It's Just a Flesh Wound

You can come out from under your desks now. The market is closed for the day. Today was inevitable and we all know that. I bought to cover 30 shares of CALM at $24.25. I laid them out at $40.41 last week as the trade blotter shows. A net profit of $484.80 and the account is now worth $2,984.80.
How often can you get to watch the markets freefall in your lifetime? Today is one of those days and it is not fun to see. The VIX ran up to 50 which is totally insane and makes the smart money want to go long the market. Here is how the VIX works.

The common interpretation of VIX movements is that the VIX will rise when fear or uncertainty does, since there will be a greater demand for put options. Conversely, when the market is rising, that typically creates complacency on the part of traders and the VIX will fall as the demand for put options decreases.

FEAR=RISING VIX=FLOCK OF SHEEP BAILING OUT=BABY TRADER BUYS

I bought 50 shares of QQQQ @ $38 near the close today based strictly on the VIX being severely extended.

Rather than watching the market drop in chunks over the next few weeks, it cleansed itself in one big freefall which is the better scenario to the road to recovery. If the short sale rule was not in effect this capitulation would have happened last week. I think I might buy stock in Kimberly Clark (KMB), the distributor of Huggies Diapers since I used about 12 diapers today. 

Please remember to share my blog with just 1 person who would enjoy reading my musings.

The Wall Street Kid

I now have a video game created about me call The Wall Street Kid. The mission of this game is to go around and put seed money into commercial banks that are about to get shorted to extinction. In exchange for saving these banks you are rewarded with warrants, options, and preferred stock at deep discounts. In the end you reap millions of dollars in profit because your cost basis is basically nothing while saturating the total outstanding shares by 10%. The more you saturate the shareholder's value you are rewarded with larger yearly bonuses.

The government has announced the $700 billion bailout details. Here is one actual piece of action that will be incorporated into the bill.

The government would receive stock warrants in return for the bailout relief, giving taxpayers a chance to share in recipients' future profit.

Now I may be young, but I am far from stupid. If you are issuing stock warrants (which tend to be deeply discounted), to the government to provide a bailout program to those banks that choose to participate you are essentially diluting the overall value of the shareholder's equity. So if and when these struggling banks begin to turn profitable one day, the government will be sitting on the sidelines and slowly selling stock back to the open market to the tune of $700 billion dollars. 

A better solution would be delivering immediate relief to the taxpayers who were hurt by these large banking failures. Perhaps raising the the amount of money you can put into an IRA or a 401k plan to $10,000 and $25,000 respectivly. Also, raising  the yearly limits on capital losses from $3,000 to $25,000 per year. These are very simple tweaks that will allow the honest shareholders immediate relief in their pockets. 

Baby trader is furious that this is going to affect his future and you should too. Please free feel to leave a comment beneath this article. I am curious as to what my readers think about this. Also, share my blog with those who would find this blog of interest. I really would like to meet Jim Kramer in person one day.

Ryan :)

Wheel Of Disaster

I would have bought more letters to solve this puzzle,
but my assets at Wamu are now frozen.

Darwinism is running through the stock market. Chase gobbled up Wamu for next to nothing and Wachovia will obviously be the next to succumb to the pressure. Wamu currently pays 4% on a savings account. I guarantee that rate be lowered to 1% very soon.

Here are some of new promotions to get the masses back into the banks.

Chase will be offering 100 free shares of Wamu to all new depositors who sign up by the end of the year. Wamu closed at 16 cents the other day.

Goldman Sachs fires up the grills and serves burgers, dogs and lemonade to its customers, their families and friends. They realize people can't even afford to eat.

A Bank of America sweepstakes gives people a chance to win one of three gas guzzling Chevy Trailblazers. The fine print on this one is that gas is not included.

Wachovia is attempting to go with the more popular toaster giveaway. They feel the need to return to the grassroots approach as a way to bring back the people.

