POTC's Best Stock Option Trade thru Year-End Available until 2 p.m. ET, Monday Only:

Subscribers received this trade today and the feedback from 7  subscribers has been positive.

If you are not a subscriber but wish to receive our #1 option trade for year-end 2011, just use Paypal in the right margin.

Festive Regards to many as we approach Christmas, Hanukkah, and New Year 2012!
POTC-

Capitalist Pig Bob : /

~POTC's Political Ambassador of Truth through the Pivotal U.S. 2012 Presidential Election~ 

Happy Thanksgiving Week to Many..

A Happy Thanksgiving to our loyal subscribers who profited  in recent weeks.

The global socioeconomic  landscape has rarely been in bigger flux, we remain hopeful about the aggressive trading opportunities ahead.

Option Trade Alert for Nuance (NUAN) Closed:

All subscribers received this NUAN Trade Alert. If you are not a subscriber and would like to receive the next trade analysis, please use the PayPal menu and subscribe for the next Quarter. 

Nuance Communications (NUAN) Trade Available:

Monday After Close:
Analog Devices (ADI)
Hewlett-Packard (HPQ)
JinkoSolar (JKS)
Perfect World Company (PWRD)
Trina Solar (TSL)

Tuesday Before Open:
Campbell Soup (CPB)
Chico's FAS (CHS)
Cracker Barrel (CBRL)
DSW Inc (DSW)

Genesco (GCO)
Raven Industries (RAVN)

Tuesday After Close:
* Nuance Communications (NUAN)

* In-depth Trade Alert for subscribers only. Please use Paypal in the right margin.

Thank You.

Regeneron Trade Closed; FDA Ruling Imminent:

Write-up explained what we thought was the best risk-reward  strategy for trading REGN options ahead of the FDA's ruling on Eylea; a drug for Wet Age-Related Macular Degeneration (AMD).

FDA decision on Eylea is Imminent.

If you're not a subscriber but would like to receive future trades, please use Paypal in the right margin for a Quarter or Year through February 2013.

Cheers from the Psychology of the Call team (POTC) and the Ambassador of Truth through the 2012 U.S. Presidential Election:

Capitalist Pig Bob : /

Priceline.com (PCLN) Monday at 10 AM ET..

Last Trade Alert for Q3 was PCLN.

Pig Congratulations to Every Yearly Subscriber; Valley Forge Moment for Free-Market Capitalism is Upon Us.

You know why and we are very happy for you (digital postage).

More theme businesses/stocks are in order. This pick was rooted in the oft dirty politics of money & banking. POTC promises to identify more political stocks like this before the PC herd of Wall Street analysts.  

The Psychology of the Call blog's Capitalist Pig Bob (CPB) is very concerned with the current political path that America has forged. The needle of the American free-market compass must be recalibrated back to normal ~economic cycles~, making the 57th quadrennial United States November 6, 2012 Presidential election a Valley Forge moment.

George W. Bush and Hank Paulson started the bailout snowball, yet the current Administration's policies have dislodged America's free-market psychology and placed it on a precipice.

It is widely known that AIG and the ratings agencies were inept and did not see the subprime crisis coming. But then rewarding bad private-sector decisions whether at Goldman Sachs, Countrywide Bank, Merrill Lynch, AIG, or Lincoln National has prolonged the private-equity freeze and the return of what must be normal ~economic cycles~    

The current U.S. Administration has placed us on a dangerous path. CPB is concerned that after a couple of left-field events occur, American citizens will only then experience how many precious freedoms they lost through this fiscal, monetary, and political stupidity of our leaders.  

Herman Cain reminds us that we Can Only Save the Savable. And the brilliant forward-thinker Newt Gingrich remains the model of a politician that we learn from, follow, and support. Newt's wisdom's are timeless & patriotic. There is a video at the end of this piece that powerfully explains the socioeconomic crises we face today, and how historic the 2012 election will be.

Repealing Obamacare, revamping Medicare (especially part D passed on George W. Bush's watch), Social Security, and parts of the Dodd-Frank bill are keys to our 'American' future.

America must condemn a kumbaya-welfare state of mind and all past and future bailouts, stimulus packages, and the central bank traps of quantitative easing (QE) and the flawed Zero-Japan interest rate policy. It's not the cost of money that's the problem, it's lack of confidence in a 'system' that has rewarded failure with bailout and stimulus then raised regulations to paradoxically prolong this psychological freeze.

What we must allow is an economic forest fire to burn the excess back to ash. The excesses created in housing and banking as a result of decades of bad legislation and central bank policies need be allowed to die in a natural economic cycle for a stronger system to root. If we continue to print money to pour water on this economic fire, we will solve nothing.

