Non-Partisan Patriotic Paradox on the Horizon

The Psychology of the Call (POTC) team congratulates Barack Obama, our 44th President. We watched the historic inauguration and are at a lack for words and feelings to describe the moments. Perhaps a patriotic paradox unfolded to the cheers of billions of people around the world. President Obama faces tremendous financial and geo political challenges, yet his rare intellect should help him better maneuver through the debris; more so than some of his beaten and out of touch competition. The $700B stimulus package was green lighted by Senator McCain and President Obama, yet Governor Sarah Palin opposed it. Facts are facts: how can a fiscally conservative thinker not see the damage caused by the stimulus package? The financial sector has received a huge amount of money that was supposed to alleviate the mortgage, credit, and banking problems, but this hasn’t happened. Does anyone agree this is NOT a liquidity problem but more a breakdown of trust and psychology? The stimulus was passed under a Republican administration and herein lies the paradox of the nightmarish mess we're in... We are proud of President Obama's inauguration speech especially where he included the word "patriotism" and his mention of "not giving in to terror", ironically a George Bush theme. Yet we’re disappointed by his failure to address the future of Wall Street, a Street that seems to be a doomed, dead end, one way road in need of more than an infrastructure face lift. The United States cannot afford to lose private banking and Wall Street. IF President Obama's administration over reaches and over regulates this sector the consequences will be uglier than anything imaginable so far. IF this administration nationalizes the banking industry the end of capitalism will be paved and the end of this great nation will be near. IF President Obama is to become a great president, he must revive positive psychology on Wall Street even though the Street has committed gigantic business mistakes recently. President Obama must not go down the path toward nationalizing banking. A great leader cannot be partisan and condemn the foundation of our capitalistic society (banking); he must embrace it and breathe life into it again. We hope President Obama's administration makes smarter business decisions than the prior party of elephants who exacerbated this paradox of 100+ year old free markets getting bailed out. IF President Obama's administration goes down the partisan road, POTC predicts only 500 U.S. stocks will be traded within 3 years of when these regulations take hold. 500 U.S. stocks would mean approximately 4,500 equities wiped from the exchanges, a sure means to Depression and overnight socialism. POTC hopes President Obama will be non-partisan and open minded toward regulating the banking sector, then we'll all be witness to the rainbow on the horizon. The Psychology of the Call team thanks you for letting us be ourselves again; we refuse to apologize for our views, as we are Americans first. Please come back soon as our 2009 ambitions will bring you a more well-rounded financial portal. The Island Where Forward Thinkers Evolve will survive regardless of what the new administration legislates; we want every reader to take advantage of the drastic changes ahead through ultrashort ETFs mentioned in our Friday piece, as well as being parked in cash more than EVER before. Enjoy the red, white and blue dreams still ahead of us: http://www.youtube.com/watch?v=6YYzIWTE1L4

Friday's Forward-Thinking Strategy

Winterous Greetings to All! Next week's economic calendar is extremely thin. From January 19th through 23rd there is actually only one day with data and that occurs on Thursday! The 44th Presidential Inauguration is Tuesday, January 20th: http://en.wikipedia.org/wiki/Barack_Obama_2009_presidential_inauguration We congratulate President-elect Obama on his against-all-odds victory, yet we are not entirely sold on his change rhetoric until we better understand his policies in regards to regulating the financial sector. As fiscally conservative thinkers, we stand for less government regulation and lower taxes in our still capitalistic society. We've blogged numerous times about the sad fact all five U.S. Investment Banks went down in 2008. With the absence of that leverage from lower Manhattan, our hope for a sustained market recovery of S&P above 1,000 in 2009 is less than 20%. Thursday brings us Housing Starts for the month of December, and Initial Claims for Unemployment for week ending 1/17, both at 8:30AM ET. At 11:00AM ET Crude Inventories for week ending 1/16 will be announced. As forward-thinkers, we recommend our readers to go to a overweight cash or a 15% short position through various ETF funds (SMN, FXP, SRS, EEV). IF you must be long equities here, we remind again of the sell stop limits you should incorporate into your 2009 strategy. Without either mental or electronically triggered stops, you carry the risk of falling in love and that buy & hold behavior may knock you out of the market. Staying in this game means making decisions from at least week to week, so most of our readers will never allow their portfolios to rust and just fade away. The Psychology of the Call team hopes this email reached you in good health & good spirits. Speaking of not allowing your holdings to 'rust', we leave you with this music video relief, compliments of Youtube: http://www.youtube.com/watch?v=mUnbNg6HHjE&feature=related

Fed Forcing the Long End of the Curve Down

"Fed Forcing the Long End of the Curve Down; Consequences of Unemployment Rising Through 9% in '09 Would Nulify this Juggling Act as Good Money Burns; Extreme caution to Equity Longs Until the Market is Free From this kind of Gov't Manipulation" NEW YORK (Dow Jones)--The U.S. Federal Reserve more than doubled its buying of mortgage bonds guaranteed by Fannie Mae (FNM), Freddie Mac (FRE) and Ginnie Mae in the second week of its program to support the housing market. The central bank bought $23.4 billion of the bonds in the week ended Jan. 14, after purchasing $10.213 billion in the previous week, it reported Thursday. It has pledged to buy $500 billion, or more, of these bonds in the first half of the year, with the goal of pushing down mortgage rates. The bulk of the Fed's purchases was of mortgage bonds guaranteed by Freddie Mac. It bought $15.83 billion of its bonds, after buying $6.899 billion last week. The bank bought $5.63 billion of Fannie Mae bonds, following a purchase of $2.864 billion in the previous week. It also bought $1.95 billion of Ginnie Mae bonds. Last week, that figure was $450 million. The Fed's program is one of many it is juggling as it expands its role in the financial markets. Like last week, much of its buying was concentrated in the 30-year 4%, 4.5% and 5% coupons, according to Fed data. "The Fed is the only significant buyer of low coupons right now," said Walt Schmidt of FTN Financial. The current coupon or that closest to par is the mortgage bond with a primary mortgage rate of 4% on its 30-year loans. Typically, lenders add additional charges and fees to this primary rate to come up with the final mortgage rate homeowners pay. There was little reaction to the data on Thursday, Schmidt said. Risk premiums on agency mortgage-bond securities were wider by two to three basis points versus Treasurys. Average risk premiums on the outstanding mortgage bonds are quoted at 200 basis points versus a close of 194 basis points on Wednesday. -By Anusha Shrivastava, Dow Jones Newswires; 201-938-2371; anusha.shrivastava@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=%2B6D38XNvDKAnlWlIhppH1g%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires January 15, 2009 15:56 ET (20:56 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 03 56 PM EST 01-15-09

