Gridlock Capitalism and Making Money in the Markets

Make Hay while the Sun Shines

For the Sun won't Shine Too Long in the Markets

By Sam Mishra,

Posted around Twitter IPO Day, 2013

Real Estate is broken in United States. We have been covering it since early 2008 on this website, and podcasting about it since 2009. 

Where else can you park your money, if not in real-estate? REITs, for starters (if you have the stomach). These trusts are riskier than ETFs like DIA (down jones equivalent) and SPY (S&P 500) equivalent.

Even though Obama means well for the poor and the down-trodden, the economists can't see value in construction. They can't see value in manufacturing. They can't see anything except inflation adjusted GDP.

While GDP = C+I+G holds, G is being shellacked by the republicans who want a small government. They hate the revamped healthcare (Obamacare). They hate government spending, which inflated during George W: Iraq and Afghanistan wars. C or consumption will keep going up, but not in real-estate; too many Americans are jobless.

So, where else can you make money, outside of a job factory?

Read on...

Investment tip: Diversification via REITs, Stocks, Bond, T-Bills is the way to keep growing your dollars. While the stocks keep going up (and down), there are ample opportunities to write covered calls and sell your invested stocks into a higher price and make money weekly.

Explanation: Suppose you buy DIA at 150, 100 shares at 15,000 dollars is your investment (excluding brokerage commission). Then, you write a covered call with 10 days to expire (to be called away at 152) for a dollar contract. So, you make $100 write off the bat. This may require active monitoring, or putting in limit trades for the next day, if you can't get up in time when the markets open.

Now, two scenarios will play out. If the stock gets called at $152 (for this to happen, it should be trading higher than 152), your stock will get called away at 152, irrespective of the market price (153, 157, 160, it does not matter). You still make $200. If the stock does not get called away, once the option expiry date is over, write a covered call again.

What is the risk? The market will correct, and the stock will drop below 150. Then, it becomes your investment in DIA long-term, and you will have to wait for the market to come back up. Right now, for a while, because of gridlock capitalism, the stocks will trade sideways, much like a trig curve.

Good luck with your investments, and always remember: trading naked options is risky.

Opinion: The NASDAQ will get past 4000 before we see a correction of 10%.

Economic Data in Detail
Updated Monthly / Quarterly

UNEMPLOYMENT REDUCING NATIONWIDE Official# of Unemployed Americans: 7 million
FRANCONOMICS.COM Real Unemployment Multiplier = 2
Actual Full-time Unemployed= 14 million

Annualized Real GDP Growth in 3rd Quarter of 2013: 3.6% (2nd Quarter Annualized GDP Growth: 2.5%)

Total # of Foreclosures (2011): 4 million households
Total # of Foreclosures (2010): 3.8 million households
Total # of Foreclosures (2009): 3.8 million households
Total # of Foreclosures (2008): 3 million households

LOW INFLATION Consumer Price Index (CPI - U) = Up 1% in 2013 (as of October)
Producer Price Index (PPI) = Up 0.3% in 2013 (as of October)

For links to free samples of the Second Edition of Strategic Case Analysis (ISBN 978-0-9798354-1-4) authored by Sam Mishra as an eBook on Amazon Kindle, please select the country you live in:

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