Hey molecool,

Why post so much on Tim Gay's Slope of Slip!He's obviously against freedom of speech.Imho you would do better concentrating on your own website.I've been banned, I'm bashin and I'm pissed, becuz of his so-called allegiance to a better country.The difference, he could care less, and I do.He's a moron with a third grader attitude.Look at me, 300K on a short position!

You know what, just fuckin ban me right now!I'm tired of the crap put out by the left wing! If you thought bush was bad, which I do, just wait for Osama Bin Biden.hey Tim, FU!That's for Peach as well.

He banned you? Jeeezz - so much bad blood going on lately on those blogs. Not sure what happened over there, but tensions seem to be running high lately.

Listen, I personally keep my political convictions out of ES (mostly). Sometimes my blood comes to a boil and I make a comment here and there, but generally I don't want to turn ES into a political blog. The reason for that is my own cynical mind set when it comes to politics in general. Winston Churchill once said:

"The United States invariably does the right thing, after having exhausted every other alternative."

So, after reading Tim's blog last Thur/Fri, I sat down with Berk and discussed the entire situation for quite a while. The choice to make was to stay mostly in cash, go long in anticipation of a bailout, or go short in anticipation of a crash. In the end we decided to stay in cash with a few long positions open to participate from a possible bonce on Monday. I know that Tim expects the reverse to happen actually (market down on bailout and up on a delay), which I personally disagree with. I think the market WANTS a rally and will get a short lived one, but I could be wrong of course. We are all guessing the psychology of market participants at this point, which appears to be erratic, and which is why we decided to stay in cash.

However, according to Winston's sentiment over 60 years ago, one major point we both agreed on was there was very little chance that Congress would vote in the interest of a public which was against this bailout at a ratio of between 100:1 to even 300:1. Recent history in Washington shows that the fat cats ALWAYS win, with support of BOTH political parties - I despise both of them equally much frankly. I wish Ron Paul would be brought into the discussion this weekend, but for obvious reasons people like him are being excluded.

Thus, we both decided to grab a few long positions and to cash them out after a bounce. The LAST thing we wanted to do was to go ALL OUT and load up on puts. The probabilities were simply not in the favor of doing that. As soon as we get a bounce we of course will both start loading up on puts in a massive way, as the inevitable cannot be stemmed, no matter what action will be taken. Even if we follow Denninger's proposal, which makes a lot of sense, this market will STILL crash, just slower.

Which brings me back to why I keep politics out of this blog. The United States will find itself in a major depression over the coming decade, and we are just at the beginning. This is the LAST chance for small non-institutional traders to establish themselves. If you can't get in now and cash in on this downturn then you won't be able to once our currency switches into hyperinflation. As option traders we have the unique ability to leverage our experience and benefit from market turmoil. The moral aspects of that can be debated at length, but I do believe in free markets for one, and I also believe that 'betting on a stock to go down does not make it so.' After all, it's not my fault that corrupt financial institutions paired with zero oversight have been abusing the system for over a decade. As a matter of fact, I see it as an opportunity to recapture some of the income potential and buying power that has been eroded systematically and will continue so in the years to come.

So, my laser sharp focus here is on pointing the way, reducing the noise, and offering the information necessary for Americans of all stripes to protect their financial assets and counteract the inflationary action of our own government. Neither political parties will come to our rescue as the system is deeply corrupt and dominated by corporate lobbyists. So, we are on our own, just as our grandparents were in the 1930s, and this time there is no remaining industrial base to help us back on our feet. All I care about is to secure the financial future of myself and my loved ones. The elections in November will not change a thing in my life, and although I do have a preference for a victor politically, I realize that neither candidate will be able to 'save us'. This country needs to completely rebuild itself from scratch, and this will take decades.

The coming weeks and months however represent a unique opportunity for traders, one that most of us will only face once in our lifetime. I feel it to be my duty to devote myself to leveraging this opportunity and not to be distracted by noise of the financial or political kind. All that matters are the trades I take, nothing else should be relevant here.

