Peter F. Hamilton wraps up the Commonwealth and Void series (I think!)

I just finished a very enjoyable duology of Peter F. Hamilton's:

You'll need to have read at least three Hamilton's previous novels to really appreciate these two:

Pandora's Star
Judas Unchained

and at least one of the Void series:

The Dreaming Void
The Temporal Void
The Evolutionary Void

These books concern Bienvenido, another world in the Void that is not Querencia, the one described in the Void trilogy. It was also settled by captain and crew of a Commonwealth ship that was captured by the Void and devolved politically where the Captain and his successors hold most political power.

Abyss opens with a colony ship being captured by the Void when it was cruising well outside the Void on its way to another galaxy. Instead it finds itself near these structures that resemble trees and decide to investigate ...

That's when we encounter the Fallers, a monstrous species that entices humans (and others) close enough to its "eggs" to capture and "subsume" them ...

Nigel Sheldon's clone arrives in the second part of the book and "marries" Kyssandra, the young woman living on a farm near where Nigel's spaceship lands. She's just supposed to be sold into an arranged marriage with a local thug to pay her mother's debts but resists and wakes up from a drugged stupor at the altar not with the young thug ... but with Nigel! "Say yes," he says ...

Nigel runs rings around Bienvenido's powerful, engineering a political revolution and finally getting enough raw materials together to get his spaceship launched ... and to figure out what happened to the colony ship that was captured and to bring as much resolution as possible to that situation ...

Night continues the story ... if you finish Abyss and enjoy it, trust me and try this one. I found it one of the more satisfying stories I've experienced in years! Five stars!

3-6% (almost) risk free return?!

I went to see a presentation last night by this guy who bills himself as Leverage Planners:

I was curious about the word leverage, as to me it means "trading with borrowed money."

The presentation started with an area that I'm familiar with from watching TastyTrade, the crazy and often hidden fees in many investment vehicles like mutual funds. I appreciated this, as well as the discussion of the standard pitch that most advisers give ("stock market always goes up over the long term; diversify with bonds as you age") and how this doesn't apply right now as the stock market it back up near its record high and the bond market is high also but under pressure from incipient interest rate increases.

 The main pitch was for fixed annuity products that are supposed to return 3-6% per year on average, sometimes more (capped around 15%) but which cannot lose money.   The investment isn't in the market, but instead is essentially lent to an insurance company. These companies have large capital requirements and the money has to come from somewhere ... this is one way they do it.

It certainly looks worth a look for anybody who's risk-averse with at least a 10-year time horizon. (I still think I can do better trading futures and options; we'll see!)

This company is local to the Seattle area; if you're elsewhere (hi Lucy!) you want to look for a financial planner who's a fiduciary, meaning he or she will be acting in your interest as first priority.

Basic your risks are two:

• The insurance company could go out of business
• You could need a big chunk of the money sooner than you think

The first one you can handle by dealing with only A rated companies, which your planner should be able to help you find. The second you deal with by only investing money you're sure you won't need for the 10-year period the money will be tied up. (You can take 10% out per year with no penalty in the plans the guy showed us last night.)

I hope this works for you, risk-averse friends!

Natural Gas: not a 100-year supply after all?

I was in Cle Elum, Washington at a coffee shop with a Little Free Library, where I found this book:

Basically the author goes through a lot of data that seem to show that the natural gas supply estimates that have been discussed in the media the last few years (particularly the "100-year supply") are wildly overblown.

Aubrey McClendon and Boone Pickens were two of the promoters of the "100-year" idea ... McClendon died earlier this year in what looked to be a suicide (single-vehicle car crash) the day after he was indicted for bid-rigging shenanigans in the leasing of natural gas fields. Pickens is still alive and still promoting natural-gas-powered cars ...

There's somebody near Cle Elum promoting this book; I got a copy from the Cle Elem library and read it while in Leavenworth at the Sleeping Lady  ... where I left it in the library there.

We stopped back in Cle Elum on our way home ... and there was another copy of Powers' book on the shelf!

So a possible trading idea: Buy natural gas futures (/NG) and sell calls against them, at least until nuclear fusion starts to work :-)  (See Tastytrade for more trading ideas ...)

Phenibut: avoid at all costs!

My Lovely Wife has often has trouble sleeping and an alternative health provider she was seeing recommended Phenibut:

She has tinnitus and found that Phenibut was aggravating it: moved the sound from a lower tone to a high, piercing sound. So she stopped.

