Scream Phoenix

A Current Affair………

The Architects of Destruction, Part 1

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They took greed and incompetence to all-new levels…

“It’s so difficult to pinpoint one person or two people [for the economic meltdown]. It really was the whole system.”
Georgetown University finance professor Reena Aggarwal

Introduction

The financial markets’ collapse — broken down — is a disgusting tale of enablers, exploitation, and ignorance…

… The wheels of which were set in motion over 31 years ago with the 1977 passing of the Community Reinvestment Act (CRA).

In short, this Act was designed to encourage FDIC insured commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.

It sounded like a wonderful plan. It meant well. And like many things, it looked great on paper… when you first glanced at it. After all, everyone should have access to some credit, and this law was meant to better our deteriorating cities.

Except, instead of banks freely choosing who they would give credit to, and determine the amount of credit the borrower would be approved for, the CRA–in a sense–held hostage the banks, forcing them to give borrowers as much money as the borrower needed, not deserved or could pay for.

In other words, this law kept banks from operating responsibly by only issuing enough credit/money that a person could pay back. It doesn’t take more than a little common sense to foresee the financial trouble awaiting those institutions down the line.

Today, it remains the forgotten catalyst for loosened lending standards, rolled-back regulation, and an increasingly blurred line between nonprofit government and the for-profit private sector.

It’s this much-decreased oversight that allowed for some to bank unfathomable wealth by inventing complicated financial instruments… and advancing them by exploiting loopholes in a wrecked system. As well, there were those — in power — who did nothing to prevent our slide to economic mayhem.

And now we’re all left holding the bag.

What’s worse — some of the same clowns who opened the gates to the financial crisis are in control of fixing it… many of them with full immunity!

It’s high time, then, to take a step back… and take stock of the “pointmen”… the players at the table in a trillion-dollar bet that led to the financial Collapse of the Century.

From the financial “mad scientists” who concocted the toxic instruments in the first place… to the brokers who peddled them… to the mortgage companies that baited wanna-be homeowners of all stripes… to the politicians and lawmakers who enabled the death vortex that the housing crisis would become… to the SEC, which left the door wide open.

On display below are some of the villains themselves… their crimes, abuses, mistakes, and ignorance… and their subsequent “golden parachutes.”

But most importantly, I want to show you how these Architects of Destruction could not only make you back every last dollar you’ve lost in the crisis… but also how “playing” them could stuff your portfolio with more money than you ever dreamed.

So here we go…

 

America’s Hall of Shame: Crooks of the Crisis
Part 1: The Pusher, The Cartel, and the Side Bet

 

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“People are adults and made choices in their lives because they wanted to own a home of their own. …The complaints about the loans only came when the opportunity for enrichment was gone…
It was impossible to anticipate the credit crisis we’ve seen on a worldwide basis.”
— Angelo Mozilo

Public Enemy #1:
Angelo “Mascot of the Housing Panic” Mozilo
Former Countrywide Financial CEO

His Crimes:

In 2006, one out of five U.S. mortgages was financed by Countrywide Financial… at a value of roughly 3.5% of U.S. GDP. Good times for Angelo and his troups.

One year later, amid swirling questions over a looming mortgage crisis, Countrywide assured the world it had ample capital and liquidity to stay in business… having disclosed $35.4 billion in reliable liquidity. Another disclosure: “…sufficient liquidity available to meet projected operating and growth needs and significant accumulated contingent liquidity in response to evolving market conditions.”

Suckers!

While Mozilo and crew rope-a-doped investors with lie upon lie, Countrywide managed to burn through the $2 billion Bank of America cash infusion, an $11.5 billion credit line used to ease liquidity issues, numerous Fed cash injections… AND a $50 billion “cushion” they went on record as having:

“Our mortgage company has significant short-term funding liquidity cushions and is supplemented by the ample liquidity sources of our bank. In fact, we have almost $50 billion of highly reliable short-term funding liquidity available as a cushion today. It is important to note that the company has experienced no disruption in financing its ongoing daily operations, including placement of commercial paper.”

Just seven days after that spirited media performance, the company announced it was facing “unprecedented disruptions” in debt and mortgage markets.

Finally, in December ’07, after months of spiraling anguish, Mozilo threw in the towel and left Dodge. Come July, Bank of America and Countrywide had officially inked the shocking takeover. It was an all-stock deal that, for Countrywide, shook out to less than 20% of the company’s $24 billion market value just one year prior.

Meanwhile, job cuts at beleaguered Countrywide have reached five-figure territory, as employees wait it out, day by day, on the chopping block.

“Friends of Angelo” (FOAs):

A June 2008 Conde Nast Portfolio expose’ revealed a number of influential lawmakers and politicians who became beneficiaries of “favorable mortgage financing” from Countrywide. The list of FOAs includes Senate Banking Committee Chairman Christopher Dodd, Senate Finance Committee Chairman Kent Conrad, and former Fannie Mae CEOs Franklin Raines and Jim Johnson.

According to the report, Senator Dodd’s arm was twisted to the tune of a $75,000 reduction in mortgage payments from Countrywide on his two homes… at rates reportedly well below market!

Golden Parachutes:

  • From 2005 to 2007, Mozilo dumped a large portion of his Countrywide stock, turning a reported $291.5 million profit. Shortly after, CFC shareholders filed a class action suit, citing securities violations.
  • In early 2008, it was reported that Mozilo could walk with up to $110 million. Such a payout would come on top of the $140 million gains he made selling Countrywide stock during the mortgage crisis.
  • Mozilo also had two pensions. His severance agreement gives him the right to receive as a lump sum on his departure. Those pensions were worth $24 million at the end of December 2006.
  • According to reports, Mozilo and his wife would also receive three years of life and financial planning benefits, in addition to compensation for any penalties he’d have to pay for receiving any payments considered excessive by the IRS.

How One Small Group of Investors Played the Countrywide Debacle Into Triple-Digit Gains:

It all started in early February 2007…

That’s when the first cracks in the foundation of the mortgage market emerged, most noticeably in subprime. Countrywide, while trying to convince shareholders it had plenty of liquidity, knew the writing was on the wall… leaking the following comment, “We’ve got eight, nine, 10, 12 months of headwinds. You’re seeing 40 to 50 subprime companies a day throughout the country going down in one form or another.”

So when an already overvalued Countrywide leapt to $44.67 on a buyout rumor, our small band of investors immediately went to work.

We bought “put” options on Countrywide… betting on its share price to nosedive.

And fall it did. In fact, each time Countrywide announced everything was OK (causing naive investors to bid up the stock price), we bought more puts… for a grand total of five trades.

Eventually, the stock dropped under $2, and our team turned around enormous profits. The biggest gainer was the Countrywide January 2008 27.50 put option, which earned members of our nimble investment club a tidy 203% return in mere days.

