Again this week, mortgage rates hit record lows while refinancing activity spiked. Following the Fed's announcement that they'd be buying up to 300 Billion in Treasury securities followed by more news on the administration's plan to shift toxic assets off the books of the large Financials into other private hands, rates dropped to historically low levels. According to the Mortgage Bankers Association,

Rates on 30 Year conventional mortgages now stand at 4.63%

That's the lowest rate in the history its survey (their data goes back to 1990). The trick is understanding what this 4.63% comes with - fees, points, hassles and more.

Two Easy Steps to Secure the Best Mortgage or Refinance Loan:

1. First, compare, compare, compare. I started off with comparisons from LowerMyBills.

After using sites like this, I was immediately contacted by local lenders with rates and quotes. It was virtually effortless and at least gave me a few baseline comparisons to work from. You can also use their Mortgage Calculator to compare rates and options as well.


Once these rates are in hand, check out other lender rates as well. I've posted some independent reader-generated results HERE. Additionally, there are ads all over the internet for mortgage rates these days. If the application process is simple and they don't ping your credit to get a rough quote, great; just be cognizant of the potential impact of having several outfits ping your credit at the same time.

2. Next, understand your Net Present Value. For instance, how could you possibly discern between multiple options with different fees, points and rates? Here's a screenshot of an analysis I performed and the spreadsheet can be accessed at DarwinsFinance if you want to try it out yourself.

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In a week furthering the upward trend in equities, there were a few standout ETFs moving more than 20% for the week. For you momentum investors out there, these may be worth checking out.


TAN - Claymore/MAC Global Solar Energy - Up 32%

The solar sector jumped on positive news on multiple fronts, from further endorsements from the administration to Chinese subsidies.


FAS - Direxion Financial Bull 3X Shares - Up 27%

This ETF's a routine mention here ("Recovery Editions 1&2") and represents a 3X leveraged return on shares of banking/financial companies. Basically, any bet on success of the recent plans to shore up Financials by taking the toxic assets off their books - and the private cash hoards required to do it, will bode well for the sector. So far, it's looking like if the auctions are structured right, and with the government backstop, Financials may do quite well (comparatively speaking following their descent to near-insolvency) moving forward.


KWT - Market Vectors Solar Energy - Up 26%

Same solar story, different holdings/ratios than TAN.


TNA - Direxion Small Cap Bull 3X Shares - Up 21%

This is another 3X leveraged play, but on small cap shares rather than Financials. If you feel that small caps are coming back, but want to steer clear of financials, you could either go with this one or even do a pairs trade by going Long TNA and Short FAS.


ITB - iShares Dow Jones US Home Construction - Up 21%

This is a play on the rebound in homebuilding. While it may be decades until the next euphoric boom we say in homebuilding occurs (this will happen again, just not while the crash is fresh in our minds), these shares were so beaten down, that any positive news on the new homes front bodes well for the sector.

3X ETFs - You'll want to read up on the Ins and Outs of 3X ETFs prior to investing if these are new to you.

Disclosure: Long FAS options with FAZ hedge. No other positions in aforementioned ETFs.





RECORD LOWS on Mortgage/Refi Rates - Compare your Savings and get Free Quotes: Mortgage Calculator

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I'm no better at calling a bottom than the next guy, but if the market's any barometer, it appears as though we may have actually rounded the corner - in equities at least. Stock market rallies usually precede the end of a recession, so it wouldn't be abnormal if this was in fact the bottom. Take a look at this candlestick chart from the past 2 weeks:

Note that most of the gains in a given year come from a few select massive up days and bear market rallies are usually rapid and momentous. If this is in fact the rebound, also note that on March 9, there were sellers for every one of the buyers, and many people sold at the very bottom. The capitulated. So, not only did they lose 50% on the way down, but they subsequently missed a 20% return on the way back. If this doesn't reinforce the tenants of a long term investment perspective for retirement savings, I don't know what does.

UPDATE for FULL ARTICLE: This was an excerpt of a full article published at JohnChow.com, one of the largest blogs in the world. The full article can be referenced HERE.

Thanks John for publishing!

Unrelated, but note that today,

Mortgage/Refi rates hit a record low again! Mortgage Calculator





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For those of you that are regular followers my twitter (see recent tweets in right column), you'll note that I tweeted last night about how Allergan options (see this article on How Options Work: Puts and Calls) were spiking on takeover rumors and the 45, 50 strike options had calls outpacing puts as originally reported by TheStreet.com. I routinely tweet on interesting developments in the market and I thought this was one of them. As it turns out, Allergan (AGN) was up 13% today and if you purchased the April 45 Call, it went from 1.52 to 5.86 per contract for a single day return of 285%.

Attached was my twit at Stocktwits, which transfers all twits to the twitter feed:

$AGN buyout bait? Calls outdid Puts 20:1 45,50s hot. Biotech/pharma merger time. anyone playing this? street.com:http://tinyurl.com/cn8lqc

Did anyone catch this and turn a nifty profit?

