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Cutest Video Ever!


View my page on PickensPlan

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All my posts for first half of 2007 were lost yesterday when my server gave out on me! Just as well. I’ve been trying to shift the direction of this site to analyze sectors my engineering background would support – namely industrial sectors such as engineering, construction, oil service, machinery, mining and base metals, as well as technology. Oh, check out some of my posts on SeekingAlpha.com.
**P.S. Any proceeds from the ads on this site will go towards charity. I received a check for $103.99 from Google Adsense for 2007, which I’ve donated to March of Dimes.  Read about my FlyboysFund 2007 Donation here. **

Gawsh Darn It!

Selling Girls in China to Adopting Parents. What’s it worth? My Perspective

If people missed out on this offshoot conversation coming from this article via twitter.. a review:

ryamada @JeffreyLin More seriously, I do know a Cornell econ prof that wants to look at the arbitrage market for adoptions of young girls from Asia

JeffreyLin @ryamada arbitrage in terms of…money? any life here is better than a life there almost definitely

ryamada @JeffreyLin Question: if life (especially as a girl in China) is so cheap, why does it remain so expensive for American parents to adopt?

ryamada @JeffreyLin Presumably there are factors (norms, politics) that prevent the “market” from efficiently eliminating the arbitrage opportunity

continued…

I believe you have to cast aside your analytical mind and wear the shoes of a compassionate person. i can not look at this from a monetary/politics/ or even a social standpoint. you have to go smaller. its about people. no, the person. imagine ur a parent. how desperate would you have to be, if you loved your child, to have to sell that child? you would most likely be in a lot of debt, a druggie, or barely able to support yourself. as your kid came along, you cannot support them. either you sell the child or you both die. so, its not just about “how much it would cost to feed/raise that child.” you’d want enough money to feed yourself for a while, to get by, and thankful someone else can give your kid a better life.

the adopting parents are willing to pay, able to pay, and compassionate enough to pay. after all, your giving money to the parent of your adopted child.

with that said, these emotions probably ring louder for me because “selling young girls” have been a big part of chinese culture and history going far far back. There have been women I know, related to, and/or heard in stories that were sold when they were girls. They were girls whos parents were too poor to even feed themselves and the hardest decision was to sell the girl just to live another day. Unless you’re psycho, and i know some are, it is not normal and not easy for a parent to give up their child. And even if it seemed that way when they gave them up, they might’ve been too young, but regret it later and want to find the child again. (too much lifetime tv, television for women). Many chinese girls, all throughout history, were sold as maids to wealthy families. The social gaps were just too great. The poor, farmers or whatnot, could barely have enough for themselves, and the landlords could live on their riches forever.

Another case is when girls were sold for money so the son could have a proper wedding. Again though, it is because a lot of people were so poor, but also because of the traditional importance of the male “namebearer” in the family, when time came where the family needed a big chunk of money, the only option was to sell the daughter.

This isn’t just a Chinese historical culture thing or with girls. A similar story was told in the movie “A Knight’s Tale” where Heath Leger’s character was sold to a knight when he was a young boy.

so why do people do something that seems overpriced, or irrational? things like this i don’t believe is about the money. you could observed this in ancient china or today, the amount of money paid for the girls would be different, the form of money is even different, but what stays the same is how the parents, adopting parents, and the adopted child feels. there is no “logical” price on love and human connections. that is why parents, when their kids have been kidnapped, would give up everything and take on debt or do just about anything to have their child back safely. you can work to get back money, even if u have to work in McDonalds or scrub toilets, but u can’t revive a person.

Guest Post: V.I.C. Stock Watchlist for 1/28/2009 by Daytrend of FINZ.tv’s POSSE

**A guest post by Vic Scherer, aka Daytrend, my friend and fellow blogger over at POSSE: FINZ.tv’s Trade Journal. Vic prepares daily scans of market trends, earnings, and technical analysis and narrows it down to the best trade opportunities for the days ahead. Today is a special post because it is once again FED day, where the Federal Reserve will announce interest rate decisions around 2pm EST.  And don’t forget, we’re still in earnings season!**

V.I.C. Stock Watchlist for 1/28/2009

by Daytrend

Wednesday is Fed day.

There are daily setups GALORE in banks, financials, and real estate, many more than usual. Unfortunately, most are in unstable situations with one or two dojis in the previous two days. Further, there are many rising wedges on decreasing volume, and some of these doji-pairs are near or at daily resistance points which could become inflection points if broken.

It is amazing how all this converged with Fed day, simply amazing. I sense that some very good intraday trends will emerge out of this in the next 1-2 days, but I can’t tell which way. And it might depend on the Fed. Also some very good swing trends could emerge.

Departing from my normal practice of placing trends on the blog, tonight will show these setups. However, this is just to illustrate the instability. FAS or FAZ and URE or SRS will be my vehicles of choice, with maybe 1-2 exceptions. If you’re into individual stocks, some of these could produce swing trends worth 10-15%, which might exceed results from the ETFs, but who knows.

WFC: Earnings before market open (BMO). Don’t touch this unless you do it all the time.

BAC: Inflection point at 6.48, could go all “some” way.