So, in closing - I do respect Tim Knight deeply, and will not take sides. He is a bear like us, but he also has financial means that the rest of us have not - thus he can afford to trade differently as he has a greater tolerance for risk. We respect his generosity in exposing his insights and trades to the public and we will continue to support him and his cause. If you are interested in making money and want to make contributions that help us and our members to do so, you will always be welcome here. I greatly appreciate your insights and I hope you will continue to come back here.

My game plan.Open down Monday AM, go long NDX.Bailout gets approved and voted on Monday after close.Gap up Tuesday, and in the immortal words of Cramer, SELL, SELL, SELL!!!

From RGE Monitor.


The Treasury plan (even in its current version agreed with Congress) is very poorly conceived and does not contain many of the key elements of a sound and efficient and fair rescue plan. Like in my 10 step HOME plan many other economists and commentators (Charles Calomiris, Raghu Rajan, Kotlikoff and Mehrling, Luigi Zingales, Martin Wolf, Barry Ritholtz, Chris Whalen and twenty others whose views have been featured this week in the RGE Monitor group blogs) have presented ideas that would have minimized the cost to the US taxpayer of a resolution of this financial crisis. It is a disgrace that no professional economist was consulted by Congress or invited to present his/her views at the Congressional hearings on the Treasury rescue plan.

Specifically, the Treasury plan does not formally provide senior preferred shares for the government in exchange for the government purchase of the toxic/illiquid assets of the financial institutions; so this rescue plan is a huge and massive bailout of the shareholders and the unsecured creditors of the firms; with $700 billion of taxpayer money the pockets of reckless bankers and investors have been made fatter under the fake argument that bailing out Wall Street was necessary to rescue Main Street from a severe recession. Instead, the restoration of the financial health of distressed financial firms could have been achieved with a cheaper and better use of public money.

Moreover, the plan does not address the need to recapitalize badly undercapitalized financial institutions: this could have been achieved via public injections of preferred shares into these firms; needed matching injections of Tier 1 capital by current shareholders to make sure that such shareholders take first tier loss in the presence of public recapitalization; suspension of dividends payments; conversion of some of the unsecured debt into equity (a debt for equity swap).

The plan also does not explicitly include an HOLC-style program to reduce across the board the debt burden of the distressed household sector; without such a component the debt overhang of the household sector will continue to depress consumption spending and will exacerbate the current economic recession.

Thus, the Treasury plan is a disgrace: a bailout of reckless bankers, lenders and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer. And the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown.

Take a look at this video posted br rebeltraders on Slope yesterday:

http://www.youtube.com/watch?v=lsC2k9opOP0

Sorry, I think it was already posted.

Yup, watched it this morning on my iPhone. Denninger is an American hero.

Major points of the bailout.

http://www.attheselevels.com/

A comment by poster Amos. Very good analysis and a nice link to a video by Jim Jurback over at MSN money.

http://yelnick.typepad.com/yelnick/2008/09/an-historical-p.html#comments

enjoy

Mole

Did you get any feed back from TOS on your request to have foriegn stocks trading?

Go Viral: STOP THE BAILOUT OR.... DEPRESSION?
http://www.youtube.com/watch?v=lsC2k9opOP0

Well, looks like they have a deal?..... It would be interesting to see what's in it. Not that it matters.

By the way...here's a real addictive site to test how good you are at reading a chart based entirely on history. I find myself coming back to it now and then just to see what I can do.

http://www.inspectd.com/

$215,661 in 19 trades.

http://screencast.com/t/aX5Y1nAr

Wanted to see how quickly I can double it. I had one losing trade and 18 good ones.

And yes, it's addicting - thanks for sharing :-)

Holy shit...I suck. I don't know what my percentage was, but it wasn't 19 good and 1 bad thats for sure. My standing record that I did (unfortunately) in my papermoney account last fall was 23 of 26 day trades were profitable. If only I could do the same with real money.

I couldn't said it better myself. All these 'Networks' nothing but with an agenda: trying to get the suckers in the mkt to fatten IB pockets. Capitalism on the way up, socialism on the way down. Sad.

