Thursday, May 7, 2009

Invest In Top Stocks For 2010…

"Each week, I tell my readers to make just 1 investment buy. And since November of 2006, not one pick has lost value! It's no wonder our readers could have turned $5,000 into $1 million in just over 5 years! Now, we're quickly closing in on $2 million ― currently at $1,892,043.04!

Since Steve Sarnoff, options guru, relaunched his elite e-mail Alert Service, Options Hotline, on Oct. 24, 1999, with an initial recommendation to buy Barrick calls...the profit opportunities for his readers have just doubled and tripled and quadrupled...again and again and again.

If you had invested $5,000 in that first recommendation and in every recommendation that followed, you could have grown that small sum into to a quarter of a million by Dec. 3, 2000.

Then half a million dollars by Sept. 30, 2002.

And then to...$1 MILLION by Dec. 2, 2004!

His track record: 100% winners in all of 2008, 2007 and 2005!...92% winners in 2004! 90% in 2003! Steve's record just keeps getting better and better!

WOW! $1 MILLION in a little over five years with a startup investment of just $5,000 in each pick! I'm so sorry you missed the ride. But get ready. Because you're invited to:

Join Steve as he shows you the way to the next $1 MILLION...it's simple and straightforward and we'll show you how with Steve's one weekly option buy recommendation

The stock market for 2010 of the past few years has produced very few millionaires. You just can't make a million dollars with a $5,000 initial investment on a nine-year average annual return of 1.63%. To do so would take you more than 400 years. . You'll never live to see it, and neither will your grandchildren, great-grandchildren, even your great-great-grandchildren.

Hello, I'm Steve Sarnoff, recognized options expert and the editor of Options Hotline. I'm here to tell you that even if you've never traded options before, you can do it. In fact, it's quite possible you could grow over $1 million richer...just by buying one option a week...in as little as five years. My proven system is all you need.

In the time it takes you to read this letter, I'm going to show you step by step how you can trade options with a minimum of risk and a maximum chance of profits.

Just ask one of my subscribers, Mr. Eckert: "My very first trade using your service was the GE August $30 call. I couldn't be happier with the 116% profit in just three weeks!"

Or Donna, who says, "I am very pleased with your recommendations, especially with the Bank of America. It's unbelievable for it to be up more than 200% in just a few days."

Mr. Abbott, another one of my happy subscribers, confirms, "Joining Options Hotline was the best decision I've ever made...since I joined -- three months ago -- I have doubled my money."

Why are we getting such rave reviews? Simple. I have the track record to prove it: My wins have overpowered my losses, and my small group of readers has had the chance to reap $1 million in profits in just over five years.

And I'm not talking about a million-dollar portfolio that looks good on paper...I'm talking about the type of wealth you have only imagined. Seriously...$1 million on just one investment a week!

Enjoy Doubling Your Money! We have a track record with more than a 100% average gain on every pick since November 2006. Compare that to the pitiful average yields of the S&P and Nasdaq! Here are a few highlights from my decisively winning trading record:

Of the 8 options I recommended in the final 10 weeks of 1999, 7 were winners, ranging from a 17% gain on DJX puts to a 628% gain on Intel calls. You could have made $87,000 on those 8 picks...and lost only $5,000 on one trade.

In 2000, I recommended 32 options that triggered (meaning the option reached the price I recommended for buying). That year, readers had the chance to pocket $173,214.55 in total profits with only $5,000 into each play - MORE THAN DOUBLE what we saw in 1999

In 2001, the year of the terror attacks, I made 45 recommendations that triggered. We had some big winners. GM puts gained 1,202%, or $60,000! Pfizer puts, 431%! Biopure puts, 341%! Total profits that year could have been as high as $216,164

In 2002, we crossed the HALF-MILLION-DOLLAR MARK when the 3M puts recommended on Aug. 16 of that year gained 103%! Total that year - $205,101!

How can I claim such amazing track record gains year after year? Simple. I look at the highest price the option gets to after I recommend it and that's the gain I record in my portfolio. So, you can be sure that the gains I talk about here are the biggest and best possible. And the potential profits are the best you'll see.

Are you noticing a winning pattern here?

In 2003, only 4 of the 39 triggered picks I recommended lost. Readers could have racked up $189,463.32 by investing $5,000 in every pick.

In 2004, I cut my losers in half! Only 2 out of 36 lost! And we HIT THE $1 MILLION MARK on the iShares 20 Year Treasury Bond Fund calls first recommended on July 16, 2004. You could have added $221,300.36 in total profits to your income that year and lost only $363.50! That certainly shows how your wins can overpower your losses.

In 2005, we simply stopped picking losers at all! Every pick was a winner! A 100% win rate. You could have added $217,523.58 by selling your options at the high mark.

In 2006, we picked 36 options that triggered. All but three were winners. The most profitable pick at its peak was a whopping 300%! You could have added $150,375.28 by selling at the right time.

In 2007, our winning streak continued! Every pick a winner. Nearly 40% of the picks were triple-digit winners too. You could have added another $202,635.16 to your bank account ― without losing a single penny!

That's right! Since hitting the first million-dollar mark on July 16, 2004, we've given readers the chance to make another $892,043.04 in profits since. We're closing in on our next million dollars, and I'd like to invite you to join us in this upcoming profit bonanza.

An unbelievable record: I haven't picked ONE loser since November 2006! Steady consistent winning on only one pick a week ismy No.1 million-dollar strategy.
It works. If you follow my recommendations, it can be your killer strategy, too!

In fact, my win rate for 2004 was 92%. That's right, 92% of the weekly picks I recommended could have made money. In 2003, it was 90%.

And in 2005, 2007, and 2008...I didn't have one losing pick. I was 100%!! You simply won't find a better record anywhere else.

In 2008, for example, I had 36 picks that triggered. Only five did not. My average gain was an astounding 127% ― with total gains possible of over $229,000!

You can even check it out for yourself. I've attached my personal Pick-by-Pick Proof Sheet that lists every recommendation I have made since 2006. Like I said before, the gains are calculated at the highest point of each of my actionable option recommendations (meaning the ones that triggered) after I have alerted my readers. You'll see what happened!

While I do not issue specific sell recommendations, with my proven selling strategies, you'll learn how to minimize your risk and lose as little money as possible.

In fact, when we reviewed the over 110 examples of winning options recommended in the past three years and how well they could have done, we found that …

The average gain was over 100% on each recommendation. That's doubling your money on every play! The highest gain was a monstrous 611% on the Newmont Mining December $45 calls in August of 2007. That's enough to turn your one $5,000 investment into $30,550!

The top 39 winners of the past 3 years were all triple-digit baggers! Winners like

472% on Bed, Bath & Beyond February $40 put, recommended on December 18, 2005

420% on Newmont Mining June $40 puts, recommended on April 10, 2005

399% on Qualcomm August $35 calls, recommended on July 10, 2005

366% on SPY November $152 puts, recommended on October 29, 2007

300% on Bristol-Myers March $25 calls, recommended on November 19, 2006

283% on TLT September $89 puts, recommended on March 5, 2007

266% on Newmont Mining March $55 puts, recommended on January 25, 2006

210% on FedEx July $110 puts, recommended on May 1, 2006

205% on Coca-Cola September $55 calls, recommended on August 2, 2007

366% on SPY November $152 puts, recommended on October 29, 2007

569% on Citigroup July $20 puts, recommended on May 25, 2008

439% on QQQQ December $43 puts, recommended on Sept. 21, 2008

These triple-digit winners have been great. Big winners like this are a real high, and when I make any recommendation, that's certainly my goal. Over one-third of all my recommendations from 2005 through 2008 were triple-digit home runs.

But the real secret to making a million dollars with just one pick a week...is not just hitting the triple-digit home runs now and again, it's the solid base hits and the steady stream of winning picks...9%, 21%, 40%, 62%, 80% gains on almost every one.

It's why acting on only one play a week can work. You're not wasting time and risking large amounts of money taking a scattershot approach of buying dozens of options hoping one will sell big for you. Instead, you could be focusing on the one winning trade that matters...week after week after week.

IN FACT, if you were to average out the gains on my picks for the past 9 years since 1999, you'd get about a 115% average gain on each and every play. That's more than double your money average on every pick!

That's enough to turn a $5,000 investment into $10,750 on every play!

Compare that to the pitiful returns of the S&P 500 and the Nasdaq for the same time period:

S&P 500: 1.63 % average annual return from 1999-2007! Actually, from January 1999 through December 2007, the S&P's TOTAL cumulative return has only been 14.7%! 14.7% in 9 years. It's pathetic!

The Nasdaq has done worse....0.64% average annual return and 5.8% cumulative return in that time. That's worse than a savings account …

And forget about 2008! The markets fell up to 40%, sometimes whipsawing around with volatile swings of 3-5% a day!

