Fly Buy: PFG

I bought 10,000 PFG @$15.30.

Disclaimer: If you buy PFG because of this post, all bank stocks will go to zero, taking your deposits with them. And, you may lose money.

Here we go again. The plan to save the world, via the banks, is about to being— again. NTRS, which is on my possible buy list, just beat the street. Expect CNBC to suck its dick, all day long, similar to what they did with JPM—prior to it being skinned alive.

Right now I have more than 90% of my assets in cash.

I will not buy into this rally, due to my aversion to fuckery. However, at the same time, I may choose to close out whatever inverse etf’s I have left, namely EEV and SRS.

I went long 10,000 DUG towards the end of trading yesterday. I suppose the only course of action is to just deal with losing some coin on that transaction today. But, with the oil companies about 1 week away from disappointing en masse, time is on my side. I will buy more DUG on dips.

On the long side, if I was so inclined, I might buy some COGT, OXPS or even some BK.

As for upside etf’s, scalping a quick FAS long is worthy of a shot, providing the banks bounce here. Expect the Obama administration to unveil lots of plans that can boost sentiment. However, the million dollar question is: how punitive will such said plans be to the banks?

Personally, I am outright bewildered as to why our banking executives are not in jail. How the fuck can they continue to get away with this shit, without prosecution?

Let’s call a spade a spade: those cocksuckers have been lying to everyone for years. Maliciously, they hid losses and artificially propped up their balance sheets, so that they could enjoy the fruits of fraud, via exorbitant bonuses.

All I know, the Enron fuckers were goose stepped to jail rather quickly. Conversely, Congress seems totally disinterested, when it comes to nailing a few bad GS men to the altar of integrity.

Fuckers.

Bottom line: I will be sitting out the initial move in the market, mainly because I do not trust it. If anything, I’ll jump on board the afternoon rally and play the momentum into the bell.

While it’s true, the market is in the process of skinning people who are long stocks alive, such as hideously ugly folks like Don Luskin and Zachary Karabell; at some point, one might want to get long stocks with large net cash per share ratios.

Within financials, it’s incredibly hard to discern what’s real and what’s not, since they are all lying cocksucking ham and eggers. Nonetheless, there are a few worth exploring.

In addition, while the economy is in rapid descent, it’s hard to forecast how much cash will be left on company balance sheets, since it’s entirely possible that such said companies may start bleeding out losses.

Nevertheless, I have compiled a list, broken down by sectors, courtesy of The PPT of course, for you—the internet schmuck—to peruse.

Tech

NTE

OVTI

VIGN

AVX

BHE

SNPS

COGT

ERTS

AAPL

PC

Basic Materials

CF

ASH

Healthcare

HUM

Consumer Goods

MGA

SKX

Financials

OXPS

NITE

AMP

PBCT

PFG

NTRS

SCHW

BK

BEN

Industrials

SGR

MDR

PCR

Services

KBR

FMCN

ABFS

UPDATE: Bob

[youtube:http://www.youtube.com/watch?v=ilTQJ6vUkE0&feature=channel_page 450 300]

I have never seen the British pound down this much (5.5%) in one day. You can track the pound via FXB.

Without a doubt, there are many people stuck in the funnel today, trying to escape The Great Obama Crash of 2009. Howsoever, due to the conviction of the bears, via egregious selling pressure applied to the banks, there is no respite.

The losses in the banks, worldwide, are staggering. Look at RBS. Look at BCS. For the love of healthy hair follicles, look at BK.

Today the world is expressing their cynicism, with regards to the notion of “change” and “hope.” Despite the flowery rhetoric from President Obama, his actions, through appointments and stimulus proposals, suggest we are in for more of the same.

On days like this, it’s important to remember the people who got it wrong. Remember the mustard seed motherfuckers from CNBC and throw eggs at your televisions, whenever they appear on your bullshit goggleboxes.

Look, I’m more than happy to be in cash right now. While it’s true, it would have been fantastic to be heavily short, kicking old men down idle sewer pipes. However, 2009 is going to a very long, painful year for equity holders. There is no need to rush into a half hazard trade.

Looking at the banks, I have no desire to short them down here, nor go long. See, recent actions in the U.K. tell me that all major banks are subject to nationalization. Essentially, the equity of all banks are at great risk here. On the other hand, I am not crazy enough to short stocks, already down 50% intra-day.

If anything, towards the end of trade, I may buy 10,000 DUG or 5,000 ERY, due to XOM‘s retarded persistence in the high 70’s. That fucker deserves to be much, much lower.

Trade accordingly.

UPDATE: I sold out of VCLK @ $5.59.

UPDATE II: I bought 10,000 DUG @ $27.95.

