Thursday, June 28, 2007

Historical Note: Stock Trader's Alamanc for End of 2nd Qtr

In 12 of the past 15 years, the Nasdaq has gained an average of .4% on the last trading day of the 2nd quarter. While I have not used the 2007 version as extensively as in prior years because of several bad trades, I do not believe I can ignore any potential one day gain.

Therefore before today's closing bell, I will buy 100 of CLB, even though it has run 10 straight points up, because it is has breached above the $100 price level.

Wednesday, June 27, 2007

Vegas epilogue during U.S. Open weekend

Here's a rundown of my stay in Vegas.

1) Having a rental car helped immensely, since I traveled a bit around the area. I was able to snag a Compact (White 4-door Saturn Ion) 3-day rental for $48.57 from Alamo by using a combination of the Costco membership discount, with the 15% American Express discount, and the $10 weekend coupon. And if I would have checked in online, I could have saved another 10%.

2) One drawback by checking in your baggage is it takes 45 minutes for it to arrive in baggage claim at McCarran International.

3 The one drawback to renting a car is the distance from the rental car lot to the terminals. While it's only 15-20 minutes away going to the lot via shuttle. Coming from the lot takes longer because the nearest refueling station is 3/4 mile away.

3) I should remember to bring $20 in one dollar bills for each day I'm there for tip money. Whether its waitresses, valet parking, housekeeping, bellhops, cage cashiers, pool attendents, it seems most of the money I spent was for tipping.

4) I stayed at the Signature Towers at MGM Grand. While the towers are pretty good, here are some pointers:

a) Do NOT ask for any special services from the front desk or from Conceirge. Tipping does NOT help. I made the mistake of tipping Tony, the evening shift's front desk clerk $20 to make sure housekeeping would arrive at 8:15a the next morning for a mid-morning gathering. Housekeeping never showed up. Also, when I asked a simple question on what are the best golf courses to play for a given handicap, the Concierge didn't have an answer.

b) Make sure there is only one key card that has access to your room. Upon checking out, the front desk attempted to charge $10 for a long distance call when valet parking has me on record of not being on the property at the time of the call.

c) There is no public parking at the Towers. While you can park in the main casino, it's a good 15-20 minute walk to get back to your room.

d) There are no fish poker players at the casinos on Sunday night. You have to catch them on either Friday or Saturday night.

e) Most of the MGM food court shops are not open until 11am.

f) Avoid eating at the Desire Deli Shop in Tower 2. I made the mistake of eating their $12 roast beef sandwich (the minimum for any sandwich is $10) and nearly threw up an hour later. Avoid this deli shop like the plague.

Now that the fluff stuff is out of the way, I recovered all but the airfare for my trip. There were a lot of fish at the MGM poker tables. Pretty much, the rest of the table singled out the fish and one by one, they were busted out. Eventually after around three hours of play, only the locals or sharks were left and I had to leave the table because I couldn't get a read on the experienced live table players. I did visit the Bellagio poker room, but didn't get to play because the waiting lists were consistently 15-20 names long for the 4-8 tables. Not to mention, for such a prestigous poker room, it has to be the only poker room that does not use an electronic waiting list which is either stupid or just plain cheap. It's clear I can hold my own on the 2-4, 3-6, and 4-8 limit tables at the MGM, but I don't have enough bankroll yet for no-limit or a 5-10 limit game. I think it's more to live table experience versus practicing in the comfortable surroundings of home.

The tables at the Palms on Fridays and Saturday's seems the place to be seen when associating with peers in their 20's and 30's. Ironically, I took a break from poker to play the $10 Pai Gow tables and had success with a female dealer named Youn as it seemed the table karma was just right with 5 people (I was in Seat 4), there was a couple to my left in Seats 5 and 6; and to my right in Seats 2 and 3, with Seat 1 empty. After a good rush of cards for 30 minutes, everyone started chatting it up and its always good when you can find such a table.

Ironically, I didn't get a chance to play Blackjack, Craps, or Baccarat. So perhaps the next time I visit, I'll make it a point to sit at a table to at least remember the feel of pressure just in case I go with a group.

