A Test of Faith

You often hear stories about deathbed conversions or returns to faith near the moment when there’s not much left to lose by professing one’s faith.

So what if an unexpected profession of faith leaves your followers and fans behind in a world of even greater uncertainty?

Screw them. When you see the white light, it’s every man for himself and the adoption of the Captain Schettino rules applies, whereby woman and children have to fend for themselves while the captain of the ship trips his way past those pearly gates ahead of the rest.

Who knows, there may be limited seating.

A Test of FaithMany famous and infamous people have purportedly had deathbed conversions, including Darwin and Stalin, but the reports of other such conversions may just be wishful thinking or generated for proganda purposes alone.

Based on the appearance of the term “ProShares UltraShort Silver ETF” in the word cloud that accompanies this blog you might be lead to believe that I worship at the feet of some silver idol.

Not really, but you would be right to have that suspicion, as it does seem to appear with great frequency.

By the same token, the constant “God Damn” refrain doesn’t necessarily reflect belief in a diety.

I’m not particularly religious, although I don’t know if I’ll be one of those undergoing the end of life “seeing of the light” experience.

At the moment, there is a 24 hour “Yahrtzeit” candle burning in our household, as is the Jewish tradition to mark the anniversary of a close relative’s passing. Still, nothing really religious, just adherence to tradition and maybe trying to keep my options open in case “The Big Man” chooses to exercise an option over whether those last minute attempts to enter the Kingdom will be honored.

Szelhamos, who wasn’t particularly religious would probably be pleased that he’s remembered. In the slight chance that such a possibility exists, then “why not?”

My sister started a Facebook page for our elementary school, a Yeshivah in The Bronx.

If you’re not familiar with the term “Yeshivah,” apparently based upon the remembrances of those sharing on Facebook, it is alternatively a wonderful place of learning and a wonderful place for the expression of sadistic and irrational behavior by Rabbis.

I went to grade school when corporal punishment was still permitted and even encouraged by parents.

Other than one particular Rabbi in the third grade, whom I credit for teaching me to behave myself in class, I don’t really have the same kind of memories. I learned to behave because I valued not having my knuckles pounded by the edge of a wooden ruler.

My sister recently asked the group of about 100 alumni of the now defunct school a question regarding faith. She asked how they would currently describe themselves in that regard.

The response covered the gamut from atheist, to converted to orthodox.

Faith undulates, as well. Look at Bob Dylan. It can run hot or cold as the moment sees fit.

Look at me.

Even among the Amish, there’s an expectation that thre will be a time to explore and to question the path set out for their lives. The ultimate expectation is that they flock will return home and forever stay on the righteous path.

Which gets me back to silver, the lesser of the precious metals.

Remember, no one of any repute staked his life and reputation on trying to turn lead into silver. The Golden Calf was gold, wasn’t it?

Right now, despite the relatively small position that silver has in my portfolio, in the form of an inversely leveraged ETF. it’s taken an unduly prominent position in my writing and fretting.

Silver has been like the devil or the snake in the Garden of Eden.

One of my very basic tenets has always been to avoid speculation. Nothing defines speculation like precious metals and leveraging on top of that.

Yet, Silver has also tested my other core tenet.

Avoid greed.

All throughout history the precious metals have done that to mankind.

In the case of the ProShares UltraShort Silver ETF, the rich call option premiums are snake-like enticing and have been part of a core strategy for me the past 6 months.

Just grab those premiums and sit back in the faith that silver will undulate.

But over the past two weeks my faith has been tested as silver keeps going up and up and the ETF, as result, keeps going down and down. That’s in real distinction to its pattern over those previous six months when it was up and down and then up and down againa nad again.

That’s a pattern that I could live with.

So while the market has been doing very well in 2012, I’m finding myself in an uncharacteristic position ever since I adopted the aggressive call option writing stratgey so beautifully described in wannabe Award winning book, Option to Profit.

That position is one that’s trailing the S&P 500’s performance for the past three weeks.

That will cause a crisis in faith.Scratch that. Ha caused. Make that “has caused.”

As anyone who follows trends and popular opinion, you will know that once something appears on the radar screen, that tends to be the kiss of death.

In the case of precious metals, everytime a gold bar has found its way onto the front cover of TIME magazine, that spelled the end of the bull market.

Crocs? Same.

Last years’ winning mutual fund sector is pretty much always this years’ dog, and not in a good way.

In the case of the covered call writing strategy, the proclamation by Barrons Magazine that it was the only winning strategy may have just been the kiss of death.

The problem with getting older is that it’s a bad time to lose faith, especially if you are by nature one who sees a role for faith in all aspects of life.

The difficulty comes in the fact that it’s hard to put faith into something new, unless you happen to be a at death’s door, in which case there’s not that much time to mull over the options.

So it’s very distressing to think that an aggressive covered call strategy has run its course, or is just not the right strategy for the moment.I’ve always understood “I want a new drug,” but not “I want a new faith.”

Mind you, questioning faith is not a very good thing to do while enrolled in Yeshivah or any other religious organization.

Faith requires faith.

Not questions and certainly not doubt.

As far as the covered call strategy goes, the potential for underperformance during an unbridled bull market isn’t surprising. That’s just the trade off that you make for accepting the options premiums. You have to give up something, especially if you;’re selling near the money options.

I get that and that can’t shake my faith. Despite the fact that the premiums may be the Devil, a dalliance doesn’t undermine faith. It may actually enhance it.

But still….

It is about the money and the bottom line.

In the case of the ProShares UltraShort Silver ETF the problem really hasn’t been its sustained drop. Sure, its been distressing, but it hasn’t been the root cause, because there have been plenty of sustained drops over the past few years and those have been weathered pretty well.

The problem has been that since the new option cycle began this past Monday its done nothing but go down and I haven’t found the opportunity to hedge the positions.

The last time I owned a naked stock for more than a day or two was during circumcision and maybe during college streaking days.

How convenient. I can blame timing and circumstance for the failing and concurrently help to sustain my faith.

But in reality, it was greed that came into play.

Yesterday, before the Ben Bernanke press conference, both gold and silver were giving back some of their gains and I was getting ready to sell call options on a portion of my shares, which were all purchased at varying price points.

But greed convinced me to wait for an even greater drop in silver prices before making the hedges come to life.

Greed is the Devil. The time never came.

Greed is what destroys faith, if allowed.

The only way to fight evil is with faith and in this case, avoiding the use of margin by usury loving bastards.

Check and check.

Crisis averted.



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