Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Slopefest III (by Market Sniper)

By -

Alright, good folks! It is time to plan the next Official Slopefest (defined as any gathering of Slopers with our illustrious host, Mr. Tim Knight, in attendance)! Just like we plan our trades and then trade our plans, in this case we plan our party and then PARTY! Meet the people you “chat” with. See friends from previous gatherings and make new ones as well.

Slopefest III date: the week end of May 7th and May 8th. In the year 2011 Anno Domini.

Slopefest III location: Bally’s, Las Vegas, Nevada.

That is the weekend prior to the Money Show which starts on Monday, May 9th at Caesar’s Palace, directly across the street from Bally’s. I have been staying at Ballys since it was the old MGM Grand. Great place with good people running it (good but not quite the same since the bean counters took it over from Kirk! LOL).

Due to the Money Show, I thought it best to get a head start as rooms fill quickly.

I have taken down a block of 20 rooms. At the end of this week, I will be negotiating with them. IF we need more than 20, my leverage with them goes up. I will grind them for rock bottom room rates, get a hospitality room with bar, discounts, coupons for free play for the gamblers, etc. So now I need your help. Think about it, talk it over with any other decision maker and get back to me.  I need to get some kind of idea of the size of the “gathering.” Please respond to Slopefest3@gmail.com with one of the following: 1) I will most definitely be there; 2) I most likely will be there or 3) I might be there but doubtful at this time.

After I get it all locked up, I will report back with such mundane items like room rates, etc. Most likely will have a code that you will use to book your individual rooms.

Some further information. Ballys has a Sunday brunch called The Sterling Brunch. Arguably the BEST brunch in Vegas. Gotten a bit pricy at $85 per person but worth every penny and more. A culinary delight. I will see if I can get us a tad off on that! No promises on that one. For those planning to come, additional input is most welcome as to additional events and activities.

Around the first of the year, I will be announcing another SPX guessing game as to the close on Friday, May 6, 2011. Contest rules and prizes will be announced then. One little kicker this time. There WILL be a valuable prize (think gold) for the Sloper in attendance at Slopefest III closest to the closing price!

I will be staying after Slopefest to attend the Money Show. Hopefully, some of you can also hang out. Might be able to introduce you to a “few” trading luminaries. Have been to a number of Money Shows and Trader Expos in the past. Never failed to glean new information that assists my trading.

Also, for those so inclined, I will give short  “workshops” on how I attempt to beat the casino at blackjack and craps. Then we will go out there and DO it! Just might be able to pay all your trip expenses and have a tad left over walking around money. You just NEVER know!

We work hard at what we do. Now is the chance to take a break, have some fun and see Tim as well as other fellow Slopers. I CAN guarantee you one thing. We WILL have a great time. I hope to see many of you there.

Trading-Part 3: The Search For Methodology (Market Sniper)

By -

This is the third installment in a series dealing with the development and the setting up your trading business. For your review, here are the links to the first two posts:

Developing A Trader's Mind Set

The Nuts And Bolts

The search for an appropriate trading methodology can be both rewarding and for some traders, very  frustrating. Most traders flit from one methodology to another in the search for the "holy grail" of trading. You will not find it in methodology. If this applies to you, review part one of the series.

There are two very basic methodologies, Fundamental analysis and technical analysis. If your trading time frame is long term, perhaps fundamental analysis is what you should be looking at as it usually  takes time for fundamentals to be realized in market price. Great fortunes have been built using purely fundamental analysis for trading decisions. The classic value trader should look at the classic by David Dodd and Benjamin Graham (Buffet's teacher) Security Analysis. Now available in pdf format  l You might also wish to pick up a hardbound copy as there have been many newer editions. Most shorter term time frame traders, however, use technical analysis for their trading decisions.

Methodologies in the area of technical analysis are dazzling in their number. Each has their proponents who sometimes insist that theirs is the trading method. There is no the trading methodology. We are all different. What resonates with me may or may not resonate with you and vis-a-versa. Resonance is crucial to you in your search for methodology. It must make sense to you. It must provide you with price points that will allow you to unambiguously enter and exit trades. It cannot create any internal conflict that would make you "up tight" using it.I also maintain that for a methodology to be truly robust, it must be applicable in any time frame you choose to trade and with any trading vehicle that creates a chart.

in your search, take a look at as many different methodologies as possible. May not trade many of them at all but you should become familiar with as many as possible. Otherwise, how will you know a "fit"? Look at RL, Pivot point trading, Elliot Wave, Gann, chart pattern recognition, volume/price analysis, various combinations of indicators, some may even look at astrology, etc. At least become acquainted with the various methodologies.