As luck would have it, I'm fully invested now with the triple short Financials hedge I added yesterday and didn't feel I should dip in to margin to speculate, so unfortunately for me...Disclosure: no position in Allergan (hey, confirmation that I'm not full of it! I had a time-stamped call to pick up the options). However, it is widely rumored that the suitor is GSK and a takeover may fetch as much as $70 per share, so shares may very well continue to move up from the $49 they closed at today.

Great FREE Trading Tutorial Videos

By the Way, I got an update notice today on these Free Trading Tutorial/Videos - INO just posted several new ones that run in succession, you can just let it run to see everything from Candlestick charting to Trade Triangles. They're FREE and you can just enter your email on the page for updates on when new ones are posted. They'd previously predicted the Dow dipping below 7000 (which many pundits doubted) and oil's runup. And they're calling a run for Apple shares, which is great, given my covered call position! Pretty good stuff, I recommend checking out!

The videos can be accessed HERE.

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Following last week's trading update (Edition 1), where I didn't necessarily call a bottom (as I'm not signaling the all-clear here either), I did make note of some especially timely volatility plays to profit from the anticipated mass-volatility in either direction.

Volatility in Financials

One play in particular has panned out quite well. Since last Monday, the S&P500 has moved about 9%, including a 7% move today. FAS has moved about 45% and the options I purchased 2 weeks ago as part of the Financials volatility play are up 220% since purchase, while the hedged FAZ long shares represent an ever-decreasing share of the position. In that edition, I also highlighted my long GE position; that is moving in the right direction as well.

Selling Treasurys short

While my Short Treasurys play has recovered, the oddly timed announcement that the Fed would be buying $300 Billion in Treasury securities on the open market triggered a stop-limit order on TBT at 45 (I've just started using these and it saved me a few ticks on the way down; I bought back in upon stabilization). I'm still a believer that on a long-term basis, money's going to have to shift out of risk-free assets with virtually no yield into stocks, bonds and other instruments, giving TBT and other short-treasury instruments a boost.

AIG - Quick Trade

In a rather stupid, but lucky move, I moved in and out of AIG quickly given continued mass runups. I don't intend on going back into AIG; this was a rather compulsive move that just happened to pan out well.
Bought 1000 AIG @ 1.3199
Sold 1000 AIG @ 1.6199

Apple and Google Options Plays

As the shares of AAPL and GOOG continue to run, the Apple Covered Calls play and the Google Credit Spread plays continue to perform well. In Google's case, as the shares diverge further from the 260 top end strike (Jun expiry), I can just watch a few dollars per day tick my way as these expire worthless; in the end, I should collect ~$900 in premium spread income by the time all is said and done, unless of course, Google drops below $260 per share by June. Apple is a bit more complex. As outlined in this initial article, the share price is now approaching my initial strike of $110 per share, which isn't a terrible outcome. As my old investment club buddy Paul would say, I need to "move the chains" on this one. If Apple rockets past $100 per share, I'll simply buy back the call I sold and re-sell one with the same (or later) expiry further out of the money. As long as I don't have to do this on a weekly basis and don't keep paying for more and more volatility premium (and commissions!), this will turn out to be a lucrative play; I've already captured my first premium from this play during round 1 of the strategy.

Liquor in Eastern Europe! - Going Like HotCakes!

As highlighted in my Doomsday edition, I picked up an option on CEDC, a liquor distributor in Eastern Europe, which was decimated by Russia's breakdown. I felt it was way overdone and have been rewarded accordingly. CEDC has moved over 60% since early March when I entered, and the option moreso of course. Still holding on to that one. As I tweeted today, an Eastern European brethren CETV in the entertainment industry moved over 45% on a partnership deal (my tweet was at 31%, so anyone acting on that one picked up an easy double digit gain today; I actually never took the position due to liquidity in account).

Bad Calls

My positions move down too; I'm human! My gold position doesn't seem to be going anywhere. I also bought some more FAZ today to balance the hedge and it continued its descent. Obviously, a 100% long position in Financials would have been optimal, but I'm playing both sides on this.

Finally, I bought an out of the money oil call, thinking it will continue to run. Will update in the future on status there, not much movement just yet.


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So, I need some help with this one. It's always been abundantly clear to me that there are servers, taxi drivers, doormen and other professions that earn rely heavily on tips for their primary source of income. In some cases, they are actually paid below minimum wage and instead rely on tips to subsidize their otherwise low wage. For this reason, I always tip at least 20% at dinner unless I'm looking to send a message for poor service and always leave a tip for the cleaning crew at a hotel, etc.

Over the past few years, Tip Jars have sprung up in rather surprising places, begging the question as to whether I should feel guilty not leaving a tip.

Ice Cream Joints

It started with Cold Stone Creamery, which took the country by storm with their great mixed in candy/ice cream cups (albeit exorbitantly priced). Initially, when this was a new chain, we'd enter, the employees would mix up your ice cream on a block in front of you, and if you tipped them, the whole crew would sing a rather corny song...but at least they were showing some sort of appreciation and it was part of the gimmick. Now, a few years later, the tip jars are still prominently displayed yet no more singing. Just a quick glance when they hand you change to prompt you to give a little.

