401K Madness!

A quick follow-up to April’s post and then onward…

I found out the only way out of my current 401K madness is to quit my job. It is then I can easily migrate the funds to an IRA.

Bummer.

So… since April I still have maintained a plug on any payroll funds going down the 401K toilet and have kept the balance in the 3% “stasis”.

Now here is my confession. The currency I “borrowed” from myself at the irresistable rate of only 5% (notice the quotes and the use of the term “currency” and NOT “money”) did not completely go to the retirement of debt. Only half did. The other half, after much study… well… not really THAT much study since it was “obvious to the most casual observer”, I purchased a 5.00 JAN 10 Call for Hecla Mining Company. My favorite silver mining company on the planet (All Hail Hecla). In other words, dear reader, I played that “dangerous game”… OPTIONS TRADING!

But there’s options trading… and then there’s options I-KNOW-A-GOOD-THING-WHEN-I-SEE-IT investing.

Anyone could see that cared to open their eyes Hecla Mining was doing everything right, and sitting on a mountain of DOMESTIC silver in Idaho and Alaska.

And with the US Dollar advancing to it’s inevitable destiny as trash, it truly was a very, very easy play.

I was not out to watch the option daily. It was a “semi-long-term” purchase. I was happy to not visit it again until December. So I watched the Call advance from 0.25 all the way up to 0.65. And then there was a dilution of shares. Now there is dilution for keeping things afloat. And there is dilution as a very smart thing to do, such as retire debt. And that’s what Hecla did. But markets get twitchy about such things and the Call then started a slide downward.

I knew reality would return and the JAN call would get “back on track”. But it just continued to waiver, week after week. So I decided to play a mind game. I am not above such things (even though I am half-Vulcan). I decided that what I was encountering was a message. It was as if “The Gods” were saying, “You can not have it all. Almost all. But not ALL.”

So I said FINE. The next day I sold 1/18th of my Calls as “tribute” at a modest 0.10 profit. (sold at 0.35). The very next day Hecla launched like a Saturn V. “The Gods” were pleased.

This is the way the Universe works, ya know.

As I watched it ascend I thought to myself this time, why don’t I watch a little more closely this time. Not too close for therein lies madness . But just enough to keep the safety net of a stop limit in place when appropriate after “inevitable degrees of ascension”. So after watching the stock advance 10 days in a row, in the early morning I could see Asia silver turning south. The day before, the JAN Call had reached an Ask of 0.95 with a last trade of 0.91. I could smell it. So before the market opened I placed a stop limit at 0.85. After the opening bell, I caught it as it started it’s apparent free fall and again decided to head south for a correction.

A few days have past. A couple days ago I got back in on the same call at 0.60. Today I sold at 0.70 and got back in, after a drop, on the 5.00 DEC call at 0.55.

I really don’t want to be monitoring these options so closely. Just close enough to take advantage of inherent silver/Hecla volatility. I do believe the silver/Hecla “trend is my friend” and Hecla will reward my insight handsomely over the next few months.

Here’s the bottom line. I’ve achieved what no bloody 401K manager could achieve with my… “currency”. I took approx 4K and grew it to 14K+ in just a few months.

But that’s not the best of it. I’ve taken back the original “seed” money to use to retire debt. So now I am operating with the profit from my insight, skill, and the Lady. I am not new to options trading. I played with it when options were only a few years old in Chicago in ’73. I learned quickly the nitroglycerin nature of options trading by, of course, losing my ass. You might say I’ve spent the last 36 years studying v-e-r-y closely The Game. But I insist on not disappearing into the rabbit hole. My Hecla trade and what I perceive will happen in the next 90 days is a Silver Perfect Storm. I am NOT going to miss it. Not this time.

So what do I expect? Well, the fundamental “tea leaves” tell me silver is going to the other side of $20/oz before the year end. The prelim earnings “hint” by Hecla’s CEO a few weeks ago tells me the earnings report late October is going to be SWIMMING in good news. The mining operation’s Greens Creek operation in Alaska derives its energy from hydropower. The “side” metals Hecla is extracting is paying for the operation, making the silver it’s taking out PURE PROFIT. In other words, dear reader, Hecla is a frickin’ ATM!

So gee, I dunno, do you think the stock has a chance to rise from its closing price today of 4.34 over the next 90 days and trend upward towards 10? With what I see, it is as close to inevitable as a life experience can come to. I’d say the chance of it making it to 10 by December is 50/50. Really, silver is going to explode before then… on second thought… let’s make it 75/25.

What does this mean regarding the 5.00 DEC call? I am controlling 20,000 shares. Every dollar rise above 5 means at least 20K. Not bad for a 4K “seed” formerly trapped in a pathetic 401K, eh?

Think of me when you see Hecla heading for 10 in November.

“Looking good, Billie Ray”.

“Feeling good, Louis”.