Become a student of market conditions of the vehicle your trading. Is the market trending? Is it in a tight range consolidation? is it trading in large range? You will need to know how any methodology's results will be under any market condition. If you are using a trend following methodology, for example, do not attempt to trade it in non-trending markets! There is always a market or a trading vehicle that is trending. Find it and trade it with that methodology. Sounds simple and it is. Many traders will attempt to trade their methodology under any condition. Not wise unless such a methodology allows for trading in all market conditions. It is your job to find out if that is the case before risking capital.

There is another way to trade that does not have an over riding methodology to it. There are many traders who just trade various trading setups. Gap fade traders is one that immediately comes to mind. They become proficient and expert at trading certain setups when they appear. To be consistent with this non-methodology requires extensive back testing of setups and knowledge of the long term expectancy of each setup. I personally trade with a robust methodology. I also have added tried and true setups that are not part of that methodology. If your trading by method, only add setups, indicators, etc. that are not part of the methodology that you trade only after mastering the methodology of your choice. Otherwise, confusion could reign.

In conclusion. Methodology goes to trading with a plan. How can you have a plan without methodology or, at a minimum, a proven setup? Find what works for you. Just because a trader you know is consistently hitting the ball out of the park does not mean that you will using the same methodology. So, take your time and shop around. The market will still be there when your ready. A last word: simple is better. Too many traders have so many indicators, it can lead to trader freeze. All the indicators do not line up. It is like a horse bettor. He may have nine specific pieces of information when he handicaps a race and makes his decision. Fifty more pieces of information will not create a "better" decision.

Yours in the continuing search for the trading edge, the Market Sniper.

Gold Lotto Play (Market Sniper)

By -

Gold is now hitting new highs. There is one school of thought that when old high prices are surpassed, there is nothing but vacuum as to price above. Nobody is waiting to sell at break even. Back on March 10, 1969, gold surpassed the old high price. Subsequently, it increased by 347%. After that, on December 10, 1974, the previous high was again surpassed. Gold subsequently increased by another 334%. Has such a time arrived again? Nobody knows but the probability is rather high that it is.

Back in 1979, knowing nothing about the mining business (terrible business, just awful!), I took the princely sum of $5,000 and opened an account with a broker on the Vancouver Exchange (one of the most manipulative and corrupt exchanges possibly on the planet). Instructions were to the broker: spread the money between approximately 50 gold mining companies and pay no more than 25 cents per share. In a little over a two year period, that investment was not only an out of the park grand slam home run, the cover left the ball somewhere above the last bleachers in the stadium. Only a few of the companies paid off, the rest disappeared into oblivion, never to be heard from again. Moral of the story: spread it around!

I offer a possible candidate for such a basket of stocks. Gold American Mining Corporation (SILA on OTCBB). They have exploration property in Mexico and the United States (Nevada). The Mexican prospect is located close to the Mexico's richest gold mine, La Cienega and Mexico's largest mine, La Herradura (of tequila fame, just kidding). It is thought that Gold American's property is part of the same mineralized structure of those two fabled mines. The Nevada property is located in Clark County approximately 30 miles southwest of Las Vegas in the Goodsprings/Yellow Pine mining district. Known as the Keeno (how aptly named!) Strike Property, there are 240 acres that are accessible for a bulk handling open pit operation. Only further sampling and drilling will determine the true extent of Gold American Corp's gold reserves on the Mexican property. The Nevada property consists of multiple old played out mining digs.

Share price for SILA at close on 9/17/2010 was $.86. The 52 week high has been $1.45 and the low was $.40. The chart is unimpressive. Average shares traded per day is around 500,000 and the shares outstanding are slightly under 75 million.