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“Most of our businesses are beginning to rebound.”
— James Cayne

Public Enemy #2:
James “Let Them Fail” Cayne
Former CEO, Bear Stearns; world-class bridge player

His Crimes:

At a 1969 New York bridge tournament, pro card player Jimmy Cayne found himself hired on the spot by future Bear Stearns CEO Alan “Ace” Greenberg. By 1993, Cayne would become CEO; by 2001… Chairman of the Board.

Fast forward to March 2007, with rumors flying of Bear’s unraveling. Cayne denies rumors of poor liquidity, reporting the company had a $17 billion cushion. Investors actually cheered the news and sent Bear Sterns stock up.

In its next major miscue, Bear Stearns plunks down over $3 billion in a collateralized loan to bail out a hedge fund created specifically for subprime mortgages: the Bear Stearns High Grade Structured Credit Fund (along with negotiations to bail out a second Bear fund mixed up in subprime).

Here’s shocker # 1:  Just one month later, Bear clients are notified of “effectively no value” in the two hedge funds, which would soon file for bankruptcy.

Then in December, just when Bear investors thought it couldn’t possibly get worse, the first quarter loss in the institution’s 85-year history was announced… in what would add up to an $854 million monkey on its back from mortgage-related write-downs.

The firm’s foray into subprime lending finally caught up with it… and within the span of a week or so, Bear Stearns — the stalwart, bulletproof institution founded in 1923 — was all but dismantled. The legendary investment bank would be sold to competitor JPMorgan Chase for a bargain-basement price of $2 a share, or $236.2 million.

Meanwhile, according to reports, “In July, as Bear Stearns executives futilely attempt to prop up two hedge funds that ultimately collapse amid the subprime meltdown, CEO James Cayne spends ten of 21 workdays out of the office, playing golf and competing in a bridge tournament in Tennessee.”

(In a now-ironic twist, Cayne’s Bear Stearns was the single investment-bank holdout in 1998’s Wall Street-fashioned rescue of Long Term Capital Management, a collapsed hedge fund. “Let them fail,” Cayne reportedly quipped.)

In the end, Cayne is largely blamed for two things: NOT selling the firm when he had the chance, and NOT pursuing the cash injection it desperately needed in the aftermath of the firm’s collapsed hedge funds, and its “in-the-dark” liquidity.

Golden Parachute: After the legendary financial institution crumbled (including roughly $1 billion in net worth of Bear Stearns’ stock down the drain), Cayne cashed in his entire stake in the company for a cool $61 million.

How We Leveraged the Bear Stearns Backlash into a Windfall:

By scrutinizing the Bear debacle, we successfully played its fallout… pinning down and cashing in on the next financial dominos to fall, including:

Lehman Brothers January 2009 10 put option: 72%, 172% and 188% average gains,

Morgan Stanley January 2009 25 put option: 71% and 13% gains, and

XLF January 2009 13 put option: This Exchanged Traded Fund (ETF) play returned our members 62% in one day (as we closed 50% of our position), then 221% in 7 days as we closed the remaining 50%.

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“Some of the media coverage of Lehman Brothers’ demise has been sensationalized – based on rumors, speculation, misunderstandings and factual errors… The worst of the impact of the financial markets is behind us.”
— Dick Fuld

Public Enemies #3 and #4:
Dick “There’s a Reason I’m Not Called Richard” Fuld, CEO, Lehman Brothers
Erin “The Best Accessorized CFO on Wall Street” Callan, Ousted Lehman CFO

Their Crimes:

Dick Fuld: The “scariest man on Wall Street,” Dick Fuld was at the top of his game… annointed “America’s Top Chief Executive” in 2006 by Institutional Investor magazine.

Then that pesky subprime mortgage situation began to unravel. And suddenly, this giant financial institution — supposedly impervious to ruin — came under fire. Fuld and company suffered unprecedented losses… the direct result of having held onto its massive subprime positions for too long.

By the third quarter of this year, 73% of Lehman’s stock value had vanished in the grips of a tightening credit market.

How did Master of the Universe Dick Fuld respond?

With outright denial, despite repeated warnings. Fuld, in Congressional testimony, seemed to blame everyone but himself for Lehman’s collapse. “A victim of his own success,” some Wall Street insiders now suggest… rolling the dice on subprime like a jacked-up casino troll, taking risk to all-new levels… over and over, until it was simply too late.

Fact is, Lehman might have averted bankruptcy had Fuld acknowledged the reality of Lehman’s situation sooner. After all, there were offers on the table to snatch up Lehman whole. Fuld, however, refused to budge. And when the bottom fell out, nothing was left to leverage.

All said and done, Lehman would become the largest corporate bankruptcy in U.S. history. Fuld, saving face:

“Lehman Brothers was a casualty of the crisis of confidence that took down one investment bank after another.”

Erin Callan: With zero experience in the company’s treasury and just six months into the job, tax lawyer turned rookie CFO Erin Callan drew national ire as Lehman’s public face and bullish mouthpiece during its fall from grace. There seemed no end to Callan’s sugarcoating, which couldn’t possibly reflect the reality and depth of Lehman’s desperate situation. In fact, after the firm sold off a nightmarish 50% of its stock value, she remained “optimistic” about the company’s future.

In other words, she’d either never seen a ledger in her life, or she outright lied to everyone.

Fittingly, in early June, when Lehman painfully announced a horrific $2.8 billion quarterly loss, Callan could no longer shove transparency aside and distort the facts.

Just like that, Lehman’s head cheerleader was relegated to the JV squad… then shown the door.

The old corporate axiom — “Management compensation is largely tied to how its performance is reported” — no longer applied. Wall Street’s head female honcho was abruptly replaced by co-chief administrative officer Ian Lowitt… and Callan quickly pulled the rip cord to her golden parachute (see below).

File This Side Note Under “Greed and Delusion”

Just days before Lehman’s collapse, executives at Neuberger Berman (a Lehman subsidiary) sent emails urging Lehman’s top brass to do away with their seven-figure-plus bonuses… in order to “send a strong message to both employees and investors that management is not shirking accountability for recent performance.”

And if you thought Lehman’s execs couldn’t be more arrogant or disconnected, consider this dismissive quote from Lehman Brothers Investment Management Director George Herbert Walker IV (second cousin to outgoing President Bush) to fellow members of Lehman’s executive committee:

“Sorry team. I am not sure what’s in the water at Neuberger Berman. I’m embarrassed and I apologize.”

Meantime, Richard Fuld and Erin Callan, along with 10 other Lehman executives, are facing subpoenas as federal prosecutors investigate whether the bank misled investors in the run-up to bankruptcy filing.

Just in the last few weeks, the San Mateo County (California) Investment Pool formally filed suit against Fuld, Callan and other top Lehman execs, seeking reimbursement for financial losses after Lehman’s fall to bankruptcy. The San Mateo lawsuit is among the first in the country to go after Lehman’s top brass… and the $1 billion-plus in bonuses they were able to siphon off before the firm tanked.

According to the lawsuit, the Lehman case “represents the worst example of fraud committed by modern-day robber barons of Wall Street, who targeted public entities to finance their risky practices and then paid themselves hundreds of millions of dollars in compensation while their companies deteriorated.”

