Angelo Bertolli

Just wanted to clarify what is happening…

1. There are X amount of dollars circulating in the US (called M2).
2. We pay 30% of our money to the gov’t.
3. The gov’t “spends” our taxes on the U.S. and the money ends up back into the system plus the deficit (borrowed money in the form of Treasury Securities).
4. Since we have so much debt, a lot of the money created goes  to paying off interest to other gov’ts and never ends up back in our economy so the amount of money in the US stays pretty much the same, but each year the gov’t gives more and more money to other countries as Treasuries.
5. The “Rich” think that they deserve the money they have extracted from the system but, it is because of them “gaming the system” that we have to produce more money each year.

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I think there is a basic assumption that is wrong. Banks simply DO NOT have additional capital to lend. Any excess will easily go to loan losses as a result of the home price decline. Yes, this does further exacerbate the problem because they are now hurting the private sector for leveraged companies. But, telling a bank to lend more is like telling someone to eat all the rations on a raft lost at sea!

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Summary

The bottomline is a 401(k) loan to yourself makes sense in the following situation:

• You need to take out a loan anyway.
• Your only other options have an interest rate of over 3%
• The amount you can take is sufficient to cover the loan
• You can pay back the loan within the time limit

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I was heavily invested in Wachovia when I heard their price had dropped to $1 per share.  I was so shocked by what had happened, I was just disappointed–too disappointed to realize that maybe it was the time to buy.  Of course at that time you never know.  Is it at $1 because it’s really worthless?

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(01:30:34 PM) Ryan: you know you can make 33% by selling options on BAC for next Jan
(01:30:50 PM) Angelo: how?
(01:31:03 PM) Angelo: to buy at $20 ?
(01:31:11 PM) Ryan: you can sell the right to buy BAC from you for $15 a share. You can charge a person $5 for that right
(01:31:28 PM) Angelo: yeah
(01:31:31 PM) Ryan: you just have to buy BAC at 15 and hold it for a year
(01:31:37 PM) Angelo: for a year
(01:31:40 PM) Angelo: ok
(01:31:52 PM) Angelo: Do I have to give them the dividends too?
(01:32:16 PM) Angelo: that’s a pretty sweet deal
(01:32:32 PM) Ryan: not sure, I don’t think so
(01:34:42 PM) Angelo: but I’m sort of taking the risk of BAC fails
(01:36:42 PM) Ryan: you and me both
(01:37:24 PM) Angelo: 33% is pretty good though
(01:38:18 PM) Angelo: what are the options on WB?
(01:39:21 PM) Ryan: just take a look at yahoo finance, there are tons to pick from
(01:39:32 PM) Ryan: basically you get 1.65 for a $5 strike price
(01:40:17 PM) Angelo: hmm
(01:40:21 PM) Angelo: that’s not quite as good
(01:40:41 PM) Ryan: actually 1.65/5 is .33
(01:41:13 PM) Ryan: actually C is the best
(01:41:36 PM) Ryan: that one is over 40% if C stays above 10!

(03:39:51 PM) Ryan: wow WB is up 60%
(03:40:09 PM) Ryan: should have bought yesterday
(03:40:21 PM) Ryan: I bought some BAC … on the day the Dow was down 450
(03:40:31 PM) Ryan: but I didn’t split it up, I bought all at once
(03:40:52 PM) Ryan: so I got it at 26.8 which is pretty sweet
(03:42:58 PM) Angelo: sure
(03:43:09 PM) Angelo: I would have bought yesterday if I had the money
(03:43:18 PM) Angelo: I knew WB was going to go up like crazy today
(03:43:44 PM) Angelo: wow
(03:43:54 PM) Angelo: my stocks went up by 20% today
(03:43:58 PM) Ryan: yeah, the Fed is done letting any more banks fail
(03:44:21 PM) Angelo: I’m going to have to laugh at those shorts who were harassing everyone on WB
(03:44:23 PM) Ryan: The new program, called the RTC, will take away much of the risk of the Merryl purchase
(03:44:30 PM) Ryan: yep

(11:13:33 AM) Angelo: don’t look at your stocks man
(11:14:35 AM) Ryan: I own Citigroup and they are near their 52-week low
(11:15:03 AM) Ryan: there are a lot of people talking about all the banks failing and a complete collapse
(11:15:17 AM) Ryan: it’s pretty bad
(11:15:42 AM) Angelo: how can it turn around
(11:16:11 AM) Ryan: basically, this is the 3rd day in a row of some kind of financial failing
(11:16:23 AM) Ryan: if the news stops for a week, then people will have confidence
(11:16:35 AM) Angelo: BAC kind of screwed everyone else over
(11:17:58 AM) Ryan: yep
(11:18:32 AM) Ryan: I think BAC may need to cut it’s dividend to save the stock value if this keeps up for another week
(11:22:09 AM) Angelo: cut this time around?
(11:22:11 AM) Angelo: I hope not

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