We must embrace bankruptcies in order for risk-takers to get excited and re-enter the market on a long-term basis. Simply switching private-sector debt to government balance sheets will loop to economic enslavement and slowly morph our Too-Big-To-Fail economy to a 21st Century form of Social-Crapitalism.

Pimco's Bill Gross and Mohamed El-Erian have referred to this cycle as the 'new normal', but we prefer to use the term the 'new abnormal'. How else could we describe an environment where the government overreaches with regulations, taxes, and fees, and then is called to 'Superman Save Us' after some left-field event that sends GDP deep into the red and an official recession? Yet we will likely fall into the longest depressionary cycle if Obama is re-elected in 2012.

The government must never play the role of economic Superman. Economic cycles must experience ~peaks and troughs~ with the least possible amount of government interference. It is dangerous when this 'new abnormal' cycle has convinced some citizens that Wall Street is the problem and little gripe is made of decades of failed legislation and entities like Freddie Mac and Fannie Mae.

The occupy Wall Street movement is a sad reflection on the class warfare cord repeatedly struck by this partisan Administration. Never have I witnessed a U.S. President who berated Wall Street as much as Obama. Pig shame on this overbearing Administration.  

America must embrace private-sector bankruptcy again as a normal and healthy economic phenomenon, but especially in the banking sector where the foundation of free-markets must have that element of failure to rebuild confidence, re-root with fresh capital, and experience new growth.

It's growth that has been stymied by grubby government hands and Bernanke's Fed in my porky opinion (impo). As Reagan taught us:
Government is not the solution to our problems, Government is the problem.  

 

  Capitalist Pig Bob : /
As Newt passionately explains after the 7-minute mark, 'America was created by people who were willing to say 'Victory or Death' while marching across an icy river in burlap bags and in the middle of a snowstorm. We are going to have to find those people again today'. http://www.youtube.com/watch?v=qtjfMjjce2

Stamps.com (STMP) and Baidu.com (BIDU) in Focus:

Thursday after close:

Baidu (BIDU)

Cloud Peak (CLD)

Coinstar (CSTR)

Deckers (DECK)

Stamps.com (STMP)

Vertex (VRTX)

Minyanville Stands Behind Amazon.com Inc. (AMZN):

http://www.minyanville.com/buzz/buzzalert/amazon-bulls-could-still-be/10/26/2011/id/145183?camp=syndication&medium=portals&from=yahoo

Our team asks Minyanville readers not to buy AMZN based on the above piece. The claim that the Kindle will 'add another leg to the stool' will be proven wrong.  And in our opinion, AMZN's foray into Tablets will not bear fruit as Professor Udall believes. 

We invite all Minyanville readers who trade stock options to sign-up for a subscription and Roll Down Wall Street with Us through the 2012 U.S. Presidential election. 

Managing risk with simple option strategies is our pledge to every subscriber. 

Warm October Regards as we do Everything in Our Power to Undermine Obamacare and that Despicable Dodd-Frank Act,

Capitalist Pig Bob : /

I am POTC's Political Ambassador of Truth through the 2012 U.S. Presidential Campaign.

Earnings this Week...

Tuesday after market close:

Amazon (AMZN)

Broadcom (BRCM)

F5 Networks (FFIV)

Wednesday the 26th before market open:

Allergan (AGN)

Ford (F)

Medco (MHS)

Nasdaq (NDAQ)

Wednesday after market close:
AFLAC (AFL)

Ancestry.com (ACOM)

Visa (V)

Thursday the 27th before market open:

Citrix (CTXS)

Exxon (XOM)

Potash (POT)

Thursday after market close:

Baidu (BIDU)

Cloud Peak (CLD)

Coinstar (CSTR)

Deckers (DECK)

Stamps.com (STMP)

Vertex (VRTX)

Friday the 28th before market open:

BorgWarner (BWA)

Calpine (CPN)

Thank You, ISRG Closed for Purchase:.

A stock option Trade Alert (TA) on ISRG is being written. This TA will be sent to all subscribers at 10 AM ET Tuesday. The company will release Q3 earnings after close on Tuesday.

POTC has covered ISRG since 2008 and we have excellent insights into their business.

If you are not a subscriber but interested in this aggressive stock option study, please use Paypal in the right margin.

Thanks for Reading, Educating, and Trading with Us, The entire Psychology of the Call team..

Google Inc. (GOOG) Closed..

will mark the start our Q3 Trade Alerts (TAs) on Thursday, October 13, at 10 AM ET. Every subscriber will receive this time sensitive stock option TA on schedule.

GOOG will release Q3, 2011 earnings after market close and host a live conference call at 4:30 PM ET on Youtube.

