Smartest Guys in The Room
Research for Online Investors

by John Dalt

10/05/09

Goldman Sachs (GS) proved again, they are the smartest guys on Wall Street.  GS loaned CIT Group Inc. (CIT) $3 billion in June 2008 on a 20-year loan.  This was before the credit markets tightened and the financial crisis hit.  If CIT files for bankruptcy during the term of the loan, they are required to pay GS $1 billion.

The market shrugged off last week today to post a strong gain, but it was done on light volume.  Earnings season starts on Wednesday with Alcoa (AA).  I expect earnings to pass with few surprises.  The danger is in the forecasts that accompany the earnings statements.  We need to see positive outlooks for investors to feel confident to return to the market.

The consensus is for the S&P500 to close higher by the end of the year.  The danger lies in the route we take to get there.  It is hard to imagine that we have seen the low on Friday.  Many expected a pull back, and today’s action seems to signal a return to the climb we have enjoyed for the last few months.  If it was only that simple and easy!  Don’t expect the market to be so clean and neat.  We are sure to be thrown some curves in the next few months.

Today has been consumed working on our new premium investing service.  Buy, Sell, Hold is what we call it.  I am excited about this opportunity to help our subscribers make larger gains than a “buy and hold” strategy will produce.

We will be making our first recommendation on Wednesday. As with all of our services Buy, Sell, Hold is fully guaranteed, with our special Double Guarantee. We are sending out an email to the 100 subscribers that reserved their place as Charter Members. Now we want to open it up to you. If you want a taste of trading, we are going to chase gains. Buy, Sell, Hold might just be the safe vehicle you have been looking for. You can enter your orders and go to work.

In short, we buy stocks and ETFs we think can appreciate in value, then we sell call options against our holdings to make income.  We have used this strategy in the long-term portfolio on selected positions to great effect.  We use it quite often in the SwingTrader to offload some risk.  It just seemed natural to have a service that specialized in selling covered calls.

Selling covered calls is safe.  You can do it in your IRA or 401k account.  We are not buying options and making bets…this is not a casino.  Well maybe it is, except you are acting as the casino.  You are selling the option to people that want to make the bet, and just like Vegas, the odds are stacked in your favor.

Think about it, does this sound like a service of interest to you?  You can read about Buy, Sell, Hold, I hope you will join us.

I engaged one of my nephews in a political ‘discussion’ while at the hospital last week.  It amazes me how some people can be so ignorant of the world and what is occurring under their noses.  I take responsibility for allowing our government to slide into the present state.  My children are not inheriting the same opportunity that was given to me by free markets and individual freedom.

When talking to someone that cannot see, and does not care to understand, it astounds me. My sweet wife sometimes rebukes me when I become agitated. Which led me to find this quote:

“Against stupidity, the gods themselves contend in vain.” ---Friedrich von Schiller

It may be a little strong, as I am not trying to elevate myself, but the frustrating truth of it is irrefutable.  It reminds me to watch the Milton Friedman video on our home page.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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