Golden Parachutes:

  • Fuld: Still flying high.
  • Callan: Oversees the global hedge-fund business at Credit Suisse.

How Our Team of Investors Turned Lehman Bros. Into a “Grab Bag” of Profit-Taking:

We knew Lehman was in trouble. Lehman knew it was in trouble. But foolish investors backed up the boat, as the bank issued one assurance after another. But how could its financial health possibly improve? Option ARMs would soon reset, and the credit, housing, and financial markets were still in a bind.

But we still needed confirmation before trading Lehman… and we got just that after the stock broke below its technical descending triangle under $13.

It paid off beautifully. We bought and exited LEH put options three times, as the stock would soon plummet under $2. Not helping the LEH cause, Oppenheimer raised its Q3 and full year loss estimates, as the Financial Times reported that the Royal Bank of Canada was abandoning consideration of an LEH buyout.

On September 10, one day after one of our recommended trades was initiated, Lehman tried to convince investors it absolutely didn’t need new capital to survive… and that its real estate portfolio was valued properly. We recall the old adage… “People lie. Stocks don’t.” With that in mind, and with a recommended January 2009 10 put in hand, our group of investors walked with average gains of 72%, 172% and 188% in just days. Chalk another one up for the Options Trading Pit crew.

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The probability that AIG’s credit-default swap portfolio will sustain an “economic loss” is “close to zero.” –Martin Sullivan, in a conference call with investors

Public Enemy #5:
Martin “Just Put It on the Tab” Sullivan
CEO, AIG

His Crimes:

On December 5, 2007, AIG head Marty Sullivan told investors, “We are confident in our marks and the reasonableness of our valuation methods… [We] have a high degree of certainty in what we have booked to date.”

But here’s what the CEO of the world’s largest insurance company failed to mention in his shareholder discourse…

Just six days earlier, Pricewaterhouse Coopers — AIG’s outside auditor — issued a private warning to Sullivan on the matter of swaps and risk management. Pricewaterhouse “raised their concerns with Mr. Sullivan… informing [him] that PWC believed AIG could have a material weakness relating to the risk management of these areas.”

AIG suddenly found itself swept into the financial vortex. On the brink of complete collapse, AIG pulled out its ace card… an $85 billion bailout handed out by Treasury Secretary Hank Paulson.

Soon after the bailout was reported, AIG allegedly took 70 of its “top performers,” including 10 senior executives, on a week-long California boondoggle… courtesy of you, the taxpayer. Incredulously, the AIG execs ran up a $442,000 bill, including $200,000 for rooms, $150,000 for meals, and $23,000 for spa treatments.

Golden Parachute: Despite horrific company losses under his leadership, Sullivan managed a cool $19 million safe landing, including a $5 million “performance bonus,” plus a new contract with a $15 million parachute… all after misleading shareholders on the stability of AIG’s finances. Sullivan’s parachute has since been frozen by AIG in an agreement with New York Attorney General Andrew Cuomo. (At present time, Cuomo is investigating AIG for “unwarranted and outrageous” executive payouts after the company pocketed billions in taxpayer rescue money.)

Here’s How We Played “Can’t-Miss” AIG… Racking Up Even More Gains:

Rumors of an AIG bailout had just surfaced. And we knew AIG was “too big to fail.” After all, the risk of AIG failing was simply too great… considering the inevitable, catastrophic trickle-down effect on financial and insurance companies across the board.

We traded speculation and hype surrounding the $700 billion bailout plan… and recommended AIG call options on Sept. 17. We concluded — as soon as AIG got bailed out and the $700 billion was in place — AIG would pop off of extremely oversold conditions and head straight back up.

We waited, patiently, for all the bad news to be priced in… then pounced and rode the “dead cat bounce” for AIG call gains.

End result: a 100% gain as we closed 50% of our position… and then a 125% gain on the remaining 50%… all in under 12 days.

In Part 2 of our report, we’ll hit up the other Crooks of the Crisis, including The Bank, The Idealogue, and other members of the Cartel. Meantime, have a look at our…

Dishonorable Mentions (Part 1):
A Short List of Those Who Pitched In To Help Bring the Country to its Knees

David “Baghdad Bob of Real Estate” Lereah, Former Chief Economist for the National Association of Realtors (NAR); Current President, Reecon Advisors, a D.C.-based Real Estate Advisory Firm

This former head cheerleader for the real estate industrial complex was one of the chief spin meisters and influence peddlers of the U.S. housing bubble… having publicly called for the bottom in the housing market no less than five times in 2007. 

“After reaching what appears to be the bottom in the fourth quarter of 2006, we expect existing-home sales to gradually rise all this year and well into 2008,” Lereah advised in February 2007. 

Even more folly… Lereah authored the regrettably titled book, “Why the Real Estate Boom Will Not Bust – And How You Can Profit From It.” 

Shockingly, he changed his tune–a stunning reversal of opinion–after leaving his post at NAR, though his “soft landing” argument for housing makes us wonder if he’s still got a spot on the NAR payroll.

The Securites & Exchange Commission (SEC)

The SEC has no one to blame but itself with regard to the financial meltdown. At least that’s what former SEC official turned whistleblower Lee Pickard alleges…

According to Pickard, “A rule change in 2004 led to the failure of Lehman Brothers, Bear Stearns, and Merrill Lynch.”

In the rule change, that is, the SEC would allow five firms — the collapsed trio of Lehman, Bear and Merrill, plus Goldman Sachs and Morgan Stanley — to more than double the leverage they were allowed to keep on their balance sheets.

Franklin Raines, former Chairman/CEO, Fannie Mae

Does a guy making $20 million a year really need a bargain?

When Countrywide head Angelo Mozilo hand picked his “FOAs,” he allegedly made sure there was a big mortgage at a super-cheap rate in it for them. One of those reported Friends of Angelo?… Fannie Mae CEO Franklin “Fred” Raines.

Raines, who had served as Bill Clinton’s budget director before heading the country’s largest lender, loosened lending standards to get more low-income Americans into homes. It’s a noble goal by itself, but not so sweet when it came out that Raines overstated earnings by up to $6.3 billion… which undoubtedly helped juke his bonus plan.

His golden parachute? The Associated Press reported that Raines will receive a pension of $114,000 per month for life, plus health and life insurance benefits. And according to documents filed with the SEC, Raines has deferred compensation of $8.7 million to be paid out through 2020.

And not to be outdone… According to the SEC filing, “Mr. Raines has asserted” to Fannie Mae that his retirement was effective June 22. So, by retiring before he could be dismissed, he’d receive — in this scenario — an extra $600,000 in salary. Fannie Mae, for its part, nixed the deal.

Chuck Prince, Former CEO, Citigroup

By the time Prince resigned from Citigroup, he’d left the bank with total losses worth up to $11 billion that would be written off, on top of a $6.5 billion write down in the previous quarter. And that’s in addition to mounting loan and credit losses.