If/when gold again goes parabolic in price, mining and explorer shares tend to out perform gold itself, often by many multiples. As speculators, part of our job is to observe where the herd moves under any given set of circumstances, get there first, buy up all the grass and then wait for the herd to arrive. When they do, we feed them the grass. The mining business is fraught with bamboozelry, flimflam and outright fraud. Given that fact, it is best to apply a shotgun approach to longer term speculation in the sector. When the herd arrives, any company with the word GOLD in it will be in demand. Even Gold Medal Flour. Diversify, diversify, diversify, use your own due diligence and good hunting.

Yours in the never ending search for trading edges, Market Sniper.

 

All Is NOT What It Appears To Be (Market Sniper)

By -

Back on August 13, 2010, Tim Knight posted "Moral Hazard Comes Home To Roost" http://slopeofhope.com/2010/08/moral-hazard-comes-home-to-roost.html For nearly a month I have had an on-going internal debate on whether to write this post. Be forewarned, this post will take you down a rabbit hole. If you wish to lead what Aristotle called "the examined life" and choose to take red pills, read on. If you are an ardent taker of blue pills, I would recommend that you skip this post.

The subject matter is extremely complex. It is historically convoluted and replete with legal and finacial intricacies. I am not a lawyer and much of this is not even part of any law school curriculum. However, as a nearly life long real estate investor and a real estate broker, as well as being a retired Certified Residential Appraiser, I am very well versed in banking as it relates to real estate loans.

As many here know, I am a staunch hard money advocate. I have come to my conclusions over many decades of research and reading the lessons of history. The purpose of this post is not to deal with the subject of what money is and what money is not. For those so inclined, I would suggest an excellent book, one of the best treatise on the subject I have read, Nathan Lewis' book Gold: The Once And Future Money. The book is well written, historically researched and not a "gold bug" rant. The money issue is not central to this post but does have bearing. As further background, I would suggest, when you have about an hour, to take a look at five videos. Here is the link to the first. You will find the links to the other four here as well. http://www.youtube.com/watch?v=vVkFb26u9g8 Money as debt is central to the body of this post.

Historical Background

Two forms of government exist today in The United States Of America. The orginal form was under The Constitution. Basically, The Constitution was a union of the Sovereign States. Under it, the states retained most of the power and the federal government had limited power. Law was Common/Private Law.

With the Civil War came the aftermath and in 1871 the original United States became an entirely different creature: a corporation! This was done through a number of Reconstruction Acts passed by the Congress. What emerged was the UNITED STATES CORPORATION. The UNITED STATES CORPORATION does not operate under the United States Constitution. It operates under Corporate/Commercial/Public Law which has its roots in Maritime/Admiralty Law which is administrative in nature.

The Constitution is still there but dormant, usurped by what is also known as the Uniform Civil Code (UCC). This fact was made clear by Supreme Court Justice Marshall Harlan (Downes v. Bidwell, 182, U.S. 244 1901) by giving the following dissenting opinion: “Two national governments exist; one to be maintained under the Constitution, with all its restrictions; the other to be maintained by Congress outside and Independently of that Instrument.” Indeed, after 1871, nearly all power was transferred from the hitherto Sovereign States to the UNITED STATES CORPORATION. The states became mere administrative districts of the UNITED STATES CORPORATION.

Fast forward to 1913 and the Federal Reserve Act. The Congress in 1913 created a private central bank. Here is a list of shareholders. http://www.save-a-patriot.org/files/view/whofed.html How is this constitutional under Article I Section 8 http://www.usconstitution.net/xconst_A1Sec8.html ? ONLY Congress can coin money and regulate the value thereof. This is an undelagatable power. It would be the same as Congress granting LOCKHEED MARTIN CORPORATION the right to declare war! Ah!

Refer to the above. We are not operating under the Constitution but rather the UCC. The Congress can do as it pleases. Follow me here as this gets even more complex. In 1917 Congress passed the Trading With the Enemies Act (TWEA). This act was created to deal with countries we were at war with in World War I. It gave the President and the Alien Property Custodian the right to seize all the property of persons included in the act. Those persons could, if they wished to do business in this country, apply for a license.

By 1921 The Federal Reserve Bank (as Trustee for the Alien Property Custodian) held over $700,000,000 in "trust." This is of great importance because in 1933 48 Stat 1 of the TWEA was amended to include United States Persons. Executive Order 6102 was issued to seize the gold held by any United States Person. We were hence reclassified as enemy combatants and it became a federal crime for any United States Person to possess any gold in bullion or bullion coin form.