Fed's Plosser Bewildered, Guessing at '09 Recovery"

NEWARK, Del. (Dow Jones)--The pace and strength of a U.S. economic recovery are hard to predict, Federal Reserve Bank of Philadelphia President Charles Plosser said Wednesday. -- "Every quarter of '09 will not be as bad or as ugly as the fourth quarter of '08," although it's hard to say how quickly the economy will turn around once the bottom is reached, Plosser said during a panel discussion at the University of Delaware. "We're all guessing," he added. -- Plosser, reiterating comments in a speech earlier, said he expects positive growth in the second half, although "it may not be very much." -- "Finding a bottom to the housing crisis is critical to almost everything that happens, in my perspective. I think we're getting close, but a lot of us thought two years ago we were getting close," Plosser said. -- In his earlier speech, Plosser said he doesn't expect to see a turnaround until the second half. He said he expects the last quarter of 2008 to book a relatively sharp decline and said total growth for the current year "is likely to be well below 2%, after negative growth in 2008." -- Plosser said the current recession is likely to be the longest since World War II, although the downturn is unlikely to replicate the sort of job losses seen in the past. -- "I do not expect the unemployment rate to stray into double digits during this recession," even as any sort of moderation on that front is unlikely to arrive soon, he said. -By Dinah Wisenberg Brin, Dow Jones Newswires; 215-656-8285; dinah.brin@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=jDKaIXK4fgMFtVMZvWQvkw%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires January 14, 2009 11:10 ET (16:10 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 11 10 AM EST 01-14-09

Focusing In on '09 while Dealing with the Scars of '08

Welcome back to Psychology of the Call as we provide our first 2009 insights! Allow us to begin with sincere greetings to all subscribers! May the New Year shower greater health, wisdom and wealth upon you, your friends and loved ones. With all due respect to the outgoing Vice President, it’s apparent that Dick Cheney & his team did not add the Psychology of the Call blogspot to their favorites list in 2008. Here's a quote from V.P. Cheney's live interview on Thursday, Jan. 8th: "No one saw Financial Crisis Coming." http://news.yahoo.com/s/ap/20090108/ap_on_go_pr_wh/cheney_interview Our readers were tipped off to the problems in the U.S. banking sector several weeks before Bear Stearns concussed the markets on that bloody St. Patrick's Day of March 17, 2008. You can verify the facts by clicking on the link below. Our post of 28 February, 2008 cited an insider at Goldman Sachs (GS) reporting on trouble brewing on Wall Street, upcoming lay-offs, and the legitimacy of what was left of the subprime market. The financial problems were black and white to us, our sources, and anyone reading in February of 2008. POTC even recommended shorting some investment banks, most notably buying puts on (GS) very early in the downward spiral. http://psychologyofthecall.blogspot.com/2008/02/foundational-crack-revealed-mass.html Here's how POTC called Morgan Stanley, five days ahead of Bear Stearns collapse (Morgan Stanley shares were trading just short of $40 before coming down to single digits a few months later): http://psychologyofthecall.blogspot.com/2008/03/gilligan-and-skipper-too-spotted-on.html Regarding the "foundational crack" in the banking sector, POTC warned three weeks ahead of Bear Stearns demise, "it'll take a lot more than carpenters to fix it." Ironically, although we called for an infrastructure plan several times in '08, we don’t see it as a panacea now like some in the media would have you believe. POTC is NOT calling a bottom in equity prices or a top in bonds, FAR FROM IT. The massive infrastructure plan announced by President-elect Obama's administration in recent days will take several years to pass through to consumer wallets. Stabilizing the fundamental and psychological deterioration will take many years, not quarters like the monolithic bullish talking heads believe. Even as the infrastructure money begins to flow into the hands of citizens, do you not feel more people will mimic recent bank behavior and hoard cash? We do. That scar from '08 will take more than an infrastructure plan and carpenters to fix. The extinction of all five U.S. investment banks means their ability to inflate asset prices up to 40X is no more, NOT a good thing as far as we're concerned. Leveraging power of 30X or 40X facilitated U.S. prosperity and incredible market liquidity for the past century, so forcing maximum leverage down to a federal mandate of 10X means cutting credit to consumers and businesses on a massive scale. The tide of public opinion has turned against Wall Street at a time when liquidity is needed. This paradox must be broken in order for the markets to begin breathing on their own again. A cyclical/temporary infrastructure plan will never come near the positive effects Wall Street had on financing for well over 100 years: forward thinkers take note. The death of investment banks is NOT a good thing for the financial markets from a liquidity/financing perspective going forward. For the most part (excluding acquisitions or ultrashort funds), anyone who goes long and holds equities will be disappointed come December 31, 2009, as POTC sees great turmoil ahead in commercial real estate. (This topic will be addressed in the coming weeks; you may consider buying SRS, our favorite buy as of January, '09; buy target $55-$60, sell stop at $40-$45 with profit target of $100.) The fact mortgage rates and energy prices have eased doesn't mean the wound of '08 will heal without leaving a lasting scar, or re-open and begin bleeding again ... Could some other left field event jar our markets in 2009; of course it could. After most felt the terror of 9/11/2001 marked a bottom, then came the accounting scandals from Enron in June of 2002. Do you recall that one-two combination? Most talking heads calling "bottom, bottom, bottom" in early 2002 were caught off guard and ended up losing fortunes. Bottoms are never formed as a result of the things we already know, but usually print after events the public never saw coming. POTC has stressed before that when a bottom sets in, it means most individuals have thrown in the towel and at least a year of boredom (sideways markets) occurs. We feel 2008-2009 could be similar to the disastrous years of 2001-2002, but in reverse order in terms of events. Despicable terror destroyed the two World Trade Centers in 2001, shaking the confidence of every consumer and investor to extreme lows, yet the equity market didn’t make a technical low until after fundamental accounting scandals were revealed at Enron, Arthur Andersen, WorldCom, and others in 2002 and beyond. So 2002 was a lot worse than 2001. Even IF you were to argue '08 fundamental lows have been reached in certain individual stocks and sectors, you cannot go all in after looking back at 2001-2002. IF some horrific terror event(s) unfolded inside U.S. borders in '09, then equity prices would shrug off all fundamental factors. IF the Obama administration were confronted with some terror event, just as happened to Bush the first year into his administration on September 11, 2001, the S&P index would slide through the old lows of 720 in a flash, and perhaps as low as 400 in an ultimate climactic capitulation. Understand it took 1 year and one month for the S&P to ultimately bottom below 800 after 9/11/2001. Here's a chart that shows 10/10/2002 marked the bottom: http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=SP500&sid=3377 IF you take the previous lows in October 2008 and add one year and one month that takes us to November of 2009. POTC believes these are good reasons to follow the 11 Commandments, but especially #2. Strongly consider being overweight cash until a meaningful breakout of S&P above 1,000 occurs, but we do NOT see it happening in 2009. Making money in the market involves being very nimble, quick, and open minded. It also calls for a multi-pronged strategy. Maintaining a 15% short position in your portfolio with ETFs like SRS makes good sense in 2009. What looks cheap today can be expensive tomorrow, yet many investors and traders fall in love with their holding(s) as the investment(s) trend much lower or much higher. We have been guilty of that sort of stinkin' thinkin' of holding onto losers and winners before, shame on us and shame on anyone who doesn't set sell stop limits or take profits! (Hats off to Fast Money's Jeff Macke, who often admits to being stopped out of a falling stock. Please use that strategy with every long position you have in 2009. Don't fall in love with any of your holdings… stocks & options are only paper instruments, with NO emotions/feelings.) Until an individual admits, accepts, and employs the short sale component into his/her investing repertoire, that individual will be let down more often than one who has evolved and understands the significance of that fundamental arrow. Best of the best in 2009! Thanks for your motivational emails since the last time we stepped foot on the Island Where Forward Thinkers Evolve (esp. Tommy S.) May your New Year voyage be safe from the churn of the stormy seas; now for some music video relief, compliments of Youtube: http://www.youtube.com/watch?v=lJZ5YZ4qmD0