Question - Are you actually supposed to tip these employees?
I don't give a tip at the deli or at SaladWorks; what's the difference here?

Curbside Pickup

Nowadays, restaurants like Appleby's and Pizzeria Uno have curbside pickup whereby you call in your order and they bring it right out to the car. It's not entirely clear to me if you're supposed to tip the person carrying your food out. When using a credit card, which I almost always do to maximize my cash back rewards, they have a tip field (could be carryover from the usual store transactions) and when I've handed them a tip, nobody every declines it or shyly says, "You don't have to do that", so I assume it's expected by the employees. I'm just not entirely sure they're entitled to it or how you should base your tip. Is it a % of sales? If they're carrying 4 pizza boxes out instead of 1, do they get more money? To date, I usually just give a buck or two, but I'm at a loss over what to actually do with this.

Grocery store bag help

Occasionally, the bagger at the grocery store asks a friend of ours if she needs help carrying them out. She generally accepts. I was shocked when she asked me if she should tip them. I figured yes automatically, but she said she had no idea and hasn't been tipping them; she just thought it was a typical service. I'm in the "tip" boat on this one; at least a dollar. When I was a teenager working in a feed store, I used to throw a couple bags of 40 or 50 lb dog food and horse feed bags on my shoulder and carry it to cars for customers. While I was only tipped occasionally, it was a nice gesture. I think groceries are a bit easier to carry than 100 pounds at a time, so I figure if you need to ask someone to do that for you, they deserve a tip. Thoughts?

Related:

9 Frugal or Cheap Comparions - Part 1
Money Saving Tip Series
Tax Refund Loans a Ripoff - Not Worth the Rush
How I Saved $250/Year for Life with Comcast


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The Best in Weekly Reads from my favorite blogs in Investing, Personal Finance and Blog Carnivals that posted my articles.

Personal Finance

Teaching kids how to save
Must you report ALL income to the IRS?
Populism in the ecomomy: Careful what you watch for!
Newsweek: Spend - it’s patriotic!
States are wrecking balls for business

Investing

The tyranny of investment fees
Note to administration: AIG is your fault!
Alternative Investments: correlation and diversification
Div Investing: Cash is King
Industry Profitability Analysis
Master Limited Partnerships highlighted

From My Network at EverydayFinance and Darwin’s Finance

Is This the Rebound? A Financials Volatility Play
Mortgage Rates Dropping to Record Low - Time to Refinance?
Will Card-Check (Removal of Secret Ballot Union Votes) Kill US Business?
Cramer vs. Steward (unedited version)
Everyday Finance Trading Update: Recovery Edition
If You Thought Americans Suffered This Year…
AIG “Outrage” - Nauseating, Disingenuous and Offensive
Don’t Fall for the High Yield Savings Ad - 6 Rate Reductions in 2 Months!
A WakeUp Call from Foreign Workers in a Flat World

Carnivals:

Carnival of Personal Finance
Money Hacks
Investing Strategies

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What if I told you that the current economic downturn and the investment losses Americans endured in 2008 and 2009 are a pittance compared to what almost happened? Something almost came to be that may have completely destroyed a large swath of American lives.

The only thing that saved us? The rapid collapse of Bear Stearns and the housing industry!

For anyone that's followed the runaway train that was the housing boom fueled over several years by easy credit and misaligned incentives, followed by the precipitous decline in home values, and hence, collateralized debt obligations (CDOs), it's evident that it could have been even worse. Fortunately for the US and unfortunately for the rest of the world, US companies exported much of their toxic waste assets to countries the world wide from China to Finland. Note that during the housing collapse last year, with the US housing at the epicenter, US stocks actually held up better than virtually every other stock index (See all 2008 index returns).

It could have been Much Worse - This is NOTHING

How? Fortunately, we were protected from ourselves. Wall Street, for all its ingenuity, failed to package CDOs in such a fashion that they could sell them to retail investors fast enough to beat the collapse. Just like Blackstone sold out at the pinnacle (boy, was that great timing), Wall Street was hard at work in the summer of 2007 to actually bring publicly traded vehicles that hold CDOs to the market. KKR and Bear Sterns were readying these instruments for retail investors. While Americans have suffered 50% declines in equity holdings, layoffs and restricted credit, could you imagine if we each had our own Bernie Madoff experience? Some of these instruments literally would have gone to less than 10 cents on the dollar within a year.

According to an IPO filing with the SEC, one of the firms looking to add retail investors to the pool of suckers, Highland Capital Management, showed that a dozen CDO funds under their management paid annual dividends of 19.6%. Bear Stearns' CDO returns were 24.5%. If "sophisticated investors" fell for Madoff hook, line and sinker with purported returns much lower than this, can you imagine the horror that would ensue if ALL investors were given access to projected returns like this?