His departure came shortly after he told investors, four days after a management shake-up, that the board believed Citigroup had a “good, sustainable plan,” and that further management changes were not needed.

“It is my judgment that given the size of the recent losses in our mortgage-backed securities business, the only honorable course for me to take as chief executive officer is to step down,” he later said. “This is what I advised the board.”

For shareholders, it was nothing less than disconcerting to watch a company’s stock fall some 50%, and then watch as the CEO walks with millions. Prince walked with total pay, perks, and share payout worth just under $100 million. This included a pro-rata cash “incentive” estimated to be around $12 million.

 

Finally, A Way To Turn Their Golden Parachutes…
Into Your Own Personal Windfall

Truth is, I’m mad as hell.

I’m fired up over today’s financial crisis — from the lost savings and plundered retirement plans to the senseless gutting of our ravaged economy…

And while there’s little I like better than ripping the villains who got us into this steaming mess, I’ve found there’s an even better way to get even…

It’s getting wealthy.

Revenge, you see, is a dish best served rich. And “rich” is exactly what our readers are getting… even in this battered economy.

In fact, it’s the very volatility of the markets that’s creating these once-in-a-lifetime investment opportunities.

You see, this small group of investors is quietly — but soundly — turning crisis into opportunity… capitalizing on every publicly traded company caught with its pants down in this bloody financial crisis.

One member — simply by acting on our trade recommendations — has already turned $10,000 into $450,000.

This small investment group is headed up by me, Ian Cooper. We’ve been at it barely five months now… and we’ve already set a new standard for success in independent investment research:

 

29 Wins out of 34 Trades… 78% Avg. Gain… Avg. Hold Time: 11 Days

It’s a membership with a single mission: to make our members serious profits.

And when you’re this successful at making your readers lots of money, it doesn’t take long for word to get out. (We’ve had to hire part-time staff just to field the phone calls and email requests we get every day.)

Still, this investment club isn’t for everyone. If you’re waiting for the smoke to clear — for that “safe entry” back into the markets — then this service isn’t for you.

But if you understand the boundless opportunities to capitalize off the transitional state of our markets, and you’re serious about making bountiful amounts of money, then simply keep reading.

Here’s what some of our “convinced” members have passed on to us lately…

“Hey Ian, I have been watching on the side lines for a while now and finally pulled the trigger on American Express. This was my first options trade and I bought in at $2.50 and exited half the next day for $4.00. I have been banging my head against the wall for years trying to make money in the markets and I’m happy to finally settle in to a winning process. Thanks for your hard work.” – Corey L.
“Just a quick note to say THANKS!! I closed out the second half of XJZMM with a 100.14% gain after 9 days. I pulled the trigger a bit early and missed out on the last hour today, oops. I also closed out QAVMD with a 69.2% gain. In just a month I am 6 for 6.” – Henry N.
“AMAG – 75%; AXP – 197%; QQQQ – 300%; XLF – 352%… And still counting…” – David P.
“Very good! I made 125% combined average on the 2 parts of XLF, 124% on AMAG, and 69% combined on the 2 parts of AXP. I’m very satisfied.” – Noam L.
“Four great trades. AXP in $2.53, out$4.32 AMAG in $3.10, out $7.00; QQQQ in $2.30, out $5.40; XLF in $1.54, out $4.50. It took me about 2 years to find a good trading service. Thanks.” – Mike E.
“Well this morning I executed my first full buy/sell option trade ever. I sold 10 contracts of AMAG put for $7 after buying them a few days ago at $3.90 (79.5% profit). Excellent!!” – Mark B.

 

 

We Played These Companies Like a Fiddle…
And The Profits Have Been Nothing Short of Staggering

Here’s a look at some of the returns we’ve bagged recently:

291% in 16 days 279% in 40 days 224% in 40 days 214% in 16 days
207% in 40 days 203% in 69 days 188% in 6 days 175% in 80 days
160% in 59 days 141% in 4 days 136% in 13 days 122% in 19 days
111% in 2 days 105% in 49 days 89% in 1 day

We did it by successfully calling out — and timing perfectly — the biggest spikes and dips in subprime, Alt-A, housing, and financials. I’m talking about the companies that lied, denied or misled its investors… refused to cut dividends… and swept themselves into what could prove the century’s greatest financial disaster.

But don’t for a second think the easy gains are all behind us. The profit taking has just begun.

In fact, there’s a whole new school of fish in the barrel… and we’ll be there to snatch ’em up.

Because the truth is… once the mountainous Option ARM (“Opt-A”) loans begin resetting, the second leg of the credit crisis will launch. (These are the loans dished out to folks with low credit scores… many of whom were reported to have been granted loans, despite little or no documentation.)

It’ll happen in early 2009, to be precise. And this second crisis will most assuredly ignite a new series of profit plays that the Options Trading Pit team will exploit for unthinkable gains.

But our gains won’t be linked exclusively to the mortgage fallout. We’ll also be capitalizing on:

  • The death of credit card companies,
  • Bank defaults and bankruptcies,
  • Beaten-down, undervalued stocks with hefty insider buying,
  • Disappointing holiday retail sales,
  • Plummeting energy prices, and
  • Toppling insurance companies (If you thought AIG was the only one to fall, think again…)

In fact, we’re just about to pull the trigger on our next big trade. And, frankly, we can’t wait to see the fruits of this one.

To get in on it right away, simply click here for your risk-free trial in Options Trading Pit right now… and become part of an exclusive investment club that’s quickly, quietly building the kind of wealth most people only dream about.

You’ll be hard pressed to find another trading service out there that matches the success of the Options Trading Pit portfolio.

Here’s to making your mint,

Ian Cooper
Investment Director,
Options Trading Pit

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US special forces launch rare attack inside Syria

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Democrats call for massive econ stimulus plan

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McCain calms supporters, urges respect for Obama

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Conn. Ban On Gay Marriage Reversed

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Obama tried to sway Iraqis on Bush deal

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Military: Suicide bomber kills 27 in Sri Lanka

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N Korea ‘restoring nuclear plant’

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Palin eases GOP jitters, you betcha

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Yes!!!!!!!!!!!!!!!!!!!!!!!!

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October 3, 2008 at 2:36 am

U.S. House Rejects $700 Billion Financial-Rescue Plan

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WASHINGTON — Defying President Bush and the leaders of both parties, rank-and-file lawmakers in the House on Monday rejected a $700 billion economic rescue plan in a revolt that rocked the Capitol, sent markets plunging and left top lawmakers groping for a resolution More………………….

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World: Explosion Targets Lebanese Army Bus in Tripoli

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US House to Consider Financial Bailout Measure Monday; Lawmakers Consider Details

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DEAL!!!!!!!!!!!!!

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Obama, McCain argue over war, taxes in 1st debate

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September 27, 2008 at 9:52 am

Bush, McCain, Obama have historic West Wing huddle

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WASHINGTON – President Bush, Barack Obama and John McCain were an unlikely trio at the White House on Thursday mulling a $700 billion bailout to end the U.S. financial market crisis. Wall Street held its breath. Would the president, a self-described free-market man, confirm that a deal had been made to infuse billions into the markets? Would sparks fly between McCain and Obama, who sat at opposite ends of a shiny, oval table in the West Wing, where each wants to work?

