How They Confuse Us

Anyone out there knows EXACTLY what is meant by:-

1.  "Like-for-like sales"

2.  One third of the World's wealth was wiped out by recent

     market turmoil/bank failures . . etc.

3.  Inflation rate(s)

4.  A.E.R%

5.  Gilts" "Coupon" Rates

6.  ex-Dividend dates

7.  G.D.P

. . . and if you do know the answers . . . where did you learn them?

Ominous Rumblings . . .

. . . heard on BBC Business News during the week!

American Banks are all set to pass their so called "stress tests". Basically, "How are your balance sheets looking now, boys, after the massive Bush/Obama injections of taxpayers money?"

"Why", the Visiting Expert asked, "will they all pass?" Because the banks, via their lobbyists on Capitol Hill, will tell Congresspersons and Senators "Make sure you set us tests we CAN pass, or you can kiss your funding of the next round of election campaigns goodbye!"

The Banks, Investment Banks, Insurance Companies etc, have won the "moral hazard" game for all time, and they know it. (Sorry about Lehmans, but somebody had to be made an example of.) They know they will be bailed out next time and the time after that, even though "it will be different next time" They now know - if they didn't know before the Crunch - that they are more powerful than Governments, than the IMF, than the World Bank, and the only "new" business model they will agree to is a rehashing of the one that unleashed mayhem last autumn. Hold on to your hats, folks. Last time it was subprime mortgages, CDO's and CDF's. Next time it "will be different" How? They'll give 'em different names.

Funny Thing . . .

. . . surfing through bloggers' profiles I find approximately 52,000 of you declare that one of your interests is "money". I can't claim to have checked out ALL 52,000 blogs - but I have so far found only one repeat ONE blog that even mentions the stuff! (And a few that tell how much the bloggers paid for their latest bits of bling.) Now check out my posting of April 10th. 2009

FTSE 100 Index . .

. . . closed this week at 4441.9   The millions of fans who follow this blog will be well aware of the implications for my 3800 - 4800 Put to Call spread.  June FTSE option contracts expire next Friday, 19th. June.  Market volatility much reduced since May.  July prices likely to be pretty low.

What you guys all waitin' for?

No one has taken me up on my ability to predict where the FTSE 100 share index will be at close of business on any day you care to name in (say) the next ten years!

C'mon . . . SOMEBODY challenge me . . .

FTSE 100 Index . .

. . . finished the week at 4439.  So my "short" spread of 3800 Puts and 4800 Calls remains safe.  Sometimes this game is plain boring . . .

FTSE 100 Share Index . . .

. . . finished the week at 4417, well within my "spread" between 3800 Puts and 4800 Calls. So far, so good. (You can view movements in the FTSE 100 Share Index over various time intervals)

Isn't it amazing!?

Disgraced Labour M.P's, shamed by the expenses exposures, now go bleating to Gordie Brown.

"Please, Gordon.  Make us Life Peers, 'cos we're going to be booted out by Cameron's mob at the next election."  Then, having pocketed their severance pay, gold-plated pensions and whatnot, they will be able to claim per diem expenses as of right, and in all probability, will be able to rip off  the taxpayers of GB for even more than they did as MPs - with no chance of being booted out short of committing criminal offences.  As if they haven't already.

What we need . . .

. . . is a completely new political party to replace the corrupt, lads-on-the-take parties we have at the moment.  How about the "Hang The Expense Fraudsters Party."  Or, for those who don't hold with the Death Penalty for robbing taxpayers blind, the more moderate "Spare No Expense Fraudsters Party".

Just in passing . . . would you bet that any of the M.Ps who have committed criminal offences to line their pockets at your expense, will end up in prison?  Or even be charged?  No way!  Nigeria-On-Thames operates on the principle - "One law for us self-regrading, self-serving hypocrites in the House of Common Criminals,  another for the berks who pay our salary-plus-expenses-plus gold plated pensions-packages".

May FTSE Options. Part 3

I repurchased my short positions in May FTSE option contracts yesterday when the index stood at about 4410 and heading rapidly south, pressuring my 5 contracts in 4375 Puts. This turned out to be a good decision, because the Index ended the day at 4331 and is heading down again this morning. At the same time I sold contracts in the 4800 Calls and 3800 Puts for June, expiring on 19th. June. Overall, these trades banked £1566, but this ain't profit unless the Index lies between 3800 and 4800 at 10.30 a.m on 19th.June.

Manure

David Heathcote-Amory, the "Telegraph" tells me, bought 550 sacks of manure. (The orifices it came out of are not specified - who's your MP?) at a cost of £385, or 70p per sack, which is fine. If manure in huge quantities turns him on, who am I etc . . .

He passed them to his gardener, which is also fine. He passed the bill to you and me, which isn't, as even the biggest twerp in the House ought to know. (I'm not getting at him paticularly. I'm sure there are bigger twerps than D.HhyphenA in the House, and who knows, some of them may have much more productive orifices.) He joins his many friends and colleagues on both sides of the House, who, we now see, have no hesitation whatsoever if spreading their horticultural requirements all over us. The BBC News keeps banging on about what we the public think of our MPs. Wonder what these well-heeled elected geezers think of US as they burn our money to grow bigger marrows?

