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1. I just finished playing Tribes 2 like there’s no tomorrow. Why? Because there might not be a tomorrow. Tribes 2’s master server is set to go down on November 1st. I’m sure there will be a work around, but just in case, I played Tribes 2 for a few hours tonight.

2. I’m pretty busy. My qual can be as soon as November 10th and as late as November 20th. I do not find out exactly when it is until November 5th. I will also be in Austin, TX from November 2-5 for a conference. No es bueno.

3. Our design contest entry is pretty much a bust and we do not know why. And I have to go to this conference to explain my crap which does not work. There are 6 teams left and pretty much our only hope of winning anything is if 3 other teams bomb their design.

4. My inflation protected securities are still dying.

5. This market as been too volatile and I decided not to trade it. On 10/22, I bought two IWM calendar spreads and I am just going to sit on it and milk the premium. Here’s the P/L curve of the position on 10/31 and when the November options expire on 11/22.

I pretty much shorted November options and bought December options at the same strike price. The idea is that the premium on the November options will decay faster than the premium on the December options, resulting in a net gain. That’s why it is called a calendar spread. As you can see, IWM would have to be significantly higher or lower when it the November options expire if I am to lose money. Maximum loss on the P/L curve is $165. This is a very small play.

I’m loving it. Slowly moving money from T-bills $100 to $200 per day.

UPDATE @ 2:03 AM on Oct 30: Okay, this is not the time to be crazy. I’m not buying more TIPS. Why not?

1. I still think TIPS are an excellent deal, but this is not the time to use up all the free cash in my retirement account. Other opportunities will arise and I must have free cash to take advantage of those opportunities.

2. There is a chance I could be wrong about TIPS. Nothing is wrong with holding onto T-bills. Risk free (almost).

3. This TIPS fund is starting to be a fairly large percentage of my account.

When you do stuff to your retirement account, you need to be extra careful. That’s why I do not enter into a position all at once. Instead, I slowly scale in. Doing so somewhat prevents me from doing something dumb. I may end up scaling into more TIPS later, but just not now.

Semiconductor stocks are getting ridiculously cheap.

CPUS+graphics
AMD under $3?
INTC under $15?
NVDA around $7?

Discrete analog
ADI under $20?
LLTC barely hanging onto $20?

Semiconductor manufacturing equipment manufacturers
LRCX under $20?
AMAT under $12?
NVLS under $14?

The spiffy stuff
BRCM under $17?
MRVL practically at $6?

FPGAs
XLNX around $17?
ALTR: Same as XLNX?

I would be shocked to see ADI and LLTC go any lower, but I wouldn’t touch them with a 10 foot pole. If I could somehow get BRCM for $10, I’d be very happy.

AMD and NVDA are just holy cow bad.

If I had to guess, if you are going to look for a turn around in semiconductors, listen to the conference calls for the semiconductor manufacturing equipment manufacturers.  Foundries will anticipate the next upswing and start building fabs and buying equiptment before the turn. However, if we have a slow economic recovery, you should start looking at the other end of the chain, the consumer.

Today’s 5 year TIPS auction had a pre-inflation adjusted yield of 3.27%.

http://treasurydirect.gov/RI/OFNtebnd

Meanwhile, the yield on the 5 year conventional bond was yielding 2.67%.

In other words, if over the next 5 years, inflation is greater than -0.6% annualized, you would be better off buying the TIPS bond instead of the conventional bond.

This is such a good deal. I still can’t believe it. I have a bad feeling that I could be falling for a trap.

Just wow.

I am definitely going to exchange more of my T-bills in my retirement account for TIPS. The bond market is definitely pricing in a few years of deflation. This kind of buying opportunity is one of the reasons you should keep extra cash sitting around in your retirement account. If this fund continues to fall, I’m going to be all over this fund and I will not have any free cash left and VIPSX will be over 40% of my retirement account. I am ready to throw money into a potential black hole for a long time.

My mother just sent me this e-mail and I cannot believe this crap.

Grandma left me a voicemail saying that Obama is a Muslim and that his campaign funding has come largely from terrorists. Is it true? What should we do?

I can’t believe I always have to deal with a bunch of misinformed Republican butt kissing retards in my family. This is the oldest piece of crap lie that has been flying around ever since the Obama campaign has started. I am seriously considering sending out a mass e-mail to my mother’s side of the family, blasting them for being the dumbest bag of rocks. I am perhaps the only liberal on my mother’s side of the family, my mother is fairly moderate, voted for Gore in 2000, Bush in 2004, the rest of the family, dumb bag of rocks. Of her siblings, my mother is the highest educated. The dumber you are, the more Republican you are because the more likely you are to fall for these cheap shot political attacks.

I’ve heard this crap before…

Grandma in 2000:

You what? You voted for Al Gore? Hmph! Al Gore won’t let you pray in school and he is also a homosexual.

What can you do? You can’t argue with the matriarch of the family. Dumb bag of rocks.

UPDATE: Now let me make something clear. If you are capable of having a logical political discussion with me, it doesn’t matter what your political views are, I have respect for you even though I may disagree with you. But if you are going to discuss baseless junk with me, i can’t take that.

Bought 1 IWM Dec 45 put
Sold 1 IWM Nov 45 put

Bought 1 IWM Dec 55 put
Sold 1 IWM Nov 55 put

Completely non-directional trade. Trying to milk premiums.

I clicked on a McCain campaign web ad (why the heck not?) and saw some of his videos. I noticed this…

Inflation protected securities are starting to look very attractive. They have taken an absolute pounding the last month or so.

If you compared the following funds over the last few months:

VIPSX - Vanguard Inflation Protected Securities Fund
VUSTX - Vanguard Long-Term Treasury Fund
VFITX - Vanguard Intermediate-Term Treasury Fund

You’ll see that VIPSX has been absolutely pounded. Keep in mind that these funds payout dividends so the plot is not a plot of the return.

How low is low? VIPSX is at $11.48 right now. Here are the price extremes for VIPSX in the last 8 years.

High    High Date    Low    Low Date
$13.31    03/10/2008    $11.38    10/13/2008
$12.73    11/26/2007    $11.48    07/06/2007
$12.24    01/20/2006    $11.57    06/28/2006
$12.90    06/01/2005    $12.15    12/28/2005
$12.91    03/17/2004    $12.03    06/28/2004
$12.86    06/13/2003    $11.69    01/10/2003
$12.08    09/24/2002    $10.61    01/02/2002
$11.22    11/07/2001     $10.42    01/03/2001
$10.53    12/21/2000     $10.03    06/29/2000

You have to go back to 2002 to find this price.

Inflation protected securities have been pounded so badly that the break-even inflation rate, the difference in yield on a 10 year conventional bond and a TIPS bond, has dropped to 1%

http://www.bloomberg.com/apps/quote?ticker=USGGBE10:IND

In other words, if the rate of inflation will be greater than 1% over the next few years, you will be better off buying TIPS rather than a conventional bond. It’s really a good deal. I would add to my TIPS position, but I am still debating whether I should pile in to TIPS, or international stocks because international stocks took an even more amazing pounding. While I am deciding, I will sit in cash.

From bankrate…