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September 26, 2008 at 2:02 am

Bush: U.S. in midst of serious financial crisis

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WASHINGTON (Reuters) – President George W. Bush on Wednesday said the United States was in a serious financial crisis as he tried to convince Americans to support a $700 billion financial rescue plan

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September 25, 2008 at 3:03 am

House clears $25bn for carmakers

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The House of Representatives on Wednesday approved a $25bn package of low-cost loans to help hard-pressed carmakers and their suppliers finance plant modernisation at a time of restricted access to public capital ­markets…

Written by Simone Avery

September 25, 2008 at 2:58 am

Death toll from Pakistan hotel blast reaches 53

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ISLAMABAD, Pakistan (AP) – Rescuers pulled more bodies from the shell of the truck-bombed Marriott Hotel in Pakistan’s capital Sunday, pushing the death toll from one of the country’s worst terrorist strikes to 53, including the Czech ambassador and two Americans.    

 

Written by Simone Avery

September 21, 2008 at 7:41 pm

Many economists skeptical of bailout

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Written by Simone Avery

September 21, 2008 at 7:31 pm

Russia threatens to seize swathe of Arctic

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President Dmitry Medvedev said that Russia should unilaterally claim part of the Arctic, stepping up the race for the disputed energy-rich region.

Written by Simone Avery

September 17, 2008 at 9:15 pm

Wall Street’s turmoil tests McCain

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Written by Simone Avery

September 16, 2008 at 10:19 pm

Nightmare on Wall Street..Will They All Fall ?

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Elizabeth Rose, a specialist with Lehman Brothers MarketMakers, works her post on the trading floor of the New York Stock Exchange, Monday, Sept. 15, 2008.  A stunning reshaping of the Wall Street landscape sent stocks down sharply Monday, but the pullback appeared relatively orderly _ perhaps because investors were unsurprised by the demise of Lehman Brothers Holdings Inc. and relieved by a takeover of Merrill Lynch & Co.  (AP Photo/David Karp)

Elizabeth Rose, a specialist with Lehman Brothers MarketMakers, works her post on the trading floor of the New York Stock Exchange, Monday, Sept. 15, 2008. A stunning reshaping of the Wall Street landscape sent stocks down sharply Monday, but the pullback appeared relatively orderly _ perhaps because investors were unsurprised by the demise of Lehman Brothers Holdings Inc. and relieved by a takeover of Merrill Lynch & Co. (AP Photo/David Karp)

Written by Simone Avery

September 16, 2008 at 9:56 am

Posted in Uncategorized

Romney wins Florida GOP primary, Fox News projects

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Written by Simone Avery

February 1, 2012 at 1:15 am

Posted in Current

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(Click here to review Part 1 of The Architects of Destruction.)

The fuse was ignited by an incestuous union of Wall Street, A-list corporations, and our oversight-challenged government.

And now that the bomb’s exploded, the sleight-of-hand message delivered by the connected media is spreading far and wide.

The economic collapse is all about the “credit crunch,” we’re being told… at 2nd-grade reading levels, no less.

It’s an argument intended, no doubt, to distract us from the obvious truth… which is that the country’s not in fact suffering from a credit freeze that’s keeping even qualified borrowers from getting loans. (That’s just the Kool-Aid you’re supposed to swig down, without as much as a glimpse at what’s in the cup.) The reality, of course, being that the country is reeling from $6 trillion of housing wealth flushed down the commode, along with another $8 trillion smackeroos worth of stock that’s vanished into thin air.

No doubt you’ve been reading about Bernard Madoff, the mad genius who orchestrated a decades-long Ponzi scheme… one that targeted even charities as marks for his con. Operating with feeder funds, this disgraced Wall Street titan has destroyed more wealth than any single individual in history. And, chances are, a string of new Madoff-esque stories have yet to be revealed.

And now we’re left with what may be the biggest con yet… some $700 billion of TARP money that’s launching without even a speck of oversight. We Americans can’t even count on a nationalized audit to sort out the solvent banks from the insolvent! As tax payers, we deserve at least some form of paper trail. But we’re fools to expect it from our government.

Let’s face it. We’ve been robbed blind by master thieves, bamboozled out of hundreds of billions, and left with a financial system ransacked by looters exploiting gaping holes. No regulation. No oversight. Zero accountability. The authors of our Constitution must be turning in their graves.

In part 2 of our report below, we’ll tackle more of the politicians, government officials and Wall Street suits who helped hijack our economy… and we’ll show you how a small group of individual investors took the bull by the horns, capitalizing on a strategy that’s turning the trading world upside down.

We’ll also show you the 3 “Doomsday Shockers” that will go off — just months from now — like firecrackers in a piñata… and how you can lock into position to collect gains of 75% to 300% with each one.

America’s Hall of Shame:
Crooks of the Crisis, Cont.

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“Any informed borrower is simply less vulnerable to fraud and abuse.”
— Alan Greenspan

Public Enemy #6:
Alan “High Priest of the Fed Temple” Greenspan
Former Chairman, Federal Reserve (1987-2006)

His Crimes:

Greenspan’s loose monetary policy alone would be enough to land him on our list. But his biggest gaffe? An unwavering opposition to oversight and regulation… despite being warned repeatedly on the consequences of lax lending standards. (Warren Buffett, back in 2003, referred to derivatives as “financial weapons of mass destruction.”)

Ultimately, Greenspan would allow interest rates to remain too low, thereby over-inflating the housing bubble… all the while adamantly refusing to regulate high-risk financial tools. The mother of all derivatives — the mortgage-backed security — would soon collapse under its own weight, triggering the financial crisis of 2008.

Greenspan maintains a blame-free posture, conceding only that his “irrational exuberance” free-market ideology — and lack of regulation — was “flawed.” Meanwhile, many leading global economists have freely called him out front and center as one of the most culpable figures behind the economic collapse of 2008… earning him what could prove to be a permanent stigma as the “engineer” of the housing bubble.

Golden Parachutes:

  • Advisory position on global economic issues at hedge fund Paulson & Co.,
  • “Special Consultant” to bond giant PIMCO,
  • “Senior Advisor” to Deutsche Bank’s investment banking team and clients,
  • Full government pension, and
  • A sweet book deal (Penguin Group), which he fittingly wrote in 2007, before the economic “sh_t hit the fan.”

Subsequently, Paulson & Co is famously known for its record profit making during 2007 by conducting bets against mortgage derivatives, which earned the firm billions of dollars last year. The financial terms of the agreement were not disclosed and Greenspan must not, under the agreement, advise any other hedge fund manager while working for Paulson.