As this BusinessWeek article from June 2007 outlines, as is typical, the class of CDOs that investors would have had access to were second rate (oxymoron in this case) with onerous restrictions compared to the junk that already existed. The author rightly predicted that these instruments aren't appropriate for retail investors and poignantly predicts:

"If a credit crunch leaves borrowers unable to refinance, a wave of defaults will follow - along with a wave of losses for investors..."

Now that mortgage rates hit record lows again this week and refinancing activity is burgeoning, there appears to be some light at the end of the tunnel for many Americans able to put more cash back in their pockets, as the Net Present Value for some of these refinancings are absolutely incredible. I'm not out to belittle the pain Americans are enduring now. But, can you imagine if retail investors chasing annual returns of 20%+ had access to these instruments? Now, that might have been enough to put us into the next Depression.




Mortgage Calculator

Related Articles:

Lowest Mortgage Refinance Rate Comparison by the Readers!
Is Now a Good Time to Start Investing in Stocks?
Toll 3.99% Mortgages - What’s the Catch?
Is Now the Time to Short US Treasuries?
How to Hedge your Home Price Decline

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Here's a quick one to the politicians - it's obvious what you're up to. Once again, just like focusing on whether the GM executives drove cross-country or flew to a hearing, rather than whether or not their survival plans were adequate to prevent further handouts from the taxpayers (evidently not, I told you so), there's now this feigned outrage over AIG bonuses. There were plenty of opportunities along the way to interject in the bonus ritual, including the most recent dole out of cash to AIG under, yes, the current administration.

They drag the CEO before Congress to grill him and chastise him over bonuses. This is a guy who came out of retirement to work for $1 a year to try and turn this thing around. Talk about Obama inheriting this and Obama inheriting that; look what this guy inherited! And now that the mystery's over on how the bonuses were allowed (Wow, Dodd, what a surprise - he finally fessed up after all the outrage), this guy has already been demonized for actions that were already put in motion before his arrival. AIG is not solely to blame for the current economic malaise. It's the same story relived every time - when leaders screw up royally and continue to screw it up worse and worse, they need to generate sound bite after sound bite and point the public's ire in a different direction. Some of the statements and behavior from out elected officials is truly outrageous.

AIG representatives should either “resign, or go
commit suicide.”

This comes from none other than Charles Grassley, such a respectable figure. When questioned on his outrageous statement, he blew it off saying,

“I hope you recognize rhetoric,” Grassley said, “and
I shouldn't even have to answer that question….”

I'm sorry, but this is just outrageous - and you should apologize for it. Political leaders have been forced to apologize for less. As someone who's been personally impacted by suicide, this is a completely offensive, unacceptable statement for anyone in a leadership position to make, and then to blow it off later and not even take accountability for the ludicrous nature of the statement. Well, that's just par for the course. Seriously though, commit suicide. These people have families. They have people who love them and rely on them. Nobody should be forced to commit suicide over a job, no matter how much they screwed up. Because some guy works for a company in a totally different division or had nothing to do with a small unit of 450 people who screwed up a company of over 100,000 employees, because they're in a leadership position with this tainted company, they should commit suicide. Ridiculous.

Have any of our politicians who enabled the current situation, who blocked efforts to slow the pace of irresponsible lending, who have burdened future generations with debt they will never be able to pay...have these politicians been asked to commit suicide? No, they gave themselves another raise this year while seeking to ration out bonuses on Wall Street. I get it, AIG took taxpayer dollars, so they shouldn't give exorbitant bonuses. How can anyone in Congress judge what a bonus should be for someone who may have actually headed up a pretty good unit at AIG that had nothing to do with credit default swaps? Let's see, the company's struggling so bad that we have to keep throwing money at it, so we'll ensure even the good employees seek employment elsewhere where they can at least earn the going market rate for their performance and skill set.

We should just accept it for what it is:

Political Diversion Tactics!

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Here's a whirlwind update of my trading activity in the past few weeks:

The Financials - A Play in Volatility:

As I tweeted today, I unloaded some FAS (3x Leveraged Financials ETF) options after a 100% run since entry. FAS was up 10% at exercise and closed 5% down on the day; timing is everything! (I can't take credit for timing perfection; I had a couple minutes between activities and decided to do a trade).

This was part of a somewhat more complex hedged long option/short shares play described here.

Treasuries - Sold Short

As described here, the yields on treasuries are rising quickly, meaning the prices are dropping. This is like clockwork. Of late, between China's reluctance to continue to satisfy our appetite for debt and today's announcement that the Fed may not end up buying the Treasuries they initially hinted at, down we go. My play via TBT has been working out great; and the various plays I listed there are up for the year pretty well vs. a down market. For instance, TBT's up 30% YTD vs. 16% down for the S&P500.

Income from Options

My Google Credit Spread and Apple Covered Calls plays continue to work in my favor, as time value drops out of the options positions I sold. Great play for a sideways market (there are risks of course; outlined in each article!).

Central European Liquor!

On the Russia collapse, CEDC (background here when it was a high flyer; I had since unloaded fortunately) was completely crushed and overdone in my opinion. I had purchased some 7.5 calls for Jan 2010 expiry last week and the shares have been on fire since, up to 35% in the last 5 sessions alone.

