Riding The Gravy Train: March 2009

Riding The Gravy Train

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

Tuesday, March 31, 2009

long ZSL, closing VZ covered call position

So many commentators continue to espouse that severe inflation is logically a given, however with increasing job losses, decreasing average earnings, and falling prices in most goods and housing, we see only the present reality of deflation and no indications of any near-term inflation.

We also notice that gold has sold-off rather than rallied recently, and if there's no rally on extremely bullish news we conclude the path of least resistance is downwards.

Thus today we go long ZSL, the "ultrashort" silver ETF, last at $11.65 With this holding, we realize double the inverse move in silver. We are among the very few, if not the only ones, who believe silver will go much lower, perhaps under $10, thus with a double-inverse position via holding ZSL the potential gain is very compelling. Should this not move in our favor, we'll consider taking a loss if ZSL begins closing under $10.


Verizon, VZ we purchased in July 2008 at $35.43 and sold calls against this position in December for $1.53 Those calls, April $40, are effectively worthless currently, last offered at $0.03 thus we'll buy the calls back at some point in the near future to close that obligation and secure the reduction in our effective cost for the original shares. Our effective cost will then be $33.93

The stock last traded at $30.22 and has proven resilient over the time we've owned it, however it remains in a down-trend begun in Ocotber 2007. We hope for better luck soon with this position.




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. Please note that we only send update notifications when a trade idea is diarized, not if a blog entry only contains general commentary.

Friday, March 20, 2009

BTU covered calls action update

With the sad flailing of Bernanke & co. this week we enjoyed a rally.

Our BTU holding rose as much as 42% from its lows on March 9 to its highs yesterday, however it seems extremely unlikely it'll make it past the $30 mark.

We currently are obligated by our outstanding March $30 covered calls sold against this long position. These were last offered at $0.15 and we shall buy them back thus making nearly the full 100% possible on this hedge.

We prefer not to let these calls simply expire this weekend primarily because we expect the markets to drop Friday as sobriety and profit-taking factor in the general markets, and if so this could be the start of a material correction of the recent rally, thus we hope it'll prove advantageous to open a fresh covered call position at the current high prices as well as ensuring we go into the weekend with an effective hedge.

We'll sell the April $30 calls last bid at $1.65

Of course actual prices may vary somewhat once markets open, but as the March strike goes up or down of course the April strike will move almost equally so the net effect will be the same - we'll effectively reduce our cost for these shares to $20.46 and if they're called away we'll profit 47% on the position.

If the shares are not called away, we'll gladly continue to sell covered calls against the holding to reduce the cost further.

Additional details of this position will be found in these postings :

selling BTU and VZ covered calls, shorting GCI

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



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.

Wednesday, March 18, 2009

selling MSFT +11% in 7 days, shorting AAPL

Selling MSFT, +11% in 7 days

Microsoft seems a solid company overall, but the stock has shown relative weakness during the past few days.

Risking such a quick & easy profit on the long side when general markets are up an incredible 14% in slightly over a week is not our style, so we now book the profit on our recent MSFT long entry.


Shorting AAPL

Apple Inc. stock has done even better than the markets the past few days, rising 20% since March 7 and closing last at $99.50

Should we short such relative strength? On average, no. Should we admire Apple's innovation? Certainly. Should we believe companies that essentially sell discretionary consumer trinkets will do well in the present and coming economic environment? Not at all, nor are we bullish the tech sector in general.

By our ranking, Apple stock is just now moving into somewhat overbought conditions and into an area of significant resistance. A better short entry would be in the $105-$107 range, but rather than wait we enter presently.



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.

Monday, March 09, 2009

buying MSFT




No guts, no glory? The markets appear to be putting in a bottom. Not "the" bottom, but at least "a" bottom of some duration we believe. Thus Monday morning we'll buy Microsoft, MSFT at the open.


January 29 2009 - "The markets could go either way, but appear to us to wish to go downwards."

Feburary was the worst month in the markets since 1933.


February 23 2009 - "We believe the banks are in much worse shape than is claimed, and that this will be painfully evident to everyone soon. We believe any rally could be very short-lived and met with equally quick selling.

We are not comfortable holding any unhedged long positions overnight, and especially not comfortable having any signficant long speculative holdings merely hoping for a protracted market rally. We sleep well with effective shorts in place, believing the markets will be much lower within months if not imminently
."

Since that February 23rd posting the Dow Jones Industrial Average dropped a whopping 10%, and Citibank shares are 57% lower, Bank of America 26% lower, Wells Fargo 26% lower, US Bancorp 22% lower, etc.







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.