Tough Love Weekend

Tell the kids to go watch cartoons.

THIS POSTING IS NOT SUITABLE FOR ANYONE WHO HAS TENDER EYES - OR ANYONE NOT OLD ENOUGH TO BE TRADING.

Play that.

Now listen up folks. I'm reading some VERY scary things in the forums the last few days, and I want you to understand what I am writing here VERY VERY CLEARLY.

I shouldn't have to write this post. But I am getting VERY CONCERNED with what I am reading, and I can't sit here and continue to read messages like the one I read this morning without responding to it here, in the Ticker, along with in the Forum as I did a few minutes ago.

You folks who are reading this may think you're God-like right now - like you have tomorrow's newspaper yesterday when you're trading in the markets.

YOU DO NOT.

YOU NEVER DO.

I NEVER DO.

NEVER.

Those of you who think I'm that good - you need to come by my house. I have in my file cabinet a couple of dead trees in the form of trading confirms from this year (and lots from other years) many of which are EXPIRED PUTS from March, April, May, June and JULY!

MONETARY DISCIPLINE is absolutely ESSENTIAL in the markets.

Some of you are trading with INSANE gearing levels. I have been reading about 50 and even 100% swings in portfolios over the course of a single day.

AND THIS MORNING I READ ABOUT A MARGIN CALL THAT "CURED ITSELF" IN THE SELLOFF YESTERDAY AFTERNOON.

THOSE OF YOU WHO ARE DOING THIS MAKE HEDGE FUNDS LOOK CONSERVATIVE!

Goddamn it, some of you - maybe all of you - ARE GOING TO LOSE EVERYTHING.

CUT THAT FUCKING SHIT OUT RIGHT NOW!

Yes, I have a disclaimer on my blog and forum. Yes, we're all adults. And yes, if you stick a loaded gun in your mouth and pull the trigger, YOU WILL BLOW YOUR BRAINS OUT.

In 2000 I watched several people I know financially implode. Two of them were literally wiped out, going from having million-dollar homes and SEVEN DIGIT portfolios to having NEGATIVE net worth in a matter of DAYS. Then they lost their JOBS in the economic malaise that followed.

They were totally buttfucked and bled from their asshole for YEARS AND IT WAS ENTIRELY OF THEIR OWN DOING.

This is not funny. I don't give a fuck how young you are or how invincible you think you might be. YOU ARE NOT.

I've done pretty good year-on-year. Over the last seven, eight, nine years I've got a damn good record versus the market averages. I have every intention of trying to profit like a bandit from what is happening now, BUT I NEVER NEVER NEVER GEAR UP ON MARGIN! NEVER!

ThinkOrSwim offers "portfolio margining", the newfangled way to blow yourself straight to hell in the markets. I have not asked them to enable it on my account. No fucking way. Ticking nuclear weapons? I don't want 'em.

I NEVER invade my margin. Never. I have done so only once and that was when I used my margin account as a bridge loan when I moved and held open a margin balance during the short time that I had physical title to two houses at once.

I never have more than 2-3 PERCENT of my total portfolio open at any given time in the the purchase value of PUTs or CALLS. NEVER. Simply NEVER. I ALWAYS expect that any PUT or CALL I purchase will expire WORTHLESS.

I short like a BANDIT but I never have more than 4% of my TOTAL portfolio value open in any one security position, short or long, with the exception of ETFs. Short squeezes are a BITCH just like companies that file a bankruptcy out from under you. I've got confirms from a few of THOSE too, including a whole bunch of WORTHLESS shares.

Look guys and gals, its your money and your ass. But people have asked me before - why I do this and what would get me to contemplate shutting it down or charging for it, usually with an eye towards whether I'm going to shift the Ticker (and maybe the forum) to some sort of pay-for subscription service.

You want to see The Ticker go away? Start bankrupting yourselves by being fucking stupid and I'll turn it all off. Not because I'm worried about people coming after me - but because there are a thousand places on the Net where you can pay $500 a year for your own personal financial Armageddon and frankly, I don't see a reason to be a part of that shit, whether its for profit or not.

Never mind that I'd get to fish and dive a lot more if I didn't write here.

I am not some kind of investment guru or "God". You're reading someones musings here that can be and has been wrong in the past.

Remember guys, I called a market top ON THE FEBRUARY HIGHS.

Was I right?

No. I was early.

SEVERAL MONTHS EARLY. $50,000 of my money is sitting in option writer's pockets because I stuck my money where my mouth is, AND THOSE PUTS ARE ALL TOILET PAPER.

How's your margin balance and ability to meet a margin call look again? What if you had gone "all in" on margin short in March? Would you still be here, even though it looks like I'm going to be proven right (but early), or would you be living in a goddamn refrigerator box right now?

In short CUT IT OUT and start practicing SOUND MONEY MANAGEMENT.

If you play poker, you know this to be true - you can be the best goddamn poker player in the world but you can't stop someone from outdrawing you for an inside straight. Nor can you prevent someone from catching a full house on the river. If they've got the balls to stay in on impossible hands, YOU WILL SOMETIMES GET BEATEN EVEN THOUGH ON THE ODDS YOU SHOULD WIN. I had a $1500 pot taken from me this way on a cruise over Christmas - a bad beat that my opponent had NO BUSINESS playing - but he did, and he caught the nuts hand on the River. I played the hand exactly correctly AND GOT MY DICK CUT OFF.

IT HAPPENS.

PLEASE folks - CUT THIS SHIT OUT RIGHT NOW.

Get off margin immediately and if you're short get WELL AWAY from invading margin. LIGHTEN UP RIGHT NOW DAMNIT!

EVERY BROKER has a "net free cash" number displayed for you. Not "net liquidating value", NET FREE CASH. That number DOES NOT include short reserve - it is FREE cash, AS IN WHAT YOU COULD WITHDRAW RIGHT NOW AND SPEND.

You should never be net short more than HALF your investable cash before you started and that number must NEVER NEVER NEVER be negative - or zero.

THAT LEVEL OF GEARING IS PRETTY HIGH AND ONLY FOR PEOPLE WHO ARE SPECULATING AND CAN AFFORD HEAVY LOSSES! For people who are MORE CONSERVATIVE (like who need the money in their accounts; its not "for fun") that's TOO MUCH LEVERAGE!

Remember, the Hedge Fund managers who do this shit are doing it with OTHER PEOPLE'S MONEY. They don't lose THEIR house if they fuck up. YOU LOSE YOURS! There is a REASON they're managing other people's money while doing this stupid shit and that's because nobody in their right mind would do it with their own cash!

PLEASE do not shred yourselves out there. The Market is a merciless BITCH and she can AND DOES turn on you without warning. The volatility we've seen the last couple of weeks is NOT going away and assrapings are going to be handed out in the coming days and weeks to both longs and shorts on a regular basis who get in over their heads.

I warned you guys last Friday that there were both Bull and Bear traps by the thousands laying all over the place right now. I guess that warning wasn't loud enough...... thus, this post.

C'mon guys and gals, PLAY SMART.