PNC, JPM: Watch for breakdown of V-bottom potential. PNC earnings 2/3 BMO, unless it is changed. JPM could be good to 18ish.

FHN: Coiled from hell. Could go either way.

WL: Nice bear flag, good for test of 14. Earnings scheduled for Friday BMO.

NTRS: I don’t trust the reaction to earnings on 1/21 BMO. If fins implode before the 1/21 high is breached, 49 here we come.

CMA: Loving the super-unstable 2-day doji situation at falling MAs on daily, right after earnings on 1/22 BMO. Could be good for a short to 14.50 at least.

STI: Continuation short.

STT: Watch for rollover. Could be good to 15.

GS: Wedging a bit like JPM.

MS: MUCH more bullish than most banks and fins.

PFG: Wedging on decreasing volume.

COF: Free-fall, but could be good for more daytrades (or a squeeze!).

Check for yourself the similar situations in Real Estate stocks.

** Disclosure: At the time of this post the author is flat. **

Utah Medical Trip Update – 1.05.09

Longer update this time because I forgot to do a video last trip (11.09.08). Includes some special footage from the trip!

read more on my blog: flyboysfund.jeffreylin.net or FINZ.tv/POSSE Trader’s Blog

(featuring “California Rain” by the Rescues)


Jeffrey Lin’s Utah Medical Trip Update – 1.5.09 pt. 1 from Jeffrey Lin on Vimeo.


Jeffrey Lin’s Utah Medical Trip Update – 1.5.09 pt. 2 from Jeffrey Lin on Vimeo.

Guest Post: TraderAlamo’s “OBAMA. Obama Backs All Manufacturers in America.” from FINZ.tv’s Blog

** I’m headed back to Utah for more medical tests this week. My partner in FINZ.tv, TraderAlamo, has stepped in for me with this great analysis of Obama infrastructure plays. TraderAlamo’s pick is Mexican cement-maker Cemex (CX), and he lays out a strategy for trading Cemex based on current technical conditions of the stock.  Welcome TraderAlamo! Follow him on Twitter! And be sure to sign up for the premier of FINZ.tv!

SCUBA. Self Contained Underwater Breathing Apparatus.

SNAFU, in military terms, simply meant situation normal, but American GI’s during World War II referred to SNAFU as Situation Normal All Fouled Up (I’ve cleaned up the word ‘foul’ a bit) to mock the U.S. Army’s penchant for acronyms. The trading community has always latched on to these acronyms as investing themes to identify hot sectors. BRIC, Brazil-Russia-India-China, was the dominant acronym prior to the slow-mo crash of ’09. In the absence of ANY monolithic trading themes, as the trend was simply DOWN, there has been a subtle theme to the rally in equities from the October panic lows.

OBAMA. Obama Backs All Manufacturers in America. The simple reasoning is the new President-elect’s potential creation of jobs via attention to the deteriorating U.S. infrastructure. (Aside: The boom of the 1920’s was the greatest building effort since that of Emperor Flavian’s Rule during the Roman Empire, and it was easily the most ambitious ever.) Sounds like I’m building to some fundamental thesis on where to invest, right? Wrong! This will only tell us what stocks to look at as trading vehicles. The fruition of this plan is not important to a trader, nor is its failure. What we are playing is the perception that traders will gravitate to the names that they feel may have some visibility going forward. The list of names to play include: CAT, JEC, TEX(think highways), SGR, FWLT, TXI, FLR, ACM(think overpass and bridge repair), X, CLF. Beyond these names would be cement, aggregate material or any company that could conceivably be contracted to repair, upgrade or construct any aspect of our infrastructure from roads to energy to electricity grids. Oddly enough, one name that could be flying under the radar as a beneficiary to OBAMA resides in our neighbor to the south, Mexico.

Cemex (CX) stealth Obama Play

Cemex (CX) stealth Obama Play

Cemex (CX) currently has an attractive daily pattern, and, with the world of cement manufacturers having merged dramatically, there are few pure cement plays. In all likelihood, we will not be able to produce all the cement for our infrastructure needs, and CX sits firmly positioned to benefit. We wanted to highlight this play on Thursday before Friday’s move as the intraday charts were perfectly aligned, but we were concerned about recommending names in a light volume environment. Notice the high volume reversal from early October then a retest that triggered a Grail buy signal (fancy name for a rare buy indicator). On Friday Cemex broke higher from a bullish flag(highlighted by blue line segments), but we are still concerned about volume as it decreased since the breakout. Also take note of the 50 day SMA as it has now turned up. With the market at an extreme overbought reading we remain cautiously bullish. This market would not be easy to play if it works higher from here because we would have to reach a bit for certain names. Ms. Market, however, loves to travel the path of maximum pain, so we would still be ready to attack longs via confirmed INTRADAY patterns. CX could potentially be headed to the 12-14 area to approach resistance if the market were to march higher from here. If the market were to pullback on lighter volume, we would look to the nature of the selling in CX to see if volume increased. A lighter volume pullback towards the 50 SMA would offer up a chance to enter a low risk high reward trade for the market’s newest acronym: OBAMA.