If you're not a subscriber but would like the GOOG stock option write-up, just use Paypal in the right margin.

Here's to a Happy & Healthy, Educational & Profitable quarter, the Psychology of the Call team (POTC)..---------------------------------------------------------------------

Q3's Stock Focus List, Subscription Info, and a Quick Explanation of the Lingering Socioeconomic Malaise~

'It's Time' for Q3's earnings. Here is our preliminary Focus List: AAPL, ACOR, AMZN, APKT, BIDU, CMG, CRM, DNDN, FCX, GOOG, GS, ISRG, LULU, MS, PCLN, STMP, REGN, and WFMI. Please read through the Psychological Financial Fusion (PFF ratio) Trade Alert and act by market close. You'll have 5.5 hours to earnings release to either buy a call, put, or do nothing. With the Post Earnings Trade Alerts (PETAs), be prepared to read through the entire analysis and act on market open. PETA's are sent after earnings, so the options are cheaper and offer a nice risk-reward profile. When most think they have missed a trade when a stock crosses up 5%+ CNBC, we know it's often only the beginning of making some Mad Money. For further clarification between a PFF and PETA, please go to the right margin. If you're not a subscriber, please sign-up through Paypal in the right margin. We chose Paypal since it is one of the most secure and trusted Internet payment processors. PFF ratio Trade Alerts require several 12+ hour days of studying financial statements, rewinding conference calls over and over, interpreting key news developments, technicals, politics, and the underlying psychology of share price with a forward-looking and often contrarian bent.

Our goal is to send subscribers: educational, aggressive, non-biased, well researched, and profitable Trade Alerts.

POTC remains firmly rooted in fiscal conservative principles. No bloated government agencies, bailouts, and stimulus packages is our mantra.

We are excited with the approaching 2012 Presidential campaign and election. We will introduce you to Capitalist Pig Bob's pigtailed girlfriend Tea Party Sally soon. They are currently on vacation somewhere on Maui.

Pig Bob believes the U.S. will drown in mediocrity if the politicians continue to rail against Wall Street and the average businessman trying to succeed at the American Dream.

The $500M+ loss in Solyndra as well as the NY Congressional seat should have jarred this Administration's intellect, yet we thought that before after Scott Brown and were proven very wrong. Obama's actions have been extremely partisan. This development is troubling, but especially after the November midterm 2010 demolition of democrats. If you buy a Quarterly or Yearly subscription by October 1, you'll receive our #1 stock to go long and #1 stock to go short for the next 6 months.

Shrewd global political forces will influence legislation or lack thereof in the weeks and months ahead. These forces will be especially evident as the October 27th Q3 GDP number posts at 9:30 am ET. POTC subscribers will be well informed ahead of all major market moving economic data points.

Obama's bloated government ensures extended suffering for the private sector. Our Capitalist Pig Bob despises this Administration's economic team as well as the FOMC's insistence on printing more and more money. A 0% interest rate policy has done nothing to nudge banking / credit / or real estate psychology. POTC believes that the cheap price of money (low interest rates) have extended the recession in housing and employment since it has created a confused and scared consumer. And this decades bad string of events: NASDAQ Bubble of 2000, Enron, 9/11 Terrorism, Wars, Bailouts and Stimulus, in conjunction with emergence of the technological efficiencies have all put the U.S. into a socioeconomic bind. The creation of an uneven global manufacturing playing field in terms of slave wages and then pegging of the Chinese Yuan to the U$D is an ongoing socioeconomic damnation. How China unwinds this peg and avoids inflation will be a case study. And if they don't unwind soon and U.S. GDP goes into the red (negative), it could spring social unrest in China and potential revolutions in orbital economically weak Euro countries like Greece, Portugal, Ireland, Spain, and Italy. Growth is the key, and how does the U.S. get growth in GDP when pirating goods and software, combined with an extremely low minimum wage has been China's M.O. It's likely the hard working Chinese will stand-up for human wages if food inflation becomes a bigger issue in 2012.

The world faces very complex socioeconomic issues in the months and years ahead in POTC's opinion. Our team is prepared to analyze these comeuppances and send trade profitable trade suggestions as they arise. Are you excited and on board with us for Q3?

The average Chinese manufacturing wage is around $2.50/hour compared to the U.S.'s $16.00, a 540% difference. The Yuan peg to the U$D could be a major reason why the U.S. has zero growth in Gross Domestic Product (GDP) and Employment. Do you view the Eastern economies as a fair trading partners or do you think some are pirating too much, paying too little, and hence a thorn to GDP and Employment?