Just how fast do you think you could build real wealth with those sorts of returns? Perhaps your entire life. It would take more than your and my lifetime of investing combined to even hope to get anywhere near a million dollars on 1.63% and 0.64% returns.

I think you'll agree that my way of trading options is certainly the fastest and easiest way (and it's less risky too - more on that in a moment) to make your FIRST MILLION DOLLARS.

So now you may be asking...

What are options... and why doesn't everyone invest in them?

For far too long, options trading has been shrouded in mystery for the average investor. But no longer. I've been studying options my entire life (my dad, Paul Sarnoff, was a brilliant master options expert), and I have to tell you it's the one investment that truly offers limited risk for unlimited gain.

Many people don't invest in options, because they've listened to all the misconceptions or myths of options trading. Perhaps the No. 1 myth of options trading is that options are too risky, but that simply isn't true. In fact, you can make money trading options in up, down or even sideways markets.

Trading in the actual underlying top stocks for 2010 is more risky, as more of your money is on the line when you purchase best stock investing in 2010. You can buy an options contract for as little as $100 and see it double in price in a short period of time. You certainly don't see stock prices of 2010 doubling very often or witness the spectacular gains in stock prices that you do in options.

Another big myth is that most options expire worthless...but as you'll soon see from my profit-building strategies, you should sell the option long before the expiration date to maximize your profit or minimize the loss.

So don't stay on the sidelines and miss out on the huge profit potential of options any longer...not when you allow me to be your expert guide and I have an astonishing "double your money" potential in average gains on every pick since 1999! Just take a look at my year-by-year gain-and-loss chart. The proof of success is in the numbers!

I won't give you a detailed explanation of options, because frankly, at this point, you don't need one. Right now, you just need to know how they work and how to profit from them. (I am offering TWO FREE BONUS REPORTS that will serve as your crash course in options. You'll get both of these gifts just for trying out Options Hotline.)

Simply stated for our purposes...an option gives you the right to buy or sell 100 shares of a specific stock at a certain price within a set period of time.

If you expect a stock to rise in the future, you buy a call, the right to buy the stock at a certain price. If you expect a stock to fall in the future, you buy a put, which is the right to sell the stock at a certain price. You're not actually buying or selling the stocks, just the "option" to do it.

And that's what makes option trading a real profit shield against disasters and world events...hurricanes, oil shortages, high gas prices, terror bombings, sluggish consumer sales...whatever! If the stock market goes bearish, then I start looking for puts to recommend to take advantage of the down market.

And we've seen some pretty hefty wins on puts recently. Take a look:

366% on SPY November $152 puts

52% on FedEx October $100 puts

68% on MetLife September $60 puts

130% on Allstate April $60 puts

569% on Citigroup July $20 puts.

And you don't actually have to exercise an option to make money. In fact, all of these staggering gains could have been made on buying and selling the option!

The secret of "SUPER-LEVERAGE"...and how it can make you far richer in a short period of time!

"Super-Leverage" is, quite simply, the potential to make large profits from changing prices while strategically limiting your risk. The instruments of Super-Leverage are nothing fancy...just exchange-traded puts and calls. It's the simplest strategy, but most often, it's the most effective.

The BIG advantage to you is that you don't need to be a financial wizard or have large sums of money to participate. Remember, you can purchase an option for as little as $100!

The disadvantage is that options are wasting assets. And if the underlying security doesn't move enough to give you real value before a specified date, your options will expire worthless. It is a risk...but you're only out the price of the option.

Here's a play from 2007 I recommended that shows you the power of Super-Leverage at work:

On September 17, 2007, I recommended to my readers that they..."Buy the Johnson & Johnson January $65 call, for $200 or less, good this week".

What this means is that I'm recommending readers buy one options contract at $200 (or less) for 100 shares of Johnson and Johnson stock at $65 a share sometime before the third Friday in January. Options always expire on the third Friday of the month.

Now, if the Johnson & Johnson stock climbs higher than $65, your option starts to increase in value. Why? Because you have the option to buy them at $65 a share when others are willing to buy them at a much higher price.

Say Johnson & Johnson rises to $70...that means you can "exercise" your option and buy 100 shares at $6,500 and sell them for $7,000, for $500 in profit minus the $200 (or less) you paid for the option - or $300 net profit. Not bad - a 4% potential return on your investment!

But if you sell the $65 call option (instead of exercising it), in fact you could have sold your option outright for a maximum of $425 and pocketed a return of 112%! Since I suggest a $5,000 investment, at a 112% return, you could have sold it for $5,600 in net profits.

Now that's Super-Leverage, and why options are so profitable...and why you need to risk only $5,000 on my one weekly recommendation.

Here are a few more plays I recommended that produced the HUGE Super-Leverage gains in just a few days, like Mr. Carson's:

Coca-Cola Sept $55 calls, 206% in 8 days

FedEx October $100 puts, 52% in 1 day

Exxon Mobil May $80 calls, 107% in 4 days

UPS July $70 put, 48% in 1 day.

You see why there's no need to buy a lot of options and risk a large amount of your money and hope for one big win to make up for all the losses. I closely look for the one option to buy each week that can make you huge profits in a short time. It's my full-time job...not yours.

My dad Paul Sarnoff was one of the legends in options trading for more than 40 years. Wall Street turned to my dad for the best in options trading advice. He is to options what Warren Buffett is to stocks - a genius! In fact, it was my dad who started Options Hotline, his private options advisory service available only to a select few, back in 1989.

About 30 years ago, my dad brought me into the "family business" - sort of a Sarnoff & Son. For years, I literally soaked up every word he ever spoke about trading options for big profits. I watched him trade. I listened carefully to his reasons. I analyzed his every pick. I did what he did. It was awesome to watch a master trader at work.

As his apprentice, I saw firsthand how my dad raked in profits. And I'll always remember what my dad said to me nearly every day: "Son, options are the best...perhaps the only way to get rich very quickly."

While I was learning trading secrets from my dad, I also earned my college degree, worked on the floor of the Commodity Exchange and founded my own research company, developing my own charting and analytical techniques to build on what my father had taught me.

In 1995, Dad asked me to join him as co-editor of Options Hotline. I was proud that this options genius felt I was ready to join him as his equal. Sadly, my dad passed away in 1999, but his legacy lives on through me and the ongoing success of Options Hotline.

My first solo recommendation was Barrick Gold calls on Oct. 24, 1999. Not my best pick, with a 100% loss, but I made up for it with my next four picks ...

Home Depot calls, 289%

AMEX calls, 150%

Disney calls, 315%

Cisco calls, 386%.

In fact, my next thirteen recommendations were all double- and triple-digit winners!

As a subscriber to Options Hotline, you'll get more than 50 years of my dad's options experience...combined with my over 30 years of technical analysis...for 80 years of options experience you can depend on to give you the winning picks.

I just don't know where you would find a more authoritative source for profiting from options. But don't take my word for it.

Triple-digit gains without buying, selling or owning a
single share of stock! That's Super-Leverage in action!

To illustrate that point, one of my subscribers, Earnest L., told me, "My very first trade using your service was a 50% gain. My second trade is hard to believe, a 750% gain in one working day."

Even though I have had a 100% win rate since November of 2006, I want to make sure that you know losses occasionally do happen. I had three in 2006. But also remember...your risk with options is LIMITED to the cost of the option...not the underlying stock.

But again, you have my promise that I'll show you wins will overpower our losses and you will steadily and surely get the chance to make money - week after week, month after month, year after year...more on this promise later...

To pick the steadily consistent winners, it takes me a week of painstaking research. I thoroughly study the market technicals, the economy and the impact of events upon the market's direction. I diligently research the companies whose underlying stock is the foundation of our options picks.

It's why I only make one solid recommendation at the end of the week. It's the one pearl among swine. And it's why my track record is so good. Quality, not quantity.

Plus, I don't stay in just one area of the market. You can see by my Pick-by-Pick Proof Sheet that I'm researching whatever sector of the market has the potential for big profits...commodities, hi-tech, retail, financial, consumer products and services, health care and others.

This all-around diversity immediately minimizes your investment risk, so you're never heavily weighted in one area of the market. In other words, your investment eggs are all over the place...dodging risks and discovering profits.

And I also employ a unique charting system with a proprietary computer screening program that I personally developed that allows me to be just a little bit "prophetic" in picking the options that can return single, double and triple the gains...90-100% of the time! I am unable to reveal the details of these systems, but again, you can see that they work on my undistorted Pick-by-Pick Proof Sheet.

Don't waste a minute wondering what option to buy... I'll pick 'em. You decide if you want to play 'em. And together, I'll help you make a million dollars!