It was a ghost town by Sunday night as all my peers had left town. This was the only night I had a negative overall session at the tables. So if I do it over again, I will make sure to take a Sunday afternoon flight instead of a Monday afternoon flight.

Now that I'm attempting to get back up to speed for the markets, I'm checking out whether I should start a Covestor portfolio and attempt to post weekly updates there. We'll see in the coming weeks.

Thursday, June 7, 2007

Stops tripped left and right.

Late yesterday and early this morning, several of my positions were autostopped. Two were ill-timed new positions and quickly reversed to the downside. So as for BKE, that's what I get for sticking my nose in sissy retail. And as for SWN, bad-timing equals flat out wrong.

Three others (SNCR, FWLT, ATLS) were pullbacks from their 52-week highs as their trailing stops were finally hit after good moves since April.

FLIR hasn't done much but as you saw, having that 39.55 stop allowed you to stay in the position all the way to a return to 41.50. We still have our shares, but be prepared to jettison at the stop price.

PALM has done surprisingly well and it's time to move the stop to breakeven.

So what does one do with 40% cash? Maybe I'll take a look at the Ultrashort ETF's on the next entry. One of the traders caught this move perfectly on the close Mon, and is riding this move for all its worth.

Monday, June 4, 2007

The IRS radar for 2006 and 2007

It seems the Internal Revenue Service will continue its aggressive tactics of score profiling when auditing everyone's just filed tax returns and for the upcoming year. The General Accounting Office has targeted the following groups in the hopes of collecting even more revenue for federal government coffers.

1) Schedule C filers. Specifically targeting sole proprietorships, the focus is on three lines: sales income, sales returns, and write-offs for inventory adjustment. In addition, the IRS is starting to pay attention on whether the "business" is attempting to make money or whether the "business" can be classified as a hobby. You can only report net losses for 2 out of every 5 year period before the IRS will start taking a line by line evaluation.

2) S Corporation filers. Watch the dividend line versus the salaries expense line. If an S Corporation's shareholder income is classified as a dividend, it's likely not subject to payroll tax liability such as social security or medicare. Given the pending shortfalls in both programs, they will be looking to see if this expense can be reclassified as subject to additional taxes.

3) 1099-G form submissions. This is the statement you receive when you win at a casino or gaming establishment. The IRS wants to crackdown on winners not reporting their losses on the current line at the bottom of Schedule A. Since most 1099-G filers don't have enough deductions to file Schedule A, it results in an additional tax bill.

4) Schedule A filers. While the deductible portion of medical expenses is virtually unchanged in 20 years, its one of the most common red flags on the GAO review. Usually, the first 7.5% of the adjusted gross income (AGI) is NOT deductible. For example, if your AGI is 100k, then the first 7,500 of medical expenses you incur are not deductible on Schedule A. You can only report the qualified medical expenses above 7,500 on Schedule A. In addition, because the charitable contributions' rule changed last year, requiring a letter from the organization for amounts above $250 or a a copy of a cancelled check if under $250, the IRS will be quick to red flag anyone who shows a dramatic change in contributions from one year to the next. Employee job related expenses is something that has recently shown up on the GAO review as it seems some taxpayers are getting creative on what classifies as a legitimate expense. Reminder that the total of valid job related expenses must exceed 2% of your AGI to be potentially deductible.

5) Filers of the Earned Income Tax (EIT). What once was a noble gesture pretty much turned into a means to abuse the system and some (EIT) filers continue to claim 10 children as dependents without disclosing valid social security numbers. It might be better off to modify this credit given its unlikely someone who have a certain number of children by accident.

6) Schedule D filers. Now that vacation and home flipping has slowed down, the IRS will be looking at whether capital gain filers report the correct cost basis and allowable expenses. Some expenses of the past have noticably disappeared and might be a rude awakening to anyone who sold a home pre-1986 versus selling one today without benefit of the 250k (500k married filing jointly) lifetime capital gain exemption for real estate.