GE

After taking a beating on my initial entry on GE, I doubled down last week and was handsomely rewarded. I went in with just two call options this time, but they're up nicely given GE's rally of late. WGEAU purchased at 2 at 3.70 now for 80% gain. Only a few hundred in profit, but it takes the bite out of the move down from 15 on shares.


I usually post these trades in real time via twitter, but this was a consolidated update. Make sure to follow for odd behavior like GOE up 400%+ in a month and other interesting action.

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This a guest post: Trisha Wagner is a freelance writer for DepositAccounts.com where you can compare rates of deposit accounts from dozens of banks in one place. Trisha writes regularly on the topics of personal finance and saving accounts.

If you are wondering how to protect yourself and make wise financial decisions during the current economy you are not alone. Each day we are bombarded with increasingly worrisome reports about the state of the economy, the rise in unemployment and the biggest banks struggling for survival. Luckily there is no need to panic just yet, the following tips can help you protect yourself and your money during the recession.

Plan in advance - Surely at this point everyone is aware of the tough financial times we are facing. Therefore it would only make sense to prepare yourself for the worse case scenario. You should revisit your budget and make adjustments to ensure you are not wasting money on unnecessary expenses. It is important to save as much money as possible to ensure you have a cushion should you lose your job or have other changes in your future income.

Know where to keep your money - Although less lucrative than they used to be, certificates of deposit and money funds are still safe places to stow your cash. Unfortunately many issuers of CD's may go under so it is important to ensure that the CD is FDIC backed. If your funds exceed the limit set by the FDIC for individual accounts, you should put your money in different banks for maximum protection.

Do not incur more debt- It may be difficult for people that have grown accustomed to living on credit but it is important to avoid incurring more debt in a down economy. In fact avoiding debt should be a main priority in any economy, as the burden of debt can ruin your chances of having a secure financial future.

Pay attention to your credit- Understand how your credit score is calculated and take the necessary steps to protect your credit. Since your payment history is one of the biggest components making up your credit score you must take special care to pay your bills on time. In addition to timely payments, you should make every effort to pay down or eliminate your debt.

Keep investing - Don't let the current state of the economy discourage you from investing. You can reduce your risk by exercising caution if you are trading stocks, diversify your portfolio and by going international in your investments. Unless you are within a few years of retirement you have to remember that investing is normally a long term strategy. Remember the economy is cyclical and while times are tough today we will not remain in a recession forever.

Tax advantage of federal incentive programs - The 2009 Economic Stimulus plan authorized the first-time home buyer tax credit up to $8,000. This and other tax credits and incentives are examples of things that you should take advantage of during a tough economy.

I love the template I'm using here at EverydayFinance...and it was free...so I'm not complaining. But it appears as though the designer used a photobucket account which has now exceeded its limit in his account so there are some rather obnoxious looking messages all over the template today. I'll look to get this cleaned up Sunday via my own account since it takes some manual effort and breaking up fights with our 2 and 4 year old all day = bed time. Just an fyi that it hasn't been taken over or hacked; will be back to normal soon enough.

For now, enjoy some Cramer vs. Stewart (unedited - you can't see this on TV since they had to edit down to fit into the time slot).

The Daily Show With Jon StewartM - Th 11p / 10c

Jim Cramer Unedited Interview Pt. 1

Daily Show Full Episodes
Important Things w/ Demetri Martin

Political Humor
Jim Cramer

The Daily Show With Jon StewartM - Th 11p / 10c

Jim Cramer Unedited Interview Pt. 2

Daily Show Full Episodes
Important Things w/ Demetri Martin

Political Humor
Jim Cramer

The Daily Show With Jon StewartM - Th 11p / 10c

Jim Cramer Unedited Interview Pt. 3

Daily Show Full Episodes
Important Things w/ Demetri Martin

Political Humor
Jim Cramer

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Over the past several weeks, I was able to enjoy an 80% return on the Leveraged 3X short Financials ETF FAZ. As my trading account was becoming too top-heavy (short-heavy really), I sold into strength as the ETF rocketed over $100 per share as rumors of nationalization were rampant and the Dow hit levels not seen since 1996. I didn't sell out completely though and still hold shares which are now moving in the opposite direction. However, this weekend, I tweeted about the potential for banking shares to double given the upcoming House Financial Services meeting which may bode well if Mark to Market accounting rules are altered. So, Monday I changed my game plan.

Was This a Bottom?

I don't know. What I do know is that Financials will continue to see massive volatility in the coming weeks. With this in mind, rather than trying to guess which way they go from here, I entered into a volatility play. Since I already captured substantial gains on FAZ over the past few weeks and was still holding shares, I had entered into a hedged position, buttressing those FAZ (remember, triple short Financials) with call options on FAS for April Strike at 4. FAS is the 3X Long Financials ETF. The thinking is that if Financials reverse course again and investors head for the exits, my FAZ shares rocket back to a 100+% gain and options expire worthless. If there's more good news like Citi's this week and Bank of America's today, followed by a recommendation from the House Financial Services Committee that benefits the financials (the meeting was today, but it was unclear what the actual verdict was from what I caught), then FAS options could continue to spike.

