Occupy Wall Street? No, Occupy Humanity

My opinions on Occupy Wall Street (OWS) and any other derivative form won't earn me any new friends. The demonstrations represent the ideals of free speech and protest in a democratic society and I for one hope these values stand the test of time, but the Occupy Wall Street movement, which apparently stands for nothing or everything, is a hypocrisy, and I'm starting to question if protestors are eating their cake and having it too.

Let's get this straight. I am not a right-wing nut job like Rush Limbaugh or Glenn Beck claiming that they are lazy, unemployed, angry hippies trying to ruin American capitalism. I believe they are angry at a system they perceive to favour the rich at the expense of the poor. I believe they view themselves as the victim of a government system that can be bought. I believe they want an end to corruption at the top. But we are being manipulated by the "fair" media that tend to shift from facts to finger pointing because it is the ideal thing to do. And don't anybody dare say the media is not to blame here, when in every situation, the media is always to blame. I also believe that many have never been in a position of power and that the participants of the demonstrations asking for the end of "moral greys" are morally no better than the people in positions of power. It just happens the latter are; the ending results would very likely be identical.

The democratic system that so many perceive as no longer representing the 99 per cent is being questioned through the voices of the rally. The general problem is that these rallies are against a large entity, known as the corporation. In reality, a corporation is run by thousands of workers making conscious decisions to benefit their company, their family, or themselves. A corporation exists because it is run by the 99 per cent but a corporation itself is not corrupt; it is that humans are corrupt - easily persuaded by money and power. This is the underlying issue that has created a broken democracy.

For us 99 per cent, it is unfair to criticize and slander those in positions of power for making greedy decisions. I have seen many instances where the common man has taken bribes, stolen from family to make a few extra bucks, and compromised their own values for supposedly justified reasons. Money can motivate men to do both good and evil. People know the laws of their countries, the commandments of their religions, the policies of their company, but people break them for selfish gains. I just find it ironic, perhaps hypocritical, that occupiers can whine about the rich and then go back to work and try to earn that promotion.

Here's something to think about. It is believed that up to 15 per cent of Americans are defrauding unemployment benefits from their government at a time when so many Americans are against wasteful government spending. Other taxpayers are bailing out these lazy bums for up to 99 weeks while they sit on their couches (or occupy Wall Street) criticizing banks for accepting money they don't necessarily deserve. To clarify to some, the bail out packages were loans and have largely been paid back. Another thing, thousands of Americans have purposely claimed bankruptcy just so they don't have to repay their mortgages because they want to protect themselves first. As we see, greed exists in humans at all levels of wealth.

I read on a MarketWatch forum from a poster that the 99 per cent do not have a say in capitalism anymore, and elections are too few and far away for our voices to be heard, but this is just not true. As consumers, we have the most powerful voices in a capitalistic economy with our wallets. We as individuals choose what companies we support by purchasing their brands, but we never put money where our mouth is. I have a friend that is against the child-labour practices of Apple, but justified purchasing an iPhone for its look. I know many people who are against outsourcing jobs, but they choose to buy the cheaper product made in China. Americans want to secure health care, but there is a battle against raising taxes half a per cent to help millions. People will fight for their environment, their democracy, their norm, but people do not change habits or take action where it really counts. This rally against corporate America is meaningless and hypocritical.

Upon Steve Jobs's death, occupiers set up a temporary memorial in his honour, which I deemed to be undermining. Protestors grieved and lamented at the former Apple boss, with one person saying that he made the world a better place. That biased opinion just wouldn't sit with me. He didn't change the world for the better, he changed lives for the wealthy Westerners living in North America and Europe, at the cost of the poor, at the cost of children in China working in their factories, and at the cost of the environment. This individual appeared in front of the camera and did not support the antics of Wall Street, but, for the decisions of Jobs; a greedy and egotistical boss that did not promote charitable donations; whose company is valued as the largest in the world by market capitalization; and has the most cash ever in the history of the world, more than the US Treasury; never once giving a dime back to shareholders, he approved because he probably owned an iPhone, iPad, or iPod somewhere and did not want to seem like a hypocrite. Occupiers can not unite against the destruction of their world by corporations while revering them too.