The latest banking crisis crippling Europe is reminding many of 2008 all over again. Yet the S&P is holding above 1, 100 as these massive structural global banking fault lines are exposed.

Hundreds of subscribers enjoy the one-on-one trading advice and assistance via e-mail. POTC's goal is very aggressive and profitable trade suggestions. Every subscriber receives the 11 Commandments that highlight key investment wisdoms regarding traditional as well as Individual Retirement Accounts (IRAs).

The 11 Commandments stress and suggest more scientific trading parameters be employed. 'The 11 Commandos' are reviewed and refined with "Lessons Learned", as well as on your advice.

The aggressive trader must be nimble and defensive in order to be successful over time, two traits that are difficult to learn when greed is tempting us to act irrational. We always suggest strict trade triggers / parameters, whether booking profits or accepting losses.

Subscribers to the blog are a diverse bunch since 2008: United States, India, China via U.S. citizenship, United Kingdom, Australia, New Zealand, Hong Kong, South Korea, Russia, Poland, Indonesia, Italy, Germany, France, Spain, Brazil, Philippines, Canada, Japan, Chile, Argentina, Bahamas, Argentina, and Mexico. Our team is confident that you will enjoy our trading information, advice, and assistance for years to come. Our short and long-term trade psychology is often times different than talking heads on CNBC and Bloomberg, as their interests are usually 'Buy and Hold' and or influenced by large institutional clientele that are not able to trade due to the large commissions they'd incur. Our Trade Alerts are effective in pegging individual stock option as well as broad market S&P direction for all who aspire to trade S&P e-mini (ES), Gold (GC), and Crude Oil (CL) futures on electronic platforms that charge small fees, giving you a big cost advantage over the traditional stock broker / financial advisor.

We are humbled by your trust and ready for the Q3 battle. Let's Roll Down Wall Street Together~

POTC-

.

We Shall Never Forget September 11, 2001

May God bless all killed and every family member still grieving.

In Memorium:
Please click for a list of names from A - Z.

In Memory of Patriots like Todd Beamer and his men,
'Are you guys ready? Let's roll' were the last words his wife heard over the cell phone from Flight 93..

POTC-

Be Prepared for the Commodity Bull in Metals to End; 2012 U.S. and Chinese Elections in Focus.

POTC thanks Simon Jester for submitting  this forward looking piece. We first published a piece from Simon in October of 2009 (link). The piece was spot-on correct.

There is a rift between what the U.S. government reports regarding inflation and what the investing public experiences, a disparity not covered enough by the mainstream media. Identifying a long-term investment strategy that will outperform, during these times of experimental economic models, is the goal of my piece. 

'Wealthy' Americans, who had more than $1M in liquid assets in 2010, grew their wealth by about 9%. But I found that 9% number to be unimpressive when I dug deeper: official inflation numbers.

The Fed's quantitative easing (QE) rounds I & II forced investors away from traditional growth vehicles. Bonds outperformed stocks and commodities outperformed all since October of 2010.

If the Fed goes with Q3 III, I expect the same investor behavior. I do not think Q3 will occur as a new dawn in GDP growth is about to begin since this is an election year in the United States and China. And fiscal move to the center should work to loosen the stranglehold of fear and invite risk appetite back to the equation.   

When the so called wealthy have experienced modest gains to slight losses versus real consumer inflation, this must change soon or the current Administration will have little  chance to win another term. I feel something will be done in the Energy sector to stimulate jobs. I like natural gas business models as mounting pressure of national unemployment weighs. We could find out within a week if the Obama Administration is ready to stop over-regulating and begin creating jobs in the green pasture that is U.S. natural gas.  

Since the wealthy Americans have lost a good chunk of their net worth with the value of real estate, some government action in this area would bring back some confidence. The monetary side has been exhausted so now the fiscal side must begin to act or a second term has no chance. The wealthy are the job creating engines in the private sector, so the long-term market strategies that they legislate in the next few months should work for the wealthy first.

Short term market fluctuations will always allow active traders the opportunity to make money, especially if you use strict trading parameters: Psychology of the Call's (POTC) 11 Commandments are a good example. 

However, if you followed my advice after POTC published my first piece on October 27, 2009 you did wonderful. I outlined a value argument defending gold, silver, and farm commodities. Even corn beat real inflation numbers. The combination of those assets have outperformed every Holy Grail S&P money manager and mutual fund. I look forward to sending POTC more articles as this economic cycle develops and as my time permits.

Today I am backing away from the wealth retention / value argument of owning commodities and predict that we are in the early stages of witnessing the gold bubble burst. The next boom cycle will cause a bust in most commodities as investors jump from wealth retention to wealth generating vehicles. But I cannot tell you with certainty if this shift will occur gradually or suddenly. But I believe it will still be associated with better than expected global growth rates in GDP as fiscal stimulus measures take center stage.

