Bill,
I guess the market is not going down, too much money being printed into it perhaps.
I hope that not too many people bought August puts as advised, you're going to have serious losses. Best of luck all,
JT

JT,

I believe that Bill advocated writing puts. In the case where the share price is above the strike price at expiry the put writer gets to keep the premium with no further obligation.

If the share price drops below the strike price at expiry, then the shares are put to him at the strike price.

todd

No, Todd, there are many here that have been buying puts on the Dow S&P on bullish days as per "surviving the market meltdown" as well as others advising earlier puts like in August. I dont know what you're talking about mate. JT

Jason22 is partially correct. Bill's 'surviving the market meltdown' did suggest buying puts on bullish days. However, he didn't give specifics on expiry dates. In fact, he has always maintained a 3-6 month timeframe for the meltdown, I think. So, to account for that, I have been buying otm dec 06 and jan 07 puts on the major indices. They are slightly expensive due to the larger time component but it does give me some buffer to wait out the coming market downturn.

cheers !

I was thinking of this post:

http://www.billcara.com/archives/2006/07/dell_enters_my.html

I found the post you guys are talking about. Sorry for the confusion.

http://www.billcara.com/archives/2006/07/surviving_a_mar.html

Myself, I am waiting until we get overbought and buying the 2x inverse dow ETF.

Good lord people! Get a grip!

We were oversold. We got the oversold bump. Then we danced into EOM for the EOM mark-up. We are getting that. NOW, if the market gets overbought and we continue higher with GOOD VOLUME and other improving internals THEN I'll reconsider what I'm doing. But as long as internals are crappy including LOW VOLUME I'll stick with diversified longs but fully hedged. The institutions are STILL on the sidelines.

As for gold, listen to g034. You don't get a more perfect environment for gold than this. Your only decision is how much of it to hold (5%? 10%? 15%? 20%?) and do you want the bullion or the metal.

As far as Bill being wrong? Give me a break. Sure , massive reflation can save this thing but if it does your gold longs are going to go to the moon.

Thanks, MarkM.
"when you can keep your head, while all of those around you...."
We need to turn down the "noise".
How many of you, like me, have lost our resolve.... just before potential gains appear?
It's the "market's" way...the way the big boys take our money.
Keep the faith,

.....bullion or the MINERS....

Common quotes for uncommon times...

"A speculator is a man who observes the future, and acts before it occurs."
Bernard Baruch

"Always do one thing less than you think you can do."
Bernard Baruch

"During my eighty-seven years I have witnessed a whole succession of technological revolutions. But none of them has done away with the need for character in the individual or the ability to think."
Bernard Baruch

"Every man has a right to his opinion, but no man has a right to be wrong in his facts."
Bernard Baruch

"I made my money by selling too soon."
Bernard Baruch

"I never lost money by turing a profit." (-:
Bernard Baruch

"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he is wrong."
Bernard Baruch

"Most of the successful people I've known are the ones who do more listening than talking."
Bernard Baruch

"Never follow the crowd."
Bernard Baruch

"Never pay the slightest attention to what a company president ever says about his stock."
Bernard Baruch

(or a talking head)

"Only as you do know yourself can your brain serve you as a sharp and efficient tool. Know your own failings, passions, and prejudices so you can separate them from what you see."
Bernard Baruch

"Take the obvious, add a cupful of brains, a generous pinch of imagination, a bucketful of courage and daring, stir well and bring to a boil."
Bernard Baruch
"
"The main purpose of the stock market is to make fools of as many men as possible."
Bernard Baruch

"When good news about the market hits the front page of the New York Times, sell."
Bernard Baruch
(or Barrons, or the Wall Street Journal, or Forbes, or Cramer, etc,)

"You can overcome anything if you don't bellyache."
Bernard Baruch

Ahhh...the weekend!

Bill-

A couple of things have me a bit puzzled. The first is what the 10 year is doing. Who or what is driving this down? As I believe the adults in the room are the bond traders, this sure is giving some breathing room to the homebuilders on the soft landing scenario. Second is Utilities. That chart is unbelievable. That looks like more than just defensive buying. Someone is awfully sure rates are coming down and soon or wants us to believe so. Last is BKX. I can see that M&A acivity is giving them a bid as is the prop desk trading against all your readers. But here too, it looks like the chart says relief troops will arrive to the beaches soon. My last conundrum though is VOLUME. Where is it if Bernanke is actually engineering The Great Escape as the key charts are hinting? The institutions should be pouring off the sidelines if this were real. They aren't because volume says they aren't. In fact, volume was lighter on Friday's Moving Day than Wednesday or Thursday. Is all the above one massive HEAD FAKE being designed by The Boys? It sure looks pretty but it smells awfully funny to me.