Sometimes the obvious just stares right out at you. Now that elite members of Congress have hammered out the bailout of our country your fellow Americans will be footing the bill. While I 100% disagree with this bailout, it must be done. These great minds came up with a figure of $700 billion dollars within 1 week. In my one year watching the market and watching analysts predict quarterly earnings estimates for some of the biggest companies like IBM, Microsoft, and Intel, they were never right. Now the government came up with the perfect dollar amount in one week. It will probably be double this number when all is said and done.

Hopefully, some good will come out of all this stupidity. We as babies and future taxpayers, need to be more proactive and less reactive when it comes to reporting the abuses, loopholes, and greed that is at the root of all these problems. Knowing that my daddy will be affected by this, it would be nice for him to be able to tell me how great our country is from an economical standpoint.

Wamu National State Park is Officially Open

Wamu is gone. A very famous icon had his mortgage with Wamu. Aol running man who banked millions of $$$ during the internet boom has officially gone bust. Although he had the looks, Aolman lacked the market sense to make solid investments. Aolman wanted all his logo friends to suffer as he did. He shorted Priceline (PCLN) and Yahoo(YHOO) and was crushed on these plays 5 years ago. He thought all internet plays were easy shorts but was completely wrong. Aolman became a night time infomercial junkie and bought books on how to flip houses and properties with no money down. This backfired too and his investment turned into long-term holds and now he lives on the trailer park property with his 4 children. Aolman took his salary in the form of options. His personal bank account went down even more after the Time Warner (TWX) merger with AOL that was not well liked on the street. Eventually his wife left him for someone else who is hiding in the picture.

Investors forget that there are three type of trading positions in the marketplace.

Long , Short, or on the Sidelines. 

Baby trader is on the sidelines except for the short CALM position. The market will be around forever.

Do not pass go. Do not collect $200.

I haven’t posted in two days because I was arrested for shorting Goldman Sachs (GS)

Through a carefully calculated raid in the wee hours of Monday morning they broke down the door to our house. Suddenly, in one foul swoop they grabbed me from my crib and cuffed me. I was dead asleep dreaming about the terrific short I laid out at $135.42 and was getting ready to cover with a $115 bid GTC. I had 20 handles on 10 shares ($200 profit) which would have been a 5 week supply of organic milk.  

I was absolutely humiliated. This was far more embarrassing then pooping in my pants. This was uncalled for. They even arrested my cat Trevor because they deemed him dangerous because he was not declawed. They made me sleep in the same cell with a person named Bernie Ebbers. He was ranting something to the tune of, "I am the king of the Worldcom". Anyways, my trading record is as follows.

I was short GS but they cancelled the trade  due to the naked short.

Still short 30 shares CALM @ 40.41

Here is the summons that was issued to me for numerous violations. Too bad Johnny Cochran isn't around anymore. I would have been easily acquitted.

"If the baby can't talk, then he must walk."

My Day in Times Square

It was an unprecedented week in the market not seen since The Great Depression. Lehman gone. Bear gone. AIG had 2 arms and 1 leg cut off. Fannie and Freddie are in wheelchairs. I could not resist driving by the Lehman Brother’s building in Times Square on the way home Friday. As I looked out my rear view mirror I was just amazed at how desolate the Lehman headquarters was. There were no newspaper vendors or hotdogs carts around peddling their wares. Even the media had moved on to the next news headline. Only one person stood in front of the building. The Naked Cowboy, he obviously is still in denial. I bet his income from strumming his guitar has dropped 90%. He might be the first true casualty of the trickledown effect from the Lehman bankruptcy. For a man who already lost his shirt to make an income, he might have to put it back on and get a normal job. It was a sad day indeed. Very sad.

Still Short GS and CALM going into Monday.