At that point she found she couldn't sleep at all for several days until finally trying the natural form of the same sort of substance, GABA:

Only then did she start reading about the Phenibut withdrawal and side effects: not only aggravation of tinnitus but on withdrawal all sorts of stuff up to and including psychosis.

If you have trouble relaxing or sleeping you might try GABA, but avoid Phenibut! Check out the Reddit thread on this for further horror stories!

A book I wish I'd read $600,000 ago

I finally read this book too late:

I had the largest loss of my trading career yet in July 2016, after the market zoomed up after Brexit and I was short. I couldn't believe it wouldn't go back down, and it just didn't for way too long ...

Mark Douglas lost everything he had trading: job, house, car, wife. He then looked into the psychology of trading losses and came up with insights that I think have gotten me off the losing track, finally.

I strongly suggest any trader would benefit by this book so I won't leak more of the contents except one of his principles that spoke most loudly to me:

Anything Can Happen at Any Time

I should have known this as I've been trading since 2009, but I just didn't have it installed uppermost in my belief system ... where it is now.

Thanks, Mr. Douglas and best of trading to all you traders out there!

Never buy a locked phone: an anecdote about unlocking a T-Mobile

T-Mobile is known for annoying AT&T and the rest of the industry by some of their pricing policies and I therefore had them filed under sort of the 'virtuous rebel' flag:

But it turns out they behave more like the Empire when you want to leave:

My wife and I started trimming Stupid Expenses, and when I looked and found that I was paying $71/month to T-Mobile for worse coverage than I can get with Cricket (see my plug for Cricket elsewhere in this blog) at $45, I had to make that change.

Naive youth that I am, I just assumed that virtuous T-mobile would automatically unlock your phone when you finished paying for it (we had) ... silly me.

I took the phone to Cricket and got the new Cricket SIM card installed and only then found out the phone was locked. I called T-Mobile to get it unlocked ... and found some unbelievable stalling practices they use:

• "Check for an email in about an hour" with instructions for unlocking, which will take another 24 hours after that.
• The email didn't arrive, so I wound up calling back once more and 'chatting' once after that
• I stopped at their retail store, who tried to help but told me I had to call customer service ...
• Finally, the Cricket rep told me how typical this all was and that I had to just ask for the supervisor at T-Mobile to get things moving

This finally worked; I gave her a shorter email address and finally watched it arrive while I was on the phone, and said thanks and hung up.

It then took about 22 hours for the actual unlock to happen ... now the next day I finally got two more of those (intentionally?) glacially slow emails ...

What modern internet-connected organization would tolerate email taking 24-36 hours to arrive unless they wanted it that way?

Goodbye and good riddance, T-mobile ... you lost my good will on the way out.

A futures trade that can pay for your retirement with as little as $50K

The e-mini S&P 500 futures (symbol /ES for most brokerages) and their options can provide an unbeatable combination for an income trade.

Here's how to try it out:

1. If you don't already have one, open a futures trading account. Many brokerages provide this; my favorite is T.D. Ameritrade with their ThinkorSwim software. Note: this can't be an IRA if you're using T.D. Ameritrade; they don't allow futures options trading in their IRAs, and that's an integral part of this strategy. (Some less popular brokerages do allow this; let me know if you've tried one that you like.)
2. Fund the account! All brokerages will have several ways for you to do this; you could even write a check. Wire transfers will typically get you trading in minimal time, if you're in a hurry.
3. Pick a direction: short or long! Right now the market is near its all-time high, so short is probably the right direction. In this case you want to sell short 1 /ES futures contract (to start):
   
   
   
4. Next sell 1 /ES put, between 7 and 14 days from expiration:
   
   In this case you get $662.50 in credit for this trade, 9 days from expiration.
   
5. The /ES futures gains or loses $50 per point. In this case, we're short, so if the market goes up from here we lose $50 for each point or if it goes down we gain $50. In either case we get to collect that $662.50 in credit for selling the covered put.
6. Hold the option position until just before expiration, when it has collapsed within 50 cents to 1 dollar of its intrinsic value. (If it's out of the money, its intrinsic value is 0, so buy it back for no more than $1.) The calculation is a little more complicated if the put is in the money, but the principal is the same. If you sell the 2080 put and the market is at 2076 near expiration, the put's value should be getting near $4 so don't buy it back for anything more than $5.
7. Do this every Friday, forever, collecting between $500 and $650 (sometimes more) for the 7 days of the trade.