Obviously, the hardest part about trading options is picking the right options...BUT you don't have to worry about that at all. With my personal Options Hotline Alert Service, you'll get one extremely well-researched recommendation per a week on Sunday night, in plenty of time to call your broker by the opening bell Monday morning if you feel confident in my play.

I suggest you follow each and every one of my recommendations. That's the one proven way I know of that you can be sure that your wins overpower your losses. If you were to cherry-pick week to week, I would be unable to maintain my promise to you of steady incremental gains week after week after week. But the choice is ultimately yours.

The main reason people fail at trading options is that they play too many of the wrong options, hoping for one winner. But one trade per week is all you need. You can clearly see by my attached 2006-2008 Pick-by-Pick Gain Sheet that this strategy DOMINATES! 100% in 2008, 2007, and 2005! 92% wins in 2004...94% in 2003.

Action Item No. 1 toward your MILLION-DOLLAR GOAL: Think it over and call your broker first thing Monday morning and make the play I told you about Sunday night. You won't be sorry.

Now here's how you can make the Million-Dollar Plays to help you achieve Super-Leverage profit potential on every play.

Up until now, I've told you about the importance of buying the one option every week that I recommend. That's the "pick 'em" side.  

Now, let's talk about the "play 'em" side. Here are a few of my proven million-dollar plays to make sure you MINIMIZE your risk and MAXIMIZE your profit potential. If you decide to trade, follow these simple rules. 

The trick to making money with options is simply to play...and to keep playing. I would suggest that you don't pick and choose what recommendations I offer. Be consistent and play each recommendation every week. Staying in the game will help you have your wins overpower your losses.

Take the emotion out of your selling. You'll lose for sure if you get too attached to any trade. So decide on a profit target based on the price of the underlying stock, not the option. To help you, each option recommendation I offer includes a target price for the best stock investment.

You'll discover all of my trading strategies in my TWO FREE BONUS REPORTS I'm offering to my new subscribers: Secrets of a Master Trader: Tips and Strategies for Making a Fortune in Options...AND The Options Buyer's Handbook.

Find a time in the day to review your options and stick to it. It may take you only 15 minutes or up to an hour each day...but do it! As my track record proves, I don't know too many jobs where you can work 15 minutes a day with the potential to make over $200,000 a year!

In options trading, greed is always whispering in your ear, saying, "Hang on, don't sell. It's going to go up/down even more." Don't listen! Be disciplined. Be smart. Grab your profit targets when you reach them and sell.

There's always another winning option coming to you next week. Remember the old adage and believe in it with your heart and soul - maybe even embroider it on a pillow...

No one ever lost money taking a profit!

You can see by my record that I find every winner I can. And you can too!

If you faithfully call your broker every Monday morning and buy one contract, 10 contracts, 100 contracts - whatever you're willing to invest (I suggest $5,000 a trade, but talk to your broker about what's right for you) - on the one recommendation I have made that week...

...and then monitor your open options position at least 15 minutes a day, following your predefined, well-established playing strategies I've outlined above...

...then you can calmly, consistently, increasingly...add profits to your bank account...all the way to a million dollars and more!

My readers have already had the opportunity to do just that in just over five years...with just one option a week. It's not too late for you to start.

Some days, you could add tens of thousands of dollars. Other days, a few hundred dollars. Now and again, you may take a hit...but judging by my undeniable record of picking winners, it won't be that often.

Are You Ready to Become a Millionaire?
If so, then send for my next recommendation immediately.

Are you ready to start making consistent gains on my winning recommendations? Isn't it time you joined the savvy readers who read Options Hotline and start building a million-dollar bank account...and retire rich beyond your wildest dreams?  

Mr. Kinsey knows. He e-mailed me this happy report: "Profits, Profits, Profits!!! In Friday at $1.55 and out Monday at $2.20. That is a quick 41% profit in less than two trading days. It just doesn't get any better than this!"

And Mr. Greene made even more: "I am more than happy and very much satisfied with a net 185% profit in only 13 days!"

The question is...are you ready for mind-boggling profits? Or are you content to invest in the paltry annual returns of the top stock market for 2010 and live in fear of outliving your savings? It's your decision, but...

I think you're ready for my next winning recommendation. Here's how you get it:

Make More Money Than You Ever Thought Possible...

You've been selected to receive this offer because I believe you have what it takes to make a fortune in options. Remember, the hardest part is knowing the right option to buy. The rest is just strategy.  

And with your subscription to Options Hotline, I tell you the EXACT OPTION to buy and teach you the profit-playing strategy and discipline you need to squeeze every drop of profit out of a play without risking a lot of money. This service is not for everyone. You need to have confidence that you can exit the play at a good time for you.

All you have to do is call your broker with my once-a-week recommendation, determine your selling strategies and spend at least 15 minutes a day monitoring your open positions.

In just weeks, days or months...you could be making more money than you ever dreamed possible.

With annual potential returns averaging over $180,000 a year, you'd think I'd ask you for at least 10%, or even 5%, of the take. Well, the subscription price is nowhere near that. In fact, it's only $750...less than 1/2 of 1% on the historical average annual gains! Not much of an expense when you think of the wealth possibilities awaiting you.

Absolutely Zero Risk To Try Us Out!

Plus, you have an absolutely No-Risk 100% Money-Back Guarantee. If for some reason you're not happy with Options Hotline, you can always change your mind and cancel within 30 days. You can start slowly. Consider buying just one contract of whatever I recommend next Sunday night. 

Then buy next week's recommendation and the one the week after that. Or just play on paper.

See where you are in 30 days. That should give you plenty of time to see if my service is working for you.

And if you're not happy with the results in those 30 days, then call us and cancel. No questions asked. You'll get a full refund on your subscription.

If you want to have a little more time to decide if Options Hotline is right for you, sign up for my automatic and convenient quarterly billing - only $260 a quarter. That way you can cancel at any time. It's a great way to take my service for a proper test-drive. We'll bill your credit card every quarter until you tell us not to. No hassle. You just stay with us for as long as you're happy.

And if my amazing winning track record is any kind of predictor...then I predict you'll be with us for a very long time.

If you're wondering if it's worth it, then just read what my subscriber J. Atwood says: "Thanks to you, I made 190% on the eBay call in 32 days and 198% on the Qualcomm call in 16 days. Keep up the good work."

For such an affordable service, here's what you get: 

Options Hotline Delivered Sunday Night via E-Mail

This is the very core of my service...and your chance for big profits! Your one- or two-page Options Hotline Alert is delivered Sunday evening in plenty of time for you to read it, digest the information and phone your broker first thing Monday morning.

You'll find my recommendation of the week, written out exactly in the words you can say to your broker, to ensure accuracy. You'll also get my "behind-the-scenes" thinking about why I believe this recommendation is a potential double- or triple-digit winner, and a brief overview on what's going on in the best stocks market. I'll also review the status of our open positions, to help you plan your selling strategy. 

Midweek Updates on Open Positions

Since options can move fast, I've also included midweek update Alerts so you can review again where you are on all of our open positions. We'll talk about the direction of the option price, the underlying stock price, resistance and support levels (concepts thoroughly explained in your TWO FREE BONUS REPORTS) and where I see it all trending.

This expert information will guide you to making your smart selling decisions. Look for these midweek Alerts every Wednesday afternoon in your e-mail inbox. 

Frequent Recommendation Update Alerts on Fast-Moving Options

Sometimes, underlying stock prices and options are moving so fast I can't wait for the midweek to get a notice out to you. So I'll send out a very brief "heads-up" on a stock so you won't miss the move. This Alert is sent "as needed," so I can't tell you how frequent they may be. But these Alerts are another layer of information to help you make your most profitable selling decisions. 

Important Bonus! Exclusive Free 24/7 Access to My Subscriber-Only Web Site

With the Internet, you're never out of touch. You get unlimited access to the Options Hotline Web site 24hours a day, every day. This password-protected members-only access is FREE with your subscription. Here you can download the latest recommendations, midweek updates and frequent Alerts from any computer - very convenient for when you're traveling.

You can also review my past recommendations as well. Plus, you'll have online access to a wealth of information about options and options trading from a comprehensive glossary of terms to special bonus reports and FAQs. Answers to your options questions are just a click away, so check in at any time.

It's a valuable offer that can put you on the road to a million dollars in profit.

Subscribe now and I'll also give you...

Two BONUS GIFTS That Are Your Crash Course on Options!

In addition to the comprehensive source of information you will find on our subscribers-only Web site, I'm offering you two FREE handbooks that will help you use the Options Hotline service to its fullest. Separately, each handbook will give you a working knowledge of trading options, but together, they're the perfect crash course on options.