Basically, if Financials rally enough, the loss on FAZ becomes inconsequential as the leverage from the FAS call options takes over. At the money, options tend to move about 50 cents on the dollar (delta). As of today, the gains on options have overtaken the losses on FAZ shares, so I'm on the positive side of the fence. If we move further in this direction, I can close out the options, take the profit and hope for a swing back down to double dip (and remain hedged for my net long portfolio).

Alternative Investment Plays

Other considerations for alternative investment trades include going short Treasuries on a recovery play (the short Treasury play has performed quite well this year) or if you think the impending recovery spells massive inflation due to our profligate spending to try to fix the problems from the past decade, buying gold via GLD is an option, just avoid the gold ETN GOE - even though it's up over 400% this year, as evidenced here, there's something rotten there, including massive spreads, irrational price movement/volatility and the fact that Credit Suisse is deleting it.



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A few weeks ago, I had warned readers to Beware the Bait and Switch SmackDown: High Savings Rates, Free Trades and Credit Cards because I was fired up about my "high yield savings account" dropping from a signup rate of 4% in January to 3.2% within a month. DollarSavingsDirect (no link, no publicity for you...just shaming you punks) has taken bait and switch to a new low now though, dropping rates virtually weekly. This is most egregious because of the outrageous advertising campaign EVERYWHERE on the internet. Pictures of Ben Franklin with 4% were on virtually every finance, trading and banking site for the entire month of January. Now, here's the trend.

After an initial reduction to 3.2%...

Update #1 - Lowered to 3.0%
Update #2 - Lowered to 2.65%
Update #3 - Lowered to 2.5% (as of 3/5/09). This is getting ridiculous. I hope this article spared some consumers thinking they were getting a higher rate for more than a week!
Update #4 - Lowered to 2.25% (as of 3/9/09). Looks like a weekly trend!

What's my point?

If you're looking for a high yield savings account thinking 2.25% is a decent rate, guess what, at DollarSavingsDirect, it probably won't be there in a week. I'd go with a more reputable, predictable bank like:ING which yields close to 2% for 100K+ or with HSBC, Earn 1.85% APY* in Online Savings. At least they don't drop their rates weekly!


Related:

7% CD Yields Raising Eyebrows

Dow 3700 - $3,500 Gold - $300 Oil...Oh My!

3 Corporate Bonds Yielding Over 10% that Aren't Financials!

Net Present Value: Why You Should Use it in Everyday Life

Deal of a Lifetime in Muni Bond Investments?

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Today, a pretty significant merger/takeover was announced in the Merck/Schering deal. In typical fashion, the media tried to assign a "cause" or "reason" for the overall market moves and since there was no other relevant news of the day to assign blame or credit to, they sought to attach various directional moves to this news item. The media needs to attribute futures/market moves to an event, even if there's no correlation whatsoever with the event. These "explanations" for market direction based on discreet news events are a sad attempt by media and investing outlets to project an image that they have a clue. They don't. When the market's down after a few days up, they claim "profit taking", when the market moves up, you'll hear "bargain hunting". Today, they cite the same bit of news for moves both up and down. As time progressed throughout the day, they tended to assign the same deal with the same details to stocks either moving up or down at various points in the day. Note the back and forth below in red and green for up/down - looks like Christmas!

Merck News No Help, as Stocks Open Lowerat TheStreet.com (Mon 9:35am)
US STOCKS SNAPSHOT-Wall St down as bank woes offset Merck dealat Reuters (Mon 9:38am) US stocks turn higher after Merck dealAP (Mon 10:31am)
Merck deal helps world stocks clamber off lowsAP (Mon 10:47am)
Wall Street Gains After Schering Bidat Forbes.com (Mon 11:00am)
Stocks Mixed On Merck-Schering Dealat Forbes.com (Mon 11:03am)
Stocks fluctuate as investors battle uncertaintyAP (Mon 11:17am)
Wall St slides, Nasdaq hits fresh 6-year lowReuters(Mon 3:29pm)

This last article included the following tidbit:

"A drop in health-care shares also helped take indexes lower after Merck's proposed $41 billion takeover of Schering-Plough. Even though news of the acquisition sparked optimism about deal activity, investors worried that it highlighted the broad reach of the recession."

Does this make sense? Is this was really worried investors? I thought stocks were "turning higher" at 10:31 AM due to the deal? Now, investors decided the deal highlighted the broad reach of the recession?

Back down again!
Wall St. drops after news of drug takeoverReuters (Mon 4:11pm)

Why is this so bothersome? It just continues to highlight the ADHD media, feigned knowledge about what really drives markets (update - nobody can nail it, it's a culmination of millions of interactions and data points on a daily basis driven by factors beyond our understanding), and a false sense of knowledge or in some cases, bravado in announcing the cause for a particular activity in the market...only to be reversed or disproven hours later with no retraction - on to the next story they go!

Related Articles:
Dow 3700 - $3,500 Gold - $300 Oil...Oh My!

