Stock Market

Now is the time to seriously reduce your exposure to the stock market. But when the music stops, it will be very difficult and expensive to do so. Don’t be a FOMO idiot.

Decline

I Don’t Think So

I don’t think there is systemic racism.

I don’t believe white people are evil.

I don’t think people younger than 60 should refrain from going back to work.

I don’t think we should suppress the use of fossil fuels and ruin our economy.

I don’t think the Chinese government is benign.

I don’t think Russia is the bogeyman.

I don’t think suppressing “hate speech” is a better or viable substitute for freedom of speech and the 1st Amendment.

I don’t think groupthink is better than individualism.

I don’t think open borders is a good idea.

I don’t think you accept immigrants as citizens without vetting them for criminal behavior, infectious diseases, and terrorism.

I don’t think this last presidential election was honest and above board.

I don’t think over half the country supports this new administration in Washington, but that a sizeable portion of the country sees this recent presidential election as a fraud.

I don’t think your vote matters anywhere near as much as who counts the votes.

I don’t think a majority of conservatives in the American public agrees with the goals propagated by the Left and the universities.

I don’t think Biden’s son’s influence-peddling was anything other than graft.

I don’t think the liberal press is anything other than distorted ideology.

I don’t think you impeach a former president after he leaves office.

I don’t think you impeach a former president because of a popular demonstration protesting a rigged election.

I don’t think all the money printing by the Federal Reserve is going to end well.

I don’t think our fiat currency in dollars has much value anymore.

I don’t think government by massive deficit spending is viable long term.

I don’t think our current economy is anything other than crony capitalism, thanks to the money-printing Federal Reserve as well as bale outs by the government.

I don’t think socialism is a viable economic system or produces any real value.

I don’t think the anti-business Biden administration is going to tackle the dismal unemployment situation and restore the economy.

I don’t think raising the minimum wage across the entire country is going to help create jobs — I think it will do the opposite, as employers reduce staff to compensate, particularly in states with a lower cost of living.

I don’t think the future is going to be bright.

I don’t think life in the US is going to be peaceful in the future.

Decline

Hedging Naked Calls with Stocks

You sell a naked call on a stock trading at 50 for a 45-day April call at strike price 65. The stock price starts to shoot up immediately and half way to April expiration, the stock price is already at 60, and naturally your call price is way under water. So you start to hedge with 25 shares of the stock. You add 50s shares at 62 and then the final 25 shares at 64.50, so now your naked call is covered.

But the stock price continues to move much higher, all the way to 75 a week before expiration. Now the 100 shares are showing a nice profit, but you need them to cover the April 65 call at expiration. But do you?

What if you rolled the April call at 65 all the way to the LEAPS 85 call at break even on the roll. That gives you a new 10 dollar leeway on this new naked call at 85, which you would again hedge by buying the stock, if need be. Although this tactic creates a lot of time exposure, if you do it, it would allow you to sell your 100 shares and take the profit ($1287) on the stock now that the price has sharply risen to 75, and it may be that the new naked call way up at the lofty price at 85 is a bridge too far for the stock to ever reach, despite the 8-month exposure, given its recent sharp rise.

Would you take that bet? You don’t get paid for not taking risk. If you don’t take the bet, you forgo the $1287 profit on the 100 shares, and merely walk away with the premium on the 65 call after the shares are called away — comparatively little to show for your trade, although now you are risk free, which is a positive. But if you do take the bet, you get the $1287, and if the stock fails to reach 85, you get to keep the premium as well — or the same scenario may play out on the 85 naked call.

Covering Naked Calls

Swamp Won

The swamp takes back Washington. Discouraging.

What can one expect? Much higher taxes on the wealthy but also the middle class…and corporations. Many looney-climate change initiatives that damage the economy because they undermine the use of fossil fuels, which underpin all economic activity. Actions that benefit China and undermine the US, particularly economically. More Russia hysteria as the bogeyman. Stupid and naive deals with Iran and a cold shoulder to Israel. Much money for various countries around the world, while the US deficit explodes. Open borders and mass immigration from Latin America. Political mismanagement and lawlessness and the growth of real poverty in American cities. Repression toward all political conservatives, particularly those who aligned themselves with Trump.

In short, the real decline of the United States, as a strong and economically powerful country, into a country that is economically weak and politically teetering on civil war.

There will be a 3-month grace period for the new administration, and then the wheels start to come off when all the stimulus money and free money don’t produce any turnaround in the economy and the dismal employment picture.

As things get worse and worse, the radical left-wingers will blame it all on conservatives as Nazis.

Keystone

Bearish

I’m bearish on the economy because I think this coming Democratic administration is guided by ideology and much of what they believe undermines business development and kills off jobs, so we will get what we got from Obama — a federal government that’s neutral to hostile to business with policies that unintentionally limit or even reduce jobs growth. Exactly what a stalled economy doesn’t need. At some point, this will show up as a sharp decline in the stock market, perhaps even a prolonged recession.

It may well be a good idea to start to invest elsewhere than in the US, as the US, so deeply divided politically and so disrupted economically, may well be a country in serious long-term decline. And add to that that asset prices like the stock market and the housing sector are seriously overvalued.

Biden’s Dumb Stimulus Plan

Keystone

Canceling the pipeline is another jobs-killing measure by our new president. This at a time when the unemployment rate has not recovered, but may be getting worse again. Fairy tale economics from this Democrat. Raising the minimum wage another jobs-killing measure, especially in states with lower cost of living.

These Democrats are ideologues. Reality isn’t an issue for them. They do what their ideology dictates — whatever the consequences.

Biden’s Dumb Stimulus Plan