Where should you place your bets now, CDs, Treasuries? Both still offer negative rates of return versus inflation but they are a way to retain wealth over what I think will be the worst place, gold and silver.

History shows us that commodity markets unwind with great passion, fervor, and volatility. Commodities are great when they work, but when they begin to rust, they are like a love story gone bad.

POTC has stated that the unwinding phenomenon in commodities often causes whipsaws in prices that destroy the most seasoned trader. 4%+ intraday swings in gold and silver will occur and impact the stock market (S&P) similarly. When we witness this volatility in metals, that could be a sign that money is moving out and will start being reallocated into stocks.

I envision money will flow out of commodities and stream into great businesses / stocks. For all looking to increase wealth, stocks should be the best show in town through 2012 at least.

My favorite sectors are technology and select energy, specifically natural gas. So what to buy?

Well, in a fearful economy there is always greater reward for risk. You have to be patient and not sell when everyone else is and vice verse.  My strategy is not short-term, I do expect jaggedness along the path. I will not panic as market scares repeat and offer opportunity.

Look for depressed industry leaders that experience a spike down in share price following quarterly earnings. In Technology, look into chip makers such as Intel (INTC) or Micron (MU). The financial health of a company is not tied to a single quarterly earnings release, it is tied to R&D and manufacturing capacity. So look for companies that are investing in the future, companies that have strong cash reserves. And then if they suffer a fall after a supposed 'bad' quarter, you should buy and hold them.

Caterpillar (CAT) had over a billion dollars in revenues last quarter and Wall Street was “disappointed.” Did you buy it when it dipped?

The emerging bust of commodities and the eventual “boom” of the stock market means that you must be looking around for bargains now. Buy like POTC suggests, incrementally in equal dollar amounts over a 3-week or even 6-month period. I am not a trader but an investor, but you could apply the way you build long-term positions to trading as well.

I cannot 100% predict what inflation will do or will not do, nobody can. But I know that if I invest in businesses with great management and competitive advantages when the cycle turns their way, I will make money. Countless “experts” are torn whether the commodity bubble will burst. So while they are debating, I recommend you should be building positions in my favorite stocks that could be up big by 2012.

Whether you like or hate Warren Buffet's politics lately, remember that he did have a vast majority of his investments in Coca Cola (KO) at one time. So the notion of buy quality when it dips and do not get discouraged; let the others get discouraged. Buy when they give up and are confused.

I consider favorable demographic winds continuing from the East, but especially China and India. If you can buy under one standard deviation from the historical average and sell one standard deviation above the historical average, you will guarantee yourself success. The key to this strategy is identifying long-term value stocks and using them as tools for creating wealth over time. Now is that time.

Over the last several weeks history was made with almost day to day 4% stock market whips, this was due to massive uncertainty. This massive uncertainty has created some real bargains in my opinion. I continue to suggest buying stocks for the long run. Right now I am very impressed with the R&D coming out of IBM for example.

Simon Jester's bottom line:

Buy innovative technology businesses and energy companies in the natural gas industry. If you accept my strategy of buying slowly and holding great businesses, you will be rewarded throughout the upcoming 2012 political / election year. Lastlt, I thank POTC for editing this piece as I work overseas and have limited computer access.

Capitalist Pig Bob Wants You to Know What Most Remain Silent About; Obama's Muslim Brotherhood Cabinet; the West and Jews Are in the Crosshairs..

The video below is a must watch in my porky opinion (impo),  'butt' especially Jews that vote for democrats. My pig heart hopes that Mr. Tarek's wisdoms jar their collective intellect.

If the stated Muslim Brotherhood's goal is to destroy Israel and the Western Devil, how could they be considered for employment in the White House?

Please listen to the part when Tarek mentions that Jews are being counted at a University in Canada. Could only imagine if this was done with any other religious group?

Some of our 'friends' are afraid of offending anybody, not my pig heart. 

After I learned that Obama has 3 Muslim Brotherhood cabinet members offering policy advice, that made me very upseet.

http://www.livestream.com/ideacity/video?clipId=flv_fd017d81-dc18-42cc-821a-18b86fdea840

Capitalist Pig Bob

~Not Silent~

Shanda Interactive Entertainment (SNDA)

SNDA reports Q2, 2011 results Tuesday, August 30 after market close.

Post Earnings Trade Alert (PETA) coming Tuesday night after market close.

All subscribers will receive this PETA Red-Eye / midnight ET.

You will have the morning pre-market hours to review and place a trade up or down, usually on market open or in close proximity.