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I read with disgust this week Obama's plan to "fix" the housing crisis. At its highest level, you have the winners paying for the losers, so we're all losers now. People that were responsible and lived a frugal lifestyle, or even a reasonably consumerist lifestyle are to pay (yes, "taxpayers" isn't a nebulous source of money that grows on trees, it's you and I) for the loan modifications and other costs associated with bringing down borrowers' costs who are underwater or simply not incented to pay for their mortgages. The best part is we're also going to pay the loan officers up $1000 for each loan they modify. These are several of the same loan officers who routinely lied, falsified information, and pushed borrowers into mortgages they knew they wouldn't be able to afford when the option ARM reset.

This isn't a political site, it's a financial one. But when the political leadership is seeking to nationalize the country, it's relevant. Not sure if you caught these clips recently, but they're gems.

Here, you have Biden stating how paying more taxes is Patriotic. He's almost snide and above it all in stating this as "getting with it and pitching in".




Next, when questioned on what the stimulus bill had in it for small businesses (since we found something for everyone else, including those already living off the government), this is great...he doesn't know what to say - so he says that perhaps if people can't get to your small business, a bridge will help; somehow trying to tie the infrastructure spending to helping out small business or something. This is priceless.




Finally, while petty, for all the knocks that Bush took on "the internets" and not being with the times, you'd think this hip Pres and his staff that are bringing the "hope" and "change" would at least know that websites aren't designated by a website number:




Look, I don't make over $250K, nowhere near it. I'm not upset because bailouts, tax increases and fear mongering impact me directly. But these policies and the direction we're headed are forever changing our country. Future generations will look back on this period in amazement and anger at how we blew such prosperity and shouldered them with a burden we chose to pass on. Within a few short years, I've seen us depart from what made America great and we're headed toward France. If we try hard enough, we may just surpass them by the time this first term is over.

Related:
Stimulus Bill - What it Means for You
Let's "Spread Those Mortgages" Around
Tobacco Settlement Money has been Squandered Shamelessly
TARP Fund Irony: Credit Enables 20,000 Layoffs by Pfizer
US Workers Have the Worst Severance Packages



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The Top 12 articles in my network for the month of March by traffic, comments, syndication and my own biased opinion were the following:

Deal of a Lifetime in Muni Bond Investments?
Layoffs: You May Be Next - Tips to Avoid, Prepare and React
Is Now a Good Time to Start Investing in Stocks?
Lowest Mortgage Refinance Rate Comparison by the Readers!
Gold ETN GOE up 421% in 1 Month - What Gives?
US Workers Have the Worst Severance Packages
Apple Covered Call Play Round 2: Capture Gain and Repeat
Let’s “Spread Those Mortgages” Around
GM - Not One to Say “I Told You So”
3 Corporate Bonds Yielding Over 10% that Aren’t Financials!
3 52-Week High Stocks Worth a Look
Beware the Bait and Switch SmackDown: High Savings Rates, Free Trades and Credit Cards

Carnivals and other outlets that included my articles this week:

Carnival of Personal Finance
Bankruptcy/Debt Carnival
Carnival of Everything Money
Carnival of Investing Strategies (Editor’s Choice!)
Nightly (Value) Investment Links #92
Old School Value’s Recommended Reading - Mar 6, 2009

If I missed any, sorry, will add after I check my links again later; off to the park!


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For Trading Updates and Post Alerts in Real Time, Follow my Twitter Updates.

For anyone following my Twitter, you've been able to follow my trades day of, but I have actually done a post on trades in a while. In following with my tradition of being net long (which has been painful I'll admit) while always having some hedged/short position to free up cash along the way down for both diversification and bottom feeding...

Short Financials - Leveraged
I purchased the 3X short ETF FAZ at 56 on 2/5. As the Financials have completely collapsed, I've been selling some off along the way. It has run up so dramatically, to the tune of 80% in a month, that the position was actually taking up over 10% of my portfolio. I sold a few more shares yesterday and now it comprises about 6% of the total portfolio.

Gold - Leveraged
Playing on the same theme of impending doom for a small portion of the portfolio, I also bought UGL, the 2x Gold ETF. It's down a bit still, but I intend on holding at least for several weeks for some diversification while the constant tinkering and bailouts by the administration continue to decimate the market. I had been watching GOE, which ran up over 400% in a month, and continues to run, but I just can't figure out what's going on there, it has diverged from reality.

Shorting Treasuries
Conversely, if things don't decline significantly and money starts to move out of Treasuries back into bonds and equities, I shorted treasuries a while back since at one point, there was actually negative interest on short term notes. It was really getting quite ridiculous. Various means to short Treasuries are listed here.

Liquor in Eastern Europe
I also bought back into Central European Dist. Corp following the complete collapse of Eastern Europe and Russia. They recently had an earnings surprise and the stock is a potential ten bagger when it returns to prior highs during a recovery in the region.