** For infrastructure sector analysis from the point of view of an engineer, read our own Jeffrey Lin‘s old post: “Subprime” NOT the headline from Honeywell’s quarter – Part 2: Strength in Energy, Construction, and Infrastructure
** Remember certain details of Jeffrey’s analysis have changed as the market deteriorated significantly since the time of the post. This is for reference only in order to obtain a general understanding of the sector.

Don’t forget to sign up for the Premier of FINZ.tv!

** Disclosure: no positions in the stocks mentioned as of 01/05/09, but positions may be taken as trades **

Missing Grandma Lin on Thanksgiving

For our family, Thanksgiving will mean something more than it has in the past.  We did not get to celebrate Thanksgiving last year.  At 10am on Thanksgiving 2007, we got a call from my aunts in Taiwan that my Grandma was in a coma & had little time left.  The main artery in her brainstem had snapped.  My dad rushed to her side that night, catching the first flight out of L.A.  My sister jumped on the first plane she could get out of St. Louis, ditching her classes at Washu, and met up with my mom and I @ LAX airport terminal. We got to Taiwan 2 days after Thanksgiving.

Docs said she was braindead & only sustainable on life support for a few days. We went to the hospital 2x/day to see her lying there.  She didn’t know we were there, and to see the pain and dispair on my aunts’ faces was terrible.  But it was also good to see all our family together in one place.  All our cousins, aunts, uncle, and my grandma’s sister and friends- family I haven’t seen together since those carefree childhood times.

I was still very sick @ the time, everyone said i shouldn’t have gone & the pollution in Taiwan was so bad my health got worse the next 6mo.  But still I hobbled 2x a day w/gas mask to hospital to see Grandma. I’m glad I went-no regrets. There are only few important days in life, the rest is just daily routines (the rubbish of life) . Make the important days count- that’s all you really remember in the end.

This year, I’m thankful for being the healthiest I’ve been & suffering less…best gift ever.  So many blessings came my way to make it so. People who I consider angels have come into my life and turned things around for the first time in my life. If you haven’t read my story, here you go: http://flyboysfund.jeffreylin.net/2008/10/22/trading-a-life-my-story-part-1/

Maybe Grandma is watching over me in heaven :)  I’d like to think so. No one loves me more.

Jeremy Grantham – “Stocks reasonably cheap, not spectacularly cheap” – 20% long exposure, no need to rush

A television exclusive with one of the most successful investors in modern times. For years, legendary value investor Jeremy Grantham has been the Cassandra of the investment community with warnings of financial and market disaster. …

Guest Post: “Long case for Fifth Third Bancorp” by Ryan Yamada

**Note from Jeffrey: Not seeing much in this market you can hold for more than a couple hours, so haven’t written about any opportunities for investments or longer term trades. Here’s one from my college buddy Ryan Yamada. Ryan’s got a great blog, Sunburnt Sky, on Politics and Macroeconomics. Take a gander. **

LONG CASE FOR FIFTH THIRD BANCORP (FITB) by Ryan Yamada

Note: This is not a rigorous analysis on either the fundamental or technical side. It’s simply an observation based on the price action of other sizable regional banks following events similar to those experienced by Fifth Third Bancorp.

Introduction:

Fifth Third Bancorp (NASDAQ:FITB) this last week is a regional bank headquartered in Cincinnati, OH, with about $67.3 bn in assets, and $41.1 bn in deposits, according to the FDIC as of Oct 28, 2008 (Thursday). I compared the figures with the June 30, 2008 report from FDIC and they are comparable: assets: $67.3 bn; liabilities: 61.8 bn; deposits: $41.6 bn; equity capital: $5.43 bn. Stock prices, incidentally, are also comparable (June 30: $10.18; Oct 28: $10.72) for the two dates.

The last few weeks have been nuts for the entire market. But in particular, regional banks are seeing a lot of volatility, and increasingly, sharp increases in share price.

SunTrust: assets: 171.5 bn, liabilities: 152.2 bn, deposits: 120.9bn, equity: 19.3 bn

PNC: assets: 128.3 bn; liabilities: 116.3 bn; Equity capital: 12.1 bn

Price increases are event driven:

Here are a few events that dramatically changed the outlook for FITB:

Aug 1: First Priority Bank is closed by the FDIC – SunTrust receives $254m in deposits (at zero premium) and purchases an additional $36m in cash-equivalent assets (total of $290m).

Sep 30: IRS rules that acquirers of weak banks can apply “losses on loans and bad debts” without limits.

Oct 24: PNC Financial Services Group Inc. announces acquisition of National City Corporation for $5.6 bn, increasing its deposit base by $90 bn and potentially earning offsets on $5.1 bn in taxes from loan losses associated with National City.

Oct 26: FITB announces that it has applied for capital from the Treasury’s Capital Purchase Program (CPP).