Our team is excited to be studying SNDA, we look forward to an educational and profitable trade.

Thank You.

Armed U.S. Marshalls vs Gibson Guitar Co.

Please watch this entire video, there are sound distractions at certain points due to planes over head, but some of the facts and accusations are mind numbing.

http://www.youtube.com/watch?v=O_-taqM5Sk0&feature=player_embedded

Capitalist Pig Bob wanted you to know what kind of anti business current we're up against in an economy that posted Q2 GDP of only 1%; that 1% is after pouring Trillions of dollars of stimulus and bailouts. 

Confiscating $1M worth of wood and jeopardizing 600 jobs in this Memphis, TN Gibson guitar plant is reprehensible. The first raid came in 2009 under Obama and Holder's watch. CEO Henry Juszkiewicz said the final decision of that case is still uncertain as the Department of Justice asked for a 'Stay', so in effect draggng the case on as Gibson's business operations, jobs, and reputation are left hanging in the wings.

The fact Gibson's CEO said any person that resells their guitar in the U.S. could be criminally prosecuted alerts  my pig brain that these sitting Donkeys have their heads stuck inside their asses.

Is the Obama Administration's focus on stalling any recovery in the private sector and awarding more power to the Federal Government, sad reflection what we're up against my pigs and piglets.

Imagine if we were to experience another horrific left field event after the U.S. Gov't overreaches and becomes all powerful, we will lose a lot more than our money.

Anyone against Wall Street or any other private business sector must rethink ASAP. As the saying goes:

 If you don't stand up just because you're not part of the targeted group, in this case Gibson Guitar Co., you may be next...

Thanks, Pig Bob.

Apple's Co-Founder Steve Jobs Resigns.

It's very unfortunate but not shocking to us, that moments ago CEO of Apple Inc. (AAPL) Steve Jobs officially resiged his role.

He wrote in this very sad tone: "the day has come where I can no longer meet my duties".

Regardless of his critics, Steve's ability to innovate will never be rivaled.

POTC's hearts and prayers go out to Steve, his family, and friends.

Notable business event for Steve Jobs:

Jobs had a public war of words with Dell Computer CEO Michael Dell, starting when Jobs first criticized Dell for making "un-innovative beige boxes." On October 6, 1997, in a Gartner Symposium, when Michael Dell was asked what he would do if he owned then-troubled Apple Computer, he said "I'd shut it down and give the money back to the shareholders." In 2007, Jobs sent an email to all employees when Apple's market capitalization rose above Dell's. The email read:

Team, it turned out that Michael Dell wasn't perfect at predicting the future. Based on today's stock market close, Apple is worth more than Dell. Stocks go up and down, and things may be different tomorrow, but I thought it was worth a moment of reflection today. Steve.

POTC's #1 Stock Option Trade..

Suggestion for September Expiration is:

If interested in this write-up, please send an e-mail to Psychologyofthecall@gmail.com. 

The Best Days are Still Ahead of Us,

The Psychology of the Call team (POTC)- 

Najarian and Kass; Two Bulls for Different Reasons..

CNBC's Fast Money Guests on Thursday, August 18, 2011 after Market Close:

Jon Najarian, of optionMONSTER, said the cash Vix and futures Vix signaled too large a spread and he felt a temporary market bottom was in.

Najarian said with 30 minutes to go in the trading day, he went long the S&P. 

Doug Kass of Seabreeze partners phoned in and mentioned that he thought the bottom for the year was in.

Kass specifically mentioned that certain banks like BAC could double literally within a couple months. 

POTC monitors, reviews, and verifies many sources on and off TV. We have found Doug Kass to be an excellent source from time to time. He called the bottom in REITs in 2009 within weeks of the bottom and has been bearish when the S&P was firmly above 1,300.

To receive our favorite list of stocks through year-end, please subscribe in the right margin for a quarter or year.

POTC-

Pierre de Fermat's 410th Birthday Celebrated With a Math Logo from Google Search~

Pierre de Fermat is the patron saint of unfinished business. In 1637, the French mathematician jotted down his 'Last Theorem' in the margins of a ancient Greek mathematical text. Pierre's theorem ended up vexing mathematicians for 358 years before it was finally solved.

Today, on what would be Pierre's 410th birthday, Google and the Psychology of the Call team (POTC) savor the amateur mathematician's work with this posting. 

Monsieur Pierre de Fermat

Ron Paul Comes Out on Top with Corn Huskers...

Michele Bachmann dead-heated in the Iowa straw poll with 4,823 votes out of nearly 17,000 cast. Ron Paul was a close runner-up, taking 4,671 votes and trailing Bachmann by less than 200 ballots. In a distant third place was former Minnesota Gov. Tim Pawlenty, who took 2,293 votes after investing heavily in the event.

