Pretty fascinating year, wouldn’t you say? For anyone who was just getting into the market, it was a very good year even if it was a bit scary the first 2 months. Using the S&P 500 Index as my benchmark, the index enjoyed a sweet 25.49% gain for the year. Fortunately I was able to participate in that with slightly better results at 31.53%! Looking at the 2009 S&P chart below you can picture what a graph of my account would like like – it would match it pretty well.
I’ve a few bad months mostly due to overconfidence and not adhering to my trading plan. I have written a few posts in 2009 related to that subject and I’ve analyzed some bad trades for your enjoyment. One thing you should notice on the Jeff versus the S&P 500 chart on my Closed 2009 page is how consistent I was the last 4 months of this year. I believe that is mainly due to switching from Covered Calls to Vertical spreads. I’ve also become much better at adjusting or exiting a trade that has gone bad and if possible, opening another trade that makes up for the shortcomings of the loser.
Visit my Closed 2009 page for the year end numbers.
2010 Preview
As I mentioned previously, I will be separating the Conservative Account from the Spread Account for my purposes and yours. I think it will be very interesting to see how they compare to each other.
I have a challenge, however, in comparing apples to apples. My IRA (the Spread Account) is used to supplement my income and I withdraw almost every month from it. The good thing is that I have yet to hit the principle – I’ve been making more than enough to make up for the withdrawals. My problem is being able to accurately record gains as a percent of account value. I think that TOS has a way around this by only considering what has been placed at risk rather than the entire account. I will look into this, but I’m not sure that will be accurate either – especially since I usually only put ½ or less of the account at risk and this would greatly inflate the gain percentage. I will have to make a decision before I post my JAN 2010 results.
The Next Bubble
A couple of things have been bothering me. The first one has to do with the next bubble, and why CNBC, Bloomberg, Wall Street Journal and all the other pundits haven’t mentioned this: the US Government is the next big bubble! Everyone is talking about anything but. Why doesn’t CNBC use their knowledge and power to dig into the financials of our country and leave the rest to the analyst? I think we are in some really big trouble. OK, the market doesn’t seem to mind the huge debt that we are piling up, or what it could do to the dollar; but what are we going to do when China gives us a margin call? I think they’re waiting for the best time to do this and it may have to do with Taiwan. Want to see something that will knock your socks off? Just look that the screen shots below from http://www.usdebtclock.org/.
Think of it this way: the US workforce is 138,801,044 and of that 21,111,232 work for Federal, State and Local government. That’s over 15% of the workforce! Add to that the number of people collecting unemployment at over 15,400,000 and over 32,260,000 receiving food stamps. This brings me to the second thing: If you counted government employees, unemployed receiving comp and food stamp recipients – that comes to over 68,760,000 – almost ½ the work force – all more or less ‘working’ for the government or at least getting a check from them. That means that the other half have to pay for it all – and that doesn’t include all the other government expenses and outlays. Wouldn’t it be great of we all had a senator like Ben Nelson – or would it? (I am trying to keep my personal opinions out of this blog – difficult at times.)
If something bad happens, I just hope it’s not too bad. If we have a pullback or another major correction, that’s OK and manageable. If the system collapses, then all the shorting in the world won’t make money if nothing is worth anything.
For now we are in a Bull market – you can’t deny what the charts are telling us. This earnings season should be fun. Be careful and watch for earnings dates on your trades.
- Jeff