Oct 27, 2:28pm, Reuters: Fitch announces a downgrade of Issuer Default Ratings on municipal bonds to A from A+; Fitch had downgraded the IDRs of FITB to A+ and F1 in June 18, but these downgrades were erroneously not passed through to the ratings of muni bonds supported by FITB. In other words, some of them were downgraded from AA- to A. (http://www.reuters.com/article/bondsNews/idUSWNA768820081027)

Oct 28, 12:20 pm: FITB to accept $3.45 bn as part of the Treasury’s CPP. Treasury receives senior preferred securities with 5% dividend for first 5 years and 9% thereafter. Shares are callable at par after three years. 10-year warrants on common stock on 15 percent of the preferred stock investment ).

Oct 29., 2:17 pm: Ladenburg Thalmann analyst Richard Bove cuts outlook on concerns about poor lending habits.

2008 estimate: 16 cents/sh (from 53 cents/sh)

2009 estimate: 94 cents/sh (from $1.30/sh)

Oct 31, 6:21 pm: FITB to accept $227m in deposits and $36 in assets from the FDIC, receiver for Freedom Bank. The additional deposits from Freedom Bank give them about a 59% larger deposit base in the Bradenton-Sarasota-Venice Metropolitan Statistical Area.

Important dates coming up:

Nov 4: Presidential election

Nov. 14: Companies must notify Treasury by 5 p.m. EST if they want to apply for the Capital Purchase Program.

Let’s look at the following events and see what similar events for other banks did for their share prices:

1. Capital Purchase Program funds
2. Acquiring deposits from FDIC-seized banks
3. Acquisition of weaker rivals with sizable deposit banks and losses that can be credited to acquirer’s future capital gains.

1. Capital Purchase Program Funds

FITB announced on the 28th that it would receive $3.45 bn in funds from the US Treasury’s Capital Purchase Program (CPP). Under CPP, the Treasury receives senior preferred securities with 5% dividend for first 5 years and 9% thereafter. Shares are callable at par after three years. Furthermore, the Treasury receives 10-year warrants on common stock on 15 percent of the preferred stock investment .

The new funds give FITB options above and beyond their relatively bleak choices prior to the announcement.

According to CNN, Fifth Third had announced in June a capital plan that included raising its capital ratio targets, including a Tier 1 ratio of 8-9 percent. The recent Fed infusion would push Tier 1 to 11.5 percent. FITB’s Chairman/President/CEO Kevin Kabat also indicated that they may postpone plans floated in June to sell “non-core assets”. In other words, the Treasury funds will help them avoid trying to unload assets at fire sale prices.

There was an immediate impact on share prices. FITB was off session lows of $8.15 and was trading at 8.50 when news broke – the stock price jumped 13.5% to $9.65, and then followed the broader market’s large gains to close at $10.76, up 26.5% from levels prior to the news. Tuesday’s price rise translated into a 1.3 billion increase in shareholder equity. The government warrants are callable in 10 years, so their immediate impact is non-dilutive. The preferred shares, while receiving a dividend, are non-convertible, unlike FITB’s June issue of $1.1 bn in convertible preferred stock.

The dividend due to the government on the infusion is about $172.5 m per year. To pay off just this dividend, FITB can either make loans of $2.88 bn ~6%. Subtracting required reserves of $288 m, this leaves $3.16 billion for acquisitions and loan loss reserves. Alternatively, FITB may try to acquire weaker competitors at discounted prices, in the model of PNC’s takeover of National City Corporation at a discount.

Note that this infusion represents a 65% gain on FITB’s asset base, compared with a 28.9% gain on PNC’s asset base. Consequently, I would expect an overall move from 1-2.25 times the size of the move from PNC’s gains.

As a rough estimate, let’s take the $3.16 bn, and subtract the amount by which stock equity has already increased ($1.3 bn). This leaves $1.86 bn. Even if 50% of that goes to loan loss reserves (and is used for that purpose), that still leaves $930 million. And, assuming that FITB finds no better use for it than to sit in a digital safe somewhere, that still represents an increase of 14.8% in net equity (based on Friday’s closing market cap of $6.27 bn). So, very conservatively, I can estimate an additional appreciation of +15%

(Summary: +15-66% because of additional equity capital)

2. Acquiring deposits from FDIC-seized banks

I calculated the impact of the additional deposits relative to existing deposits and assets, and how it could affect net assets (in the unrealistic event that FITB chose to loan out all the cash).

Freedom Bank FITB pct chg 10x ($mm) asset growth potential ($mm)
Deposits ($mm) 254 41604 0.70% 2900 4.13%
assets purchased/ total assets ($mm) 36 67272
FDIC cost ($mm) 80-104

For comparison, I look at a similar action taken in June when Suntrust took over First Priorty bank, also located in Florida.

First Priority Suntrust pct chg 10x ($mm) asset growth potential ($mm)
Deposits ($mm) 227 119800 0.22% 2690 1.52%
assets purchased/ total assets ($mm) 42 177400
FDIC cost ($mm) 72

How did Suntrust perform after that? The chart below illustrates it best.

In terms of raw numbers, it looks like STI appreciated 15.2% over the week prior to the announcement, a premium of 6.4% over XLF (+8.8%) and 13.1% over the S&P500 (+2.1%). On Monday, after the announcement, STI closed for a gain of +1.9%, outperforming XLF and S&P 500 by 2.3% and 2.9%, respectively. Over the week after the announcement, it rose by 8.0%, a premium of 4% over XLF (+4.0%) and 3.5% over the S&P 500 (+4.5%) over the next week.