For other recent trading ideas, check out:

Stocks Making New Highs in Surprising Places
Using Google Search Trends to Exploit Market Moves
Is Now a Good Time to Start Investing in Stocks?
Apple Covered Call Play Round 2: Capture Gain and Repeat


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...And if you enjoy Everyday Finance, you'll love my new blog,Darwin's Finance: Financial Evolution .

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I'd like to just highlight the absurd lengths media outlets will go to in order to get a page view. Some of the headlines I see on prominently placed links just force you to click through and see how this dire prediction could possibly occur, only to find some unsubstantiated, hypothetical example outlining where things might go if the perfect storm occurs. I wonder how much of the current economic malaise is actually due to the media's frenzy to run with the most sensational, shocking prediction in a game of one-upmanship. Remember the days of Dow 100,000 and Nasdaq 10,000, etc. The predictions were becoming more and more stupid as the media and investor euphoria deepened. I actually felt dumber after having read some of this material.

$300 Oil

This article was prominently featured on CBSMarketwatch's home page and drew over 600 comments. This ex-trader cites the contango and economic recovery as justification for this rather absurd prediction. He makes this rather nonchalant prediction - it's elementary, right?

Any economic recovery results in higher energy prices -- it's elementary. That means $300 crude oil could be one year away or three years away, but certainly not much more.

I'm sorry, but contango doesn't result in an 8x move in a couple years. And if this were so elementary, oil wouldn't be constantly teetering at $30-$40 per barrel. This prediction is just silliness and sensationalism at its best.


$3,500 Gold

This video made the front page of TheStreet.com touting $3,500 Gold. The guy in the video cites the emergence of ETFs (news flash, they've been around for some time now) and low interest rates (investors have figured this out already) as justification for his prediction. But there is not a single iota of quantitative justification for his assertion. The $3,500 could just have easily have been $35,000. Why not print an article entitled, "Gold to hit $35,000 per ounce!". I'm really surprised by the lack of evidence for an assertion on the website brought to us by Jim Cramer (yeah, right).

Now, there is an Exchange Traded Note (ETN) for gold that's been up over 400% in the past month while the actual price of gold has only risen moderately during that period and nobody seems to have quite figured out what's going on there. But that's got nothing to do with a run to $3500 gold. It's an instrument gone wild the likes of which I've never seen...and I don't expect it to last.

Dow 3,700

This article is on CNBC's homepage touting a Dow 6000, with a possible drop to the next support level between 3,700 and 4,000. To put things in perspective, the Dow last traded at 3,700 in 1994. We're currently at 1996 levels which is pretty shocking, so perhaps an extra two years back on the clock isn't too far fetched, but I think enough's enough.

Some Sanity Out There

At least this trading video hit most of these trends right - recently called continued move downward in US equities. I've been following these for some time now and I can't argue with the accuracy/quantitative support provided for predictions. And the best part is, they're free just for signing up!

Warren Buffet recently took some accountability for his lousy timing last year, which resulted in the worst year in the company's history and made an interesting analogy to the female anatomy in this article. He makes some predictions I can't disagree with, but overall, he doesn't view the world as coming to an end.

"...major industries have become dependent on federal assistance...Weaning these entities from the public teat will be a political challenge. They won't leave willingly"

You've got to love the media. Remember when parents had to pick through Halloween candy and apples each year even though there had never been a single documented case of "candy sabotage" in US history? Remember all the bans on using cell phones near gas stations and some states' attempts to actually impose fines and prosecute reckless barbarians from blowing up the gas stations - even though there has never been a documented case of a cell phone igniting a fire or explosion in the presence of gasoline?

By the way, did my title get you to click on this article? :>

Disclosures: I am long gold via ETFs, I have no position in oil and I've been shorting Treasuries as outlined here.

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Since I subscribe to Consumer Reports and routinely find good tidbits on either money-saving ideas or product reviews, I like to share some useful items from each month's magazine.



Best GPS Navigators:

This month's issue highlighted the Garmin Nuvi 760 as the best model for traffic-ready GPS.


Windshield Wipers:

As mundane and insipid as this topic may sound, we all need them and we generally overpay. According to this month's publication, buying Anco 31 Series blades outperform virtually all other types of blades that cost double the amount.


Most Economical Car:

Toyota Prius ranked as the top value among 300 cars. They utilized a complex algorithm to consider various rankings, road-test scores and costs over a 5-year period.


Best and Worst Cars:

In testing and reliability, the Best Car in their test was the Lexus LS 460L. The worst was the Ford F-250 Lariat. I noticed in a different table that the Lariat also had the worst fuel efficiency at 10 mpg. This was worse than the Hummer. Way to go Ford!

Who Makes the Best Cars?

Japanese automakers clearly win out. While anecdotal press reports cite gains by US automakers and the notion that the Japanese dominance in today's manufacturing era is nothing but naysayer lore, the data from CR shows clear dominance among Japanese autos:

1. Honda
2. Subaru
3. Toyota
4. Mazda
5. Mercedes-Benz
6. Nissan

....

Ford came in 12th, GM 14th and Chrysler 15th - Out of 15.

And we're throwing more money at the US autos with taxpayer dollars.

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