Tuesday, September 16, 2008

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 www.lazytraderdave.com 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.

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