Wednesday, April 28, 2010
And more Goldman Commentary:
And even more damaging testimony:
Friday, April 23, 2010
I have a promotional rate of 3.99% on the card as well as a promotional rate of 0.00% on the card. I have not used the card in months so there are no new charges that enter into the picture. I ALWAYS make more than the minimun payment so that isn't at issue either.
I first asked her, "How do you apply payments?". She replies, "First, we apply your payments toward fees and interest and then to the balance with the lowest APR.". I didn't stop her because my main issue was still how in the world does the balance on my 3.99% promotional go up when I am making above minimum payments.
On my statement due in April, the balance on my 3.99% portion is 10 cents higher than the balance on the March statement even after you add in the interest charges (we are dealing with small balances, but if they Chase cheats each customer out of 10 cents, they will make enough for the the CEO to get a good bonus this year). Debra was trying to tell me that this occurs because the balance used to calculate the balance subject to interest rate is done on an average daily balance basis and then she goes into some sort of song and dance about one month having 30 days and the other month having 31 days. A fifth grader can tell you that if we are averaging 2 numbers, your number should fall in between the two numbers you are averaging, not outside the range.
She kept referring me to the top of the billing statement to show me that they are applying to payments correctly and my total balance is coming down. I felt like she was reading a script because she wasn't processing anything I was saying. So, moving on, I said, "You told me earlier that you apply my payments to fees plus interest and then to the balance with the lowest APR." She replied, "That is correct." I said, "Well, according to the new credit card regulations you are suppose to apply any payment I make above the minimum payment to the balance with the highest APR." She then replies, "That is right, first we apply your payment to the fees plus interest and then any payment above the minimum to the balance with the highest APR." I said, "Well, that's not what you said about 5 minutes ago." She then repeated, "First we apply your payment to the fees plus interest and then any payment above the minimum to the balance with the highest APR." I asked again, so which one is it. Just five minutes ago, you told me it was the balance with the lowest APR. Let's go through this calculation together. When I walk through the calculation with her, I now find a $3.22 discrepancy. When I asked her about that, I got the response, "If you look at the top of your billing statement you will see the total of all your balances and the interest charged and your payments. I assure you your payments are being applied correctly!"
I then told her, I understand what is at the top of the statement, my issues are in the details. I am trying to figure out how to get the numbers are you are posting at the top of statement. I then asked her, "Am I the only customer that is having these problems, or are you getting other calls with folks who have the same issues?" At that point, she hung up me!
To be fair, in Chase's defense there is something on the statements they are not sharing with us because when I add to the balance used to calculate the interest rate, it's a few dollar short of the balance due even after adding the interest rates. I guess we need a little more transparancy here. I may forward this on to the credit card regulation people Senator Shelby told me to refer any of my issues to. I just have to find the letter. I'm pretty sure I scanned it into my Neat Receipts software.
Tuesday, April 20, 2010
The market opened and I decided that since the security was in my account, I was going to sell it anyway, and I did. I also got a confirmation on the sell order. However, over that weekend, E*Trade backed out my sell and my buy orders so it was just like I never owned the position.
Now we fast forward over 10 years later. Until this time, anytime I've had an option in the money, the option has exercised. If I didn't have the funds to cover the exercise, I would get a courtesy call informing me of the exercise and giving me 2 options:
1) Wire money to fund the purchase
2) sell the position
3) One time, risk management simply closed my option position 15 minutes before the close without my instruction, but I was ok with that.
(By the way, Fidelity gives me the same options....)
Well, this weekend, I got alerts informing me of my options that expired out of the money, but I never got the alerts of the options that exercised. When I looked in my brokerage account today, I ask, where are my in the money options that expired.
I called E*Trade and was informed that since I didn't the funds to cover the exercise, E*Trade issued a 'do not exercise' instruction without alerts. The most messed up part about this is that I bought these options in the money which means they had instrinsic value, but I lose everything I put into them because of the 'do not exercise' instruction. So for now, I'm sour with E*Trade once again.
I first had a full service broker, that was charging enourmous fees, then I opened up a Fidelity account because they were a dicount broker. Later I opened up an E*Trade account because they offered $25 trades which was super cheap back then. However, now Fidelity offers $7.95 trades against E*Trades $9.95 trades (I'm a Power E*Trade customer, but I guess that doesn't mean squat!)
And then I remember the time, I had a put option on a particular stock that exercised. That put in me in a short position with the stock. E*Trade politely called me and said that had a put option that exercised and it put me in a short position with a stock. Since that particular stock wasn't shortable, I had to close out my short position immediately. Now, if at any time, E*Trade had the ability to do this 'do not exercise' instruction, it seems like that would have done it in that case and I would have been ok with it back then.