"Capitalism on the way up, socialism on the way down"

WORD! I read 'Conquer the Crash' way back and it's almost creepy because everything Prechter predicted back then has come to pass. He is not only spot on with his predictions but also offers a time line of events at each stage of the ensuing bear market. For example, page 200:

"In a bear market, bullish investors always come to believe that short sellers are 'driving the market down,' when in fact, the decline is almost entirely due to selling from within their over-invested ranks. Sometimes authorities outlaw short selling. In doing so, they remove the one class of investors that *must* buy. Every short sale (except when stocks go to zero) must be *covered*, i.e., the stock or derivative contract must be purchased to close the trade. A ban on short selling creates a market with no latent buying power at all, making it even less liquid than it was. Then it can dribble down day after day, unhindered by the buying of nervous shorts. Like all other bans on free exchange, a ban on short selling hurts those whom it is designed to help.

BTW, this was published in 2002 ;-)

I can't believe I haven't read that book yet. Mole, do you subscribe to his site? I have checked his site many times, but I'm not sure how it would fit in my trading, on a daily basis that is.

By the way I'm sure you have heard what's going on with Fortis overseas. I think the inevitable is upon us. But I had to go flat over the weekend. About you?

About us? We posted several of our trades in our intra-day updates. Come by more often ;-)

We grabbed a few long positions - very small exposure - 95% cash. I'm waiting to load up massively on the bounce (if we even get one - I hope we do, I don't like to buy puts while the VIX is at 35).

I didn't have the balls to buy calls or puts to hold over the weekend. There's just no telling. If there is a bounce because of any resolution, I think it will be very short-lived.

"If there is a bounce because of any resolution, I think it will be very short-lived."

Agreed - if my calls are worth anything on Monday I'll dump them shortly after amateur hour.

Not sure is about having balls.

I think right now the risk is pretty outsize my comfort zone, given my strategies size of account and trading style. I try to stay disciplined in all type of mkts. So what if we miss few handles in SP. Lot more coming.

Every time risk becomes somewhat unmanageable at least for me I just stay away and take the time to plan my next move.

I was 100% cash until GM broke $10, which was my trigger to sell puts, which I did when it was at about $9.75 -- but for me, those kinds of trades are easier to manage the buying puts or calls.  But that's just me.  Those who have more guts and feel more comfortable with $$$ out there have plenty of ways to manage risk on long puts or calls.

hey mole, I just came buy to give everyone disqus points.
I heard on local news, $25 billion is going to US auto makers.
Should I have bought GM on Fri?

Are you kidding me? They are actually going to hand funny money to auto makers as well?

Sorry, I have to go outside and kick a tree...

another reason i sold puts on GM

Wow...that quote was incredible! And true. If you were to flip everything around, banning short selling in a bear market is just as stupid as banning long buying in a bull market. Well, maybe that's not a perfect parallel, but you get my point.

Actually, it is exactly the right point. It just boggles the mind the other way around because people are used to only thinking on the long side. Limiting short selling is as hare brained as banning long buying when a market super rallies.

I met Rick when I went at the CME. Great guy and great American.

I rarely watch CNBC - the few times I actually to watch it I have it on mute. Only turn on the sound when Santelli is on - the rest of the crew are nothing but vacuous make-up wearing suit donning product pushers.

Love Rick - he's the best! 'Don't like Steve - he sounds egoistic everytime he's on a "debate" with Rick, but this vid showed his cool. [Among their crew who doesn't know much is Michelle... they just need to let her go.]

molecool, if I could have given you more points on the vote, I would have. Never once have I ever heard any of the "experts" add to the subject of discussion with options through any number of means, not the least of which is capitalizing off the selling pressure of any given issue with either the purchase of puts or the selling of calls (or a call spread). I seriously think they have dumbed down every one of their comments to the morons who follow Cramer in lockstep and let their broker at Oppenheimer or whatever handle the lien share of their money. Never once have I heard of say anything intelligent that made me think, "Wow, I had never thought of that but that gives me a whole new perspective." And it is clear that I am not very smart (except that which I glean from this blog and SOH...I am, after all, a believer in the bear. If only SPY would have the common courtesy to go down after I purchase puts, damn it all to hell).