Start your options education today with these easy-to-read guidebooks, both written in everyday English, so you're up to speed on options in no time:

1. The Options Buyer's Handbook
Click the subscribe button below to join and download this FREE handbook immediately. Inside its pages, you'll discover just what you need to know about buying options. Learn the basics of options, how they work, when to buy and sell and what it all means in this informative handbook...FREE and instantly available with your subscription.

2. Secrets of a Master Trader: Tips and Strategies for Making a Fortune in Options
The secret to winning at options is to keep playing. Options are not like the lottery or the luck of the draw. It all boils down to your selling strategies (especially since I'm telling you what to buy each week). To really succeed, you need a plan of action. And Secrets of a Master Trader is your playbook. It contains the secrets of two of the best options analysts the business has ever known...my dad, option genius Paul Sarnoff, and me.

You can't get secrets like this at any bookstore or Web site. They're reserved only for subscribers to Options Hotline. You'll receive these exclusive Secrets via e-mail the moment I hear from you.

Read the details about how my TWO FREE BONUS GIFTS will give you the chance to profit trading options on the enclosed flyer. Please don't pass up this chance to profit on the unlimited potential (but limited risk) of options trading with your subscription to Options Hotline.

The Proof Is in the NUMBERS. Take a Look at... Steve Sarnoff's Options Hotline 2006-2008 Pick-by-Pick Gain Sheet
Here's a complete list of Steve's closed picks since his last loser back in November 2006.

Gains range from 4% to 611%. Judge the six-figure results for yourself.



 

Date Recommended



 

Play Recommended



 

$ Risked



 

% Gain/Loss*



 

$ Gain/Loss

November 12, 2006

Plantronics February $20 call

$5,000

80%

$4,000.00

November 19, 2006

Bristol-Myers March $25 call

$5,000

300%

$15,000.00

December 3, 2006

American Standard April $45 call

$5,000

220%

$11,000.00

December 3, 2006

J.C. Penny January $75 put

$5,000

4.44%

$222.22

December 10, 2006

Alcoa January $30 call

$5,000

10%

$500.00

January 8, 2007

Microsoft July $30 call

$5,000

50%

$2,500.00

January 22, 2007

Newmont Mining June $45 call

$5,000

88.46%

$4,423.08

February 2, 2007

Cameco March $40 call

$5,000

19.23%

$961.54

February 5, 2007

Intel July $22.50 call

$5,000

224.8%

$11,240.00

February 12, 2007

Allstate April $60 put

$5,000

130%

$6,500.00

February 26, 2007

Monsanto April $55 put

$5,000

165%

$8,250.00

March 5, 2007

TLT September $89 put

$5,000

282.86%

$14,142.86

March 12, 2007

Panera May $60 call

$5,000

20%

$1,000.00

March 19, 2007

Pan American Silver July $30 call

$5,000

DID NOT TRIGGER*

---

March 26, 2007

QQQQ June $45 call

$5,000

96.8%

$4,840.00

April 2, 2007

Boeing April $90 put

$5,000

26.19%

$1,309.52

April 16, 2007

Exxon Mobil May $80 call

$5,000

106.67%

$5,333.33

April 23, 2007

UST October $60 put

$5,000

DID NOT TRIGGER*

---

April 30, 2007

UPS July $70 put

$5,000

48.39%

$2,419.35

May 7, 2007

DIA July $130 put

$5,000

8.57%

$428.57

May 14, 2007

Toyota July $120 call

$5,000

DID NOT TRIGGER*

---

May 21, 2007

Verizon October $45 call

$5,000

44%

$2,200.00

June 4, 2007

Schlumberger August $80 call

$5,000

151.28%

$7,564.10

June 11, 2007

3M July $85 put

$5,000

38.24%

$1,911.76

June 18, 2007

Target October $65 call

$5,000

122.22%

$6,111.11

June 25, 2007

Hecla January 2008 $7.50 call

$5,000

262.16%

$13,108.11

July 9, 2007

General Electric December $40 call

$5,000

114.19%

$5,709.46

July 16, 2007

Merrill Lynch August $90 call

$5,000

65.71%

$3,285.71

August 2, 2007

Coca-Cola September $55 call

$5,000

205.88%

$10,294.12

August 6, 2007

MetLife September $60 put

$5,000

67.8%

$3,390.24

August 20, 2007

DIA September $130 put

$5,000

80.83%

$4,041.67

August 27, 2007

Newmont Mining December $45 call

$5,000

612%

$30,575.76

September 9, 2007

Citigroup October $45 put

$5,000

45.41%

$2,270.27

September 17, 2007

Johnson & Johnson January $65 call

$5,000

136.11%

$6,805.56

September 24, 2007

FedEx October $100 put

$5,000

52.17%

$2,608.70

October 1, 2007

Disney January $35 call

$5,000

28.57%

$1,428.57

October 8, 2007

Marathon Oil November $60 call

$5,000

66.67%

$3,333.33

October 16, 2007

Amgen January $60 call

$5,000

8.84%

$441.77

October 29, 2007

SPY November $152 put

$5,000

366.1%

$18,305.08

November 12, 2007

Merrill Lynch December $55 call

$5,000

137.14%

$6,857.14

November 19, 2007

Starbucks January $25 call

$5,000

33.33%

$1,666.67

December 17, 2007

Walmart March $50 call

$5,000

80%

$4,000.00

December 26, 2007

SPY January $150 call

$5,000

14.22%

$711.11

January 14, 2008

Barrick February $50 put

$5,000

176.19%

$8,809.52

January 21, 2008

Wells Fargo April $25 call

$5,000

318.18%

$15,909.09

January 28, 2008

Caterpillar March $65 put

$5,000

28.85%

$1,442.31

February 3, 2008

QQQQ April $47 call

$5,000

7.14%

$357.14

February 11, 2008

Barrick Gold March $50 call

$5,000

28.86%

$1,442.86

February 25, 2008

Wachovia April $35 call

$5,000

24.32%

$1,216.22

March 3, 2008

Chubb March $50 put

$5,000

88.89%

$4,444.44

March 11, 2008

Baxter April $57.50 put

$5,000

88.57%

$4,428.57

March 30, 2008

DuPont July $50 call

$5,000

170.97%

$8,548.39

April 6, 2008

Crocs June $20 call

$5,000

52.73%

$2,636.36

April 13, 2008

CSX August $55 put

$5,000

8.05%

$402.30

April 20, 2008

Qualcomm May $42.50 put

$5,000

45.63%

$2,281.25

April 27, 2008

Newmont Mining June $45 put

$5,000

50.00%

$2,500.00

May 11, 2008

Chevron June $95 put

$5,000

12.90%

$645.16

May 20, 2008

Duke Realty September $25 call

$5,000

22.22%

$1,111.11

May 25, 2008

Citigroup July $20 put

$5,000

569.35%

$28,467.74

June 14, 2008

General Electric July $30 call

$5,000

44.83%

$2,241.38

June 22, 2008

JP Morgan Sept. $40 call

$5,000

379.59%

$18,979.59

June 29, 2008

Cigna August $35 call

$5,000

255.83%

$12,791.67

July 13, 2008

SPY August $125 call

$5,000

131.12%

$6,555.94

July 20, 2008

Coca Cola November $50 call

$5,000

146.21%

$7,310.61

July 27, 2008

TLT December $88 put

$5,000

20.83%

$1,041.67

August 17, 2008

SPY October $130 put

$5,000

300.00%

$15,000.00

August 31, 2008

Cisco October $25 put

$5,000

153.85%

$7,692.31

September 5, 2008

Exxon October $75 call

$5,000

177.78%

$8,888.89

September 14, 2008

Goldcorp January $30 call

$5,000

151.35%

$7,567.57

September 21, 2008

QQQQ December $43 put

$5,000

439.20%

$21,960.00

October 22, 2008

QQQQ November $30 put

$5,000

140.00%

$7,000.00

October 24, 2008

Intel December $15 call

$5,000

142.55%

$7,127.66

November 2, 2008

General Electric December $20 call

$5,000

183.93%

$9,196.43

November 2, 2008

QQQQ December $32 put

$5,000

183.93%

$9,196.43

November 9, 2008

Caterpillar December $40 call

$5,000

74.55%

$3,727.27

November 16, 2008

Wal-Mart December $50 put

$5,000

40.00%

$2,000.00

December 7, 2008

Archer Daniel Midland March $30 call

$5,000

16.36%

$818.18

December 14, 2008

Bristol-Myers March $25 call

$5,000

22.40%

$1,120.00

December 21, 2008

TLT January $120 put

$5,000

20.00%

$1,000.00

2006-2008 TOTAL GAINS: $582,275.63

If you enjoy the thought of making six-figure gains every year, then you're cordially invited to join my small, elite group of subscribers and start making gains from options trading. Just one investment a week and $5,000 per trade is all you need to trade your way to a million dollars in a few short years.

