EDGE TRADER

Thursday, August 04, 2005

Who needs the toasters???

I remember the day when my dad told me about saving money in the bank and how you earn interest on it. Interest earns interest too, he told me. That's why you need to save money in the bank he told me. After getting my first paper route, he correctly convinced me to open a bank account so I could save it. I opened a passbook savings account. Guess what I earned? Well your guess is as good as mine - I can't remember, but I do remember getting a little angry with him - I looked at the interest rate (maybe 2%?) and thought to myself, big deal - my $100 will become $102 a year from now? This is nuts! And my $100 didn't even get me the proverbial toaster from the bank.

Why did they come up with a toaster as a gift? I can just picture it - bank execs sitting in a room - what kind of freebie should we give to new account holders - let's see - giving us their money for safe keeping. Maybe they can go home and make some toast to celebrate while we make money on their money and give the sap 1/2 a penny a day for every $100 they gave us. You're thinking this guy is so 60's, they don't do that anymore, right? Wrong! The company I work for in my day job has bank branches - one of the gifts they give out to a new account opener is????? You got it - a toaster.

I am writing this post in memory of my dad's little speech about interest. Why? Because an hour or two yesterday researching oil service stocks caused me to make 5.4% on my money OVERNIGHT! Yes, dad, that's right. 5.4% - to get my $100 to $105.40. In that first lousy bank account, it would have taken 2 years and 7 months in to get there. And like they wouldn't have slammed me with some fee to take it all back anyway. Come on!

Thats right, GLBL. Who needs a toaster when you can make that kind of money overnight. There's probably someone out there thinking if this is such a great company Mitty should keep it. NO WAY. GLBL is a distant memory for me now. I am so confident in the tools in my pocket protector that I think I can find more ideas to make me money overnight. True, it won't happen every time. Some will be +.75%. Some will scare the crap out of me (PCU). Some I will even get wrong, but there is no way I would even think about giving up that jackpot by holding too long (5.4% per day compounded for 200 trading days in a year would turn $1 into $3,590 by day 200).

I've listened to so many oil sector conference calls over the last two days, I'm talking with a twang and using the word "jackup" in casual conversation. So my next attempt is FST. They release Monday. It was down yesterday so it in effect has hovered through strong oil for at least the last 48 hours. I must admit I was less confident in my research on this one, though, I scaled down the investment, but I am now an owner for at least the evening. Mr. Mitty thinks that the sector is so strong, the odds are heavily in my favor of at least a nominal bump off of earnings. It is hard to enter into an oil these days, which is the reason for buying today rather than tomorrow. If FST gaps up tomorrow, I will just let my small stake ride until Monday. If it shows weakness, I may double down tomorrow.

I have to follow up on my Poker post. Yes, I did indeed find myself sitting at the poker table with hedge fund managers and the specialist this morning. I will also admit that it was a little scary. I took a risk and held relatively firm to my convictions. I still say the logic is clear. But I'm not a total psycho. So what I did was enter a day limit sell order at the amount of my entry point on 40% of my PCU holdings. Then I left my house. I did not look at the screen until 3:30. If I had stayed I would have went insane as long as I owned PCU. I would have sold 50 different times throughout the day. What I found when I got back is that my order got executed. So for 40% of my trade I am at breakeven not including commissions. I can live with that. I still think this one has to go up. In his show, Cramer professed that he agrees with me and PCU is a buy now. So things are looking very bright that I will sell into some dumb money tomorrow (no offense) and make a healthy profit. Bottom line, I sat at the poker table, bluffed and it looks like this pencil necked geek will win tomorrow, although with some of the chips taken back off the table.

The other thing I did today was review all my long positions. There was some dead wood there. I clear cut some of the dead wood and only have healthy stuff remaining. I am very nervous about next week's tightening on Tuesday. On a very low volume vacation week, things could be ugly. We all know they will go +25bp. And unless Greenspan is going senile he will not signal an end to the measured pace thing. But every meeting, CNBC and Bloomberg talk ad nauseum (translation: until it makes me want to vomit) about whether an end to tightening will be signaled, of course it isn't and each time the markets still go nuts. The second week in August, every fund manager is thinking about what to pack and how many days to take off for that long weekend at the beachfront mansion, so I am thinking the market will be short buyers to engineer a recovery. My personal plan for Tuesday is to listen to Alan on Bloomberg 1130 ON the beach, with my trading portfolio in cash. I may miss a good entry opportunity after the meeting depending on how scared people get, but I guarnantee you that I will live to fight another day.

With my garbage picking expedition today, I looked at DGX. I cannot for the life of me understand why this stock was down 2 points today. It seems obvious that a big player unloaded their stake fast today. The real question is why. An optimist would say they are on vacation tomorrow and wanted to cash in, or were profit taking to roll the money into another idea. A pessimist would say that DGX is about to hit the presses with something very negative. So it may be a good thing that I didn't get execution on DGX. But I will watch closely tomorrow.

I will sleep with a smile tonight. But not before listening to at least one conference call!

1 Comments:

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