The super wealthy are wealthy because of our decisions. They have not stolen from the poor; they have earned a large piece of the pie. They created great companies offering great products and services that we all loved and admired a few weeks ago, but demonize today. It is strange that the protestors are shamelessly receiving free Starbucks coffee, free wifi, and free fancy tents. That's a thousand times more than a child in Ethiopia would ever see in their life time if he even made it to adulthood. This child has more of a reason to protest wealth inequality than we do, that's for sure. I for one would like to know that if I worked my butt off, I could one day be wealthy without the evil eye from the common man staring with envy.

But how rich would I have to be before I am considered the evil 1 per cent playing the role of "backwards Robin Hood?" In Canada, to be classified as a top 1 per cent earner, an individual would have a salary above $200,000. These include doctors, lawyers, engineers, small business owners, and professional athletes, hardly an enemy by any definition.

The protestors are rallying against something unclear, but it represents anger at the economy, at government, at everything that has not gone right in their lives. My Canadian government provides free education and subsidized post-secondary education so that its citizens can achieve great heights, universal health care because they want its citizens to be healthy and help run a democracy, multiple political parties to represent a wide array of opinions and beliefs with checks and balances, the ability to walk safely anywhere I choose. My Canadian democracy is not perfect. It might be guided by corporate hands. It might be somewhat corrupt at all levels. So what? It is run by humans who are not perfect. Honestly, the people of Occupy Wall Street, Occupy Toronto, Occupy Edmonton have never seen real poverty, real government corruption, real oppression. These people are 83 per cent luckier than the entire world and will always be.

The resolution of our problems do not involve changing the rules of democracy or destroying government or redistributing wealth. The resolution exists only when people realize we all act corruptly, have a thirst for money and power, and every action has a reaction, and decide to change our collective behaviours, but that will never happen. The rally lacks clarity and objectives. I have not heard one demonstrator make a suggestion on how to make this free world better. I have only heard criticisms and attacks at corporations and governments. The rally has not conceived a solution, just garnered attention at the belief this is the start of change. I don't think it's remotely similar enough to even compare Occupy protests to spring time Middle East revolts; it is unfair and blind. I think these demonstrations are a farce and this is why I do not support Occupy Wall Street and its derivatives forms. Instead, we should be occupying humanity.

How to Properly Use a Credit Card

When my friend told me that he took my advice and found the advantages of using a credit card for every purchase, I realized that I must share this advice on here. I've seen many people who owe thousands of dollars on credit cards. I can not fathom how they have put themselves in such a worrisome position.

A credit card is the best personal finance product available to consumers. It is essentially a product that pays you to borrow from them at an interest-free rate. The problems that arise from overusing a credit card is a result of a lack of education and discipline. So here's the advice and information I tell my friends.

First and foremost, use a credit card only when you would make a regular purchase in cash or debit, such as lunch or groceries. This avoids large debt. There is no advantage in using cash or debit, so put it on the credit card and keep your money in your bank account. In theory, that money in your bank account will earn interest for you. If you do receive a discount when purchasing with cash, make sure that the discount per cent is greater than your bank account interest rate. In today's low interest rate society, any discount will do.

Secondly, most credit cards, even annual-free credit cards, will give you "cash back" on purchases. The range can be as high as 2 per cent to as low as 0.5 per cent. Take advantage of this. The cash back rewards can total up to hundreds of dollars per year. Don't forget that this "income" through the cash back program is also tax free because it is a penny saved versus a penny earned. Saving $10 on a purchase is equal to earning approximately $14 at a job, so don't ever undervalue a few dollars saved.

A third tip is to find out the billing cycle of your credit card. Mine is the 14th of every month. So if I were to buy something today (Oct 13), it would show up at the end of this month's bill. If I postponed it to tomorrow, it would show up in next month's bill, pushing the debt to a future date while earning about 47 days of additional bank account interest. This was also a tip my instructor told me during my college days. It is great for financing non-essential items that can be purchased at a later time.

The fourth tip is to pay the credit card on the required pay date, never before. By paying days earlier, the money in your bank account will lose potential interest. Just make sure you don't forget. Most credit card companies give you a grievance period before they will charge you fees or interest anyways, but make it a good habit to pay on the day. Set up a reminder or have a post-dated payment from your bank account.