The rest of the lineup: Rick Santorum – 1,657 votes; Herman Cain – 1,456 votes; Rick Perry – 718 votes; Mitt Romney – 567 votes; Newt Gingrich – 385 votes, Jon Huntsman – 69 votes; Thaddeus McCotter – 35 votes. {Note: there was 1 smart vote cast for our Pig Bob}. 

Romney, Huntsman and Gingrich were listed on the ballot, but did not contest the poll. Perry’s sixth place finish came despite not being listed on the ballot; his votes came through write-ins, since the Texas governor only announced his campaign this weekend.

U.S.A.'s 94 Year String of AAA Rating 'Changed' to AA+ on Obama's Watch..

United States of America Long-Term Rating Lowered To 'AA+' On Political Risks And Rising Debt Burden; Outlook Negative.

We have lowered our long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term rating. We have also removed both the short- and long-term ratings from CreditWatch negative.

The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics.

More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.

Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics any time soon.

The outlook on the long-term rating is negative. We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

Rating Action

On Aug. 5, 2011, Standard & Poor's Ratings Services lowered its long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA'. The outlook on the long-term rating is negative. At the same time, Standard & Poor's affirmed its 'A-1+' short-term rating on the U.S. In addition, Standard & Poor's removed both ratings from CreditWatch, where they were placed on July 14, 2011, with negative implications.

The transfer and convertibility (T&C) assessment of the U.S.--our assessment of the likelihood of official interference in the ability of U.S.-based public- and private-sector issuers to secure foreign exchange for debt service--remains 'AAA'.

Rationale

We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.

Our lowering of the rating was prompted by our view on the rising public debt burden and our perception of greater policymaking uncertainty, consistent with our criteria (see "Sovereign Government Rating Methodology and Assumptions," June 30, 2011, especially Paragraphs 36-41). Nevertheless, we view the U.S. federal government's other economic, external, and monetary credit attributes, which form the basis for the sovereign rating, as broadly unchanged.

We have taken the ratings off CreditWatch because the Aug. 2 passage of the Budget Control Act Amendment of 2011 has removed any perceived immediate threat of payment default posed by delays to raising the government's debt ceiling. In addition, we believe that the act provides sufficient clarity to allow us to evaluate the likely course of U.S. fiscal policy for the next few years.

The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.

Our opinion is that elected officials remain wary of tackling the structural issues required to effectively address the rising U.S. public debt burden in a manner consistent with a 'AAA' rating and with 'AAA' rated sovereign peers (see Sovereign Government Rating Methodology and Assumptions," June 30, 2011, especially Paragraphs 36-41). In our view, the difficulty in framing a consensus on fiscal policy weakens the government's ability to manage public finances and diverts attention from the debate over how to achieve more balanced and dynamic economic growth in an era of fiscal stringency and private-sector deleveraging (ibid). A new political consensus might (or might not) emerge after the 2012 elections, but we believe that by then, the government debt burden will likely be higher, the needed medium-term fiscal adjustment potentially greater, and the inflection point on the U.S. population's demographics and other age-related spending drivers closer at hand (see "Global Aging 2011: In The U.S., Going Gray Will Likely Cost Even More Green, Now," June 21, 2011).

Standard & Poor's takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.'s finances on a sustainable footing.

The act calls for as much as $2.4 trillion of reductions in expenditure growth over the 10 years through 2021. These cuts will be implemented in two steps: the $917 billion agreed to initially, followed by an additional $1.5 trillion that the newly formed Congressional Joint Select Committee on Deficit Reduction is supposed to recommend by November 2011. The act contains no measures to raise taxes or otherwise enhance revenues, though the committee could recommend them.

The act further provides that if Congress does not enact the committee's recommendations, cuts of $1.2 trillion will be implemented over the same time period. The reductions would mainly affect outlays for civilian discretionary spending, defense, and Medicare. We understand that this fall-back mechanism is designed to encourage Congress to embrace a more balanced mix of expenditure savings, as the committee might recommend.

We note that in a letter to Congress on Aug. 1, 2011, the Congressional Budget Office (CBO) estimated total budgetary savings under the act to be at least $2.1 trillion over the next 10 years relative to its baseline assumptions. In updating our own fiscal projections, with certain modifications outlined below, we have relied on the CBO's latest "Alternate Fiscal Scenario" of June 2011, updated to include the CBO assumptions contained in its Aug. 1 letter to Congress. In general, the CBO's "Alternate Fiscal Scenario" assumes a continuation of recent Congressional action overriding existing law.