UPDATE III: There is no need for “The Fly” to opine on today’s market close, since he is in a glowing state of “winship.” Instead, I offer you a little poem, written by none other than Karl Marx.

1. Abolition of property in land and application of all rents of land to public purposes.
2. A heavy progressive or graduated income tax.
3. Abolition of all right of inheritance.
4. Confiscation of the property of all emigrants and rebels.
5. Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.
6. Centralisation of the means of communication and transport in the hands of the State.
7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan.
8. Equal liability of all to labour. Establishment of industrial armies, especially for agriculture.
9. Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country, by a more equal distribution of the population over the country.
10. Free education for all children in public schools. Abolition of children’s factory labour in its present form. Combination of education with industrial production.

There is poetry and symbolism being represented in stocks today, despite the grand party in Washington. While millions of hapless dogs celebrate one man in D.C., millions of fucktarded, dick faced bullshitters are having their portfolios microwaved today, as banks march to zero.

From STT to AIB to BAC to C to WFC to JPM, times are tough for the optimistic type.

I know many of you assholes were convinced that God himself would not allow such a trading day, while President Barack the Builder celebrated like it was 1999 in Washington. Forcefully, you left messages on “The Fly’s” blog, pertaining to the bullish nature of stocks and pointed out that a new bull market was upon us.

You told your friends and family members to buy mutual funds and dastardly bank stocks, due to the inherent belief that our Federal Government could make things better with a snap of the hand.

However, as your face gets melted off by Chinese roman candles, you now realize the error in your ways. You want to apologize to your friends and family. You want to beg forgiveness to “The Fly” for being such a blockheaded dick; but it’s too late.

“The Fly” does not accept your apology. Instead, he will chuckle at you, while large capital losses sack the entirety of your bullshit internet brokerage account.

There is an old saying that can be applied to such arduous times. It goes: “The Fly wins all the time, even when he appears to be losing badly.”

Most ignore such sayings, and discard them as “urban legend or fantasy.” However, for the select few, the chosen ones, those words are golden and quite useful, especially when it comes to the business of buying new cars or other important shit, from the proceeds of egregious stock market gains.

As for the market:

I sold the rest of my FAZ, north of $75. My cash position is now 92%. Barring some sort of miracle, I will sit out the rest of the trading day, while eating sandwiches. In other words, I do not trust this tape and want no part of it.

Sometime soon, I will sell all of my shorts, which include EEV, SRS, and REW. And, furthermore, I may initiate a new short position in XOM, just for old times.

Starting with the share prices of BAC, WFC, STT, COP and other fine American corporations.

UPDATE: I know it is very tempting to trade something on this historical day. However, considering the dismal outlook for banking shares today, coupled with the emotions of Lord Lancelot being sworn in as King, “The Fly” has decided to go take a nap instead.

Fuck the noise. I do not care to partake in this assholish tape. Plus anyway, I have a 90% cash position and year to date gains of about 13%. There is not logical reason for me to rush into an inauguration day “fuck you, you’re dead, ha, ha, ha” trade.

More on this later.

Here is the short list. Progressively, I will narrow the list down to “Four Horseman of Certain Death,” for 2009. NOTE: this list does not include “non-financials.” Sometime soon, I will reveal a “top fucked” list for the oil/gas sector.

SLG, MAC, COF, LYG, WF, SHG, SLM, MET, CMA, Mi, ZiON, ESS, TCO, FHN, PACW, LM and WFC.

Reminder: “The Fly’s Four Horseman of Certain Death,” 2008–

DSL—all the way to zero.

CORS

FED

FHN

Developing…

You can buy all of the best stocks and still lose money, providing you buy them at the wrong time.

Back in the old days, I would go “all in” and “all out” like a fucking maniac, making outrageous splashes along the way. However, in time, I came to the realization that my buy and sell points will almost always be wrong.

The sooner you realize that no chart or divine intervention can enable you to time the top or bottom perfectly, the sooner you will stop making an idiot of yourself on Wall Street.

Investing is all about “staying in the game.” Preservation of capital during arduous times is key to making a fucking killing when times are good. In other words, you can’t make shit without food, if you know what I mean.

For young/novice investors, I suggest keeping individual positions small, no bigger than 5% of capital. This way you can experience the market, without breaking your face open on a bunch of dumb shit.

In the past, I’d recommend an asset allocation model that would mirror the S&P 500. For example, 20% banks, 10% industrials, 15% tech etc. However, since the market spits on people who do that now, I have altered my investment philosophy dramatically.

Instead of asset allocating, I now hedge my portfolios, via a myriad of long/short trades.

Let’s say I have 100k to invest and I am willing to allocate 70k on the short side, since I am a bearish motherfucker. Of the 70k, I want to allocate 10k into FAZ (300% short banks). Note: 10k into FAZ gets me 30k exposure, since it is 300%. It’s important to recognize the leverage, especially when hedging with upside longs.

