Don't be a greedy pig

Don't be a greedy pig.  Don't be a greedy pig.  Don't be a greedy pig.  Don't be...When I was a kid, one of my punishments for bad behavior was to write something over and over again.  Alot of it has stuck with me.  "Don't be a greedy pig" is something I need to write over and over again.
Take your gains, don't be greedy. 
Now, in my defense, oil surged today for ridiculous and ignorant reasons.  The concern is that the riots in Egypt will close the Suez canal and affect oil transit flows.  This is unlikely to happen because 1) this is not an Al-Qaeda/Muslim Brotherhood insurgency; its a popular uprising against a dictator that the population feels does not represent their best interests and/or cannot provide for a better future, i.e., there is no reason that - even if they toppled the current government - the Suez canal operations would be affected whatsoever; 2) even if the Suez canal was closed completely, only about 1.5% of world oil used per day flows through the Suez, i.e., at most, it would delay some delivery of oil, but with stockpiles at all-time highs, its hard to see how a normal supply/demand price would be affected (i.e., its idiots/HFT that hear "maritime chokepoint" and "Middle East" and are pre-programmed to "buy buy buy").

Trade #3

I think I may have jumped out of the last trade too soon.  I mistook (I hope) a dead-cat-bounce for a reversal.

Short WTI crude oil at ~ $85.90 ---> SCO at $11.60

Exited Trade #2

Closed short WTI crude oil at 87.25 (roughly) ---> SCO @ 11.27
Total gain, including margin - 20%

Selloff was due to a combination of global CB tightening (and fears of) and Saudi Arabia stating they are ready to increase production if prices rise out of control.
I still think there's a real correction coming soon, but with the deluge of liquidity (esp. the end of Fed's Supplementary Financing Program - see Bloomberg or Zerohedge), the path of least resistance is up.  I'm looking to possibly do a short-term long for a small gain, or wait for a tactical short at the next correction.  A real correction, however, is going to take some type of catalyst...take your pick.  Most obvious is the Irish elections now set for February 25, but its not the only danger.  My 401k (LT investments) is in MM.

Trade #2

Maybe I should have held on to my last trade a little longer, lol...anyways, we're looking at at least a correction, possibly a new "story" (e.g., from double-dip, to QE2, to stronger growth, to ?...etc).  I like to use oil as a macro trade because its volatile.

Short WTI crude @ 90.75 using 2x short ETF on margin ---> SCO @ 10.24

Exited Trade #1

Like a frog in a slowly heating pot of water, I got boiled alive.
Sold FAZ @ 8.36.  Including margin, total loss of 15%.  Ouch.  And that probably means that was the top, lol.
I still think the short term will see some volatility, so my eyes are on the lookout.  I just can't see myself going long at this point; there are too many major risk factors.  Right now, my plan is to wait for one of those risk factors to materialize (hopefully not jumping the gun again), then to go short.

What to do?

Portugal managed, thanks to the ECB (China & Japan) to place its 10 yr bonds this morning below  its self-imposed line in the sand, and a few basis points lower than the November auction.  Look at their 3 year placement, however, for the real risk/reward evaluationin Portuguese bonds: 5.4% (vs. 4% in Nov.).  So what to do?  Leverage means that timing is everything.  Spain has a bond auction tomorrow and next week, but earnings season, if its as expected, should see a rise in stocks.  Maybe the ECB has bought itself a little more time here?  Anyways, I think I jumped the gun a little bit here; i.e., I think I got in a bit early.  We'll see.

2011 Trade #1 - Open

This is not investing advice, just a record of my own trades.  Make up your own mind.

Short financial stocks using 3x Inverse ETF, on margin --> FAZ @ 9.24

This trade is based on a few different ideas.  Technicals: the spectacular run-up in stock prices with barely a breather since August, equities are a little overbought, and provided a catalyst, a correction to the 50-day MA seems possible.  The catalyst?  Spain and Portugal have bond auctions this Wednesday the 12th.  Last Wednesday, Portugal placed ?€500? of 6 months at I think over 3.5%...anyways, it was a completely unsustainable number, and it looks like it may spiral.  Euribor is steady/declining (liquidity courtesy of the ECB), but PIGS yields and CDS spreads are widening, as well as 2-year swap spreads (the highest since the Greece crisis last May).  The choice of shorting financial stocks in particular is based on the Massachusetts Supreme Judicial Court ruling yesterday that is likely to cause certain foreclosures (see the Court's opinion - a good read - see below) in title-theory states (about half the states) to be voided.  This is more of a medium-term theme, only because I don't think most people will see the significance of the decision right away.

Key risks:
- Path of least resistance for stocks is up, so without a catalyst, the market will likely grind higher.  For example, if China does buy the large amount of Spanish, etc. bonds that it has suggested it may, that might keep the lid on the crisis for now.  Close attention will be paid, and my eye is on the exit door. 


The case can be found on the Massachusetts Supreme Judicial Court website:

The case: U.S. BANK NATIONAL ASSOCIATION, trustee vs. Antonio IBANEZ (and a consolidated case). For ABFC 2005-OPT 1 Trust, ABFC Asset Backed Certificates, Series 2005-OPT 1. [FN3]).  No. SJC-10694.