POTC's timing (dated pre-Bear Stearns collapse) and sources at Goldman Sachs proved golden

Loyal Readers,

As we approach the Holiday Season and the end of 2008 we invite you to click on the link below and read what POTC had to say about the current financial crisis ten months ago, on 28 February, 2008. We hope you decide that POTC will continue to be your source of forward-looking financial insight in 2009.

http://psychologyofthecall.blogspot.com/2008/02/foundational-crack-revealed-mass.html

In the meantime, it is our pleasure to wish one and all a Merry Christmas and a Happy Hanukkah. We will e-mail all subscribers when we resume activity in the next week or two.

As POTC Predicted, Wall Street Rallies Big after Obama's Infrastructure Plan

As POTC predicted, Wall Street rallied big after President-elect Obama's Infrastructure Plan, but we now urge caution. Our reading of the market and looming malaise in Europe has POTC expecting a reversal to test October lows sooner than most believe. "NEW YORK – A stock market gaining in confidence shot higher for a second straight session Monday as investors bet that President-elect Barack Obama's plans to increase spending on public works projects will help lift the economy back to health. The major market indexes jumped more than 3 percent, and the Dow Jones industrials' nearly 300 point advance gave the blue chips their highest close in a month." http://news.yahoo.com/s/ap/20081208/ap_on_bi_st_ma_re/wall_street

A Youtube Dream Unfolding

=DJ Sprint, Clearwire Complete Next-Generation WiMax Deal. DOW JONES NEWSWIRES -Clearwire Corp. (CLWR) and Sprint Nextel Corp. (S) have completed a deal to combine their next-generation wireless Internet operations. -Sprint and Clearwire had said they will roll out Sprint's mobile WiMax Internet network, which is expected to reach as many as 140 million people, within 30 months of the deal's approval. -At the close of trading Friday, Sprint's shares added 11.6% to $2.79 and Clearwire's were up 9.8% at $6.62. Clearwire gained 1.4% in post market trading. -Intel Corp. (INTC), Google Inc. (GOOG), Comcast Corp. (CMCSK), Time Warner Cable Inc. (TWC) and Bright House Networks collectively invested $3.2 billion in the new company, which will retain the Clearwire name. -Sprint will hold around 51% of the firm, existing Clearwire shareholders will own 27% and the new investors will hold 22%. -Sprint, which has been struggling as its subscribership continues to fall, has considered several strategies to catch up with rivals AT&T Inc. (T) and Verizon Communications Inc. (VZ), including jettisoning the Nextel network or selling its long-distance network. -By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; kerry.grace@dowjones.com -Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=AhwCpQQ0pWKzJrCNi%2Bzc7w%3D%3D. -You can use this link on the day this article is published and the following day. -(END) Dow Jones Newswires November 28, 2008 13:50 ET (18:50 GMT) Copyright (c) 2008 Dow Jones & Company, Inc.- - 01 50 PM EST 11-28-08