Disclaimer: this post is meant for entertainment purposes only. I am not a professional, yada, yada, yada… In other words, people, you control the horizontal. You control the vertical. I suggest no actions on your part. This post is for the sole purpose of sharing a chronicle of personal events, past, present, and future. .

In other words, dear reader, I do not have a gun to your head. That’s what criminals and governments do. Or do I repeat myself?

I can not believe it has been one year almost to the day since I last made a post here.

While no doubt most of my fellow 401K prisoners lost approximately 40-50% of their balances during the past 12 months, my balance maintained positive growth, thanks to Treasuries. I even moved funds into PIMCO the day it jumped 9%, You would have thought I had a “red phone” to Newport Beach on that day the way I timed that.

A few months ago I could see the “bullish trend in a bear market”. So I moved the balance to a “small aggressive fund” heavy into the likes of Amazon and Google.

But last week I determined the “bullish trend” is over and reality is quickly sinking in.

If you look at the charts of ’29 and ’30 you’ll see a pattern we are currently repeating. People think the BIG crash happend 4th quarter in ’29. It didn’t. Yes, there was a crash that brough the markets down about 50%. But if you look at the charts for ’30 THAT is where you see the markets falling into the abyss.

And that is where we are now. About to fall into the abyss.

I had the opportunity last week to pull HALF of my 401K balance out in the form of a loan, being charged only 5%. I have taken advantage of that opportunity to retire debt. The balance remaining has been moved into the “Guaranteed 3%”, the only remaining lifeboat, leaking with a money supply that has exploded with hyperinflation soon to follow with the sooner than anticipated crash of the U.S. Dollar.

I’d say it’s time for me to start creating content for another one of my sites. A few years ago I registered the domain: DUMP THE DOLLAR . COM.

What I would like to do now with the 401K, which I deem now to be an entirely hopeless case and have changed my contribution to ZERO percent, is to see if I can close the account and move the balance to an IRA where I can at least introduce some sanity and link the balance to precious metals and commodities. Perhaps the only way to close the account is to conclude my employment. I don’t know. But I’ll find out. And when I do, I will make another post here at 401K Madness!.

I’ll do my best not to wait another year. Because after all, it’s not going to take that long for all HELL TO BREAK LOOSE.

Between the Middle East, the FED, Wall Street, and DC, how can it not?

I want those odds in Vegas.

Below is what I sent out to the Assistant Director of our Department in early February of 2006. The Director was also aware of my observations. It was my hope they would bring these opinions forward in one of the “Directors Meetings”.

I now understand why my thoughts were never forwarded to the “inner circle” of 401K portfolio decision makers. They already had their opinions. They weren’t interested in mine.

This is what I wrote on February 9th, 2006:

There are no options in the “401K portfolio of possible investments” that seriously consider a bear market. They are all skewed to bull markets.

Consider the possibilities with this:

http://www.forbes.com/investmentnewsletters/2005/05/13/cz_js_0513soapbox_inl.html?partner=netscape

When they are jumping out of windows we could be protected with the option of bear funds, something we currently do not have.

The best we can do is put our “bucks” in “stasis”, the “Guaranteed” option shown below (screenshot not provided here).

Of course, while in that “holding pen”, our dollars might be turning to being useful for starting fires…

Alas, nothing in the portfolio is seriously geared toward foreign currencies, commodities, metals, or bear markets as a means of “diversification”.

They all depend upon a never-ending “we’re in the money” delusion – reminds me of the Twenties.

I first became aware of the pathetic, dangerous state of my 401K plan over two years ago. Because of my observations I was inspired to reserve the domain name, 401KMADNESS, in May of 2006.

I didn’t think I’d get much attention from anyone then. So I decided to wait.

Well, since the housing meltdown and the dumping of the fraudulent US Dollar issued by a bankrupt government are now taking place, I’ve decided to put some “meat” on this “domain bone” and I think now might just be the time where I’ll get someone’s thoughtful attention.

While most particpants in my 401K plan a couple years ago remained blissful in their ignorance, the plan’s prejudice screamed out at me; it was entirely slanted to the expection of a bull market that went on forever.

There was no safe haven for protection against, let alone to take advantage of, any downward trend, bear market or recession. I found this absolutely insane. And while I brought the topic up with my superiors, hoping they would bring it up with their superiors, there was no way I was going to risk my job going directly to the decision makers of our plan. The last thing I needed was to reveal my opinion of their gross incompetence that was eventually going to cost all participants in the plan dearly.

What was apparent to me then is still apparent to me now. But now I’m running out of time. The only “life raft” left in the plan is “International Bonds”. And that life raft definitely has an “inflationary leak”. But it beat the rest of the plan which I view as nothing more than a sinking Titanic. Amazing how even now, music plays and the deck chairs are being moved around.

I really don’t enjoy being on a Ship of Fools.

Future entries will present how the “life raft” can be abandoned for a “speed boat”, fully fueled, and ready to kick ass. But of course, it will only be worth mentioning if they listen.