It’s not to say that all of the Suntrust movement was due to the deposit acquisitions, but a search of news stories indicate that most other important events happened outside that time period. (For example, a disappointing Q2 report happened on Jul 22, while the announcement that the dividend would not be cut happened on Aug 12. (The dividend was subsequently cut on Oct 27.) So, I would argue that at least a large portion of the price action, relative to the overall markets, was in response to this particular piece of news about the acquired deposits. (If talk surrounding the other news did affect the price action this day, then it would’ve affected it negatively, and the analysis would price in even greater gains from the deposit acquisition.)

A comparison to the week’s actions prior to the FDIC announcement for FITB is more complicated, especially since so much news happened. Here’s a chart with some of the important news events highlighted.

During the last week, FITB rose by 28.1%, while XLF rose 14.1% and the S&P by 14%. However, looking at just the action over the last three days, FITB rose only +0.8%, while XLF rose +3% and the S&P 500 fell 2.2%. So while FITB performed 3% better than the S&P over those last few days, it lagged XLF by 2.2%.

I’ll also note that FITB experienced a 6% increase in the last 15 minutes of trading, a full 2% more than XLF and 4% more than the S&P 500. There was a slight pullback after-hours, then another spike after the announcement.

Note that the asset growth potential supplied by the additional deposits is 3 times that enjoyed by Suntrust on a percentage basis. FITB is also taking the deposits at a slight premium (1.16%), while Suntrust took them without one.

Using the STI price action as a guide, we might reasonably expect FITB to outperform XLF by 4% and the S&P 500 by 3.5% over the next week. If I adjust for the last-minute spike, FITB could be expected to outperform XLF by about 2% and lag the S&P 500 by around 0.5%.

(Estimate contribution: +2% rel. XLF; -0.5% rel. SPY)

  1. Acquisition of weaker rivals with sizable deposit banks and losses that can be credited to acquirer’s future capital gains.

As mentioned above, Suntrust probably has at least $3.16 billion of the Treasury CPP funds for acquisitions and loan loss reserves, and potentially more from its recent increase in share equity, its issue of preferred securities, and its spare cash on hand. FITB may try to acquire weaker competitors at discounted prices, in the model of PNC’s takeover of National City Corporation at a discount.

That’s why FITB has the potential for a short-term trade on the long side. Yes, long-term the new deposits and CPP funds will help them make more loans. But in the near-term, it gives them ammunition to take over their weaker neighbors, particularly banks that have (1) sizable deposits, (2) don’t yet have access to CPP funds, and (3) are in trouble because of bad loans. National City Corporation had all three properties, and since the present environment favors the shareholders of the acquirer rather than the target, this spells short-term appreciation for FITB shares.

Note that PNC jumped 3.5% on Friday, Oct 24, while XLF fell 6.5% and the S&P fell 3.5%. The NCC acquisition allowed PNC to outperform by 10% the XLF and 7% the S&P 500. Since the deal was announced, PNC has essentially traced both XLF (0%) and slightly outperformed the S&P 500 (+3%). It is up in nominal terms 17% since the announcement.

It’s difficult for me to estimate how much of the gain was due to the Treasury CPP funds, and how much in response to the acquisition of NCC. I will estimate, as I did above, that the increase in Treasury funds led to an increase in NAV. PNC has assets of $128.3bn; liabilities of $116.3bn, and therefore an equity capital of $12.1 bn. Applying a similar sort of analysis as before, PNC will need to pay about $175m in interest on the preferred shares to the Treasury each year for the next five years. Assuming it can make new loans of about $2.9bn, it needs to set aside $292m for reserves, leaving it with $3.2 bn in additional equity. Applying 50% of that to loan loss reserves, and 50% to shareholder equity, I come up with an increase in equity capital of 26.5%.

PNC’s share price did not jump 26.5%, or anywhere near that amount. The combined value placed by the market is 17%. As a guide, then, only 2/3 of the equity capital increase has been priced in, and none of the increase from what is widely being considered a good acquisition deal for PNC.

Since I don’t know how much of the price increase can be accounted for by each component, I am going to say that the short-term gains from BOTH the CPP funds AND the acquisition of a weaker rival with the three criteria listed above translates into a gain roughly equal to 2/3 of the initial equity capital increase. The market is either pricing in an inability for the new banks to make new loans, keep existing loans current, or successfully acquire rivals at a discount, or otherwise have greater difficulty financing their loans than I have assumed here.

Let me further build in a margin of error by saying that FITB may find a deal only about 60% as good as the NCC deal. This translates into an anticipated increase in FITB of 60% x 66% = 40% of the increase in equity capital supplied by CPP.

This still means that when FITB announces its 60%-as-good-as-PNC’s-NCC deal, FITB’s combined appreciation over its price prior to the CPP announcement should be an increase of 40% from its Tuesday noon price of 8.50, taking it to 11.90. This represents a $1.25 or 11.7% premium over Friday’s close.

Political Risk?