The whole 'do not execute' options sounds shady to me. I asked the representative, what if I had a put option on some stocks in my portfolio. If the put option expired in the money, could I ask for a 'do not execute' on the option. He said I could and I would get to keep my stocks!?!?!!! And then I wonder what happened to person I had my call options against. Were their stocks still called away from them and if so where did they go? Also, how do they determine which lucky person doesn't get their stocks called away from them if they write call options and that expire in the money?
Maybe this is all my fault. Back in 1996, I swore off the options market after losing my shirt, only to return 10 years later. I'm on the verge of swearing it off again. I have made intoxicating amounts of money in the options market and have turned around and lost intoxicating amounts of money in the options market.
One thing I remember from the good chat room on America Online about options:
With options, you can lose your shirt with no rags left, with options at least you have the rags.
With stocks time works with you, with options time works against you
With stocks if the stocks doesn't move much, you don't lose much, with options even if the stock moves your way, you can still lose everything.
Addendum: I just checked with 888-options and here is their take on my situation:
Q: In order to exercise a put or call, do I have to have cash or stock in my account to buy (in the case of a call) or sell (in the case of a put) the shares of stock that underlie the contract?Apparently, E*Trade is not on the same page in this case. However, in the past this has never been a problem. I guess it's a how they feel at the time situation. One thing is for sure, it will NEVER happen again! Fool me once, shame on you....Fool me twice shame on me!
A: One way to answer your question is to ask yourself, "Which provides the highest price/lowest cost - exercising the rights of the option contract OR selling the contract back into the marketplace?"
If you exercise an option, the settlement will be in three business days, just like if you bought or sold stock on an exchange. So for example if you exercised a call and simultaneously sold the equivalent shares of stock, those transactions would offset each other. Assuming the option is in the money there should be no need to post margin for such a set of offsetting transactions. Of course, you will want to check with your brokerage firm to ensure that you are both on the same page regarding this practice.
Monday, April 19, 2010
- Jim Cramer of CNBC was telling his listeners to go all in the market, because the market was going up and you didn't want to miss out --> Bearish sign
- The market has been going straight up since March 9, 2009 --> A tired market
- The news of Goldman Sachs being investigated for fraud (they were shorting the very securities, they were selling as grade AAA securities) --> A really scary sign
I fear investors to stay invested in this market will suffer a loss while telling Cramer, "That's not what you said last night!".
What I find interesting this morning, are all the upgrades and downgrades coming from analyst on the day AFTER options expiry. I also found the $GS announcement interesting since it came the morning of options expiry. I always get irritated when news comes so close to options expiry. There are 30 days in most months and they always seem to choose to time their news around that 3rd Friday before the 3rd Saturday of each month. And then I learn that Goldman Sachs knew of the news months ago and failed to disclose the news the the shareholders. What other information have they withheld? I guess we shall find out soon. While Goldman Sachs may be able to buy off officials in the SEC, will they be able to do the same with the German government?
Nothing good can come of this situation, this is why I have decided to head to Cash Hill with the ole 401k. It's not about being older and subjecting myself to less risk, its about not riding the market down when there is a high probability that we are headed lower. In the year 2000, I was a member of the church of buy and hold. I suffered painful losses then. I vowed never again to just sit and ride. Now, you have an account that you are dollar cost averaging in, I can make a case for you to just ride it out; however, I would still consider moving a portion of your portfolio to cash, for still continue to dollar cost average into the declining market and pick up your shares on the cheap!
Tuesday, April 13, 2010
Then JP Morgan decided to let it be known that this company is still on the verge of bankruptcy. I find it interesting that they waited this long to reveal this information. Usually, analysts make their recommendations and offer their opinions on stocks immediately after an earnings report not after the investors react to the earnings report. The timing is very suspect, but we know this. This is the market. This popped the bubble. Everyone was hitting the doors trying to get out as fast as they could and at any price. This is why the stock is dropping faster than a prom dress or going down like free beer. The same eagerness people used to get in, they are using to get out. Now we are at the point where the stock is broken.
I define as stock as broken as follows: We had a whole lot of volume this morning. I lot of people were buying the stock all the way from 2 up to and past 3.35/share. Many of those people are going to be in for a real shock when they check their stock this afternoon and find out they are down and down big. They will then turn on the 'I can't sell it now, it's down too much' coping mechanism. At this point, 2 things happen. 1) They just sit and wait it out in the house of pain hoping that one day the stock will come back up. Eventually, they may even sell the stock while it down low 2)If the stock does come back up, once they hit near break even or a lesser pain threshold, they will sell it preventing the stock from moving higher. I am speaking from experience, I have been in both situations!
I told a fellow tweeter last night that there were no fundamentals to base the stock on. When he asked for price target, I simply told him, I will ride the stock up until it starts to fall. So, I set my stops at a decent price. My stops executed and I was out. If I hadn't been at the dentist office, I'm sure I would have bought some put options and ride it back down.