At the same time, in 1933, the UNITED STATES CORPORATION was bankrupt. Since the private Federal Reserve controlled the money, the UNITED STATES CORPORATION collateralized YOU so as to borrow the money. How could that be done? We are not owned by the UNITED STATES CORPORATION. Yes, indeed we are and through that corporation, we are indirectly owned by the Federal Reserve. I will explain this "mechanism."

The Straw Man

You will notice in all of the above, corporations are identified by all capital letters. That is how all corporations (a legal person but fictitious entity ) are identified under the UCC. Now, if you have it available, look at your social security card. Your name is in all capital letters. Have a checking account? Look at your name. All capital letters. Do an experiment, next time you open a personal checking account, attempt to get your name spelled with capital letter at the beginning only. Also, while you have your checkbook handy, get out a strong magnifying glass and look at the "line" where you sign your name. It is not a line. It is printing. Now you are twins.

One a natural person and the other a quasi-corporation, the straw man. This was done to you at birth. If you have the chance. Take a look at your birth certificate. Again, your name is in all capital letters! Take a look at the border of your birth certificate, bottom left hand side. Says American Banknote Company! You will also note that your birth certificate has a red number on it. All birth certificates in public hands are copies even the one at the county recorder! Where is the actual original? Within two weeks and three days each Certificate of Live Birth is to be filed in Washington D.C.

Evidence reveals that there is even a Federal Children Department established by the Shepherd/Townsend Act of 1922 under the Department of Commerce that appears to be involved in this process in some way. Every citizen is given a number (the red number on the Birth Certificate) and each live birth is valued at from 650,000 to 750,000 Federal Reserve dollars in collateral from the Fed. Since the early 1960's, state governments have issued birth certificates to "persons" with legal fictitious names using all capital letters. This "corporation" then generates taxes and wealth over its (your) lifetime. This is the way that the collateral (you) pay the "money" borrowed from the Federal Reserve by the UNITED STATES CORPORATION. Your birth certificate (or papers of naturalization) is actually a bond as well as a banknote. It is also a form of securities known as warehouse receipts. Your birth certificate meets all the requirements of A/7-202 of the UCC. To wit:

  • the location of the warehouse where the goods are stored…(residence)
  • the date of issue of the receipt…..("Date issued")
  • the consecutive number of the receipt…(found on back or front of the certificate, usually in red numbers)
  • a description of the goods or of the packages containing them…(name, sex, date of birth, etc.)
  • the signature of the warehouseman, which may be made by his authorized agent…(municipal clerk or state registrar's signature)
  • Adding insult to injury, if you wish to take your child as a deduction on your tax return, you have to obtain a social security card for that child.
  • You may wish to find out how you can regain your status as a Soverign Individual by taking control of your straw man! That is well beyond the scope of this post.

The Real Estate Loan

When I was a real estate appraiser when time was not pressing, I would often ask this question of the real estate broker who admitted me to property that had been sold. "I see that on this $1,250,000 sale, the buyer is getting a $1,000,000 loan. Do you know where that $1,000,000 comes from?" Never did get the correct answer.

The truth of the matter is simply this: until that loan is funded, the $1,000,000 does NOT exist in the known universe! The borrower creates the very money he borrows. Here is how that is accomplished. When you take out a loan, you signed a Promissory Note (and yes, your name was, again, all in capital letters). A promissory note is a monetary instrument, much like the dollar bills you have in your pocket. So in this case the promissory note for $1,000,000, to the funding bank, is the same as a $1,000,000 bill, same as cash. The bank creates a Demand Account in your straw man name. with a balance of zero.  The bank then takes your promissory note (can't fund the loan without it!) and puts it in your straw man demand account. Balance is now $1,000,000 in that account. The bank then writes a cashier's check (or bank wire) for $1,000,000 to pay the seller of the house your buying their Monies in Full. The balance in your straw man demand account is then reduced to zero.

IF the entire process stopped right here, there would be no crime committed, no fraud committed and everyone would be in an equitable position. The moment you start paying principal and interest payment demanded by the bank after your account has been brought to zero, your payments become your damages. The bank is extorting money from you and giving you nothing of value in return!