The PNC-NCC deal has caused some uproar in the halls of Congress, so there is some political risk that stricter guidelines might be placed on CPP funds. I’m not sure how difficult it would be to do that retroactively, however. Congress might push through something, but that would be after the Nov 4 elections, and likely after the deadline of Nov 14 for banks to apply to CPP anyway. Based on this, I would assume that retroactive restrictions on CPP funds would be difficult, if not impossible. In the unlikely event that greater restrictions could be made on subsequent tranches of the $700 bn, this would affect new applicants, and therefore put FITB and other early recipients at a relative advantage.

Let’s summarize:

Short-term gain from CPP+acquisition: +11.7%

Short-term gain from acquired deposits: -0.5%

Combined with an expected bump Monday of about -0.5% from the news of new deposits combined with the last-minute rally, and I would anticipate at minimum 11% upside for FITB, corresponding to a share price of $11.93 in the very near term, assuming no market appreciation or depreciation.

Naturally, the price targets increase for broader market gains, and decrease for market losses. Since I anticipate modest losses or gains, I will play it safe and enter into a position at prices below $11.00 and will likely sell out following announcement of an acquisition by FITB.

I would also hurry. Barron’s mentioned FITB in a recent article, and while I would hardly consider buying on news from Barron’s, it will mean that more people will be looking at this stock and coming to similar conclusions.

Disclosure: none, though author intends to be long FITB.

**Disclosure: No positions.**

“Trading a Life” – My Story (Part 2)

GO TO PART 1
If you’ve read my bio, you’ll know I’ve been very sick the last few years, confined to my home, and learned to trade because of it. When I heard James “Rev Shark” DePorre’s story of learning to trade after going deaf, losing his job, and his wife, I could relate (except the wife part). But other than his hearing, I guess Rev’s health was ok. Mine’s not. Here’s my story. I wrote this for a trader friend of mine. However, it seemed fitting to post it here today, on my birthday, as I reflect on all that has transpired.

2007 was a much better year. My health was still a roller coaster and there were countless days I held on for dear life. However, things started to happen that made me feel more alive and mentally stronger. Mental health is more important than anything. A person in the worst circumstances can be happy, while someone with everything can be depressed.

I needed human interaction, even if only online. So, overestimating my improvements, I started the Systems Architecting and Engineering M.S. program at USC with just one online course. I still hoped to do engineering someday. If I could do night trading, I could surely handle one course right? I quickly gave up on this nonsense. I didn’t have the energy to keep up with the class schedule. Besides, the class was for managers much older than me. The markets were much friendlier to my chaotic lifestyle. I worked when I could, as much as I could, and simply rested when I felt terrible.

Luckily, even without middle-aged USC classmates, I didn’t go back to solitary confinement. An acquaintance in Utah, with whom I’d traded a few emails, kept me company. Other than my parents and occasional IMs with two buddies from college, this was the first person I’d talk to in over a year. Unlike my “friends” on TV, here was someone who responded and cared I existed. Day by day, the online chats and phone calls nursed away some depression. She didn’t mind I that couldn’t talk much at first. I slowly learned to control my mouth and form coherent phrases again. Through her stories, I felt more connected with the world. Our conversations helped me remember myself. My interests, ideals, humor, and creativity: parts of me that used to light up my life even when I was sick. I’m forever grateful she stayed with me on the phone everyday, and became my closest friend through it all.

Neither my mental or physical health turned around on a dime. Stories always jump to turning points, making things seem easy. If thing’s don’t come easily for people, one after another, they think something’s wrong. It’s not. Everything’s a process that takes shape over time.

Slowly, I became more proactive in my life as best I could. I turned my unfinished USC research paper on Akamai Technologies into my first stock analysis article, explaining complex technologies in layman terms. A lot of work went into the research paper. Why not make it useful? I submitted it to SeekingAlpha.com. The editors liked it enough to ask me to be a contributing author. What a fantastic confidence boost, especially for my first submission! This motivated me to write more. I felt my technical background gave me a firmer grasp of a company’s technology and opportunities than many analysts.

Did I find my niche? To explain to people a company’s technology and the company’s potential because of it? What a useful place my engineering degree proved to be in this new, unexpected “job”! It seemed like the best of both worlds. I launched a stock blog, Flyboys Fund, and wrote about technical topics such as technology and aerospace & defense. I found myself drawn more to global growth topics like construction, oil drilling, and the power grid. I actually enjoyed these companies’ conference calls because this was my comfort zone.

I was always uncomfortable owning stocks, like biotech, whose business confused me. These stocks were in my portfolio because they say you should have a little of everything to be “diversified.” No more. My portfolio had a facelift. I punted these stocks and replaced them with stocks I wrote about on my blog, the stocks I’ve knew. I didn’t have to spread my attention across tons of industries anymore. I concentrated on a few stocks, knowing them inside and out, selling when my analysis said the price was too high or buying when I felt the price was too low. I always kept extra cash for safety.

This is the general plan I’ve stuck with since then, though I’m constantly experimenting with new strategies such as options and technical trading. I figured, since the markets keep changing, I should be like a ninja: the more skills and tools I master, the better I can adapt. The airing of Fast Money in 2007 proved to be a godsend, teaching me to process news faster and take more decisive action. Thanks to Jeff Macke, I even went on the show via webcam.