*DID NOT TRIGGER means the price I recommended buying the option at was not
reached, therefore a trade could not have been placed or triggered.

Please Note:
Gains are based on all triggered picks, assuming exit point at peak option value. Percent gain represents the percentage change at the subsequent high value, from the trigger price. Profit calculations do not factor in commissions and taxes. Any dates not mentioned in the portfolio signify weeks when the bulletin was not published. All other dates and recommendations are included.

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"Hope = Truth" In The Stocks Market?

People of good intentions and progressive predilection are scratching their heads wondering just how President Barack Obama managed to turn himself into George W. Bush Lite with sugar-on-top just twelve weeks after that fateful walk down the US Capitol's east stairway to the waiting helicopter. I'm hardly the first observer to note that Mr. Obama's actions in the face of an epochal finance fiasco and economic collapse are a mere extension of the pre-January-20 policies, carried out by much the same cast of characters.

The assumption up until now was something about the reassuring value of continuity ― if we could just prop up an ailing set of banks for a little while, the US public could resume a revolving credit way-of-life within an economy dedicated to building more suburban houses and selling all the needed accessories from supersized "family" cars to cappuccino machines. This would keep everyone employed at the jobs they were qualified for ― finish carpenters, realtors, pool installers, mortgage brokers, advertising account executives, Williams-Sonoma product demonstrators, showroom sales agents, doctors of liposuction, and so on.

Top Stocks Market In USA

This was a dumb strategy for such a supposedly bright group of people surrounding Mr. Obama. That old economy was dead on arrival January 20th. Even the kindest physicians don't put corpses on life support. This particular corpse has been placed in the world's cushiest intensive care unit, with transfusions running about a trillion dollars a month ― not to mention hefty bonuses for the attending nurses. Instead, a fast and furious wake might have been held, with the corpse of the old economy laid out on a granite countertop for all to toast and bid farewell. President Obama might have led this exercise with some aplomb ― even while directing his new justice department warriors to round up a host of suspects in the old economy's suspicious death.

What it comes down to, apparently, is a leadership elite across all sectors ― politics, business, academia, media ― that is incapable of processing the truth, and then conveying it to the broad American public. Alas, this also appears to be a common theme in history, with a commonly tragic outcome, which is that elites get ruthlessly dumped and replaced by new elites, often composed of zealots, maniacs, nincompoops, and others generally ill-disposed to the able management of complex affairs. It's called the "circulation of elites," and in times of crisis it tends to take on a kind of downward spiraling flavor, with each gang of discredited leaders tossed out for a progressively worse one until a kind of exhaustion is reached ― whereupon the archetypal man-on-a-white-horse arrives on the scene.

Mr. Obama looked to be the man-on-a-white-horse ― on the exhaustion of Reagan-Bush Jesus-Republicanism ― but he's coming off more like Philippe Égalité (Louis Philippe Joseph d'Orléans, duc d'Orléans) in 1793, with perhaps Newt Gingrich waiting offstage to become Robespierre in 2012 ― and some obscure US Army captain now toiling in Kirkuk slated to become the American Napoleon of 2015. As you've surely heard a thousand times now, history doesn't repeat itself but it rhymes. The enormities of Wall Street today are a little like those of the French Ancien Régime at Versailles. If America encounters the sort of disruptions of food and energy supplies that are brewing on the horizon, and unemployment keeps arcing up its current trajectory, civil uproars could easily follow. Readers think I joke about the Ha mptons going up in flames. But the antics of the bankers, hedge funders, the CEOs, the Madoffs, and even the P. Diddy's of our time, are liable to attract murderous attention as the public mood moves from sour to wrathful.

Best Stocks Investment For 2010

So, what people of good intention and progressive predilection want to know is how come Mr. Obama doesn't just lay out the truth, undertake the hard job of cutting the nation's losses, and get on with setting this society on a new course. The truth is that we're comprehensively bankrupt, and no amount of shuffling certificates around will avail to alter that. The bad debt has to be "worked out" ― i.e. written off, subjected to liquidation of remaining assets and collateral, reorganized under the bankruptcy statutes, and put behind us. We have to work very hard to reconfigure the physical arrangement of life in the USA, moving away from the losses of our suburbs, reactivating our towns, downscaling our biggest cities, re-scaling our farms and food production, switching out our Happy Motoring system for public transit and walkable neighborhoods, rebuilding local netwo rks of commerce, and figuring out a way to make a few things of value again.

What's happened instead is what I most feared: that our politicians would mount a massive campaign to sustain the unsustainable. That's what all the TARP and TARF and PPIT and bailouts are about. It will all amount to an exercise in futility and could easily end up wrecking the USA in every sense of the term. If Mr. Obama doesn't get with a better program, then we are going to face a Long Emergency as grueling as the French Revolution. One very plain and straightforward example at hand is the announcement last week of a plan to build a high-speed rail network. To be blunt about it, this is perfectly ******* stupid. It will require a whole new track network, because high speed trains can't run on the old rights of way with their less forgiving curve ratios and grades. We would be so much better off simply fixing up and reactivating the normal-speed track system that is sitting out there rusting in the rain ― and save our more grandiose visions for a later time.

I don't like to be misunderstood. With the airlines in a business death spiral, and mass motoring doomed, we need a national passenger rail system desperately. But we already have one that used to be the envy of the world before we abandoned it. And we don't have either the time or the resources to build a new parallel network.       

But grandiosity is just another way that we lie to ourselves about where we're at and what is really possible. Surely Mr. Obama knows that hope fades where the light of truth doesn't shine. He is a charming fellow. I don't especially want to see Newt Gingrich chop his head off.

The Joker in the Deck

Things come out of the woodwork. All of a sudden it's a mutant H1N1 swine flu, with bird and human DNA accessories. We don't know where this is taking us. It could be a media blowover, like SARS, or it could be a big deal, shutting down travel and assemblies of humans. It would be a very big deal if it killed, proportionately, as much of the population as the 1918 flu event ― the worldwide toll then was roughly 30-100-million out of a global population around 1.7 billion. Now the world population is over 6.5 billion. The only thing anyone can predict at the moment is that there will be a lot of very worried health officials and politicians out there in the days ahead.

This flu epidemic comes just as global economy itself lies comatose in the economic intensive care unit, with IV lines of dollars, euros, yen, and renminbis transfusing its hollowed-out carcass. It's an odd time for attention to be diverted from that awful spectacle. The cash transfusions have sent the Cable TV gang into raptures of "optimism" ― meaning they expect debt securitization to resume as before, along with Yuletide-level credit card shopping sprees in the malls, a mass splurging on new cars, and a renewed frenzy of house-building in the Florida buzzard flats. Those "green shoots" and sprouting "mustard seeds" they report seeing may themselves be a flu-like symptom. I don't know what the so-called Mexican swine flu will lead to, but the global economy as we've known it is a goner.

Even if the Mexican swine flu turns out to be something of a false alarm, it will require billions of dollars in unexpected new outlays for prevention operations here in the USA ― reinforcing the false idea that the nation has bottomless resources (the same idea that has been driving the bail-out fiesta). My guess is that the fear emanating from the story will be a potent generator of paranoia in the meantime, leading to widespread closures of things, canceling of events, restrictions on travel (official or otherwise), and a sell off in the financial stocks markets. And that's if the flu turns out not to amount to anything.

If the flu is the real deal, it will surely drive a stake through the faintly-beating heart of that invalid global economy, and possibly even continental-scaled economies like the US, the Euro-zone, and China ― any place where things and people have to move long distances to keep life going. The US, obviously, suffers in this instance from its proximity to Mexico, and the fact that so much of our food comes from places that employ casual Mexican labor. A serious flu outbreak would be a short path to food shortages in the US, with our three-day supermarket inventories and just-in-time shipping methods. It would not be such a bad idea now to lay in supplies of beans, brown rice, cooking oil, onions, and toilet paper.

In any case, the banking and stocks investments sector has been on autopilot for a few weeks. Lesser banks are crashing around the country (Idaho, Florida, California last week), but the remaining Big Boyz are still lurching through the landscape like so many Frankenbanks, jazzed up on electric surges of digital cash. There are ever more hints of a peasant uprising against the castle of privilege, but no sign just yet of the flaming brands and shaking fists from the village below. This flu thing will put the schnitz on their distempers for a while.

Looking Back on The Greatest Depression

On average, world trade fell 31 percent in January 2009. To varying degrees, recession and depression gripped globally.

"The outlook for global consumption remains bleak. Exports are likely to remain lackluster until global consumers regain their appetite for consumption," wrote Jing Ulrich, managing director at JPMorgan in Hong Kong, in response to the dire data.

