Wednesday, February 10, 2010
I Broke My Rules and Paid
Yesterday I laid out 8 rules to trading options at hard times. Rule #3 said not to buy options when there is a sharp upturn in the market. And Rule # 8 said not to hold options over night. I broke both these rules and paid. I bought options in Ford Motor because they had just come off a small downturn and it seemed like market conditions were right. So I bought them at the end of the day and held them over night.
This morning the pre-market was trading up. Even the Wall Street Journal said that stocks were pointing to another positive day. In the pre-market trading Ford Motor was up 14 cents. The minute the market opened stocks started tumbling.
The reason for the tumble is this: our Fed Chairman, Ben Bernanski got up and mumbled something in public about raising interest rates. These guys have two problems: 1) Every time they open their mouths the market goes down. 2) They are addicted to raising. That's right. They always want to raise something. If it isn't interest rates, it's taxes, or fees, or something else that makes your life a little more miserable. It just doesn't sit well with investors.
Now, I understand that a lot of people don't like investors. Why, I'm not sure. I think it might be jealousy. But folks, our economy is lubricated with investors' dollars. People willing to take the risk to finance a company that produces a product that creates jobs. A lot of people don't like the guy that provided their job. That's OK. take away the investors and there will be fewer jobs.