Still… While Greenspan Missed the Bubble, One Group of Investors Showed Up First to the Profit Party:

We capitalized by riding the inevitable outcome of Greenspan’s loose policies — on the heels of the subprime fallout — to the tune of a 4,822% cumulative gain in 2007. Among the biggest gainers:

  • The Countrywide January 2008 27.50 put option, which earned members of our nimble investment club a tidy 203% return in mere days.
  • The September 2008 AIG call option, which turned a 100% gain as we closed 50% of our position… and then a 125% gain on the remaining 50%… all in under 12 days.

 

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“You’ve heard of mental depression; this is a mental recession… We have sort of become a nation of whiners.”

“Some people look at subprime lending and see evil. I look at subprime lending and I see the American dream in action.”
— Phil Gramm

Public Enemy #7:
Phil “High Priest of Deregulation” Gramm
Former Republican Senator, Texas (1985-2002); Senate Budget Committee (1989-2003)

His Crimes:

This legendary “free market capitalist’s” staunch position against deregulation played a major role in the road to financial meltdown. And it happened with unusual bipartisan flare, as deregulation efforts were backed and aided through eight years of the Clinton administration… as well as by other members of Congress whose campaigns benefited from financial industry donors.

In the 1990s, according to reports, Gramm would turn down SEC’s Arthur Levitt’s requests for funding aimed at policing Wall Street. He also opposed an SEC rule that would’ve prevented accounting firms from getting too close to companies they audited… and warned the SEC that if the commission adopted that rule, funding would be cut.

Among Gramm’s other efforts to deregulate the markets:

He pushed through a provision that ensured virtually no regulation of the complex financial instruments known as derivatives, including credit swaps, contracts that would encourage risky investment practices at Wall Street’s most venerable institutions and spread the risks, like a virus, around the world.

In 1999, Gramm pushed a banking deregulation bill that broke down walls between commercial banks, insurance companies and securities firms.

Worse, in 2000, Gramm slipped a thick, 262-page measure (the Commodity Futures Modernization Act… more on that below) into a $384 billion spending bill. The act, said Gramm, would prevent the SEC — especially the Commodity Futures Trading Commission — from getting into the business of regulating financial products called “swaps.” Swaps, of course, were at the heart of the subprime debacle.

“Tens of trillions of dollars of transactions were done in the dark,” reports University of San Diego law professor Frank Partnoy, an expert on financial markets and derivatives. “No one had a picture of where the risks were flowing… {subsequently} there was more betting on the riskiest subprime mortgages than there were actual mortgages.”
Source: MotherJones.com

The “Enron Loophole”

The Commodity Futures Modernization Act of 2000 included a last-minute Gramm provision, now known as the Enron Loophole, exempting energy speculators who make trades electronically from U.S. government regulation. Along with being the catalyst for the Enron debacle, it’s believed to be the primary reason for California’s 2001 electricity cost spike. What’s more… the Ken Lay-Phil Gramm love fest turned out to be an ugly threesome… with Gramm’s wife having served on Enron’s board when the company collapsed under scandal.

Beyond that…

Many economists assign some blame to 1999’s Gramm-Leach-Bliley Act — legislation spearheaded by Gramm and signed into law by President Clinton — for bringing on the 2007 subprime mortgage crisis and 2008 global economic crisis. The Act is most well-known for repealing much of the Glass-Steagall Act, which was designed to regulate the financial services industry.
The Washington Post in 2008 named Gramm one of seven “key players” responsible for winning a 1998-1999 fight against regulation of derivatives trading.
2008 Nobel Laureate in Economics Paul Krugman lists Gramm as #2 on his list of people most responsible for the economic crisis of 2008 (trailing only Alan Greenspan).

Golden Parachutes:

  • Gramm would become vice chairman of UBS Securities — the investment banking arm of the Swiss bank UBS. According to a New York Times piece, “elite private bankers” of UBS “built a lucrative business in recent years by discreetly tending the fortunes of American millionaires and billionaires.”
  • All the trimmings that come with a full government pension, including 80% of his salary and full health care benefits.

How We Parlayed Phil Gramm’s Flawed Fight To Continue Deregulation Into… “Cha Ching”… Major Profits:

  • Standard Pacific (SPF): Trade opened: July 24, 2007; Trade closed: July 27, 2007. Days after we got in with a put option play, the company would fall on a big Q2 2007 loss and news that it pulled its full-year guidance… and couldn’t rule out further impairment charges. End result: In and out four times with gains of 111%, 79%, 75% and 48%, giving us an average gain of 78.25%.
  • Accredited Home Stock: Trade opened: February 23, 2007; Trade closed: March 5, 2007. We purchased put options on now-defunct Accredited Home right alongside the downside of New Century. End result: in and out four times, returning gains of 45%, 141%, 134% and 45%… and earning members of our investment club a total average gain of 91.25%
  • Thornburg (TMA): Trade opened: Aug. 7, 2007; Trade closed: Aug. 10, 2007. At the time, banking, housing and lending stocks were rallying on hopes of a rate cut. Many stocks ran to overbought conditions, including Thornburg. We waited for speculation to peter out and jumped in with put options. Bolstering our position was news that investor confidence was waning, and on news that the company could not offer clear guidance on the dividend. End result: in and out twice, with gains of 45% and 188%… and an average gain of 116.5%.

 

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“…Today I can say that we will not need additional funds. These problems are behind us.”
— John Thain

Public Enemies #8 and #9:
John “I Robot” Thain
Former Chairman/CEO, Merrill Lynch; Current President of Global Banking, Securities & Wealth Management at Bank of America

Stan “No Risk Too High” O’Neal
Former Chairman/CEO, Merrill Lynch; Former GM Board of Directors (2001 – 2006)

Their Crimes:

The financial headlines read a lot differently only a year ago for John Thain… “The Man Who Saved Merrill” and the “Best Paid CEO of 2007” ($81.3 million total compensation), just to name a few.

Today’s he’s just “the guy at the helm” when the Merrill ship went down… another high-profile financial that bloodied its fingers in subprime and paid the price.

Thain has been accused of misleading investors over a span of months as Merrill took hit after hit, insisting the firm was well-capitalized. Among Thain’s now-infamous quotes during his company’s historic swan dive:

“We’re very confident that we have the capital base now that we need to go forward in 2008.” (January 18, 2008 — quoted by the New York Times)

“…Today I can say that we will not need additional funds. These problems are behind us. We will not return to the market.” (March 8, 2008 — France’s Le Figaro newspaper)

And by July 18, 2008, after Merrill Lynch wrote down $9.4 billion and sold a 20% stake in Bloomberg, Thain said, “We believe that we are in a very comfortable spot in terms of our capital.”

Truth was, the company was writing down $5.7 billion more and wanted to offer $8.5 billion worth of shares. And here’s the kicker. Just recently, Thain redefined the “performance-based bonus” by lobbying (unsuccessfully) the Merrill board for a cool $10 million… by actually insisting that he saved a fortune in shareholder money… simply by selling the company to Bank of America.

(That’s the same kind of delusion leaders of Detroit’s Big 3 must’ve been under… after flying into Washington by private jet to beg for a bailout.)