With 10k to spend on a maniac etf, it’s VERY important to get good prints. Knowing my first trade will be wrong, I buy an initial 2k or 20% of my FAZ funds, at the market. I get filled at $70.

Ideally, I will buy FAZ in 5 parts, all $2,000 orders.

Right after I buy it, FAZ shoots higher to $74 and looks ripe to break the fuck out. Quickly, I buy more, with the caveat that the new purchase will be sold quickly, since the etf is on fire. Remember, I expect to lose money on my first trade.

But, life does not always work out the way you want.

So, now I have 4k in FAZ with an average cost of $72 and life is grande. The next day, unbeknownst to me, the fucking government reveals some new plan to inflate all bank stocks, sending FAZ reeling down to $60. Now I am fucked, right?

Well, not necessarily. First of all, I was only allocating 70% of my funds to the short side and I did not have a chance to go “all in” yet. To date, I only spent 20% of the 70% or 14k. With 30% set aside for long positions, quickly, I hedge my FAZ and other shorts, buying some FAS amd UYM. Trying to stay in line with my target ratios, I only spend 6k on my longs.

I know this is getting confusing, bear with me.

Let’s assume the market continues to melt up, sending my FAZ down another 10 to $50. Considering FAZ is down almost 30% from my initial purchase price, I decide to buy more.

So I step in and buy another 2k worth at $50. After my third purchase, my average cost is $62.6.

Understanding I am on the wrong side of the trade, I must be extremely patient with my next two buys. After all, they will define my final cost basis. If FAZ is to gap higher and eclipse my average cost of $62, before I get the chance to allocate the remaining 4k, so be it. At this point, I find myself in a hole. Risk management is key, not greed.

So, a week goes by and the market is on an idiot streak to the moon. Aware of my surroundings, I decide to allocate the full 30k or 30% set aside for longs. I buy all sorts of stupid shit, like FAZ, UYM and URE. However, since I base my investments on a blend of price action and fundamentals, my goal to sell a large portion of my longs, if not more, at the next inflection point, otherwise known as the time when I will become Godly.

Remember, my bias is on the short side and I am sticking to it.

A few more days pass and the market is simply out of its mind with bullishness. The news is still horrid, but stocks are going higher anyway. Almost everyone I know is bullish and mostly everyone I know is stupid.

Perfect.

By this time, FAZ is printing $35 and I am down 43% from my initial purchase point, on a 3/5ths position. Assuming I allocated 60% of the funds set aside for shorts, or 42k, and my losses in the other shorts vehicles are equal to my maniac FAZ position; total losses, following a mind numbing melt up, should be approximately 18k or 18% of my starting capital (100k).

However, because I rode the wave of inept optimism with my longs, all 30k worth, my total losses are somewhat muted. Due to my stubbornness, I was late to the bull rally. Nonetheless, I ended up making a sweet 30% on a variety of leveraged longs, or 9k.

So, net-net, my losses are 9k or 9% of my assets, aka “a fucked up start.”

With 14k left in cash, my next trades must be perfect. Bucking the trend, I step in and buy another 2k worth of FAZ at $35, despite my “smart friends” begging me not to. Now, my cost basis on FAZ is $51.94.

A few more days go by and I sense an inflection point. Quickly, I sell off some of my profitable longs, at least 25% of the positions, and allocate the last 1/5th of my short funds, as the market begins to roll over. I get filled on my last trade of FAZ @ $41.

With my target exposure (70%) on the short side fulfilled, my cost basis for FAZ is $49.50. My cash position, from the sale of 25% of my longs (39k), is approximately 9k or 9% of assets—which will be set aside for an emergency or trading opportunities, such as FAZ taking another dive lower or “hot tips.”

Over the next week, “The Fly’s” prophecies come true. The market swan dives into pig shit and vomit. Along the way, I scale out of most of my longs, leaving my long exposure at a mere 5%. Net-net, I end up making 15% on my longs or 4.5k.

As God would only have it, my FAZ position spring boards to $60, gifting me a 20%+ gain. Not trusting the market, I take my profits and go to cash, leaving a token 5% short position.

On my shorts, I end up making 20% or 14k.

Unfortunately, along the way, with the 9k in cash, I made a few errors, due to the market chopping around. I end up losing 2k on erroneous trades, mainly because I listened to the advice of my “smart friends,” who had some “hot tips.”

After it’s all said and done, starting with an initial 100k, I end up booking 16.5k in profits or 16%.

Moreover, I have a 90% cash position and anxiously await to do it all over again.

UPDATE: Wood is talking about position sizing too. Get your BBQ sauce and head on over there now, ya hear?

How much is the fucking inauguration going to cost, while the recession/depression persists?

So much for change.