On the other hand, Bill Gross of PIMCO recently opined that bond yields have peaked and will decline over the next few years. I don't personally find any difficulty believing that the economy is slowing and inflation will decline in a commensurate fashion. Yes, I think that official inflation numbers probably understate inflation. But, housing a big component of inflation numbers, and even commodity prices will drop if the US and European economies start to slow due to rising rates.

So, I don't buy into the idea that inflation this time around won't respond to higher interest rates, and apparently the bond traders don't either. Stocks in the US and much of the world are not expensive, and even the chronically bearish Barron's this past week wrote that big caps in the US are pretty cheap, and buying them at these valuations has in the past been a good move. If you add in the fact that the Fed may be done, or at least be very close to done, than it's not inconceivable to me that the market here will hold up pretty well.

As for trading, money management is the key to success. Proper position sizing, cutting losses and letting proifits run are key. Personally, I prefer to trade on what the market is actually doing, rather than on what I think might happen, but that's just my way of doing things.

MarkM, good call on the end of month mark up paragraph, that was my thought this week as well, hope we are both correct.

Bill Gross talks his book today, just like he did when he said he liked the 10 yr. at 4.50%. If you bought bonds then, he played you and will play you again until you figure out his game, IMO. This is standard operating procedure for large fund managers btw. Open your Eyes ;-)

Inflation and deflation go hand in hand.

Actions: lower interest rates while inflating money supply - watch asset prices rise in all asset classes - raise rates to curb the inflation that the low rates and money supply growth caused in the first place - the higher rates deflate various asset classes and slow economy. Buy bonds due to perceived economic slowing and lower stock market earning growth rates. Bonds are bought at technically oversold levels. Piece of cake.

As interest rates rise, economy slows and asset prices fall (stocks, housing), one would expect inflation expectations to fall also. BUT, the MASSIVE liquidity injections due to foreign central banks (see Japan) purchasing US Treasury bonds/notes etc. has low historical context. The typical cycle of US Central Bank liquidity injections that can be reversed has, IMO, been trumped by the non-reversable (without a massive US bond collapse by foreign central bank bond selling) past foreign central bank US bond purchases. I don't think that traders are thinking about this liquidity that can't be reversed. Well, maybe Bill is because that liquidity is the inflation that can get out of control while the economy slows. Not the end of the world, but simply a case of STAGFLATION.

No recommendation on anything, just a rambling that I hope is understandable.

Disclaimer - long gold, miners, oil, stocks, bonds, and lots of cash. Short stocks that I like less than the ones that I am long ;-)

Boy, it's nice to have football back.

Have a great weekend and try to stay cool cats!

g034,
I've been trading for about 22 years, and my eyes are always wide open. Bill Gross isn't going to talk bond yields down any more than Alan Greenspan could talk stock prices down. Gross honestly believes bond yields will fall, as apparently do the bond traders, and as do I. I really don't care one way or the other, as I'm diversified out the wazoo, and I'll trade in such a way as to take advantage of whatever happens.

Eye Doc-

"Gross honestly believes bond prices will fall..." How do you know this? Do you know him personally? Are you invested with PIMCO?

My trouble with Gross (as others here) is that we have heard his siren call before. Let's charitably call the last three "honest mistakes" but that doesn't mean he doesn't have a book to talk. He most certainly does.

I see the action in the bond market so I see what you are talking about. So bonds have moved in the direction of your beliefs for a couple days. That's all it is right now and it doesn't mean it is going to stay that way. We will see. Nevertheless, I believe g034 raises a valid point re Gross. Your differences as I see them is that you took his words as a personal attack. I have a hard time thinking they were meant maliciously.

Long Bonds-

Bonds have been moving in there current trend for more than just a few days... but all of us work in different time frames and have differing concerns in regards to risk management and portfolio diversification.

Looking at 20 year chart of the 30 year. We have now bounced off the 100 mma continuing a very long trend. This also happened in 99, 94, 90, 87. Each time proved to be a time to accumulate, not distribute the long bond.

Of course, this time may be different. JMHO

long TLT

Okay. Thanks for that.

Bill Gross-

Pimco writes some pretty good research, different perspective, and worth reading. Some quality people there.

Talking their/his book? YES, alsolutely... as I believe he should. He has a responsibilty to every shareholder in those funds to do what he can to preserve their money. As a respected authority would he be a good fiduciary to come out and talk down his book (their $)? I don't think so. His responsibilty is with his own investors first. Does that mean he should come out and purposely mislead the public, no. But over the long term shareholders have benefited by maintaining a long term perspective, Pimco does not cater to traders that I know of.

