A Political Thought

As I read the newspapers daily, I am confronted with dread that our country is headed in the wrong direction. Every day its something new: congressional show-trials, divulging CIA interrogation secrets to our enemies, a ballooning spending plan and resultant obscene deficit, a health-care philosophy that will severely limit its effectiveness - yet significantly increase its cost, bailout after bailout, etc etc etc.

It got me thinking back to those heady days before Nov 4, 2008. You know....when the majority of Americans thought Barack Obama was the new Jesus Christ and he was going to save the world. When adoring crowds treated Obama speeches like it was The Beatles at Shea Stadium in 1966.

The Democratic movement - by most accounts - usually represents the young, new, hip generation (think: Bill Clinton on MTV, playing saxaphone on late-night talk shows, banging his subordinates with cigars, etc.). These are the people who generally want "change" and want to do away with the "old way of doing things." We are the "new generation." Etc....

Meanwhile, the Republican movement is generally thought of as the old, out-of-touch, stodgy way of doing things. The media loves to portray Republicans and their ideas as "the old guard" and make fun of their age whenever possible (think John McCain). These old codgers want to return to the glory days of the 1950's, The Greatest Generation folks. yada yada yada. 

I've had a thought. There is an old saying that I think most people can agree with: 

"EXPERIENCE IS THE BEST TEACHER"

While people who side with Democratic ideals generally don't do so with malice or intent to harm others or their country (though ACORN supporters may have a different take), they unfortunately lack a real perspective of how government affects them personally, and their country as a whole. 

The reason Republican supporters tend to be older is because as they've lived and gained experience with the world they live in, they've come to recognize the effect big Government has on their present and on their future - and it scares the hell out of them.

The young Democratic idealists just haven't had much exposure to how big Government can limit their future. This comes with time. Or Education.

P.S. Can anyone please explain to me how divulging our military secrets to the world (and therefore our enemies) will make us safer? 

P.P.S. Does anyone really believe that dragging ex-CIA officials and CEOs before congress in an effort to assign blame for things that have gone wrong is in anyway beneficial to our country? Will it fix our problems? The energy that is wasted on Capitol Hill is MIND BLOWING.

 

My High Cost of Education (What keeps me going)

This is a blog I've been wanting to write for a while, just couldn't muster up enough energy or sustained concentration to make it happen....

I friend of mine recently was faced with a decision of where to get his MBA. His two choices where both great schools with solid MBA programs, however one has SIGNIFICANTLY higher name recognition than the other.

The lesser of the two was offering a full scholarship for it's 2-year graduate program. Sweet deal. The more "prestigious" school offered no financial assistance, but it is an accelerated program that he would complete in under one year. Long story short, he decided in favor of the "prestigious" school. I probably would have made the same decision.

Anyway, the point of this post is that he got me thinking about my college experience and the tuition I paid back then. I attended four years at a State school, and with room and board, my tuition in total was about $10K per year.

However, due to the career path I've chosen, in many ways - I'm still "at school" and still learning. And most importantly, I'm still "paying tuition."

The financial markets are not easily conquered. And most people who attempt to make a career in this field are washed out relatively quickly - one or two years. In the best case scenario, they just couldn't make any money. In the worst case (and sadly, most common case), they lose a significant amount of money.

I've been at this for 11 years now. And no matter how you measure it...I wouldn't consider myself a success. I've HAD success. But it hasn't translated into sustained and consistent profits. There were periods of time where I was making more money then I ever thought I could spend (but of course, I tried). There have been periods where I could do absolutely nothing right and paid for it with significant financial hardship. But most commonly, I have periods where I make two steps forward, then take two steps back, etc etc....

So what keeps me going? There are many reasons which have been sprinkled throughout previous blog posts, but I think most significantly, it is because I need to earn back the Tuition I've paid to make this work.

When I say "tuition".... I'm not paying tuition in the conventional sense. My tuition is measured in Opportunity Cost. A person with my education and talents (and inflated self-worth) could have been reasonably expected to have earned over $1 million in salary and benefits in the 12 years since I graduated college. When I think of that, it is really staggering to me.

So what keeps me going in rough times? Well.... the sense that I need to at least break even on my investment. Is that to say that as soon as I make $1 million, I'm going to walk away? Hell no. But I certainly can't rest until I've at least built my trading account into this size.

The cost of tuition is skyrocketing all around the country. But I've met few people who can realistically say they've paid as much tuition as I. It is my intention to make the investment worth it. I'm on my way....

I've been cheating on my blog with TWITTER

Ok, so part of the reason I haven't been keeping current on my blog is because:

a) nobody seems to read it.

b) I've been lazy

c) I've discovered Twitter.

The immediacy and instant gratification of twitter has captivated me and I've thrown most of my market-related input fit for public consumption on twitter.

The cool thing about twitter is being able to share my trades with other Traders, and receive feedback on my existing positions. Meanwhile, I can keep up with market chatter to see what other Traders have their eyes on. I use an application called TweetDeck to manage all the people I follow (so as to separate my market friends from my regular friends, etc). It's really cool.

If anyone is interested in following my market activity in real time, I post my trades on Twitter within minutes of execution. I also occasionally offer my real-time market analysis (if you fade all my prognostications, you'll probably make a tidy income) :)

My handle on Twitter is: chicagosean. Look me up.

For those of you who would rather take a sharp stick in the eye than read about my market exploits, I also comment about all things Chicago, Sports, Music, Politics, and whatever else I feel like. There's a little something for everybody, I guess.

A Belated Performance and Strategy Update

Well...I did it again. I hit a rough patch, and I shied away from updating my blog. This has happened repeatedly. I really should stop hiding when the shit hits the fan.

Oh well. February and March where ugly and stressful. The market swung WAY down, then swung WAY up - screwing me on both sides. Perfect. At least April expiration finally allowed me to get back on track - earning 13% for the month. That's more like it. 

The experience of the past few months exposed some flaws in my approach; However, April's result gives me confidence that my fixes are a step in the right direction.

As the market appears to have formed a bottom (at least in the short term), leading stocks have begun to break out, showing some promise for the market as a whole. While I continue to seek profits from selling out-of-the-money (OTM) options premium on the S&P, I also am now attempting to catch some upside on the aforementioned market leading stocks.

To achieve this, I've begun purchasing bullish call spreads in selected stocks. My risk is limited to the purchase price of the spread, and I'm limiting the amount of positions I hold so as not to exceed the income I receive on selling OTM SPY call options. In otherwords, to offset the outlay of cash to purchase these bullish call positions on market leading stocks, I'm selling OTM call spreads in the S&P (SPY) as a hedge. I'm attempting to convert my SPY trades into a 10% portfolio gain per month. Meanwhile, trying at worst, to break even on my bullish trades.

Each Month:

If the market tanks hard, the worst thing that should happen is all my bullish positions will expire worthless, but I'll keep the entire premium I received on selling SPY call options - and thus earning a modest profit. 

If the market rips up, my SPY trades will have to be constantly adjusted, reducing the income from this hedge...meanwhile, many of my bullish stock positions should see impressive gains. This time the result would most likely be a nice profit.

If the market goes sideways, I should make around 10% on my portfolio for the month

I've included the italics because, as I've learned over the years, things don't always work out the way you planned.  

All-in-all, this seems like a good proposition. We'll see.