Insiders Putting their Skin in the Game; POTC's Optimism Grows

DJ InsiderScore.com: Insider Buying Reaching 30-Year Highs By Ed Welsch Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Insiders are buying their own company stocks at rates near the highs of 1975, a research firm said Wednesday, a sign that historically appears near a bottom point for the broader market. More buying by company insiders has been a reliably bullish sign in the past, as insiders have proven better than average investors at calling the direction of their own company stocks and, when looked at as a group, the direction of the overall market. However, during the current downturn even insiders have been fooled. InsiderScore.com's measurement of insider buying also spiked in March and in August and November of last year, though at lower levels. Those spikes marked false bottoms rather than real recoveries. InsiderScore Research Director Ben Silverman said there were more signs that the current wave of insider buying is a more reliable sign of an approaching bottom. Among the signs that give Silverman more confidence is that insiders across all industries are buying heavily, while the last three buying sprees were led by insiders at financial companies. In fact, buying among financial insiders this time is lagging behind insider buying in every other sector, he said. Also, a larger percentage of highly placed executives like chief executive officers and chief financial officers are doing the buying this time, he said, as opposed to directors or junior executives. Statistically, trades made by top executives are more likely to be more savvy than those made by other insiders. The overall rate and quality of the buying, as calculated by InsiderScore's proprietary algorithm, is also much higher this time. The algorithm's score of trades made last week reached 12,594. That's the highest level its ever reached in five years of collecting data, and nearly twice its previous peak of 6,398 after the Bear Stearns collapse in March. During the false bottoms of late last year the score reached in the 4,000-5,000 range, compared to a normal level around 2,000. Silverman says that while exact apple-to-apple comparisons between the InsiderScore algorithm and historical data are hard to make, he believes the level of insider buying exceeds the level after the 1987 crash, when insider buying peaked near a bottom in the market, and is near the level of buying reached in 1975, when the market recovered from a long slump, with the Dow Jones Industrial Average rising nearly 40% during the first half of the year. Before deciding to act on signs of broad insider buying, Silverman said investors should both consider whether insiders at the individual companies they are considering investing in are putting their money where their mouths are by investing in their own stocks, as well as whether the companies are likely to be in a stronger position after the economy recovers. -By Ed Welsch, Dow Jones Newswires; 201-938-5244; edward.welsch@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=CvsyNdtZ0JgBkppd%2FRLX6w%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires November 26, 2008 16:00 ET (21:00 GMT) Copyright (c) 2008 Dow Jones & Company, Inc.- - 04 00 PM EST 11-26-08

Auto Manufacturer's = Bank Holding Cos., Perplexity Whipsaws Markets

DJ: GMAC Bonds Soar On Bond Holding Co Plan, Exchange Offer By Kate Haywood Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--The bonds of General Motors Acceptance Corp., or GMAC, jumped sharply, while the cost of insuring the firm's debt against a default fell Thursday after the firm confirmed it has applied to become a bank as it seeks money from the Treasury Department's $700 billion injection effort. -The cash-strapped financier, 49%-owned by General Motors Corp. (GM), also announced offers to exchange $38 billion in notes from GMAC and its Residential Capital home-lending business for new securities with the same maturity dates and interest rates. The move would cost GMAC up to $2.5 billion in cash, it said. -"If it gains bank holding status, GMAC will be able to access the Treasury's $700 billion rescue package, which will clearly improve its prospects in terms of funding and capitalization," analysts at Daiwa Securities said. -As a result, GMAC's 7.25% bonds due 2011 charged 16.75 points higher to 52 cents, according to BondTicker. The company's 5.625% notes due 2009 gained 18 points in early trading to hit 80 cents, BondTicker shows. -In the credit default swap market, where investors make bets on the likelihood of a company defaulting on its debt, the cost of protection on GMAC's senior bonds dropped slightly but remained at extremely distressed levels. The company's five-year CDS was quoted at 57 points upfront Thursday morning. This implied that investors would have to pay $5.7 million upfront plus $500,000 a year to protect $10 million of GMAC's' bonds against default for five years, according to CMA Data Vision. This is a modestly lower compared with late Wednesday when investors had to pay around $5.87 million upfront. -"GMAC's application to become a bank holding company was already anticipated by the market," said Kingman Penniman, president of KDP Investment Advisors. "But until investors saw it in black and white [this morning], the market [for GMAC's bonds and credit default swaps] didn't move." -GMAC offered investors combinations of new GMAC notes, GMAC preferred stock and cash. This will cut the firm's debt levels as part of its plan to become a bank holding company. Holders of GMAC bonds maturing before 2031 will receive new guaranteed GMAC notes with the same interest rate and maturity, the company said. Investors in GMAC notes maturing in 2031 will receive new guaranteed GMAC notes, new GMAC 8% subordinated notes due 2018 and new 5% perpetual preferred stock with a liquidation preference of $1,000, or cash, which will be prorated after $2 billion. -The new guaranteed GMAC notes will be guaranteed by the firm's subsidiaries GMAC Latin America Holdings, GMAC International Holdings Cooperatief U.A., GMAC Continental, IB Finance Holding and GMAC US. These new notes will be senior to any subordinated notes at these subsidiaries and will rank equal with all existing and future senior debt of such note guarantor, GMAC said. -In addition, GMAC offered to exchange its mortgage unit Residential Capital LLC or ResCap's 8.5% second lien notes due 2010 for new GMAC 7.5% notes due 2013. Holders of other ResCap notes, including 9.625% junior secured third-lien notes due 2015, can receive new GMAC 7.5% notes due 2013 and new subordinated notes or cash, which will be prorated after $500 million, GMAC said. -This sent ResCap's bonds higher. The 8.5% bonds gained between six to seven points to around 31.5 cents, while 9.625% 15 cents from 11 cents Wednesday, according to Standard & Poor's Leveraged Commentary and Data. -ResCap completed a $14 billion refinancing in June, which resulted in a downgrade to D on a host of the company's bond issues. Holders of bonds due in 2008 and 2009 received the 8.5% second-lien 2010 notes, and holders ResCap's bonds which matured in 2010 through 2015 got the 9.625% junior secured third lien notes. The exchange announced Thursday offers expire on 11.59 p.m. EST on Dec. 28 -GMAC's confirmation of its application to become a bank holding company and its exchange offer comes just days after Commercial-finance company CIT Group Inc. (CIT) announced plans to swap $2.2 billion of debt in an attempt to raise the amount of capital needed to become a bank. -As banks, both GMAC and CIT could raise money at lower financing costs if they participate in the Federal Deposit Insurance Corp.'s guarantee program that provides government backing to debt from qualifying financial institutions. -By Kate Haywood, Dow Jones Newswires; 201-938-2348; kate.haywood@dowjones.com (Mike Barris contributed to this article) Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=ZeJWYD76SSUIrDh7xN%2BBbg%3D%3D.