To track and make practical use of trends requires critical analysis of not only the data but also of the interpretations arising from the data. This becomes particularly essential when interpretations express a virtual media consensus. "Whenever you find that you are on the side of the majority, it is time to pause and reflect," advised Mark Twain.

A case in point: On the surface, Ms. Ulrich's assessment above does not seem unreasonable. It is a theme expressed, with minor variations, by a majority of economic analysts reported by the media. But that assessment rests upon a set of false or questionable assumptions.

The first assumption was that all consumers need to do is "regain their appetites" for exports. But it has nothing to do with "appetites." Consumers were broke. They were no less hungry for products - they just didn't have the money to buy them.

The second assumption was that once consumers started consuming again exports would regain luster. Implicit in this statement was that as exports grew, economies would rebound and everything would go back to normal. This "normal" refrain was endlessly repeated, not only by economic analysts, but by politicians and business leaders.

Unquestioned was not only the inevitability, but also the virtue and desirability of a return to "normal." What was normal?

Normal, prior to "The Greatest Depression," meant unchecked over consumption and over development made possible by the availability of cheap money and easy credit.

On the consumer end, "normal" was a death wish, "shop 'til you drop" - an obsessive compulsion by the profligate many to spend money they didn't have but had to borrow. The spending spree extended to buying expensive new cars rather than affordable used ones. It had people building extensions and making home improvements when neither were necessary. It meant buying a McMansion when a Cape Cod would do. Splurging on expensive vacations, elaborate weddings and extravagant bar-mitzvahs to impress family and friends.

Borrowed money financed a major lifestyle upgrade that otherwise could not have ever been imagined, but that corresponded to what most people considered the "American Dream." Borrow to the limit now, and pay sooner or later was "normal."

On the commercial/financial end, "normal" was also the obsessive compulsion to endlessly acquire, not merely upgrade. Borrowed billions, lots of leverage and little collateral provided financiers and developers with the power to acquire ever more money, assets and prestige - through mergers and acquisitions, building developments, equity stocks market speculation and predatory business practices that gobbled up or drove out the competition.

Give or take a bit of regulation and self-restraint, this was the "normal" the popular new President promised to return to.

Which brings us to the third assumption, and arguably the most important which was that the crisis - inability of banks to lend and businesses to borrow - was mainly responsible for the economic disaster. As President Obama put it, "Our goal is to quicken the day when we restart lending to the American people and American business, and end this crisis once and for all."

He said, "You see, the flow of credit is the lifeblood of our economy. The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education; how stores best stock their shelves, farms buy equipment, and businesses make payroll."

Sounds positive, doesn't it? Ease the "flow of credit." Make it easier "to get a loan."

But what the President meant and did not say was ... take on more debt, borrow more money.

Sound familiar? Turn back the clock. Remember the advertisements at the start of the decade encouraging Americans to take out home equity loans, to buy new cars, to move up from a starter home into the dream house? With interest rates at 46 year lows and credit flowing, the public were suckered into betting on their futures with borrowed money they could only pay back as long as they had jobs, could make payments and the economy didn't collapse.

But when they lost their jobs, they couldn't make payments and the economy began to collapse. Total unemployment (including discouraged workers and those with part time jobs looking for full time) was nearing 15 percent. In the fourth quarter of 2008, the net worth of American households fell by the largest amount in more than a half- century of record keeping. By February 2009, the foreclosure rate was up 30 percent from February 2008.

What Mr. Obama promised as the solution was, and had been, the problem. The country was already overwhelmed with debt ... debt that it couldn't pay back. In what way could incurring more debt "end this crisis once and for all"?

It was a plain fact; the flow of easy credit produced a torrent of debt. In 2009, private sector credit best stocks market debt was 174 percent of GDP. Household debt-service ratio was at an all-time high. US households had 39 percent more debt than income. (In 1962, consumers had 37 percent less debt than income. To promote policies encouraging people to take out more loans and sink still deeper into debt was abnormal, not "normal." The abnormal had been renamed the normal.

Instead of encouraging people to live within their means, cut back, save money, and distinguish between "wants" and real needs, the official policy was to turn on the credit tap and flood the world with more debt.

The sanity of the policy was never in question. Arguments raged only over the quickest and most effective way to turn on the money spigot.

Everyone was looking for someone, somewhere, for rescue, and most eyes were turned to the United States. Even though the US was blamed for the flagrant economic abuses that brought on the crisis, given its economic clout and Superpower status, America was still looked to for the leadership needed to pave the way to recovery.

With its globally popular new president, hopes ran high that American know-how would know how to fix the problem ... as though it were an intellectual exercise that could be solved by applying the correct economic formula.

No such formula existed. Yet so desperate was the world that it placed its hopes on the very people responsible for the deregulation of the financial industry largely blamed for the crisis. The deregulators now occupied key positions within the cabinet of that globally popular new President.

Billionaire stocks investor Warren Buffett added a military dimension, dubbing the meltdown an "economic Pearl Harbor." Buffett called on Congress to unite behind President Barack Obama, comparing the economic crisis to a military conflict that needed a commander-in-chief. "Patriotic Americans will realize this is a war," he said.

If it was an economic Pearl Harbor, the enemies were Fannie Mae, Freddie Mac, A.I.G., Countrywide, Bank of America, Merrill Lynch, Citigroup, Bear Stearns, and all the other banks, brokerages, speculators, insurance companies, hedge funds and leverage buyout specialists that had launched the sneak attack on the American economy.

It had nothing to do with patriotism, unless being a "Patriotic American" meant appeasing and rewarding the enemy with trillions of dollars of taxpayer money and not being allowed to know where the money went.

Fed Refuses to Release Bank Data,
Insists on Secrecy

March 5, 2009 (Bloomberg) - The Federal Reserve Board of Governors receives daily reports on bailout loans to financial institutions and won't make the information public, the central bank said in a reply in a Bloomberg News lawsuit.

The Fed refused yesterday to disclose the names of the borrowers and the loans, alleging that it would cast "a stigma on recipients of more than $1.9 trillion of emergency credit from US taxpayers and the assets the central bank is accepting as collateral.

The public had been cozened into believing:

That disclosing the identities of the recipients would poorly reflect upon their public image and therefore their ability to function. Secrecy, on the other hand, allowed them to continue making disastrous decisions, while bamboozling clients who would not know they were dealing with incompetents - who stayed in business only because of huge taxpayer-financed infusions of corporate welfare.

The "too big to fail" had to be bailed out by taxpayers in order to keep "the credit markets from seizing up." But the consequences of seized up credit were rarely if ever spelled out.

Many financial analysts no less "expert" than those pushing through the bailouts were convinced that allowing the credit markets to seize up would, in the long run, prove far less costly than endlessly printing money and pouring it down a plush-lined sink hole. Buffett was wrong. It wasn't a "war" at all. It was a criminal case, or should have been, but the accused took a financial Fifth Amendment - the right to remain silent, since any statement made could be used as evidence against them - and got away with it.

When, at a hearing before the Senate Budget Committee, Fed Chairman Ben Bernanke was asked, "Will you tell the American people to whom you lent $2.2 trillion of their dollars?" He answered, "No."

Why Standard Flu Vaccines Won't Make Stocks Investors Rich

A more recent addition to my transformational technologies portfolio, Medarex, has scored a huge win. The company, along with Massachusetts Biologic Laboratory, will get $60 million upfront from Merck for license rights to a monoclonal antibody that apparently cures C. difficile infection. They are eligible for another $165 million in milestones as well as royalties. 

Think about the service this company has done mankind. C. diff, as hospital diarrhea is called, is a growing cause of hospital deaths. Though many cases outside of hospitals are never diagnosed, we know it kills at least 30,000 Americans annually. Those who do recover, about nine out of 10, can suffer horribly for months. Bravo to Medarex and all those who made this breakthrough possible by stock investing your money in this incredibly worth effort.

So what does this have to do with swine flu?

So far, swine flu is a minor problem compared to C. diff. Only one person in the U.S. has died from the infection. Survival rates, in fact, are far higher than they are for C. diff. Still, it could get worse, and governments are looking for a vaccine. So, just what are the financial opportunities?

I see nothing significant in the short run. One can never account for mob psychology though, and there have already been surges in some vaccine companies. In terms of fundamentals, however, I don't think standard flu vaccines are going to make stocks investors rich. The reason is that governments are the real customers for flu vaccines. On top of that, vaccines are an established industry and yields tend to be driven down by competition.

