the big firms are giving GM a sell rating.

On January 20 of this year we shorted GM with the simple analysis that "The reasons for shorting General Motors to us seem self-evident, so we short GM at $27.46

American Axle & Manufacturing Holdings Inc. supplies the automakers. We short AXL at $21.65
"

GM closed today at $11.43 (we covered the short per this blog on March 07 for an excellent 20% gain in just 5 weeks, writing "We remain GM and general market bears)"

We'd personally been shorters of GM for years, and remain so with personal holdings outside of the trades we diarize herein. We mention this because as seen during the last market crash, earlier this decade, it was very rare to see any "sell" ratings on major stocks and those "sell" ratings didn't emerge until far too late, as is the case now with this "sell" rating on GM.

It is nothing short of comical that the company had not been rated a "strong sell" a long time ago. We are reluctant to call some analysts stupid or irresponsible, so we perhaps suggest they're merely self-serving. It'd be interesting to see what positions they held while talking up the stock, and what they hold now. Enough said, other than "good riddance" to those deserving of termination among the tens of thousands of firings withing the financial sector.

Our blog is read by some of those who remain employed at large investment banks, and if they're in hiring positions we suggest they'd do much better to hire us and thus their holdings and public image would fare far better.

Expect more big-brokerage "sell" ratings on obviously doomed companies far too late as the bear market nears its bottom, at much lower levels we believe. For now, we still see "buy" ratings such as this one on AXL issued recently by Citibank.

We shorted AXL, as noted above, on January 30th covering 4 months later for a 28% gain. At the time we wote that "We expect [AXL] to be a great deal lower in coming months."

Here is the AXL chart.

Here is the Citibank chart.

No comment, just an observation.



- We cover our JAS shorts for a gain of 24% in only 1 month. We expect it to go lower, and we expect to re-short JAS should it rally, but for now we wish to pocket the profit.

- We purchase shares of National Oilwell Varco, NOV which closed today at $24.75 and sell against these shares covered calls expiring in December at the $25 strike, last bid at $3.50

By doing so we pocket the call premium immediately and we thereby reduce our market risk by effectively lowering the price paid for the shares to $21.25 (price of shares $24.75 minus calls premium $3.50).

If the shares are called away we make a 15% in 5 weeks, and if not then we keep selling calls against the shares to continue lowering our effective price.



We receive no remuneration or incentive directly or indirectly in any way, shape, or form for buying or selling the stocks we do, or mentioning them in this blog. If we hold existing positions we divulge the fact, otherwise we generally buy and sell as diarized here. This blog itself is merely a diarizing of our thoughts and trades and is in no way whatsoever to be considered investment advice of any kind. Always without fail consult a competent, experienced, and honest broker or investment advisor before making any investment or speculative decisions.

To be notified when this blog is updated :
Please e-mail christianguinness@hotmail.com with "Subscribe to blog" in the subject line or click here to do so automatically if your computer is configured accordingly. We have never shared our mailing list with anyone, nor will we, nor have we ever sent anything other than update notices for this blog to our mailing list. We only send update notifications when a trade idea is diarized, not if an update only contains general market commentary.