Wednesday Night Market Update" (President-elect Obama needs to step up)

A somber Wednesday good evening, Since the Presidential election a little over two weeks ago, the S&P is down nearly 20%. IF President-elect Obama doesn't enunciate his tax policies more clearly in the days ahead, the unwinding of old money could continue regardless of how strong balance sheets look or how oversold charts appear. These are unbelievable times that we are witnessing. On the day of the election, Mr. Carl Icahn was on Fast Money and said, "If this Obam-er wins, the market will not like it." http://en.wikipedia.org/wiki/Carl_Icahn We now better understand the power of those words; larger government and higher taxes in the midst of a global recession is something smart money fears. Even though this is the worst bear market since the Great Depression, we do not believe there'll be soup lines or runs on banks. There are safe guards like social security and massive bank liquidity injections, unlike the 1930's, so we know the reaction of panic today is way overdone. Just like we predicted oil would implode from the $120/barrel - $140/barrel area after the Beijing Olympics; just like we disagreed with Fast Money's Joe Terranova about his call that oil will not break $120/barrel for long a couple months back, we now feel the overshoot in the stock market has the same parallels and psychology driving it ... The market is dying to hear President-elect Obama say 8 words: "I will not repeal the Bush tax cuts,". The S&P would rally through 1,000 within a couple days. POTC stands behind the bear market rally call, but it would help IF Mr. Obama stepped up and delivered. The majority of the people who voted for him (college - under 30) do not have much riding in the stock market, so he needs to reinforce to the older conservative money he will not raise taxes. IF he doesn't do that, the market will have another climactic sell off, perhaps S&P 720; that would be the death of an entire generation of investors. Could Mr. Obama want the market to fall further before he takes his Presidential Oath this January 20th on the steps of Capitol Hill? We hope not. POTC gave him the benefit of the doubt, as we felt he would be pro-active and more Wall Street friendly than the Carl Icahn's believed. So far we were wrong and they were right. Mr. Obama needs to clarify his fiscal policies very soon, or investors will continue to sell until there is absolutely no doubt regarding who and how much tax is paid. Raising taxes on individuals and businesses making over $200K a year now would be ridiculously ignorant, as they are the growth engine for jobs and have the greatest amount swirling around in the financial markets. We continue to believe Mr. Obama will do the right thing and tell Wall Street nobody's taxes will go up. But time is running out. The Psychology of the Call team is dumbfounded by the valuations, technicals, and battered sentiment. We believe the Bush tax cuts will remain in effect through 2010. That is the panacea this stubborn bear needs to hear in order to dig the claws in & climb through S&P 1,000 by Thanksgiving Day, otherwise POTC will be eating stuffed crow!

Trend Setting Tuesday Intraday Alert, Alert: (Dow -64 S&P -14)

Good Day to All! Our call for a bear market rally stands. The S&P index has never traded this much below its 200 day moving average since the Great Depression. (Doug Kass- perma bear) The two overhangs have been energy stocks due to falling crude and - obviously - financials. They weigh tremendously on the S&P. We believe the job cuts behind and ahead will only bolster bottom lines/earnings, therefore knocking down already ridiculous price to earnings multiples and exploding stock prices. Today's fundamentals offer a compelling reason to be long, even breaking the 2nd Commandment of Trading and going all in... When the tide of a technical bear market rally comes in, it tends to have a tsunami effect on prices, raising 95% of sectors, so caution to all technicians calling for lower prices, and all seeking to find blame (government bashers). Many of the talking heads today are focused on a hyper doom & gloom scenario; we feel if you act on their advice, you will miss a 20%+ rally in the S&P, and larger moves in individual oversold issues like Chicago Mercantile Exchange (CME). Profiting in the short run requires skills that combine technical, fundamental, and qualitative analysis. Our bear market call hinges upon the crippled psychology of the average investor coupled with the amount of cash on the sidelines in hedge funds. We urge all forward thinkers to consider that bear rallies come when sector dislocations are occurring, and if you take a moment and study Citigroup (C, -6%) and Goldman Sachs (GS, +.06%) side by side on a daily chart, you'll see there is a tug of war that's sector internal and that strongly suggests one thing: A rally is about to begin. Thanks to all who took time and answered the blog poll. As of today, President elect Obama's appointments have been approximately 30% conservative, usually deemed "Wall Street friendly"... We will continue to monitor these developments as they unfold. We strongly believe the connection between politics/policy/legislation is critical to the financial markets, so the uncertainty this Presidential transition of power is causing has decimated equity valuations as though the world was coming to an end: IT'S NOT. From the entire Psychology of the Call team, cheers to a great bear market rally that takes us through 1,000 on the S&P by Thanksgiving!

The Creditella Outbreak; Yet We're Ready to Rally this Bear, Ma’am

Sunday greetings to all! The uncertainy and pessimism has never been higher, and since many heavy-weight money managers are 50% in cash we see the S&P either rallying through 1,000 or breaking 800 by Wednesday's close. Ironically, here is an example of the fear level from the kings of hedging, half in cash?!?!?!: http://www.fiercefinance.com/story/cash-king-buyside/2008-10-15 The genius of Cohen and Jones must be respected, but please realize hedge funds are rarely in cash since their strategy calls for being dynamically hedged, for example: convertible arbitage, merger arbitrage, event driven, distressed securities, equity market neutral, and equity long/short, the focus of brilliant mathematician Jim Simons of Renaissance Capital Hedge Fund: http://en.wikipedia.org/wiki/James_Harris_Simons When we see the most astute minds of investment finance overweight in cash, we believe the market will not remain hosatge in this trading range for long. Look for the S&P to either explode up or implode down ahead of Thanksgiving. With the G20 summit over, 13F filings behind (http://www.sec.gov/answers/form13f.htm), and Presidential election results now fully discounted, the market is ready to move violently up through S&P 1,000 or down through 800. We wrote about the bear market rally in our last piece, and as gloomy a scenario we will offer in this article, we stick to our thesis nonetheless of a technical bear market bounce beginning on Monday, November 17th through at least Wednesday the 19th. What happens after Thanksgiving through New Year 2009 remains unclear, but we will revisit all factors related to Psychological Financial Fusion (a timely balance of qualitative, fundamental, and technical analysis focused on short-term opportunities) next Saturday night. Here's a very important look at the S&P dating back to just post WWII levels. Please understand that long term charts make better sense during times of complete panic: http://finance.yahoo.com/q/ta?s=%5EGSPC&t=my&l=on&z=l&q=c&p=&a=&c= Notice the powerful move in the S&P from under 400 in 1990 to 1,500 in 2000. Also notice the pronounced double top break down in 2000 and 2008. Microsoft's Windows software and many other computer related technologies/innovations spurred a tremendous rally from 1990 through 2000, agree? If you study the S&P chart, the sprint up from 1995 through 2000 may be a attributed to billions of consumers logging on to the information highway and transacting business from former non-capitalist nations, i.e. Soviet Union, Eastern European countries (Poland, East Germany, Romania, Ukraine), India, and the Chinese Dragon cannot be discounted. Do you feel the internet super highway and chip technology will enhance... --------------------------------- If you would like to receive this and future posts and market analysis, please send an e-mail to Psychologyofthecall@gmail.com and make sure that your e-mail client will not consider messages from that address as spam.