It would be like you borrowing $100 from me and I have a counterfeit bill printing business in my basement and then demand you pay me back with interest. The UCC has remedies (administrative) for this type of fraud. The banks can be defeated using administrative proceedures in the UCC. They can be beaten using their own rules under the UCC. It is common perception that the banks hold all the cards. They hold cards alright. Ten high with no flush or straight or even a pair and the game is not lowball. The borrower, once this is understood and acted upon actually holds the winning hand.

It can also be stated that when the bank made the "loan" the collateral was the property. They made a business decision. If the homeowner makes a  business decision to allow the bank to take its collateral that does not constitute moral hazard.

I have attempted to make a very murky and complex subject as simple and understandable as I could. Suffice to say, without honest money there can be no honest debt. Moral hazard in not paying the mortgage? What moral hazard?

Market Jazz (by Market Sniper)

By -

This Labor Day weekend we have been treated to some very remarkable posts. Our illustrious host, Tim Knight, kicked it off with an after the Friday Bar post. In that post was a heart felt appeal to the Slope for some help. Tim, you;re a remarkable man. Such public openness and baring of the soul is extremely rare in a public trader. It rivals Don Miller http://donmillereducation.com/journal/  in this aspect. The community response was also telling. It is a very remarkable community that has coalesced here on The Slope. Following that, we were treated to a very insightful post by our Slope den mother and resident muse, Leisa. Market Shamans taking us to the primeval roots/aspects of trading..remarkable.

As traders, we are faced with an absolute fact. NOBODY knows what happens next. How then are we to deal with an unknown and unknowable future? How do we keep our sanity, retain our trading capital and add to that capital? We learn to think in probabilities. The market is constantly speaking to us, giving us information. In fact it often sings. The market's notes are prices. If we are tone deaf, the market will find us out and trading equity will suffer, eventually, driving us from market participation.

To me, most often, the music of the market is American jazz. It is both spontaneous and extemporaneous but within a certain form. The jazz musician plays a note or a short series of notes. From that, various combinations of those notes create a theme or "riff." From that riff comes additional new combinations with a final addition of a note or more at the end of the previous and a new riff develops. There other types of music, however! What happens when the type music changes? There we are, right in the middle of a superb composition by the great John Coltrane http://www.youtube.com/watch?v=S1GrP6thz-k and in the middle of a riff, we hear the beginning of a Brahms lullaby! We are not only disconcerted, we are confused which, if we are trading the music, we might even freeze with a loss of trading capital if we have not accounted for that probability which just happened!

In listening to the music the market is playing through price, we are fortunate that the notes the market is playing, price, has a memory. This is why we look at charts. The trader must know what kind of market he is in. It is either trending (up or down) or going sideways in a channel. When in a trend, it plays like jazz. When it hits support/resistance it continues to play jazz or we begin to hear the Brahms lullaby start as price channels sideways. Probabilities are in play at resistance/support. Does the market start a new riff and retrace or does the riff continue? These areas I have found to be very good places to do business. Regardless of your outlook, your in a price area that allows cheap stops. Relative minor price change will tell you whether correct or incorrect in following the riff. Gains, potentially great, if correct in your assessment. Listen to the notes. They will tell you very quickly to either exit the position with a relatively small loss or steadily garner gains as the notes you hear are the ones you thought you might hear. Always stay aware of probabilities as price unfolds.

In conclusion I would make the following observations. I am absolutely convinced that 98% of trading success is done by the creation of The Holy Grail between your own two ears. All the indicators, TA, sentiment, astrophysics, numerology, etc. is merely 2% of what makes a trader a success at this business. The construction of that Holy Grail is self mastery and discipline. The Holy Grail does not exist extraneous to self. If you undertake to search for The Holy Grail outside of yourself (99.98% of all traders attempt the search) you will be frustrated, disappointed, lose money and eventual fail. No trader has looked around and found it because, outside of yourself, it does not exist. That 98% is the hard work. Do your work there and you will find the trading business to be almost stress free and simple. The other 2% can be taught to and learned by any reasonably intelligent 12 year old. I find it telling that almost all traders spend 98% of their time on the 2% that can be learned competently and quickly and only 2% of their time and effort is devoted to what creates successful traders (defined as an individual that can extract constant profits from markets at will). Could it be that this is the root cause of the failure of 95% of the people who attempt to succeed at this business?

Yours in the eternal quest for the elusive trading edge, Market Sniper