Of course, much of Merrill’s wreckage was left behind by Thain’s predecessor, Stanley O’Neal… who may have played a bigger part in helping take down one of this century’s storied Wall Street firms…

In 2006, with O’Neal at the reins, Merrill’s revenue and earnings soared. And it looked as if Merrill’s aggressive move into the mortgage industry was paying off well… until it began to speed its hunt for mortgage riches by trafficking complex and lightly regulated contracts tied to mortgages and other debt, ahead of the subprime collapse.

By 2007, mortgages started to fail, debt ratings on CDOs were cut, and any firm holding toxic products became locked in a downward spiral. Merrill was one of them.

Merrill would soon shock investors with a $7.9 billion writedown because of its CDO exposure, resulting in a $2.3 billion loss… the biggest in the company’s 93-year history.

Worse, O’Neal had promised that the $1.3 billion acquisition of First Franklin, a subprime mortgage lender, would provide “revenue velocity” and that it would add to earnings by the end of 2007. Neither happened. Then, he approached Wachovia, without consulting the board, about a merger — a monumental “no no” for any CEO.

In October of 2007, as the subprime crisis swept through the global financial market, O’Neal threw in the towel and resigned.

Here’s how Bloomberg neatly summed up the fall of Stan O’Neal:

“Losing a lot of money for shareholders is the surest way to end a career on Wall Street.” (Another valuable reminder for shareholders everywhere: When it comes to Board-approved corporate pay structures, your votes count. Otherwise, it’s called “complicity.”)

Golden Parachutes:

  • John Thain: A swank new title: President of Global Banking, Securities and Wealth Management at Lehman’s rescuer, Bank of America. 
  • Stan O’Neal: A position on Alcoa’s Board of Directors, after looting Merrill’s stash to the tune of a $161.5 million compensation package.

How We Played ‘Em To Profits:

While we didn’t play Merrill directly, we did trade on its backlash… with an average gain of 115.7% on 9 trades, including Lehman Bros., Morgan Stanley and XLF, the Financial Select Sector SPDR ETF.

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“I don’t see [subprime mortgage market troubles] imposing a serious problem. I think it’s going to be largely contained.”
— Hank Paulson

Public Enemy #10:
Hank “Crony Capitalism” Paulson
Outgoing U.S. Treasury Secretary; Past Chairman and CEO, Goldman Sachs

His Crimes:

Back in 2000, when Paulson was CEO of Goldman Sachs, he testified in front of the Security and Exchange Commission. Among other things, Paulson lobbied the SEC to enact a “change to self-regulation” for Wall Street.

He also urged them to change the “Net Capital Rule,” which governed the amount of leverage investment banks could use. In 2004, the line between government and Wall Street would get even blurrier, as the Net Capital Rule officially changed… and is now blamed by many for the investment banks’ collapse.

A few years later, as the housing market began to unravel, Paulson would prove the government couldn’t see what was coming… unleashing a string of misguided soundbites:

April 2007: “We’ve clearly had a big correction in the housing market. Retail housing was growing for some time at a level that was not sustainable,” Paulson said in a speech to The Committee of 100, a business group in New York promoting better Chinese relations.

May 2007: “Well, let me say this. As you’ve pointed out, we’ve had a major housing correction in the U.S. The U.S. economy had been growing at a rate that was unsustainable and, in housing, it had clearly been growing at a rate for a number of years.

…That correction was inevitable; that correction has now been significant. We think it is near the bottom. It will take a while to work its way through the system. Fortunately for us, we have a very diverse, healthy economy. There are other things that are positive that are offsetting that.”

August 2007: Paulson reported he failed to see any reason to reconsider his view that the economic damage from the housing correction was “largely contained,” despite losses in a number of financial institutions and a long period for subprime issues to move through the economy.

October 2007: “I have no interest in bailing out lenders or property speculators… I can’t think of any situation where the backdrop of the global economy was as healthy as it is today…”

Then a slight concession…

“We’re not proud of all the mistakes that were made by many different people, different parties, failures of our regulatory system, failures of market discipline that got us here,” Paulson said in an interview on Fox Business Network.

Truth is, Paulson’s got no playbook for this financial mess.

He’s simply making it up as we go along… because there’s nothing in history — not even the Great Depression — that he or anyone else can draw from… to figure out the best next step.

Here’s how Wikipedia sums it up:

“…It has been pointed out that Paulson’s plan could potentially have some conflicts of interest, since Paulson is the former CEO of Goldman Sachs, a firm that may benefit largely from the plan. Paulson has no direct financial interest in Goldman, however, since he sold his entire stake in the firm prior to becoming Treasury Secretary, pursuant to ethics law. Despite this, opponents argue that Paulson remains a Wall Street insider and still maintains close friendships with higher-ups of the bailout beneficiaries. The proposed bill would give the United States Treasury Secretary unprecedented powers over the economic and financial life of the U.S. Section 8 of Paulson’s original plan stated: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” After the passage of this bill, the press has recently reported that the Treasury is now proposing on using these funds ($700 billion) in other ways than was originally intended in the bill.”

Nevertheless, We Leveraged Paulson’s Failure To Anticipate the Fall-out in Housing & Lending… Into Our Own Personal Wealth:

Here are some of our biggest gains, realized by buying put options on soon-to-plummet housing and lending stocks:

  • Fremont General September 2007 12.50 puts — earning 291% gains in 16 days: A rebound to $14.50 gave us an attractive entry point, as W%R (Williams % Range indicator) showed extremely over-bought conditions. We played FMT downside four times, as the stock would soon fail… and become yet another victim of subprime. We played it again on February 2007 news that it would delay 2006 results and a 10K filing.
  • Lennar January 2008 25 puts — 279% in 40 days; Pulte January 2008 15 puts — 224% in 40 days, and Centex January 2008 25 puts — 207% in 40 days: July 2007 rumors that Buffett would take a stake in homebuilder Hovnanian jettisoned the housing sector. But that would mean that Buffett actually saw value in homebuilders, which simply didn’t exist… not with foreclosures up 87% year over year… not with glut forcing down prices… not with housing contraction… and especially not with money continuing to flow out of homebuilder stocks.
  • New Century January 2007 25 puts — 214% in 16 days: Given its exposure to toxic mortgage debt, we anticipated an eventual bankruptcy filing for this $39 stock… and we were spot on. Two days after our initial put buy recommendation, New Century plummeted $9. The company posted a surprise loss, and announced it would have to restate Q1, Q2 and Q3 2006 numbers to correct accounting errors. When New Century was foolishly upgraded by Bear Stearns on March 1, 2007, we bought more puts… and waited. Shortly after Bear Stearns upgraded the company, New Century announced it was the target of a federal criminal inquiry into the accounting and trading of the stock.

 

But Where the Finger Pointing Ends…
the Profit-Taking Begins

You see, it doesn’t matter who ends up in some minimum-security country club prison… or who gets railroaded out of Washington or Wall Street… or who continues unabated to wreck our financial system.  

…Because our small group of investors is going to continue taking gains to the bank, each time another domino in the crisis starts to fall.

