Photo of dead Moslem Freedom Fighters in Stolen Iranian election – Investors411 6/26/09

“Fear Is The Mind Killer”

Frank Herbert’s SF novel Dune was the first place this expression was used.

Fear mongering works especially in politics but it has long lasting and significant consequences.

Back in the 50′s President Eisenhower made a very unpopular decision to support sending a little black girl to an all white school. He sent in the 101 Airborne to protect her. This nation that grew strong because we grew united – all races & religions became more tolerant.

Now The major US news story being fear mongered is the possibility of a Moslem cultural center a few blocks away from the former site of the Twin Towers. Have we all forgot the events of last summer?

On June 21st Investors411 ran the following picture of Moslem Freedom fighter Neda Agha Soltan


How the Fear Mongering Will Spread

  • Fear monger advocates in the USA  blame ALL Moslems for the attacks NOT al Quaeda fanatics
  • Moslem Jihadist groups like Hezbollah, Hamas, al Qaeda will respond and “say see the USA is not about freedom” as word of the hatred of the Islamic Center in NYC spreads.
  • The blood lusting jihadist will hold up the example of the NYC Moslem culture center to all their potential recruits as an example of how ALL Americans hate ALL Moslems.
  • Fear mongering right wing polls in the USA will say Hamas, Hezbollah and Ahmadinejad wants a Culture Center. You’re either with them or us.
  • And so the fear will grow into a deadly spiral

The fear mongers on both sides will be political winners, and our Military industrial complex (weapons our #1 export and we are 43% to 60% of the worlds military budget) Osama Been Forgotten & company is laughing in his cave at the of thousands of new recruits he will enjoy.

The biggest losers are those who believed this country stood for religious freedom. Not just here but the moderates throughout the Moslem world, especially those moderates like Neda who fought and died on their own or with us in Iran, Iraq, Pakistan, the Sudan or anywhere in the world.

KISS & Stocks (Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary


Index Percentage Volume
Dow -0.01% flat
NASDQ +0.39% flat
S&P 500 +0.01% down
Russell 2000 +0.92% -

Technicals, Fundamentals & Analysis

Investors411 record – 5 years of beating benchmark S&P 500

Mantra for the month - The Black Box/High Frequency Traders BB/HFT control the majority of trades. Paul R in the comments section has found a great source describing the BB/HFT traders and consequences of what they do.

Pitiful volume and flat US market.

Covered Calls

We all owe a debt to JS for an illuminating presentation of a more conservative form of investing.  From the comments section of the blog –

“This is a strategy I use to replace CD’s bonds when rates are extremely low. My goal is to replace the income lost by such low rates. This is NOT a strategy for growth. This is a strategy to severely limit losses.
Example using today’s prices: buy CSCO $21.95; sell a COVERED call for January 2011 at strike price of $17.50. (this means you have sold the right for someone to buy CSCO from you for $17.50 anytime till 3rd Fri in January 2011. You will get $5.00 for selling this option. Why did you do this? Because they paid you a premium above current price for this option: $21.95 minus $5.00 =$16.95 (your net cost of CSCO. Math: 21.95 minus $5.00 =16.95, your net cost. Taken at $17.50 = $.55 profit after 5 months which equals 7.78% year. ( $.55 divided by 5 months =$.11 x 12 [ to get yearly rate] =$1.32 divided by your net cost [$16.95] =7.78%.

Positives: you beat CD rates; you have 20% downside protection (from 21.95 to $16.95). Even with all the fear out there, prices are not highly inflated, so 20% is decent protection.

Negatives: you MUST own CSCO till end of call date Jan, 2011. To sell CSCO, you MUST buy call back.
If CSCO stays above $17.50 all the way to $50, CSCO will be taken from you for $17.50. But remember, this strategy is for income above current CD rates.
Cost for this is: $8 to buy 1-1,000 shares, $16 to sell call, and if taken [you have really sold CSCO] $8, for a total of $24. To keep costs low, one should commit $10,00 or more for this.

Remember, this is income part of my portfolio; I’m trying to limit risk as much as possible. CSCO has to go below $16.95 (my net cost) to lose money. You must buy companies that have much cash and won’t go under. Also, after Jan 2011, I can sell another call.

Significant Indexes

  • The Dollar (USD)  [Anything price move over +/- 0.50 is significant] The dollar fell -0.50% yesterday. A fall of this magnitude should have translated into a rally in stocks. =
  • The Baltic Dry Index (BDI) [measures cost of world trade/proxie for China & emerging markets] Rally +0.81% yesterday. Has broken up through 50 day moving average. But upside momentum slowing shows possible trend reversal. Overall trend still = Bullish
  • McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] MO rose to -26.12Neutral

Reading Tea Leaves

You have both the dollar dropping significantly and most emerging markets in the third day of a rally. Yet US stocks have failed to move.

Somethings got to give. – Rally Ho. – Perhaps its short term, but it could be a sharp rally as short positions caught off guard. Remember I’m reading tea leaves.

NB – This rally is dominated by BB/HFT traders.


The  Positions Section link to latest & former buys and sells  - These are positions I actually own

Current positions – EWZ & EWS

Bought  small positions yesterday in EWZ (Brazil) at 69.00  & EWS (Singapore) at 11.99

Will add resource rich Australia EWA in list of ETF’s

Each time we have a MO below 40 and a dip, I plan to buy.  First nibbles and the lower we go the more riskier ETF’s.

Same strategy – Will sell 1/2 ETF at @3 to 5% gain/loss and let the rest ride till the MO moves higher.

Long Term Outlook - NEUTRAL


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