Monday, January 14, 2013

If you want to learn more read here.

Friday, January 27, 2012

Modern Day Wealth Inequity

Here are some dirty stats on Wealth Inequity:

400 Americans own 3percent of all the nations wealth- they own more than 60% of all Americans combined.
top 1 percent own 43 percent of america
top 20% own 93% percent of america.

the bottom 80% own 7% of america
the bottom 50% own .02 percent of america.

in 1970 the bottom 99% owned 70% of america
in 2011 the bottom 99% own 57%

the bottom 90% account for 55% of all consumer spending. the barely middle class and the poor in the bottom 55% pay the majority of sales tax and the evil inflation tax.

Wednesday, January 4, 2012

If you own physical gold and silver you may want to hedge it with options.

There are plenty of investors that don’t trust ETFs for as a substitute for owning the physical metal in hand.

While this is completely understandable, it doesn’t’ mean that you can’t hedge what you own by using options on the GLD and SLV ETFs.

If you own thousands of dollars in precious metals, you are completely unhedged against severe market fluctuations.

Silver in particular displayed a lot of volatility in 2011, it had multiple 30% swings to both the upside and the downside.

The roller coaster ride was enough to make most owners a little bit squeamish.

The solution: Options.

If we take SLV as an example. We can purchase an (otm) out of the money put with 100 days till expiration, for .15 cents.

The catch: the put Is 30% out of the money.

That means you have unhedged for a 30% drop in the next 100 days, however, if silver were to drop precipitously the put would increase in value. The put would increase in value even if the spot price of silver didn’t fall below the strike price.

The reason, increased volitilty would make the put worth more than you paid for it. And at .15 cents, its pretty cheap protection for the next 100 days.

Hedging Gold (gld) is a little different. Gold hasn’t been as volatile as silver but you can still purchase a put that is 25% Out of the money for .20 cents. The question is though; with gold’s drop from 2000 does anyone expect it to drop another 25% this year? Either way- purchasing one put for 20 dollars, can protect your expensive gold holdings from a catastrophic drop.

I don’t favor purchasing puts less than 100 days before they expire, and I don’t believe the premium you have to pay for at (ATM) at the money put is worth it.

You are long term bullish on the metal, so it makes little sense to spend a ton of money to marry puts to your position at all times.

But, when the market is uncertain- owning a put is akin to owning insurance.

You insure all of your most precious assets, your precious metals must be thought of the same way.

If silver were to fall, you can sell the put for a profit, and purchase even more silver with it at the cheaper price point.

If the option expires worthless, as most do, then it would be the same as the premium you pay in your insurance policy- even if you never use it.

For bullish investors, I don’t calls work the same way. Instead of paying the premium for a call, you could just buy the physical. Most options expire worthless, so instead of wasting money on a call- you could own the metal in hand.

Its important to remember:

These puts are 30% out of the money. That means if gold or silver drop 15% your puts aren’t going to be worth much. The 15 dollar puts might be worth 100 bucks. Expectations need to correctly set.

Thursday, December 29, 2011

Wages as a percentage of corporate profits.

This chart paints an ugly picture.

Corporate profits are at an all time high, personal income and salary for the 99% is at an all time low.
Why the disconnect? 
The top 1% which include the CEO's directors, and upper level managers are siphoning more of the salary pie than they used to receive as compensation. 

What's left after the executives take the lions share is a tiny fraction. The small crumbs that are left are split amongst offshore workers that make pennies a day, and the American laborers that are forced to work for salaries that are barely above minimum wage.

Before the Ronald Reagan revolution- that was the beginning of the destruction of the middle class, executives in the 1% took 10% of the salary pie, now they take 40% of all wages. The middle class in the 99% now has 30% less of that salary pie to divided between themselves. Its even worse when you consider anther 20% of that income pie goes to workers in India and China.

Wednesday, December 28, 2011

If you thought Bloomberg even had one shred of decency- think again.

A Living Wage, Long Overdue
Published: December 25, 2011
Published in The New York Times.

New York City provides hundreds of millions of dollars a year in taxpayer-financed subsidies to private developers. It is only right that the jobs created by those projects pay a decent wage. The Fair Wages for New Yorkers Act, widely known as the living-wage bill, would nudge these employers in the right direction.

Get that- middle class NYC taxpayers provide kickbacks to developers so that they can build fancy buildings for wall street big shots and others.

The bill now before the City Council would require future development projects that receive $1 million or more in discretionary financial assistance from the city to pay $10 an hour plus benefits for full-time workers and $11.50 an hour without benefits for at least 10 years. That may not be much, but it is an improvement over the minimum wage of $7. 25 an hour.

The benefits sound fair.

Mayor Michael Bloomberg is fighting this change, arguing that a wage increase might scare off new developments and cost the city thousands of lower-paying jobs. That has not been the experience elsewhere.

First off, $7.25 isn't a living wage in New York City, it hasn't been for years. Meanwhile, on the left coast, the other expensive city, San Francisco, just raised their minimum wage for ALL workers to $10.24 an hour.

Once again Bloombito is talking his book:
"But, if we don't give these fancy billionaire developers millions in kickbacks, they will build those penthouses that sell for 30 million in Cincinnati!
We can't make these job creators pay another 3 bucks an hour to poor people- that would cut into their tens of millions in profits."