GCC: 0.52 to $35.23 (1.50%, 0.51% overall)–bought at $35.05
PFF: 0.04 to $39.65 (0.10%, 1.15% overall)–bought at $39.20
SLW: -0.65 to $43.36 (-1.48%, 20.44% overall)–bought at $36.00

OVERALL: -0.03%

March definitely went out like a lamb…a fleeced lamb, that is…

I added more “recent comments” to the sidebar on the blog, so you folks can see any comments you may have missed if we all add more than 5 comments. Hopefully this helps.

Next week, I add more cowbell…

I didn’t realize I had been so wordy over the past 2 days until I noticed the last Options/technicals thread had dropped to the end of the front page. I guess I’m talking and I can’t shut up?

Regardless, Michele added a question to the last thread, so I thought I would post it here for you options traders out there:

Technical question for any of you that might me able to help me with this. Lets say a stock has a large short interest. If I read that it”would take nearly eight sessions to unwind, at xyz’s average pace of trading”, does this mean that if there is a short squeeze I could expect the stock to trade higher for eight days? Or is this too simple an assumption. (yes, I know what happens when we assume) Thanks.

Have at it folks. As usual, this is your thread for all things options or technical analysis. Feel free to post any questions or suggestions.

Apparently, I spoke to soon about Greek investments yesterday. Today, it is looking like Ireland might force a few bondholders to accept haircuts (in bond-speak, that means accepting less than you paid for the bond). This could shut down Europe’s senior unsecured debt market, with banks in countries like Spain and Italy basically getting shut off from selling any debt.

Mind you, this is speculative at this point. My guess is that Ireland is threatening this in order to get the EU to give more money to Irish banks. Based on the fact the euro is up against the dollar today, I suspect the currency markets are thinking the same thing.

1. The big news today is David Sokol. If you didn’t know who he was, you will certainly become aware of him today. Sokol, supposedly the hand-picked successor to Warren Buffett, suddenly resigned from Berkshire Hathaway yesterday. To make a long story short, Sokol was the one who recommended the Lubrizol purchase to Buffett. Sokol also made about $3 million from that deal, because he was sitting on 96,060 shares of Lubrizol BEFORE he made the recommendation to Buffett.

This is the very definition of “insider trading”. The fact that Buffett KNEW that Sokol owned shares of Lubrizol makes Buffett complicit in the insider trading, at the least from an ethical standpoint. I don’t know if Buffett will face any legal action for this, but Sokol is toast.

Frankly, the fact that Buffett knew about this and did nothing makes him look bad. This really comes down to the Wall Street culture, where insider trading is done so often, that nobody bats an eyelash at it. What we see in this is the curtain drawn back from Buffett’s folksy charm, revealing the Gordon Gekko behind his personna. Buffett is nothing more than a Wall Street shark, whose moral compass doesn’t recognize insider trading as wrong. His folksy charm may yet get him out of this, but I personally wouldn’t trust Buffett as far as I can throw him. 

As for Sokol, he was already quite wealthy, so that extra $3 million didn’t make or break him. He did NOT have to do it. But because he didn’t have to “rob the bank” doesn’t absolve him of guilt.

2. Inflation in the Euro-zone is up to 2.6%, from 2.4% in February. Who says the U.S. doesn’t export much?

3. Speaking of Europe, Microsoft has made a filing with the European Commission. The filing accuses Google of engaging “in a broadening pattern of walling off access to content and data that competitors need to provide search results to consumers and to attract advertisers.” Maybe it’s just me, but this looks awfully desperate on Microsoft’s part…

4. From USAToday: Wal-mart’s CEO thinks inflation is “going to be serious”, and “We’re seeing cost increases starting to come through at a pretty rapid rate.” In addition, “John Long, a retail strategist at Kurt Salmon, says labor costs in China and fuel costs for transportation are weighing heavily on retailers. He predicts prices will start increasing at all retailers in June.”