My portfolio ended 2007 up nicely. Sure, global growth stocks like the ones I owned were stellar in 2007. How could I not make money? Why didn’t I make more? It doesn’t matter. What mattered was the markets started making sense to me, I felt I could succeed in the markets, and above all, I was a little healthier than I was in 2006.

Being tested by this death of a market in 2008, apparently I did learn a lot, or enough to not lose my pants. While the markets kept getting worse all year, my life has gotten better. Blogging helped me reach out to the world through the Internet. Many people have contacted me through my blog, including traders whom I’ve become great friends with.

In June, thanks to my friend’s dad, I visited the University of Utah Medical Center. For the first time in my 25 years, I found doctors who had dealt with conditions as severe as mine. Finally! The confidence in the doctors was well placed. Within a few weeks my skin cleared considerably. After 10 years, I can touch water again and even bathe now as part of the treatment.

Is everything peachy now? No. I have a long road ahead. The doctors are just getting their arms around the situation. Tests show my IgE allergy protein level at 18,000 (75-200 is normal), meaning I react hundreds of times more intensely to everything. We haven’t found a food I’m not allergic to, so I’m surviving on a prescription liquid diet. But I’m no longer in pain. I can go out, even went to New York for the Merrill Lynch Power & Gas Leaders Conference in September. I can look forward to tomorrow. It’s not dark anymore.

** Dedicated to my grandma, who passed away last November and couldn’t see me get well. She loved me as much as she could, maybe more. I miss her very much. **

** Thanks to all my angels: my parents, sister, family, friends, and doctors. I’m forever in your debt. **


PART 1

Videos Tracking My Health Developments

“Trading a Life” – My Story (Part 1)

GO TO PART 2
If you’ve read my bio, you’ll know I’ve been very sick the last few years, confined to my home, and learned to trade because of it.  When I heard James “Rev Shark” DePorre’s story of learning to trade after going deaf, losing his job, and his wife, I could relate (except the wife part).  But other than his hearing, I guess Rev’s health was ok.  Mine’s not.  Here’s my story.  I wrote this for a trader friend of mine.  However, it seemed fitting to post it here today, on my birthday, as I reflect on all that has transpired.

Why do we trade? There are as many reasons as there are traders, but the reasons are probably similar. Intrigue, gambling, occupation, and, for a few, because you’re actually great at it. In early 2006, a few months after college, I dipped my toe in the markets for sanity. I traded to escape reality. I traded to have a purpose. I traded so the people on CNBC could keep me company.

I was a complete market retard at first. Didn’t even know how to use Yahoo! Finance. True, in addition to engineering, I majored in mathematical economics, but I never cared much for finance. Only spent an hour per week on finance versus seventy or eighty on engineering. Being an engineer was my dream. Always loved figuring stuff out, having some vision in my mind, then seeing it come to life. Same reason graphic/web design was a hobby- I got to share my visions with others. But finance? Did it because I promised my dad I would.

So you ask, Jeff, why do you trade now? In short, life happened. I was born with asthma as well as severe skin and food allergies. I took a gamble on an immunosuppressant shot to deal with my allergies, hoping for a chance at a normal life. I wanted do what my friends were doing. Brand spanking new careers. Grad schools. Or just going out. But this shot nuked my life. My health, which had been sliding downhill since birth, simply fell off a cliff. My life and dreams went with it.

I looked like I had third degree burns or worse. Not a single clear patch of skin anywhere, only infections and leaking wounds that wouldn’t heal. My system was in chaos. Everything doctors tried made it worse, including the steroids I’d fall back on during emergencies such as this. Painkillers were off limits too. I was constantly itching and in pain. My mind also started to go. I didn’t know who I was, couldn’t comprehend much at times, and had trouble forming coherent speech. It might’ve been side effects from the shot, or simply a hysterical panic attack. I couldn’t cope with my new reality. I couldn’t see tomorrow. Little Orphan Annie stopped singing. Like P.O.W.’s, I felt “broken.” For two years, until a few months ago, I barely left my house, my room, and often had trouble just getting out of my chair.

One afternoon during these “early days” after “the shot,” I halted my channel surfing on CNBC to the screaming of Mad Money’s Jim Cramer. The show was packed with information and, for the first time in months, I didn’t feel brain-dead. At that moment, I became involved with the market. Doesn’t matter what people say about Cramer, even if every call he makes from now on is wrong, Cramer has my deepest gratitude for doing Mad Money that day.

I couldn’t have discovered the markets at a better time. Days get pretty long for someone without a job and can’t run the errands that fill up people’s days. Friends I’d chat with online had moved on with new lives. I woke up at odd hours while my parents were asleep, losing a bit more of my mind everyday as the loneliness set in. The markets gave me something to focus on, and it was accessible online. Like most beginners, I started on Yahoo! Finance. I signed up for way too many newsletters, forums, and even the Wall Street Journal. My dad had bits and pieces left from a portfolio he owned during the tech bubble. This was my starting capital.