We view the act's measures as a step toward fiscal consolidation. However, this is within the framework of a legislative mechanism that leaves open the details of what is finally agreed to until the end of 2011, and Congress and the Administration could modify any agreement in the future. Even assuming that at least $2.1 trillion of the spending reductions the act envisages are implemented, we maintain our view that the U.S. net general government debt burden (all levels of government combined, excluding liquid financial assets) will likely continue to grow. Under our revised base case fiscal scenario--which we consider to be consistent with a 'AA+' long-term rating and a negative outlook--we now project that net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 79% in 2015 and 85% by 2021. Even the projected 2015 ratio of sovereign indebtedness is high in relation to those of peer credits and, as noted, would continue to rise under the act's revised policy settings.

Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act. Key macroeconomic assumptions in the base case scenario include trend real GDP growth of 3% and consumer price inflation near 2% annually over the decade.

Our revised upside scenario--which, other things being equal, we view as consistent with the outlook on the 'AA+' long-term rating being revised to stable--retains these same macroeconomic assumptions. In addition, it incorporates $950 billion of new revenues on the assumption that the 2001 and 2003 tax cuts for high earners lapse from 2013 onwards, as the Administration is advocating. In this scenario, we project that the net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 77% in 2015 and to 78% by 2021.

Our revised downside scenario--which, other things being equal, we view as being consistent with a possible further downgrade to a 'AA' long-term rating--features less-favorable macroeconomic assumptions, as outlined below and also assumes that the second round of spending cuts (at least $1.2 trillion) that the act calls for does not occur. This scenario also assumes somewhat higher nominal interest rates for U.S. Treasuries. We still believe that the role of the U.S. dollar as the key reserve currency confers a government funding advantage, one that could change only slowly over time, and that Fed policy might lean toward continued loose monetary policy at a time of fiscal tightening. Nonetheless, it is possible that interest rates could rise if investors re-price relative risks. As a result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in 10-year bond yields relative to the base and upside cases from 2013 onwards. In this scenario, we project the net public debt burden would rise from 74% of GDP in 2011 to 90% in 2015 and to 101% by 2021.

Our revised scenarios also take into account the significant negative revisions to historical GDP data that the Bureau of Economic Analysis announced on July 29. From our perspective, the effect of these revisions underscores two related points when evaluating the likely debt trajectory of the U.S. government. First, the revisions show that the recent recession was deeper than previously assumed, so the GDP this year is lower than previously thought in both nominal and real terms. Consequently, the debt burden is slightly higher. Second, the revised data highlight the sub-par path of the current economic recovery when compared with rebounds following previous post-war recessions. We believe the sluggish pace of the current economic recovery could be consistent with the experiences of countries that have had financial crises in which the slow process of debt deleveraging in the private sector leads to a persistent drag on demand. As a result, our downside case scenario assumes relatively modest real trend GDP growth of 2.5% and inflation of near 1.5% annually going forward.

When comparing the U.S. to sovereigns with 'AAA' long-term ratings that we view as relevant peers--Canada, France, Germany, and the U.K.--we also observe, based on our base case scenarios for each, that the trajectory of the U.S.'s net public debt is diverging from the others. Including the U.S., we estimate that these five sovereigns will have net general government debt to GDP ratios this year ranging from 34% (Canada) to 80% (the U.K.), with the U.S. debt burden at 74%. By 2015, we project that their net public debt to GDP ratios will range between 30% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at 79%. However, in contrast with the U.S., we project that the net public debt burdens of these other sovereigns will begin to decline, either before or by 2015.

Standard & Poor's transfer T&C assessment of the U.S. remains 'AAA'. Our T&C assessment reflects our view of the likelihood of the sovereign restricting other public and private issuers' access to foreign exchange needed to meet debt service. Although in our view the credit standing of the U.S. government has deteriorated modestly, we see little indication that official interference of this kind is entering onto the policy agenda of either Congress or the Administration. Consequently, we continue to view this risk as being highly remote.

Outlook

The outlook on the long-term rating is negative. As our downside alternate fiscal scenario illustrates, a higher public debt trajectory than we currently assume could lead us to lower the long-term rating again. On the other hand, as our upside scenario highlights, if the recommendations of the Congressional Joint Select Committee on Deficit Reduction--independently or coupled with other initiatives, such as the lapsing of the 2001 and 2003 tax cuts for high earners--lead to fiscal consolidation measures beyond the minimum mandated, and we believe they are likely to slow the deterioration of the government's debt dynamics, the long-term rating could stabilize at 'AA+'.

On Monday, we will issue separate releases concerning affected ratings in the funds, government-related entities, financial institutions, insurance, public finance, and structured finance sectors.

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