GCC: -0.02 to $34.71 (-0.06%, -0.97% overall)–bought at $35.05
PFF: 0.08 to $39.61 (0.20%, 1.05% overall)–bought at $39.20
SLW: 1.11 to $44.01 (2.59%, 22.25% overall)–bought at $36.00

OVERALL: +0.58%

As I was looking into preferred stocks, I came across the National Bank of Greece’s preferred shares.

I know what you’re thinking: “Are you friggin nuts Ed?! GREECE?!”

Hear me out on this one. NBG actually has profitable operations in Turkey, and they have been cutting their costs in Greece. One of the problems they had in Greece was the need to increase their reserves against losses. Overall, they were profitable last year, even with their Greek losses.

But here is the great thing about NBG’s preferred shares: Their call price is $25/share, and the next call date is 6/6/2013. The shares are trading at $19.74. Unless this profitable Greek bank goes out of business in the next 2 years, shareholders can make a tidy 25+% return, in addition to the dividend (paid quarterly), which is currently at 11.2% annual.

Granted, this is a gamble, but I honestly don’t see Greece, or the EU, allowing this bank to go out of business. But I won’t call it an impossibility, as European politics can end up going anywhere. However, the risk here is Euro-centric risk, not U.S. market risk. Overall, this is a gamble on the level of buying a junk bond. But it could pay off, especially if the preferred shares make it back to $25 before 2013.

Since my preferred stock etf iShares S&P U.S. Preferred Stock Index Fund (PFF) has done reasonably well, and exactly what I wanted it to do, I decided to do a little research on preferred stocks in general. Although preferred stocks don’t come with voting rights, they do usually have a better dividend than the common stock. They also tend to have lower volatility, which means they won’t tank as much when the market does.

On the downside, they also tend to have lower trading volume than the common stocks, which will mean you will have to sit on it for awhile before you can sell it.

I was just curious if any of you have ever owned any preferred stocks, and/or any tips you may have.

My limit sell order on UPRO went through today at $79. The final line:
UPRO: 0.66 today, 1.35 overall to $79.00 (0.84% today, 1.74% overall)–bought at $77.65

UPDATE: If I have to make a mistake, at least it was an understatement. UPRO actually sold for $79.70. The revised final line:
UPRO: 1.36 today, 2.05 overall to $79.70 (1.74% today, 2.64% overall)–bought at $77.65

1. With apologies to Doug, there was a lot of “chicken little” reaction to the Case-Shiller report yesterday, showing house prices falling by an average of 3.06%. I have even heard the infamous phrase “double dip” used. It should be remembered this report was for January, which has never been a traditionally strong month for home sales anyway. Mind you, I am not saying housing is just going to come alive economically this year. I will be more worried if we see the same trend in the May report, which comes out at the end of July.

Having said that, with 13% of all U.S. homes vacant, and considering that number has increased from 12.1% in 2007, we definitely have an oversupply issue, which will continue to put downward pressure on housing prices.

2. Yet another reason to avoid Chinese stocks: Phony resumes by directors. Bloomberg reports:

Gene Michael Bennett, a director for at least four Chinese companies trading in the U.S., has come under the scrutiny of a short seller who says he’s not what he claims.

Absaroka Capital Management LLC posted a letter on its website last week saying Bennett didn’t work for the accounting firm listed in his biography, has no law degree from the University of Michigan and fails to comply with rules of the audit committee he leads at China Shen Zhou Mining & Resources Inc. Bennett, who hasn’t been accused of anything by regulators, says he’s done nothing wrong and blamed some of the confusion about his background on misperceptions.

Avoid all Chinese stocks for now. It seems like every day brings new allegations of various lies in Chinese companies. About the only Chinese company I would even consider at this point is BYD Co., the Chinese auto maker which is partially owned by Warren Buffett. I feel pretty safe that he did his homework on it.

3. If you need some economic sunshine, here you go:  “Planned Layoffs Hit Lowest Level in 16 Years“.

4. I got a kick out of this CNBC article: “Should the World Be More Like Belgium?” Basically, with only a caretaker government, you don’t have any politicians to tax or spend. I will leave it to my European readers to comment on this, but it certainly sounds positive…

5. U.S. stock futures are up this morning. Precious metals are up in early spot trading. Life is good…