I dove into it like every other naïve, innocent novice out there. Just because analysts and newsletters said Caterpillar’s stock was a buy, I believed them. I love the big yellow “CAT” dumptrucks. They were everywhere on National Geographic and Discovery shows! I sold the shattered pieces of MRV Communications my dad still had, and bought Caterpillar, all at once. Yes, everyone knows that’s a very bad idea, but I didn’t. I really didn’t know anything. Seemed ok at the time. The markets kept going up in spring of ’06. Easy! Sure helped my self-confidence and emotions. I thought, maybe I could make a living from my room! I saw other stocks, like Peru’s Southern Copper, go up everyday, much faster than my Caterpillar. China needed a lot of copper to build a city a day? It made sense. I bought the story and the stock. Again, bad idea. I know.

Focusing on the markets helped me get through the day. Any little thing that went my way was a big boost because everyday my health got worse. My body was simply overwhelmed by infections and allergies. I wasn’t handicapped, but my parents had to do everything for me, especially since I couldn’t touch water (hadn’t been able to for years). I was so weak my kneecaps would pop if I forgot to clench my muscles for even a moment. I hobbled to the bathroom or crawled there on my elbows. My skin was rotting, especially on the legs where I had the shots, and considered amputation. I was constantly on edge, uncertain of what I had to face tomorrow. Sometimes I wished I had cancer. At least I’d know what I had.

My sleep schedule was random. When I wake up or pass out was up to my body, not me. I was always exhausted, staying awake for only a few hours. I was mostly nocturnal. Daylight gave me migraines. The daytime heat irritated my rashes and often caused hot flashes.

Everyday I was woken up by pain, then cried out in pain while bandaging myself for the next hour. By the time I was done, my heart felt like it’d go into shock, and I’d collapse in front of the TV. I’d turn on CNBC, watching Squawk Box (3am here on the west coast) or a late replay of Mad Money. The anchors at CNBC were the only people I saw everyday and the only familiar voices I’d hear. They became my “friends”: Joe’s unique sense of humor; Mark’s quirky attitude; Erin’s engaging interviews; Dylan’s intuitive explanations. I even watched WorldWide Exchange from 1-3am. Yes, Ross Westgate in London, someone in California knows who you are!

These wonderful people kept me sane, and I dreaded the weekends when they were off air. When they were, I’d do research mostly by listening than web browsing. My eyelids hurt, and so did my bandaged fingers. I played Jim Cramer’s “Real Money” radio show (which he was still doing at the time) on weekdays, and conference call after conference call on weekends. Boring? No kidding! But I didn’t hurt as much when I had voices to focus on.

The good times making money on Southern Copper lasted for all of two weeks. The markets, especially metals like copper, went down hard in Summer ’06. My plan of buying, holding, making money, and living off of my “investments” suddenly sucked big time. The portfolio was worth less everyday. I couldn’t understand why. The “work” I did for months seemed worthless. (I realize now it’s just part of the job.) I was frustrated I couldn’t talk to the people on CNBC, or anyone, about this. I was angry I couldn’t be up while the markets were open, often thinking “if only…” Even when I was awake, I’d forget what I was doing. As I said, my mind wasn’t always there. This stress wasn’t healthy and I got even sicker. I couldn’t take it anymore. I sold Southern Copper and others I’d lost the most on…at the bottom. By the end of the year, Southern Copper had nearly doubled from where I sold it.

Everyone’s been there. Bought at the top, sold at the bottom, lost money, only to watch it go back up and laugh in your face. I felt worse because it was “my dad’s money.” Like everyone else, I wanted to give up, but I had something going for me. Something more painful than losing money: my reality. I needed the markets to focus on.

My mom said to consider the loss as tuition paid. I had learned a lot. I learned not to get emotionally married to any stock. I learned to sell, to think for myself, and to get back in.

It was impossible to watch the markets all day, even though I was always home. I worked around my unpredictable hours, taking a longer term “investing” view. I bought stocks I wouldn’t be afraid and confused about if they went down while I slept. Going along with my nocturnal hours, I caught up on news in the peace and quiet of the night, away from the market frenzy during the day. I even thought of myself as a “Night Trader,” the slow, languid counterpart of hyperactive “Day Traders.” I still bought and sold when I felt necessary, doing this early in the morning if I could. When there were economic or company announcements, I tried to get up for them. Then I’d pass out again.

Finally by the fall, my health stopped getting worse thanks to help from QiGong (Chinese internal energy exercises). Things weren’t rosy, but they weren’t in freefall anymore. That’s enough sometimes. My health improved a bit, then deteriorated some, but the worst was behind me. My portfolio made up some lost ground too, ending down slightly for 2006. Not bad for my first year, all things considered.

PART 2 COMING TOMORROW

Videos Tracking My Health Developments

Cool Videos! Minyanville’s Todd Harrison interviewed by Aaron Task

Longtime Bear Todd Harrison Turns Bullish — for a Trade

Hedge Fund Carnage: ‘Invisible Catalyst’ Causing Big Market Moves

Fear Stalks the Street: Does Paulson Have Any More Tricks Up His Sleeve?