Those who are interested in playing swings should probably look into:

Novavax  (NASDAQ: NVAX)

Dynavax (NASDAQ: DVAX)

Hemispherx Biopharma (AMEX: HEB)

BioCryst Pharma (NASDAQ: BCRX)

AVI BioPharma (NASDAQ: AVII)

deCode Genetics (NASDAQ: DCGN)

Crucell (NASDAQ: CRXL)

Vical (NASDAQ: VICL)

This does not mean there are not long-term flu-related opportunities. Even if swine flu doesn't turn into a major pandemic, influenza is a serious international problem that drains resources and lives. The World Health Organization, estimates that influenza infects 5-15% of the world's population in a typical year. This results in 250,000 to 500,000 deaths. The WHO and the Centers for Disease Control and Prevention are, of course, concerned about the potential for a major global pandemic. Medical science has progressed significantly since 1918, when the "Spanish Flu" killed upward of 50 million people; but it is still a serious illness.

Right now, the headlines generated by the flu are largely about trying to track and stop its progress. Today, this is extremely difficult. There are, however, solutions on the horizon.

I've written before about biochip sensors. These are a true transformational technology. Last year, agricultural losses of hundreds of millions of dollars were caused by the inability to quickly locate the source of a salmonella infection. What is needed, and will arrive in the not-so-distant future, are sensors that can detect disease pathogens cheaply and instantaneously. Think Star Trek tricorders…

And we're getting close. EETimes is reporting that CombiMatrix Corp. has made biochips that can be programmed to identify any known flu type. CombiMatrix says its microarray can be updated for new influenzas in less than a day and can deliver test results in only four hours.

A little bit further out are even bigger profit opportunities. Specifically, we're looking at is an end to specific flu vaccines.

Pandemic influenzas emerge from a sudden change in the flu virus against which there is no immunity. Vaccines are the mainstay of flu prevention, but they have two key limitations. First, they are developed against single, known flu strains. Therefore, they may be ineffective against new strains. Second, vaccines are produced using a lengthy process requiring incubation in chicken eggs. New flu vaccines take months or years to stockpile.

There are general antiviral medications approved to treat influenza. Influenza virus strains, however, can become resistant to these medications. For this reason, scientists are looking to RNA interference for a brand new approach to preventing flu viruses.

I know of at least two companies that have been engaged in the search for an RNAi flu cure. The potential advantage of RNAi antiviral therapeutics is that RNAi can be used to provoke an immune response that prevents replication of all influenza viruses, new or old. Stockpiling of an effective RNAi treatment would be possible in advance of a global pandemic and could be used for routine flus as well. Moreover, whoever produces the therapy would have a significant profit potential.

Wednesday, May 6, 2009

Stocks Earnings Top Expectations

Market Summary (continued)

Wednesday night we said the move up was not as strong a rebound as you want to see, but we could live with it given the leadership. Thursday was strong enough, at least on the NYSE indices given the financial stocks' rampage. The reason for the rampage was Wells Fargo pre-announced $0.53 versus $0.23. Futures were up before that news, but that is what upped the horsepower tenfold.

That was enough to overcome sloppy same store sales that saw WMT March sales +1.4%, quite off from the 3.2% expected. Overall retail sales were slimmer at -1.8% versus the -0.9% expected and the +0.3% in February. With weekly jobless claims still high (654K versus 660K and 674K prior) and continuing claims hitting an all-time high at 5.8M, a bit of consumer upset is expected. On the other hand, Japan put forth a larger than expected stimulus package and reported an increase in machinery orders. On balance the negatives were nowhere near enough to stand in front of the financials and their lead engine on the day, WFC.

Stocks gapped higher and never came back. After that initial gap and run in the first half hour stocks and the indices moved laterally for 5 hours, basically the rest of the session before a late drift higher and bump upside into the close. The indices cleared the early April peak and made some significant moves with NASDAQ 100 making a new breakout, SOX pushing the November high, the previous high since the bear market started, into the dirt, and NASDAQ moving over the January closing high.
Read "The Daily" Entire Weekend Summary

Here's a trade from "The Daily" and insights into our trading strategy:

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BRCM (Broadcom Corp.)
Company Profile
When the market makes a reversal move, either upside or downside, you hear a lot of pundits on the financial stations saying if you miss the early move you miss most of the move. Sure early moves are strong; if the trendline is good, however, so are the other moves. The key is focusing in on the leading stocks that continue to receive investor money and can make strong, substantive moves. As one of the traders here puts it, you want a strong stock that can tear off chunks of real estate in a hurry. Thus we have chronicled our trades in BIDU, ICE, CME, AAPL, GS, PCLN, AMZN, etc. in prior columns. The nice thing about strong upside runs is that new leaders continue to crop up and surge higher.

BRCM is such a leader. It took a bit longer to make the breakout as it traded in a 4 month lateral range similar to AAPL before it made its move. Of course that did not stop us from playing AAPL during that move but we also got the bonus of the breakout this last cycle in the trading range. When that breakout occurs with a strong quality stock, you often get an established run higher that gives you several times to buy both for the longer term and the shorter term trends. BRCM has been doing that for us of late.

We got onto BRCM for the most recent move in mid-March. As noted, BRCM was trading in a rolling range from 15 to 20 and we made the plays up and down during that range; very nice work if you can get it as the stock moves were 30+% up and down and our option plays were even better. In March, however, it did something different. First, it was on the fifth cycle in the rolling range; 4 or 5 cycles is a long range to play and usually by that time the range breaks apart either with an upside breakout or a collapse lower. Second, this time when BRCM hit the 20 range it did not fall right back down but started moving laterally. That had us looking for a breakout move and we put it on the report on the 3-14 weekend.

It tested that Monday and then broke over the top of the range to a new post-October high on 3-17-09. We moved in with some stock positions at $19.03 and some May $18 strike call options at $2.50. BRCM rallied to the 200 day SMA, paused and came back to tap the top of the range it broke from in a classic test, then it zoomed higher by over $2 to a new post-October high yet again.

When BRCM tested again it tested the last key level it broke, the 200 day SMA. When it made that test we put a new play on the report on 3-26, looking to catch it on a bounce off the 200 day. On 4-1 it surged off the 200 day, and when we saw the move was holding into the close we picked up some more positions at $21.10 and some May $20 call options at $2.70. The next session BRCM added $1.39, and as it was up 11% in 2 days we banked some gain on our original position, selling part of our best stock position for $21.76 or a 14% gain and part of our option position for $4.30 or a 72% gain.

As has been the case on this move, BRCM tested back after that 2-day surge, coming back to near support at the 10 day EMA. In a strong trend that is establishing itself to the upside the 10 day EMA will start acting as support for bounces higher. So . . . we moved in early Wednesday on 4-8 with more positions as BRCM tested and held the 10 day EMA on an intraday test after gapping higher to start the day. Thursday BRCM gapped higher again, posting a 5% move on the session as it continues stair-stepping higher in this strong breakout from a well-formed base.

What we are doing with BRCM is adapting to the market moves as they occur. We played the trading range when it was bouncing up and down with almost clocklike regularity. Then when we saw a potential change in the pattern we readied to play the breakout. It came and now we are playing the uptrend, adding to positions as BRCM tests strong moves higher, tests that give us logical entry points for longer term and shorter term positions. BRCM's earnings are on 4-21-09 and we are looking to ride this trend as long as it holds toward earnings and then bank much of the gain. We have gains in excess of 100% on our early option positions and the others are pushing the century mark as well. Averaging up into strong leaders allows you to put your money to work on proven movers that are building strength into their moves. Have to like that.

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BUCY (Bucyrus International--$18.58; +1.81; optionable): Cranes, draglines
Company Profile
After Hours: $18.56
EARNINGS: 04/23/2009
STATUS: Cup w/handle. BUCY has spent all 2009 forming a 13 week base. Nice handle this past week with a low volume fade to near support and then a breakout move Thursday on rising, above average volume. This is BUCY's first base coming off the bottom and the industrials are finally starting to make their move to join the rest of the market. Nice break higher Thursday as BUCY made a higher high on this run off the March low. Been awhile.
Volume: 3.467M Avg Volume: 2.86M
BUY POINT: $18.72 Volume=3.8M Target=$22.95 Stop=$17.41
POSITION: HBU GA - July $17.50c (65 delta) &/or Stock

CHK (Chesapeake Energy--$20.70; +1.21; optionable): Natural gas exploration, production
Company Profile
After Hours: $20.55
EARNINGS: 02/17/2009
STATUS: Trading range breakout. CHK bounced up and down in its 4 month trading range from 14 to 20 and then gapped out of the pattern Thursday. This move is a bit different from the prior up and down cycles in the trading range: on the last dip off the high it held midrange at the 50 day EMA (17.55) and rebounded immediately to the top of the range, tested, and broke higher. It could still fall back in but after this many cycles (4) the range tends to break down and with the market breaking higher it is logical for CHK to break higher as well. Thus looking to move in this week. It could test back to 20 first and if it does we will pick it up off that test. If not we can pick up positions from a continued move higher.
Volume: 17.319M Avg Volume: 17.257M
BUY POINT: $21.11 Volume=22M Target=$24.95 Stop=$19.63
POSITION: CHK GD - July $20c (62 delta) &/or Stock

No, the Free Stocks Market Did Not Cause the Financial

In March 2007 then-Treasury secretary Henry Paulson told Americans that the global economy was "as strong as I've seen it in my business career." "Our financial institutions are strong," he added in March 2008. "Our investment banks are strong. Our banks are strong. They're going to be strong for many, many years." Federal Reserve chairman Ben Bernanke said in May 2007, "We do not expect significant spillovers from the subprime stocks market to the rest of the economy or to the financial system." In August 2008, Paulson and Bernanke assured the country that other than perhaps $25 billion in bailout money for Fannie and Freddie, the fundamentals of the economy were sound.