We all talk our books here with every comment, don't we? It is important for all to recognize that anyone involved in the markets- is biased, and talks their book. So just take that into consideration when hearing their opinion- but differing opinions can be valuable. If those opinions trigger you to double check your own view they have served a purpose- even if only helping your opposing conviction.

MarkM- you know I respect you, just trying to make a point on the time frames. Apologize if it came across poorly.

For us newbies, the following text off Bloomberg explains a bit the 2-y and 10-y bonds.

(btw can these be tracked in realtime?). Thx.

"U.S. 10-year Treasuries rose for a fifth straight week, pushing yields below 5 percent, as reports showing the U.S. economy slowed fueled speculation the Federal Reserve will stop raising interest rates next month.

Treasuries rallied as futures traders cut bets the Fed will lift the overnight target rate between banks another quarter percentage point to 5.5 percent. Yields on benchmark 10-year notes dropped about 5 basis points this week, or 0.05 percentage point, to 4.99 percent for the first time since June 14.

``You have to be pretty secure that there is really a slowdown'' to buy 10-year notes under 5 percent, said Scott Gewirtz, head of Treasury note and bond trading at Lehman Brothers Inc. in New York. ``The economy definitely does seem to be moderating.''

The price of the 5 1/8 note due May 2016 rose 12/32 this week, or $3.75 per $1,000 bond, to 101, according New York-based bond broker Cantor Fitzgerald LP.

The yield on two-year notes, which are more sensitive to changes in expectations for Fed policy, dropped 10 basis points this week to 4.98 percent. The 30-year bond yield fell 2 basis points to 5.07 percent.

Interest-rate futures suggest there is a 28 percent chance the Fed will increase rates again in two weeks, down from 44 percent before the report. Expectations for another rate increase next month was near unanimous until Fed Chairman Ben S. Bernanke said in his semi-annual testimony to Congress on July 19 that the economy is moderating, which will contain inflation. "

[...]

ursus- Now there was also this little note:

"The drop in yields may make it more difficult for the Treasury to sell three- and 10-year notes and 30-year bonds during its so-called quarterly refunding Aug. 7-10. The Treasury will sell $21 billion of three-year notes, $13 billion in 10- years and about $12 billion in 30-year bonds, according to six firms surveyed by Bloomberg News. Details of the auctions will be announced Aug. 2.

Auctions

``In order to have successful auction given where yields are today, the market is going to demand higher yields'' with the Fed meeting Aug. 8, said Kenneth Taubes, who oversees $17 billion in Boston as director of fixed income at Pioneer Investment Management Inc. ``The market is going to be hesitant on Treasuries.'' "

Sincere comments (although differing) on the movements of capital markets should NEVER require an apology to a condescending rebuttal. We should instead refer to such comments as debate and/or banter and proceed with the discussion.

These equity markets are composed of buyers and sellers (the two essential but opposing requirements to maintaining an efficient market) and will never discriminate between for example, the value investor, the momentum trader, the stock speculator, the long term investor, the short term trader, the stock buyer and seller, the bond buyer and seller, the put writer and put buyer, etc,. On any given weekday, these markets will indiscrimimately reward or punish any buyer or seller.

The only way to acquire success at trading capital markets is to study, test, apply, review, study, retest, apply, etc,... your INDIVIDUAL trading strategy and ignore all criticisms in the process.

As Bernard Baruch once said "Don't try to buy at the bottom and sell at the top. It can't be done except by liars."

Eye Doc,

MarkM is correct, I meant nothing negative towards you or your trading abilities. I hoped the wink would tell you that.

As MarkM (and Bill) knows, I have almost 20 years professional trading experience from pits to screens, trading for myself and former clients that include the largest money management firms. Working with these former clients gives me the same perspective regarding their motives as Bill has - which means that I don't trust one word from the "experts" on CNBC. That's all.

Stockman is correct, of course, that we all talk our books. That is what makes a market. What bothers me is when large managers are saying one thing to Joe Public while taking the opposite action for their portfolio. People fall for this time and time again, buying tops and selling bottoms.

The best traders, and I know a few, can be confident to the point of cockiness, BUT are quick to admit their mistakes and are open to discussions. The discussions here are healthy and I look forward to all future dialogue here.

Sometimes you guys (comment posters) sound like my girlfriend: complaint after complaint after complaint. :) She's lovely, nonetheless, but still in the process of realizing that complaining gets you no where real fast. Act and gain. Rationalize and lose. I guess many of you are also still learning this lesson. I'm thankful for Bill's patience when I read so many negative comments on the blog.

"If you can keep your head, while all about you are losing theirs ..." - Rudyard Kipling