The New Obama Team

DJ Obama Unveils Transition Teams For SEC, Other Agencies.

WASHINGTON (Dow Jones)--President-elect Barack Obama's transition team Friday unveiled teams of high-powered executives and former government officials to review the Securities and Exchange Commission, Department of Energy and other critical federal agencies in the run up to the inauguration.

-The president-elect's transition office said former Treasury Under Secretary for Domestic Finance Gary Gensler will lead the review of the SEC. Gensler, a former Goldman Sachs partner, was an adviser to Sen. Paul Sarbanes on the Sarbanes-Oxley Act.

-The SEC team also will include former Federal Trade Commissioner Mozelle W. Thompson and McKinsey & Co. partner William "Thomas" Dohrmann.

-Sylvia Mathews Burwell, president of the global development program at the Bill & Melinda Gates Foundation, will lead the team reviewing the Federal Deposit Insurance Corp., while James Johnson, a partner at the law firm of Debevoise & Plimpton and a former Clinton-era Treasury official, will lead the team reviewing the Commodities Future Trading Commission.

-The team reviewing the Department of Energy will be led by Elgie Holstein, a senior energy policy advisor to Obama, Elizabeth Montoya, a consultant with Sealaska Corp. in Juneau, Alaska, and Sue Tierney, a managing principal at Analysis Group. All three held posts in the Clinton administration.

-The teams are expected to begin their work immediately so senior appointees can hit the ground running at their departments as soon as they are sworn in.

The list of agency review teams can be viewed by clicking: http://change.gov/agencyreviewteams.

-By Henry J. Pulizzi, Dow Jones Newswires; 202-862-9256; henry.pulizzi@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=Zl42RD3mDSA12KI2spLZ%2Bg%3D%3D.

You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires November 14, 2008 16:15 ET (21:15 GMT) Copyright (c) 2008 Dow Jones & Company, Inc.- - 04 15 PM EST 11-14-08

Trading Alert Update

You can read an updated version of Tuesday's "Trading Alert" post at http://club.ino.com/trading/2008/11/is-now-the-time-for-a-bear-market-rally/

Obama Showing Some Partisanship & Old Name Experience

DJ Obama Taps Ex-Rep Leach, Albright To Meet With G20 Leaders . WASHINGTON (Dow Jones)--Former Republican Congressman Jim Leach and former Secretary of State Madeleine Albright will be available to meet leaders from the Group of 20 this weekend on behalf of Barack Obama, the president-elect's transition team said Wednesday. Obama won't attend Saturday's emergency G20 economic summit but will receive a briefing from Leach and Albright after their meetings. Details of those sessions, including which delegations Leach and Albright will meet, will be released at a later date. "This weekend's summit is an important opportunity to hear from the leaders of many of the world's largest economies," said Obama Senior Foreign Policy Advisor Denis McDonough in a statement. "There is one President at a time in the United States, so the President-elect has asked Secretary Albright and Congressman Leach, an experienced and bipartisan team, to be available meet with and listen to our friends and allies on his behalf." Albright was Secretary of State and U.S. Ambassador to the United Nations under President Bill Clinton. Leach, who backed Obama's presidential bid, is a former chairman of the House Banking and Financial Services Committee. -By Henry J. Pulizzi, Dow Jones Newswires; 202-862-9256; henry.pulizzi@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=gyqrrrOUgvITV9NeLavKMw%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires November 12, 2008 12:04 ET (17:04 GMT) Copyright (c) 2008 Dow Jones & Company, Inc.- - 12 04 PM EST 11-12-08

Trading Alert

Warm November Greetings to All Forward Thinkers! The ongoing global financial crisis has made perma bears look like geniuses, yet the Psychology of the Call team (POTC) senses the imminent appearance of a bear market rally for three good reasons. 1) President elect Obama's first speech, and his chief of staff pick, Mr. Emanuel, are very bearish for the market. We are confident both of those negative developments will change soon. POTC believes Mr. Obama's goal in the coming days and weeks will be to do everything popular in order to be re-elected to a second term in just four short years. It's that second pivotal term where most Presidents are more inclined to show their true colors, especially in terms of openly hell bent policy. We remain confident and are prepared for the Thanksgiving Day Obama rally to begin this week, as his centrist appointments begin being leaked by hedge fund insiders. We are not waiting for New Year to enter long positions, as that seems to be the easiest and most ‘herdish’ trade today: we remain forward thinking contrarians and are going long on Tuesday. We believe President elect Obama will appoint some Wall Street friendly names to his first cabinet/administration. He will do this to satisfy his political appetite to win that critical no holds barred second term in 2012, agree? Please answer the poll question regarding this issue on our blog: http:psychologyofthecall.blogspot.com/ Yet, IF he chooses to select only hard line left wingers, the market will not rally. After witnessing the extremely well planned and hard fought victory, we would be shocked to see a concentrated cabinet: it won't happen. 2) The pressure from Warren Buffett on President elect Obama to call for a change in mark to market accounting or announce a huge infrastructure stimulus plan plays a factor in our short term bullish call as well. Berkshire Hathaway just reported a horrible quarter, and even if Buffett is okay with paying higher taxes, we know he does not want to see his almost perfect legacy wither, wilt, and die in his waning years: http://www.thestreet.com/_yahoo/newsanalysis/insurance/10446832.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA Other recent Buffett investments in Goldman Sachs (GS) and General Electric (GE) have underperformed as well, and both of those companies will survive this wickedly panicked market. 3) The financial sector could begin to stabilize as it shrinks. The S&P is heavily weighted with oversold financials, about 20% of the S&P value lies in financials. Regional banks could begin bouncing with 50%+ buy-out premiums. Rumors abound that Citigroup (C) is very close to bidding for a regional bank with government TARP money. http://biz.yahoo.com/ap/081110/citigroup.html?.v=3

This would ignite a type of forest fire under financials, forcing many perma bears to cover their seemingly bullet proof short positions. We will take advantage of what we view as monopoly money about to be used to boost stocks like Regions Financial (RF) and/or Suntrust Bank (STI). POTC feels the S&P index could settle above 1,000 by Thanksgiving, and as the bear rally gains momentum from one or two other positive developments mentioned above, then 1,100 on the S&P could well be reached before we wish you a Happy New Year. We hope this trading alert helps you profit. We will be writing our standard Psychology of the Upcoming Week's Earnings & Economic Data and sending it to all subscribers this Saturday night... Thank you for reading & sharing The Island Where Forward Thinkers Evolve, the Psychology of the Call team.