Then, all of a sudden, things were so bad that without a $700 billion congressional appropriation, the whole thing would collapse.

In the wake of this change of heart on the part of our leaders, Americans found themselves bombarded with a predictable and relentless refrain: the free stocks market economy has failed. The alleged remedies were equally predictable: more regulation, more government intervention, more spending, more money creation, and more debt. To add insult to injury, the very people who had been responsible for the policies that created the mess were posing as the wise public servants who would show us the way out. And following a now-familiar pattern, government failure would not only be blamed on anyone and everyone but the government itself, but it would also be used to justify additional grants of government power.

The truth of the matter is that intervention in the stocks market, rather than the market economy itself, was the driving factor behind the bust.

F.A. Hayek won the Nobel Prize for his work showing how the central bank's intervention into the economy gives rise to the boom-bust cycle, making us feel prosperous until we suffer the inevitable crash. Most Americans know nothing about Hayek's theory (known as the Austrian theory of the business cycle), and are therefore easy prey for the quacks who blame the stocks market for problems caused by the manipulation of money and credit. The artificial booms the Fed provokes, wrote economist Henry Hazlitt decades ago, must end "in a crisis and a slump, and...worse than the slump itself may be the public delusion that the slump has been caused, not by the previous inflation, but by the inherent defects of 'capitalism.'"

Although my recently released book, Meltdown explains the process in more detail, an abbreviated version of Austrian business cycle theory might run as follows:

Government-established central banks can artificially lower interest rates by increasing the supply of money (and thus the funds banks have available to lend) through the banking system. This is supposed to stimulate the economy. What it actually does is mislead investors into embarking on an investment boom that the artificially low rates seem to validate but that in fact cannot be sustained under existing economic conditions. Investments that would have correctly been assessed as unprofitable are falsely appraised as profitable, and over time the result is the squandering of countless resources in lines of investment that should never have been begun.

If lower interest rates are the result of increased saving by the public, this increase in saved resources provides the material wherewithal to see the additional investment through to completion. The situation is very different when the lower interest rates result from the Fed's creation of new money out of thin air. In that case, the lower rates do not reflect an increase in the pool of savings from which investors can draw. Fed tinkering, in other words, does not increase the real stuff in the economy. The additional investment that the lower rates encourage therefore leads the economy down a path that is not sustainable in the long run. Investment decisions are made that quantitatively and qualitatively diverge from what the economy can support. The bust must come, no matter how much new money the central bank creates in a vain attempt to stave off the inevitable day of reckoning.

The recession or depression is the necessary, if unfortunate, correction process by which the malinvestments of the boom period, having at last been brought to light, are finally liquidated. The diversion of resources into unsustainable investments out of conformity with consumer desires and resource availability comes to an end, with businesses failing and investment projects abandoned. Although painful for many people, the recession/depression phase of the cycle is not where the damage is done. The bust is the period in which the economy sloughs off the malinvestments and the capital misallocation, re- establishes the structure of production along sustainable lines, and restores itself to health. The damage is done during the boom phase, the period of false prosperity that precedes the bust. It is then that the artificial lowering of interest rates causes the squandering of capital and the initiation of unsustainable investments. It is then that resources that would genuinely have satisfied consumer demand are diverted into projects that make sense only in light of the temporary and artificial conditions of the boom.

Adding fuel to the fire of the most recent boom was the so-called Greenspan put, the unofficial policy of the Greenspan Fed that promised assistance to private firms in the event of risky investments gone bad. The Financial Times described it as the view that "when markets unravel, count on the Federal Reserve and its chairman Alan Greenspan (eventually) to come to the rescue." According to economist Antony Mueller, "Since Alan Greenspan took office, financial markets in the U.S. have operated under a quasi-official charter, which says that the central bank will protect its major actors from the risk of bankruptcy. Consequently, the reasoning emerged that when you succeed, you will earn high profits and top stocks market share, and if you should fail, the authorities will save you anyway." The Financial Times reported in 2000, in the wake of the dot-com boom, of an increasing concern that the Greenspan put was injecting into the economy "a destructive tendency toward excessively risky investment supported by hopes that the Fed will help if things go bad."

When things do go bad, pumping more money into the banking system, thereby lowering interest rates once again, only exacerbates the problem, because it encourages the continued wasteful deployment of capital in unsustainable lines that will eventually have to be abandoned anyway, and it forces healthy, wealth-generating firms to have to go on competing with bubble firms for labor and capital. When interest rates are made artificially low, they encourage the kind of investment that would normally occur only if more saved resources existed to fund them than actually do. Continuing to force interest rates down only perpetuates the allocation of capital into outlets that the economy's current resource base cannot sustain.

In response to the dot-com and NASDAQ collapses and the modest recession that accompanied them in 2000 and 2001 that Alan Greenspan and the Fed chose to embark on a robust policy of inflation, an approach that culminated in lowering the federal funds rate (the rate at which banks lend to each other) to a mere one percent from June 2003 to June 2004. Already by early 2001 the Fed had begun to ease once again. That year saw no fewer than 11 rate cuts. The unsustainable dot- com boom could not, in the end, be reignited, and thank goodness - the resource misallocations in that sector were unhealthy for the economy. But the Fed's easy money and refusal to allow the recession of 2000 to take its course led to an even more perilous bubble elsewhere. That was the only recession on record in which housing starts did not decline. Not coincidentally, that was also the moment at which people began to conclude that house prices never fall, that a house is the best investment one can make, and so on. By intervening in the best stocks market then, the Fed prevented the market from making a full correction, thereby perpetuating unsustainable investment and consumption decisions. In so doing it merely postponed what it was trying to avoid, and made the crash worse when it finally came.

Fiscal stimulus, meanwhile, merely diverts resources from the productive sector in order to fund money-losing enterprises arbitrarily chosen by government. These artificial expenditures, moreover, interfere with the market's attempt to sort out genuine demand from bubble demand. "Stimulus" spending can in fact keep firms (construction companies, for example) in business that for the sake of genuine economic health need to be liquidated so their resources can be more sensibly employed in more urgently demanded lines of production.

The claim that "stimulus" spending is necessary to bring "idle resources" back into use also misfires, since it fails to consider why so many entrepreneurs - who have survived as long as they have on the market because of their skill at anticipating consumer demand - should suddenly have become, all at once, such poor forecasters that they're all saddled with idle resources.

The reason for the idle resources is, obviously, some prior act of miscalculation. And what could have created such systemic miscalculation? Could it be the Fed's artificially low interest rates, that distort entrepreneurial forecasting and encourage the wrong kind of investments at the wrong time?

Consider a restaurant owner who mistakes the temporary demand for his product deriving from the presence of the Olympics in his city with real, sustainable demand. Suppose he opens a new location to accommodate all this new demand. When the Olympics are over, he's left with idle resources - labor with nothing to do and empty restaurant space for starters. Should we want to "stimulate" these resources back into activity? Of course not. They shouldn't have been allocated this way in the first place. We should want the market, guided by the price system, to redeploy them into sensible channels.

The problem, therefore, isn't that we lack enough "spending" or "demand," and that we need government to fill in the "missing demand." The problem is that in the wake of Fed-induced misallocations of resources we wind up with structural imbalances, a mismatch between the capital structure and consumer demand. The recession is the period in which the economy repairs this mismatch by reallocating resources into lines of production that actually correspond to consumer demand. The modern preoccupation with levels of spending instead of patterns of spending obscures the most important aspects of the question.

Had the market been allowed to work before the collapse, there would have been no housing bubble and no crisis in the first place. Had the stocks market been allowed to work when the crisis hit, recovery would have been swift - as it was in 1920-21, when an even worse depression came to a rapid end without any open-market operations by the Fed, and without any fiscal stimulus. (In fact, the federal budget was cut in half from 1920 to 1922.)

What, in short, should we do now? Exactly the opposite of what our so- called experts, who in a sane world would be forever discredited, urge upon us.

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