Greed Claims Another Suit
One of the most respected names in the auto industry, Carlos Goshen, the 64-year-old automotive genius was arrested after a whistle blower told Nissen Motors that Mr. Goshen had forgoten to pay taxes on a substantial portion of his income. Although Mr. Goshen and his attorney have not replied to the charges, it appear he was running a Ponzi scheme on his own income. I feel sure that he will have the ultimate defense for scammers. He was misled and didn’t realize that portions of his income were taxable, but since the scheme lasted so long it is going to be hard to convince a court that he was naive.
Nissan immediately fired him, and his other auto connections followed suit. How is it possible that someone with a successful forty-year track record of accomplishment could end up in such a morass? It could be envy of the 28-year old wonder kids that are making billions in the tech world, but it wasn’t like Coshen will need to get unemployment after he was fired.
So, how do successful people end up in such a mess? One-word – Greed. Over my more than forty years in the business it is hard to even remember how many titans have brought down not only themselves and their reputation but have cost thousands of workers their jobs. My all-time favorite has to be Enron. Now there was a first-class scam run by three of the biggest con men of all time.
If you don’t remember what happened I’ll review the situation. Enron was on the “cutting edge” of trading. They did it all, and one of their best trades was buying and selling excessive quantities of energy. When one utility had too much they would take the overload and find a buyer. They acted as a middleman. Unfortunately, President Bush’s good friend “Kenny Boy” Lay and his other henchman Jeffery Skilling and Andrew Fastow kept two sets of books. If a trade was going bad it would be shuffled by Fastow into one of the hundreds of partnerships that the company kept. If it was a winner it would go on Enron’s books. Now that is the way to run a business!. Tails I win and heads you lose.
Eventually, although none of the partners including CPA firm Arthur Anderson & Co. admitted to any wrong doing the whole scam imploded. Anderson collapsed, Skilling was sentenced to 40 years in prison but was released after serving about 10years, Kenny Boy avoided prison by having a heart attack and dying and Andrew Fastow served his time and is now back in business. Moral of the story is that greed is always going to exist as long as man survives, and human nature isn’t about to change!.
Ask Mr. Seifert
I am constantly asked questions about trading and how to exploit certain market factors to insure success. Each week I will answer one of those questions with a short paragraph which will cover the trading subject.
What is dollar neutral investing?
Answer: It is a strategy in which equal amounts of capital are invested simultaneously in both the long and short side of the market. It has been around for years and the idea is that one side or the other will move into a trend and that on the trending side of the market you will gain more than you will lose on the other side. Proponents of this methodology believe that it allows a trader to gain an edge on riskless interest rates (T-bills, T-notes, etc.). Opponents believe that it is more dangerous than taking a position on one side of the market, as it is possible that you can lose on both sides if you have picked the wrong equities. As with all strategies you need to have a method that will produce results greater than can be expected by chance.
Using sophisticated option strategies we can take away much of the risk as one side of the market will have unlimited reward and the other will have limited risk. The Market Edge stock ‘Opinions’ are used in conjunction with the Optionomics trading strategies to create this type of trade.
The Wise Guy Report: The View from The Electronic Floor
Each week I talk about how the Wise Guys (floor traders) find the soft spots in the market and take advantage of price dislocation in three major commodity markets: Gold (GC), Crude Oil (CL) and Long-Term Interest Rates (ZB). On the equity side, I cover MSS which is the Mister Seifert Sez Composite Index. This is a proprietary index that I created which measures the dollar flow of the four major indexes (S&P 500, Nasdaq 100, Russell 2000 and the Dow Jones Industrials) on an unweighted basis. Let’s look at how the Crude Oil markets are faring.
Crude Oil Continues to Collapse (Blow Off Bottom )
Crude Oil seemed to have found a bottom last week but like all trading strategies nothing works 100% of the time. Oil collapsed as the week came to an end. The rig count in the U.S. is starting to fall as Frackers can no longer produce a profit with crude trading in the low $50 range. It appears that the strong hands are still the shorts as every rally is met with sellers. I still believe that to get short this market at these levels is a bad mistake. You can either stay out of the market or take a long position. Right now, being long is painful, but I still believe it is the right position. The Saudis keep threatening to cut supply, and this time they may actually do it. This market can turn on a dime and the media will be totally surprised by the turnaround as they always are when the obvious is right in front of them!
Get Your FREE Two-Week Trial Subscription
The option trades and strategies offered by The Optionomics Group are very unique in that they all have limited risk while creating great leverage. Our basic BL – BR Credit Spread Strategy (and all of the others) let you control 100 shares of a $200 stock ($200*100 = $20,000) for less than $500 (the spread differential minus the credit spread) or 40:1 leverage with your risk limited to only $500. Plus our strategies produce winning transactions in four out of five possible outcomes.
The Optionomics’ strategies let you become the casino whereby you have a mathematical edge that lets you grind out consistent returns in any kind of market environment. These strategies are designed to produce good returns over a short to intermediate term time frame. It is an approach to the stock market which will be hot, cold or average over time, but the end result should be very good in any type of market environment.
I offer a FREE Two-Week trial to the various subscription services with no cost or strings attached. Each strategy is explained in a 5-7 page booklet which includes sample recommendations and model portfolios. I doubt that you have ever seen anything like this. During your FREE trial, you can paper trade the various strategies and get a feel for the deal without risking a penny. Simply click on the appropriate tab on the Optionomics’ Home page to access the informative booklets and then sign up for one or all of the weekly subscriptions.
- The 21st Century Covered Calls Strategy: A modern day alternative to the old fashioned covered call strategy.
- The Low Cost Put – Call Hedge Strategy: Sleep at night knowing your portfolio is protected for little or no cost.
- The Bullish – Bearish Credit Spread Trade: The basic strategy of trading weekly credit spreads.
- The Earnings Trade: Get in on potential big movers with little or no downside risk.
- The One Day Wonder Trade: Get ready for some real action. A one day trade with great potential.
- The Blow Off Top – Bottom Trade: A lot of action and big moves too.
Each Monday morning by 11:00 EST, the plays for the upcoming week plus updated model portfolios for each strategy are posted on the site. The prices in the reports are Monday morning’s opening prices. In addition, I have a webinar on Thursday afternoon where I discuss various option strategies, what is happening on the floor and answer any questions that you may have. Don’t worry if you miss the show. They are archived on the site. Sound Good? Good! You can subscribe to one or more of the subscriptions for only $19.95 each per month on a month to month basis with no contract or strings attached. If you subscribe to three, it is only $49.95 per month while you can subscribe to all six for only $79.95 per month, a 33% discount. I think you will agree that this is a super offer so give it a try. Click on www.optionomicsgroup.com to access the Optionomics Group web site and get started today doing what the pros do –
“Don’t Buy Them – Sell Them”.
Mr. Seifert