Here’s what I mean…

As Countrywide CEO Anthony Mozilo spewed one boldfaced lie after another — driving the company into the dirt — one group of investors made an aggressive move, at just the right time.

I’m talking about my Options Trading Pit readers, who had the opportunity to collect a 203% profit in just a matter of days on Countrywide… all by using our powerful Wall Street Revenge trading strategy.

And then there’s Hank Paulson. Frankly it’s a chore just keeping up with his gaffes. And now he’s throwing some $700 billion at the wall… while ruling out any oversight AND granting complete immunity from future review.

But make no mistake — we’ve played Paulson’s housing and lending miscues into triple-digit profits… Gains like 291% in 16 days… 141% in 4 days… 136% in 13 days… and 111% in just two days.

And how about Lehman Brothers’ Dick Fuld and Erin Callan, and their multi-billion-dollar smoke-and-mirrors campaign? While Fuld, Callan and other Lehman brass face heat from the Fed, our investment group is counting the money made in just a period of days… having walked away with gains of 95%, 49%, 188%, 208% and 135%.

And yet, what’s about to happen — in no more than 3 months’ time — will make all these gains seem minuscule by comparison…

“Doomsday Shockers” # 1-3
Here’s How the Next Round of Profits Will Go Down

Doomsday Shocker #1:  Hold onto your seats, because part two of the housing-credit crisis begins in April 2009. So you have to ask yourself… Will you be well-positioned for it, or will you be sitting with the sheep in the wolf’s den?

You see, Alt-A loans were given to borrowers with credit score between 600 and 720 and included the option of interest only loans, option ARMs, and no doc loans that require little or no documentation. What’s particularly concerning is that 90% of these borrowers that got an Option ARM in 2006 provided little or no documentation. And it’s estimated that only 60% of them make minimum payments.

This will spark round two of the crisis, as waves of foreclosures wash out what’s left of the banks, lenders and homebuilders that are left standing. Trust me, more banks will fail… and we’ll be right back to square one in the financial crisis… with not a financial bailout dime to spare. And, just like before, the Options Trading Pit team will be capitalizing with major profits in put options… gains we expect will range from 100% to 200%.

“Hey Ian, I have been watching on the side lines for a while now and finally pulled the trigger on American Express. This was my first options trade and I bought in at $2.50 and exited half the next day for $4.00. I have been banging my head against the wall for years trying to make money in the markets and I’m happy to finally settle in to a winning process. Thanks for your hard work.” — Corey”

Doomsday Shocker #2:  Think Round One was tough on the homebuilders? You ain’t seen nothin’ yet. Homebuilders, especially the big luxury builders, will fall the hardest — and the quickest — as foreclosures mount and glut builds. Need proof? Kimball Homes just filed… so did Dunmore Homes and Woodside Homes. They couldn’t handle any more of the pressure, and neither can some of the biggest builders.

It’s just a matter of time. In fact, we’re only a few months away from this wrecking ball. And we’ll jump on each profit scenario at precisely the right time… showing you the way to score massive gains, week in and week out.

Doomsday Shocker #3:  Credit card debt’s starting to resemble the mortgage debt problems at the core of our financial meltdown. And the last thing the financial sector needs to feel is further squeeze, as Americans have accumulated some $970 billion in revolving consumer debt since the end of September 2008, up 3.4% from the close of 2007.

Sure, the credit card industry is typically resilient during our economic slowdown, thanks to pricing flexibility. The prevailing premise has been that — as the economy sours and consumers become late on payments — credit companies can boost earnings through late fees and higher interest rates. But consumers are tapped dry. Defaults are growing. Charge-offs has been pushed well beyond expectations. And losses are far outpacing what companies were hoping to account for with extra card fees and higher interest rates.

“Just a quick note to say THANKS!! I closed out the second half of XJZMM with a 100.14% gain after 9 days. I pulled the trigger a bit early and missed out on the last hour today, oops. I also closed out QAVMD with a 69.2% gain. In just a month I am 6 for 6.” — Henry

Bottom line:  Each of these 3 “Doomsday Shockers” are about to go down, one by one. The global financial crisis is ensuring it. And each shocker will trigger a series of trades with unfathomable profit potential… opportunities not likely to be seen again in our lifetimes.

The timing on these trades, of course, must be perfect. And that’s where we excel… to the tune of a 68% average return on closed trades. And we’re doing it in an average of 10 days.

So when the opportunities arise to profit — from financials and homebuilders to credit cards and auto maker and service companies, the Options Trading Pit crew wastes no time getting to the goods.

Downside, Upside… It Doesn’t Matter.
Our Readers Are Making a Mint on Both Sides of the Market

It all happens by getting in ahead of the curve…

In fact, during one 66-day run, we recommended a series of quick-hitting “put” and “call” option trades… positions that closed as a cumulative gain of 927.48%. And it occurred during a stretch when the Dow Jones Industrial Average plummeted a whopping 31.8% — down from 11,600 all the way under 8,000 at one point!

Here’s a quick snapshot at some of our profit plays:

  • Lehman Brothers January 2009 10 put: 95% in a day
  • Lehman Brothers January 2009 10 put: 49% in a day
  • Visa June 80 call: 74% and 80% in 5 days
  • CurrencyShares British Pound 177 put: 26% in six days
  • Radian Group November 2.50 call: 58% and 75% in 10 days
  • Lehman Brothers January 2009 10 put: 208% and 135% in four days
  • Morgan Stanley January 2009 25 put: 71% and 10% in two days
  • AIG January 2009 5 call: 125% and 100% in 12 days
  • iShares Emerging Markets 32 put: 71% and 157% in six days

And with the 3 “Doomsday Shockers” just around the corner, we’re already primed and ready to pounce on the profits… with a strict stop-loss strategy to drastically curb risk.

Now listen, we charge $799 per year for this service. (Many of our readers have made their money back well before even getting their credit card statement in the mail.) But if you were to compare our track record with other leading trading services, you’ll assuredly find Options Trading Pit produces more winners… at a fraction of their costs.

I could go on all day. After all, I’ve been making fortunes for investors like you for years. Today, the economic challenges we’re all facing have presented us, remarkably, with the trading opportunities of a lifetime.

I urge you to take advantage of them, starting right now, by joining the Options Trading Pit.

Now I can promise you two things:

1. No investment advisory will work harder to put money in your pockets during this prolonged financial crisis… safely and consistently.

2. We won’t be able to hold the low price of Options Trading Pit beyond this month. The overwhelming success of our service requires that we take on additional staff in order to continue making our readers the kinds of gains to which they’ve become accustomed.

Fact is, while Wall Street wrangles through regulatory red tape over the next few years, we’ll be maximizing every single profit opportunity — week in, week out — on both sides of the market.

All you have to do is click the subscribe button below to get started.

Here’s to making all your money back… and then piling it on,

Ian Cooper
Investment Director, Options Trading

Written by Simone Avery

January 10, 2009 at 4:09 pm

Posted in Current