Friday 7 November

We hope you were able to take advantage of the artificial rally in solar stocks last Friday and Monday of this week by shorting on Tuesday afternoon, prior to the close. POTC did not send out an e-mail alert, but we posted links in the section above and mentioned that we considered solars and the S&P to be overbought. Look at a 5-day chart of FSLR, or LDK, or ENER, or the S&P 500. We made substantial returns this week buying puts on the above-mentioned stocks and the S&P.

We will launch our website next week and give you an opportunity to monitor our trades before offering an advisory service. Regardless of this economic environment POTC knows how to trade market mechanics, market psychology, and how to generate profits consistently. We do it every week and would like for you to do it also. We'll provide more details soon. In the meantime have a great weekend and remember, now that it's Friday and the weekend with all of its uncertainty beckons, Cash is King.

Do these Golden Ebay Bids Signal a Preliminary Market Bottom?

DJ Gold Bars Fetch Ebay Bids Far Above Spot Prices . SYDNEY (Dow Jones)--Gold bars are trading far above current spot prices for one troy ounce of bullion on the internet auction portal eBay, highlighting current strong demand for safe-haven assets among retail investors, traders said Monday. One Credit Suisse 24 karat pure one ounce bar had attracted 12 bids, the highest at $835 with the auction open for another 10 hours and 20 minutes. This is in sharp contrast to gold's spot prices, currently trading at $728.60/oz. Heavy selling from hedge funds and other investors in need of cash to meet client redemptions and margin calls have clipped gold from around $930/oz just over two weeks ago to a one-year low of $681.75/oz Friday, before a strong bounce lifted prices back above the $700/oz level. Another Credit Suisse one ounce bar, with 15 hours to go, had attracted 13 bids, topping $880. Retail investors seeking physical gold have forced coin and bar producers such as the U.S. Mint to ration supplies. "It's an anecdotal story, but the high bids on eBay illustrate the high level of retail demand. For that reason we believe gold will go up again once hedge fund redemptions wane, which should happen at the end of October," said one Sydney-based trader. -By Elisabeth Behrmann, Dow Jones Newswires; 61-2-8235-2965; elisabeth.behrmann@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=ho8PTXEg%2B5DfkckkGM%2BVJw%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires October 27, 2008 02:17 ET (06:17 GMT) Copyright (c) 2008 Dow Jones & Company, Inc.- - 02 17 AM EDT 10-27-08

Psychology of the Upcoming Week's Earnings and Economic Data

May this mail reach you in good health & good spirits! The churning in the markets continues to wash out most professional money managers. The only sure fire method to use today is what Dennis Gartman describes as "getting smaller", and it's still not too late to get small into any 3%-5% rallies. Two weeks ago, the Psychology of the Call team (POTC) recommended selling all rallies greater than 3%, and that advice has worked well. We are concerned with the temporary and limp market blip Friday, after the semi-bullish sentiment expressed by legendary investing guru Warren Buffett (http://en.wikipedia.org/wiki/Warren_Buffett) was quoted and quoted time and again. And yet equities sold off violently from their afternoon highs. We are also very concerned with many respected professionals like Dennis Gartman and Warren Buffett piling into the banking sector and espousing its merits publicly. Could their behavior be construed as desperate? Giants can afford to be wrong a lot longer than the individual investor, as their liquidity is wider and deeper. Anais Nin once wrote: "If a person continues to see only giants, it means he is still looking at the world through the eyes of a child". Of course POTC respects the legendary minds of investment finance, yet we must not forget that they’re mere mortals. Gartman's and Buffett's decision to overweight banks today could turn out to be the biggest paradoxical blunder come early to mid 2009, as unemployment rises north of 7%. Moreover, IF it happens to be an Obama/Biden administration, their policy of raising taxes on individuals and businesses making more than $250K/year will further cripple the economy and trickle into the banking sector, extending the pain to all sectors. Anytime the government has regulated any sector.... --------------------------------- If you would like to receive this and future posts and market analysis, please send an e-mail to Psychologyofthecall@gmail.com and make sure that your e-mail client will not consider messages from that address as spam.

Shattered Psychology, Bloodied Charts, Politics, & Earnings Reports will Whipsaw Market

Sunday Greetings from the entire Psychology of the Call team (POTC).

Our goal is to keep you at least five paces ahead of both angry herds, with a focus on exposing the many irresponsible talking heads. Perhaps having one go-to cable channel isn’t a good thing and shows like Jim Cramer's Mad Money aren’t helping anyone. Granted, Cramer is in a very difficult situation as the bear market evolves, and we don’t believe he’s inherently bad, but we would prefer it if he had more competition. His mantra "there's always a bull market somewhere" has been proven wrong of late, but he won't admit it. The aura built up around his "genius" fooled more people than a David Copperfield magic show, still GE's parent CNBC allows his circus of errors to continue on-air. POTC's ambition of offering you the most educational go-to portal on the internet is only two weeks from fruition. We feel for everyone still reading this, and we thank you for being patient during these market dislocations; dislocations caused by the virtual overnight failure of all five U.S. investment banks. The reality of their charters being changed to Bank Holding Company status means that trillions of dollars of stocks, bonds, and commodities had to be sold or bought back, thus the anomalous moves, especially with falling stocks in the face of falling bonds.

The long term buy & hold investor has suffered incredible emotional and financial loss. Only the...

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G7, G20, .... Are We Heading Toward One World Order?