The graphics here are from ThinkOrSwim's OnDemand Virtual trading platform. You can experiment with this or with one of its counterparts at other brokerages, but don't mistake it for real trading. Personally I find paper trading worthless except as a vehicle for showing examples like this. Your mileage may differ, but I think just starting as small as possible: 1 /ES contract and 1 covered put or call, will give you the flavor of the real thing at minimal risk.

Analysis of the profit-loss potential and the virtue of being short

Basically, three things can happen:

1. The market can fail to move at all from where you put the trade on. The put expires worthless, in this case giving you a gain of $662.50 for the week and you sell another one for the next week.
2. The market moves against you, in this case going up when you were short. You gain $662.50 on the sale of the put but lose $50 for every point the market goes up from where you sold the futures contract. So in this case you can cover 13.25 points before you start to lose money.
3. The market moves in the direction you expect. You make the $662.50 you got on the put, plus $50 point between the sale price at the time you put the trade on and the strike price of the put. In this case, the market was 2088 and you sold the 2085 put, so that's $150 plus $662.50 or $812.50. You lose $1 on the put from that point for every $1 you gain on the futures contract, so your profit graph flattens out at $812.50 for this week.

The same principles apply if you're long (i.e. you bought an /ES future and sold a covered call against it), with two exceptions:

1. The puts pay better: fear is overpriced in the marketplace so you get paid better for selling them than you do calls.
2. The market never crashes up ... it can grind slowly up for long periods, but being short you're protected from a crash. You make a bit more money that week, that's all.

Scaling up

Say you've been doing this trade with 1 contract and one covered put or call for some weeks and you understand the nuances. You could then go to 3 or 5 or 10 or 20 contracts; I'd suggest no more than 1/2 of the buying power in your account, to cover moves against you. Each contract takes roughly $5000 in buying power, so if you have $100000 in your account you could reasonably use a size of 9 or 10 contracts and covered options.

At size 10, that makes the $500 to $650 into $5000 to $6500 ... and $50 per point into $500 per point. You could reasonably take 1/2 the credit as income every week ... 

When to Change Direction

If you've been short for a while and watched the market go down 10% within a few weeks ... shouldn't you then go long? Maybe ... you can use your intuition on this or use technical analysis or ... you can just watch TastyTrade and do whatever Tom Sosnoff is doing. He's mostly short-oriented but will go long when the market has "capitulated" as in late February this year ...

Happy trading ... Comments?

BulletJournal: analog orderliness for a digital world

I subscribed last year the reboot of Business Week with Bloomberg and have found it consistently useful and interesting. This past week there was a small article on BulletJournal:

It looks like a distinct upgrade to the "lots of little sticky notes" that a Close Relative Who Will Not Be Named tends to use. I just ordered a moleskine for myself to try this for some events on which I take analog notes, to make sure they're all in one place.

Updates as I try this out ...

Reading text out of PDF bank statements: takes some pain out of tax time!

I was working on my wife's business taxes today for Washington State. Our state has a simple and simply not very fair tax: the B&O (Business & Occupation) tax. But that's not the issue today; the issue is my grinding my teeth about retyping stuff from a bunch of PDF bank statements.

I was starting on this while sighing and then thought, hey, there should be something!

And indeed good old Ghostscript came to the rescue!

I already had this program on my 2013 Macintosh, but it was an older version that didn't have a necessary device, but I downloaded and compiled the latest Ghostscript 9.18 and was able to run:

#!/usr/bin/python

import glob

import os

for f in glob.glob('*.pdf'):

    os.system('gs -sDEVICE=txtwrite -o %s.txt %s' % (f,f))

This program takes all the PDF files in the current directory and converts them to plain text!

Then to get the data out of these files that I was looking for there was a lovely Unix-y command line pipe string to do the trick:

grep Rain *.txt | awk '{ print $3 }' | ~/bin/add.py 

I was looking for the transactions starting with 'Rain' and the numbers were in the third field, and the final program in the chain is a simple adder:

#!/usr/bin/python

import sys

n = 0.0

for line in sys.stdin:

    nline = float(line.rstrip())

    n += nline

print n

Hope this is helpful!