Oops! Almost forget . . . the FTSE 100 Index presently at 4440.

The Rats Leave the Sinking Ship.

This morning's "Guardian" tells me that "hundreds of highly regarded RBS staff are leaving because of "government interference and bonuses". CEO Hunter does not explain what is meant by "highly regarded", or by whom. Possibly they belong to the right golf clubs? Where will these professional gamblers with your money and mine turn up next? Will anybody want them? But it's an ill wind . . etc . . etc. Perhaps the spaces they leave will be filled by newcomers with some useful knowledge of old-fashioned banking and a modicum of prudence.

FTSE 4454 . .

. . at 11.00 a.m. America and London seem to have discounted the noises coming out of the European Central Bank yesterday. The FTSE Index recovered quickly as soon as the London market opened . . . so for the moment my narrow spread is safe. May contracts expire this time next week.

A Busy Day . . .

. . . yesterday! I mowed the lawns! I sold 1750 Ashtead shares bought on 22/04/2009. This very short term hold yielded a profit - small in cash terms - of 259% when expressed as an AER%. Would I have been making this percentage rate if I had held the shares for a year? Better a bird in the hand. I put the sale proceeds into BT. The company will reduce it's dividend - some analysts said it would pass its dividend. Div. should be about 7% on the 97.5p I paid for the shares. I countered the run-up in the FTSE by splitting my 5 short contracts in 4500 Calls (May) into 5 x 4550 May Calls and 5 x May 4375 Puts - with the FTSE at 4520. Then I went to haircut the lawns. When this was done I returned to the laptop to find some expert in the European Central Bank had been raving about rolling the printing presses to create enough funny money to save the world. (Hasn't Gordie Brown already done that?) London responded by selling the FTSE down to 4380 putting my 2 hour old Puts under pressure. It's a funny old game, this Option Trading. Total take for May FTSE contracts now £1118.00 - but that now looks far from safe! Watch this space.

The Last Few Days

See next post down!  FTSE going up because it's going up!  The guy at the next screen is buying shares in any plc that's going up, so I better buy some as well!

Option on U.K.Gilts . . .

. . . there aren't any! This is because bond markets are proper markets whereas equity markets are not. So the bond prices do not gyrate the way equity prices do. Bond prices move with interest rates and anticipated changes in the inflation rate (and approach to maturity) and to some extent with equities. Equity prices move with the weather, the vapourings of experts, the snapping of red braces and with the Masters of the Universe (including your pension fund managers) buying and selling them by the millions and tens of millions so that the bets they have made on their "futures" positions come out right. Equities go up because they are going up because traders can see lots of buy trades going across their screens, and go down because etc. . etc. Fear and greed rule the trade in equities so price fluctuations are sufficient to create a worthwhile market in derivatives (options). Many traders also use options to hedge their futures. Futures expire quarterly in June, September etc. Consult the Euronext pages to see the huge "open interest" options in these months.

Bank Holiday . . .

. . . so while the stock market and the options market are  on holiday, let's think about what the bankers will do next. Easy! They will dream up new names for crazy schemes.  So -  "Collateralised Debt Obligations" and "Credit Default Swaps" will re-emerge wearing new hats.  And the game of lending money that doesn't really exist to borrowers who have no expectation of repaying it will start again.  In the process, a few people will get very rich.  They are called "bankers."  Some of them will be the same people who from "Big Bang" to 2007/08 put the "W" into "banking".  In due course the rest of us will be asked by H.M.Govt via Revenue and Customs to bail them out. Again.  From the sidelines, Keynsians and Will Hutton will cry "More regulation!" whilst Thatcherites will cry "Less regulation!" or even "No regulation!" And where will base rate be in 12 months time?  Don't ask me - ask the academic economists. Between them they will have at least a dozen answers because it's a well known fact that economics - with or without regulation - is a very, very exact science that invariably predicts what will happen to base rates, inflation, GDPs and so on very, very precisely

Random Questions . .

Blogger gives you "random questions."  Here's another -

Name  3 "professions" whose help you do not need provided that you can read.

The Good News is . . .

. . . that we are now in a Bull Market! An expert on the BBC "Today" programme today said so. Makes one wonder whether there is a definition of a Bull Market. There is a definition of "recession" but where it came from and who dreamed it up is probably not worth finding out. Soon the FTSE will reach "a permanently high plateau" . . an American Expert said this of the New York Index in 1929, shortly before the Wall Street Crash . . .

Pig Flu!

The Media are falling over themselves to get another health scare going. Remember BSE and it's handmaiden new-variant something-or-other that was going to kill beef eaters by the thousand and the tens of thousands? Remember salmonella, SARS, and avian flu - and tremble! But help is at hand! The one 0'clock BBC news today tells me that H.M.Govt. is sending me a leaflet about pig flu. This can be used to swat the viruses away. Or if you collect enough of them, you can bung up the cracks in your doors and windows to stop the little blighters getting in. Pass the time till some new pandemic turns up by reading "Scared to Death" (Ed Christopher Booker and Richard North, available from Amazon) . . . and remember, you gotta be scared of something! That's how they keep you in line. Now wash your hands.