=DJ G7 Makes Room At Table To Brainstorm On Spreading Crisis. By Tom Barkley Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--Group of Seven leading industrial nations are making room at the table for other countries as they battle a fast-spreading financial wildfire that defies containment. The spirit of collaboration was displayed Wednesday when the U.S. Federal Reserve, European Central Bank, Bank of England and Canada were joined by central banks from non-G7 countries such as Sweden, Switzerland and China to conduct a joint rate cut unprecedented in scope. When the G7 meets Friday, it will try to present a unified front in the struggle against a crisis that in the past year has ballooned from a small sector of the U.S. mortgage market to envelop Europe and an increasing number of developing countries. Acknowledging the viral nature of the credit freeze, U.S. Treasury Secretary Henry Paulson called for an emergency meeting of G20 finance ministers and central bankers. Such a gathering, set for the day after the G7 meeting, will "discuss how we might coordinate to lessen the effects of the global market turmoil and the economic slowdown on all of our countries," Paulson said Wednesday. The G7 has been criticized for being slow to recognize the depth of the financial system problems and even slower to come up with a coordinated response. Infighting was on display last weekend as European officials failed to come up with a common approach to protect their intertwined financial sectors. Since then, the U.K., Spain and Italy announced their own financial sector rescue programs, though officials in France and Germany have indicated they see no need to set up similar bank recapitalization plans. French President Nicolas Sarkozy said later Wednesday that German Chancellor Angela Merkel agreed that the two countries responses to the turmoil would be "totally coordinated." Sarkozy has taken a lead in pushing for a pan-European approach and has also called for a special G7 heads of state meeting, which some media reports have suggested could be held as early as this weekend. Paulson said it doesn't make sense to have "identical" policies. "You're going to have different policies, but the key thing is that we continue to work closely together," he said, adding that he sees more signs of coordination and "very helpful statements" coming out of Europe. Edwin Truman, senior fellow at the Peterson Institute, who has worked at the Treasury and Federal Reserve, said he doubts the G7 meeting will result in any major new measures, especially with upcoming elections in the U.S. and Canada. "I suspect you're not going to have a lot of concrete initiatives," he said. "I mean, they will commit themselves, like here, to seek multilateral solutions and work together." In addition to European officials not being on the same page, there will also be an undercurrent at the meetings that Paulson "will have to eat a little bit of humble pie," he said, since the global crisis began in the U.S. World Bank President Robert Zoellick, who previously worked at Treasury, earlier this week called for a doubling in the size of the G7, which he said "is not working." While he also criticized the G20 as too unwieldy, the quickly assembled meeting of that larger group of major advanced and developing countries suggests that his idea for a "new multilateralism" to include rising powers is shared by others. The G20 includes the G7 countries of the U.S., U.K., France, Germany, Italy, Japan and Canada - as well as Russia, Australia, Brazil, China, India, Argentina, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea, and Turkey. The European Union also has a separate representative. By involving developing countries, the G7 is acknowledging that an effective response to the crisis requires more players, said Michael Monderer, managing director of Washington-based advisory firm G7 Group and a former Treasury official. "The G7 is not the sole actor in the world," he said. While Monderer doesn't entirely agree with Zoellick's idea of a flexible steering committee, he said, "I think that it's clear that there are other large actors in the world, such as the Chinese and the Indians and the Brazilians and the Mexicans and the Russians, that need to be part of the process." He doesn't expect any coordinated measures at the G20 level, seeing the meeting more as making sure everyone's on the same page. David McCormick, Treasury undersecretary for international affairs, said the G20 meeting will be mostly about exchanging viewpoints on the crisis. "If nothing else, what hopefully the last six-to-12 months has shown is how interdependent our financial markets are, as well as our global economy," he said. Still, Monderer said that even if no major announcements are expected out of this week's meetings, he gives the G7 some points for starting to show leadership. He expects Friday's communique to convey the sense that they are in charge. "If there were ever a time for the G7 to show its relevance, this is it," he said. "And I think they've gone a long way in that regard, actually." -By Tom Barkley, Dow Jones Newswires; 202-862-9275; tom.barkley@dowjones.com (END) Dow Jones Newswires October 09, 2008 09:02 ET (13:02 GMT) Copyright (c) 2008 Dow Jones & Company, Inc.- - 09 02 AM EDT 10-09-08

Past, Present and Future Psychology

Good Saturday to all! The Psychology of the Call team (POTC) begins with an important quote during this ongoing crisis: "If we get involved in fears about the future, we shall miss the chances that the present offers us".

Anonymous

'It could always be worse for the living' is our way of describing the horrific financial meltdown. Money is important to all, but respecting yourself and others during these unprecedented times is where POTC believes the solution rests.

Looking back, there have been world wars, plagues, and market crashes of unimaginable severity, yet within a decade after these events, human life actually improved as a result. Although we are not happy to see the market fall, we do take credit for our expression of negativity back in February and March based on what we perceived to be the "foundational crack" in banking. We were able to use that theory and profit, and we know through emails many of you have too, so congratulations.

The Eighth Commandment of Trading stresses the two sided market,

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Friday afternoon

It has been a wild and wooly week on Wall Street and we suspect that next week may not be a whole lot different. The much heralded bailout was approved by Congress today and signed into law by President G.W. Bush. The market dropped shortly thereafter. We hope most sincerely that you are adhering to the 11 Commandments of Trading. To not do so is to invite disaster.

We wish you a wonderful weekend and we'll be in touch soon. The Psychology of the Call Team.

The Eleven Commandments of Trading

1. Never trade more than 10% of your total capital/account value in any one position.

2. Cash is King, and we recommend keeping 20% liquid to take advantage of dislocations and volatility.

3. Cut losses to 15% maximum whenever possible. If your psyche is shaken, step away and don't trade for 1 week.

4. Take and enjoy profits of 30% or more.

5. Never fall in love with a stock and never force trades or over trade; remember commandment #2.

6. Never accept excuses from management, period.

7. Use technical and fundamental data & psychology/sentiment from the conference call to select trades.

8. There are two sides to the market, long & short; take advantage of that leverage.

9. Understand the significance of the macro geo-political economic environment.

10. Unforeseen events/shocks will happen, inverting the market upside down (remember commandments #1 & #2)

11. All of the above are void without reading the Psychology of the Call.

Warren Steps in Again

GE Raises $15 Billion; Buffett Gets Preferred Stake

http://www.bloomberg.com/apps/news?pid=20601087&sid=a38DBL6ufMgw&refer=home