Sell Mortimer Sell

I was in the options pit today waiting for the moment of sheer panic to hit the markets. I even wore my favorite bib because I have a bad habit of drooling when thinking about all the shorts that were in the money. I began to cover slowly after seeing the VIX run up to an insane 42. Suddenly, the sheep arrive and munch on the offer. There were bids everywhere, 1/8 for 10k, 1/2 for 50k, even pikers yelling out 1/16th for odd lots. It was unreal. The flock of sheep took a 300 point downturn into a 400 point gain within the hour. I raised my hands high and laughed to myself. I have followed Bill Fleckenstein on CNBC and completely agree with his seller mentality.

While people think this was a capitulation, baby trader's like me know that this is simply another fantastic opportunity to lay out some short positions. 

Now to the plays


Sell Short 10 share GS @135.42

Sell Short 30 shares CALM @40.41


PS: I brought my pet ostrich to work today to keep the flock of sheep away from me.

Try to find him.

My Loan From Wamu

With all the turmoil about mortgages going under due to poor qualifications of applicants I decided to investigate this in person. I crawled into my local Wamu branch the other day. I attempted to cover my youthful looks by wearing a pair of Sarah Palin glasses that I borrowed from my Mommy. The loan officer whose name was Frank  welcomed me into the Wamu family. He never once challenged my age. He explained the various types of loan I can qualify for. ARMS, HELOC's, Fixed, 15 or 30 years. I was excited knowing I was so close to having a house at such a young age. I was so close until he ask me for my driver's license to attach to the loan application. I was somewhat nervous but handed it him anyways. He came back within 15 minutes and I was approved. We then took this fantastic group photo of myself with Frank and Barry. I went home, logged into my Ameritrade account and shorted another 500 shares Wamu (WM).

Below is a copy of my driver's license that help me become a first time homeowner.

Ryan's Trip to the Central Park Zoo

My boy loves to short stocks. Not to Brag, but my boy is good. Real good. We took him to the zoo to celebrate his 1st birthday last week  on  9/8/08 and while inside the petting zoo  visiting with the house Alpaca he had another short play epithany.

He swirled the wooden box letters for 15 seconds and there it was. We as parents failed that day. Ryan was trying to tell us something. He can't speak yet, but his actions were telling us something. Another monster short in the form of AIG. 

Unfortunately, we only transferred the photo from the digital camera tonight so we completely missed this stellar play. Sorry son :(

By the way, he is the house Alpaca. We call him Larry. Most people confuse him with a llama, but he is indeed an Alpaca. 

Alan and Me

Every CEO is finally admitting that they had tremendous losses due to poor risk management. I was asked by my pal Alan Greenspan to join him on the Hill for official hearings on how to handle this debacle. This reminded me of the hearing for all the hyped up stocks back in the 1999, where no one took responsibility for their actions. Companies like KTEL records simply added a ".com" to their name the stock rally from $1 to $59 in less than 2 weeks. I remember when Qualcomm(QCOM) and Broadcast(BRCD) rallied over $100 each in a single day. 

My favorite is this quote by Henry Blodget of Merrill Lynch fame.

"AOL is the most stable investment opportunity in a sector that is anything but," 

I thought he was dead wrong on this call. But who is going to listen to a baby over a 5 star analyst leading the Thundering Herd? AOL was a screaming short. AOL was an organized environment of web browsing, email, games and reading. I thought that people should just surf the web on their own. Why did we need to pay someone to take you to the internet?  Unfortunately, I let some three year old talk me out of it saying that it was way too risky to short given the current irrational exuberance running through the stock market at the time.

I made my first $1 this week

I went home short Lehman (LEH)  over the weekend anticipating that a bailout merger was not going to happen. Too much risk even with the firesale. 

I am awaiting the earnings of Goldman Sachs (GS) and Morgan Stanely (MS) due out Weds. If these are bad I will stay my shorts and await the capitulation for the complete short cover. 

The Early Days.

My initial investment of my christening money was used to fund my 1st computer, Blackberry, and workspace.