Wednesday, September 24, 2008

Frankly Barney, it is your fault....

Looks like everyone is taking a wait and see attitude on the bailout. Paulson and the Fed want it right now, the dems want to attach pork and run for cover as to who really allowed this mess to happen. My small brain says they all are guilty- The Clinton administration and a willing Congress (both Republican and Democrat) wanted to buy votes by giving away mortgages to people that had no business owning a home. The Bush administration made some feeble, half-hearted attempts to sound the warning bell. McCain did have a pretty long track record pointing out that this was a house of cards.

It's hard when you live and die by your reelection campaign funds to actually do the right thing. When Frankling Raines comes calling throwing money at your campaign coffers to leave things as they are, it is hard to see reality through the $$'s. The mortgage companies didn't like all the risk so they ginned up some fake collateralized securities that Wall Street then leveraged to the max.
Still no one really looked to hard at how these crappy pieces of paper had permeated the world economy.

So now instead of a $200B bailout of all these bad mortgages, we have a bailout of highly leveraged investment banks and one huge insurance company that will cost probably $2T when its all done. I say let the markets do their job and not have 'Atlas Shrugged'-like government intervention into banks telling them who they must lend to regardless of their creditworthiness.

Tuesday, September 23, 2008

The Art of Being Lazy

One nice thing about being a lazy trader is that time is always on our side. The recent unrest in the financial sector and the machinations of the Washington politicos have sidelined me in cash for the bulk of my portfolio. I did buy some Oct 135 puts on AAPL about 2 weeks ago just because the chart was in a nice even downward slide, but it was more a gut play than anything specific that I saw in the chart.

I took the weekend off, went to my regular job and decided not to start thinking about this until today. Starting today and for the next couple of posts I will lay out the framework for my philosophy on being a lazy trader, show my rules and portfolio construction. Then start working at a very lazy pace to achieve financial independence.

This is real world play by play of an average guy interested in the markets with a wife, 4 kids, dog and a job. What we will try to accomplish is market beating returns without spending more than an hour or two a week handling the portfolio.

Tuesday, September 16, 2008

Lazy Trader Portfolio - Construction Begins

When starting on a journey the first stepis always the one that carries the most trepidation. Left foot forward... here we go...

My initial goal in writing this blog is to force myself to write down my goals and methods (and results). Put them up in a public forum and then allow anyone who comes along to comment and add the communal acerbic wit as it applies to my simple plans.

As we move along I will outline my trading stategies as it pertains to 3 portfolios - trading portfolio, 401k portfolio, and my lazy trader portfolio.

The Chickens Come Home to Roost

Good Evening. Quite a day to start the everyman's guide to being a lazy trader. I have been thinking about a blog for some time and always made the excuse that there was no time. For years, I have been an active market trader while keeping a real job, helping my wife raise 4 children (an ongoing enterprise) and trying to put all I learn into laser beam like focus to knock my personal returns out of the park.

What has all this brought me? A brain full of a thousand trading ideas, a voracious appetite for every new trading book that comes along (good, bad and UGLY) and some fairly decent trading years that involved a lot of work. In hindsight, too much much work and not enough living. About 2 years ago I made a commitment to rethink my methods, retool my objectives and start over with a new focus on earning a decent return with the least amount of work. I want to be engaged in the markets but not have my life revolve completely around the daily machinations of Wall Street and CNBC.

I started this blog and the accompanying website to chronicle my journey to find the balanced life while still maintaining my closet geekiness when it come to charts, options, and the never ending quest for the better system. Please join me and feel free to comment, cajole and sometimes curse at the foibles of an everyday guy that wants to soar with eagles (trading-wise) and still coach my kids basketball.

The September Meltdown
Today was the end of the world if you have been living in a mortgage back derivatives la-la land for the past few years and actually believed that it would go on forever. The failure of IndyMac back in July was really the start of the much larger mortgage backed securities debacle that we witnessed today. The Lehman bankruptcy and the BofA buyout of Merrill only forebode the next failure, AIG. Mr. Greenberg has let his traders run fast and loose in Connecticut and those chickens will come home to roost tomorrow. Whether or not Washington will step in on and bailout AIG will not undo the damage that the mortgage crisis has wreaked on the credit markets.

The weak dollar and no fed intervention to prop it up will slow down credit for months, if not years. So what is a lazy trader to do? Look for strength among the rubble. Longs Drug Stores (LDG, 75.75), Ralcorp Holdings (RAH, 65.28) both are trading at or near their highs, have great earnings growth rates and very decent liquidity. Longs received an offer from Walgreens but many think it is too low and a bidding war may ensue. Those two aside, get your coffee brewing early as we watch how Wall Street, the Fed, and the sharp tools in Congress try to bail (literally) their collective behinds out of this mess at 9:30 EDT when the market opens.

As we march along the lazy trader path together in the coming days and months, you will discover I love my charts, eagerly race to the front door in the morning for my copy of IBD, and will admit to all sorts of trading failures and bad habits in the past and going forward. I invite you to post your comments and suggestions and I will respond in kind as time permits.