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Friday, May 22, 2009

Lottery Tickets 2 - Fourteen Days later

As previously mentioned, the second Lottery Tickets are MUCH higher risk. So these lottery tickets aren't for the feint of heart.
Lets take a look how we did 14 days later.

Stock 5/7/9 5/21/09 Percent Gain
FAZ 4.75 5.41 13.9%
SRS 20.1521.60
TZA 24.9528.41 13.9%

The lottery tickets have lost ground since last post (click). However, all things considered, not doing too bad. If you haven't bought lottery tickets, and where thinking of doing so, or if you haven't yet bought the full target volume, consider this.

The banking index broke down the 21st below the bull trend line. See below.
Trade at your own risk.

As for SRS, read what is happening to commercial real estate.

Also , on earlier lottery tickets I said Ford maybe a long term hold. I change my mind. Sell all ford!
Why? The us Government will in effect operate the zombie GM company, allowing it to offer financing and pricing that Ford can't match. So the US Government saving GM jobs will eventually cause Ford to shed jobs.
When will people learn! There is no such thing as a free bail out!

*NOTE* Today has two posts, please see earlier post on Bear Market traders.


  1. Hey Murph,

    I think I'll take a dip into FAZ. Next week's treasury offerings should be interesting.

    I was just wondering, who is buying these secondary offerings from these busted banks?

    My guess is maybe pension funds? I'm thinking it has to be someone the government can coerce. One would think the true suckers are already broke or at least getting there fast.

  2. If you talk to the common person, many think the banks are fine since they passed the stress test. I think many people are dumping their money into fixed income for an extra 1-2% ROI over US Treasuries. At 1% vs 3%, people should realize that the 2% bonus is not worth the risk, and go with treasuries. But I don't believe people (professional or otherwise) are looking at this as risky, since the US Government has gauranteed just about everything. Therefore there is a sense that people won't lose their money. Disaster may happen if/when the government has to choose between higher treasury rates vs allowing mass failures. At that point, the government has to choose mass failures. Higher interest rates (significantly higher) will be the death toll on the US economy and destroy housing values.

    In any event, one thing I have learned is it takes much longer for these things to play out than expected. So FAZ is a good gamble, but treat it as gambling, not investing. :)