The last tip is really a summary of the first tip. Use the credit card only to replace common purchases and for emergencies. Personally, I use my credit card mainly for lunch, gas, and my cell phone bill. With a few other purchases for entertainment, my credit card bill is very consistent, which makes life easy because I don't need to keep track of my purchases.

If you happen to be someone with spending problems, start by ensuring your total credit card purchase per day is less than the amount you make at work per day. Once that becomes habit, alter it to the disposable income per day through basic calculations. Maybe talk to a financial advisor to determine this value for you. If you can follow my above tips, you should be spending your credit card at most twice a day which should never put you in debt. You will even profit, tax-free, from it too!

Calculated Risk on Netflix, IBM, and Yahoo!

Playing the Expiry: October 7, 2011

The American markets barely escaped bear market status yesterday afternoon when equities rallied more than 3 per cent in the final hour of trading. That was followed by another round of buying today which led markets higher by more than 1 per cent. So, with the markets showing some upward stability and support in these areas, is it time to start writing puts? The answer is yes.

After several weeks of massive volatility, yet very sideways trading, the market has been able to show strength at lower levels, and although the charts are still trending downwards, increased put activity and premiums are become attractive once again. It's time for another installment of Playing the Expiry for October 7, 2011.

Before the markets surged on Tuesday, I attempted to write puts on Microsoft which was trading close to $24. Over the last two years, the stock has shown significant support at these levels and has risen to nearly $28 every time. The stock has gone sideways which is perfect for trading. Unfortunately, I could not get a fill and the stock rose to $26 over the past 24 hours. However, continue monitoring the price-action for future opportunities.

With that trade missed, I chose to go a little riskier and selected Netflix [NFLX:NSD] instead. The stock plummeted from $300 to $110 in a matter of weeks, but is showing support at these prices. Consider writing a 115 put for the remainder of the week. At close, the bid on the puts were $1.25 with the shares at $119.76. Based on the stock price, this pays out 1.04 per cent over the next two days. This also provides protection of 5.02 per cent. That is, the stock must fall 5 per cent or below $113.75 by Friday's close before an investor would lose money. This payout and strong downside protection makes this trade very attractive. For disclaimer purposes, my fill was at $1.87.

If you're looking to go less risky, consider writing International Business Machines [IBM:NYSE]. The stock closed at $176.85, the short-term mid-range point. One may consider writing a put on IBM at 175. At close, the bid was $1.20. Against the market price, one would earn 0.67 per cent, with protection of 1.72 per cent. This may look less attractive, but IBM's stability and blue-chip status makes it easier to handle and it often avoids volatility, unlike Netflix. If the stock trades below $173.80, a loss could be absorbed, or you could consider rolling out the option to the next week or taking assignment and selling the shares once it rose back above your optimal price.

Going against the grain, one trade to consider could be Yahoo! [YHOO:NSD] call options. The stock surged in the afternoon today with rumours (again) that Microsoft would be dishing out the dough to acquire the company. The 16 calls for this week were bidding at close $0.45; the stock closed at $15.92. Many believe this rumour will turn out like it did in 2008, when Yahoo decided not to get bought out, only to see their stock fall 50 per cent since, but I digress. Writing these calls pays out 2.82 per cent for the next two days. Although the loss is unlimited if the shares rise, the odds of the rumour becoming reality by Friday are quite low. The stock would also have to rise 3.33 per cent before a loss would occur. Note, the stock is now at $15.33 in the after-hours market, so before attempting this, consider the values tomorrow.

Because I wrote this blog after the market closed, the values of all puts and stocks will vary tomorrow morning, but these are the three ideas that came to my mind today.

Disclaimer: Writing uncovered (or naked) options requires substantial margin and is only available to sophisticated traders. Uncovered calls have unlimited risk and can have infinite losses. Before making any trade, always discuss this with your advisor or professional broker. Reminder that all Playing the Expiry posts are transactions placed in my account and should not be taken as professional advice. As already mentioned, I have an uncovered put on Netflix.