Pailin's Trading Corner

Me and the missus.

When I was laid off last October, I didn't bat an eye. It's not the first time it's happened to me. Being in financial services, it's been a cycle every 6-8 yrs that I've "enjoyed". So I've been preparing accordingly for a long time. I'm debt free and rent. The salary was just funding further savings anyway, and too much of it was a donation to Uncle Sam. I won't miss giving at the office :)

My monthly cost of living is 1/10th of 1% of my net worth. I'm actually actively working at all times to reduce my COI footprint even further. Since nearly all my savings is inflation-hedged, I'm -in broad terms- good to go for the next 90 yrs w/o being productive.
Except I'm too young to sit around doing nothing. I also miss the office interaction, though not the politics. My plan was always to be able to walk away at any time the BS wasn't worth the paycheck. TPTB just beat me to the decision, that's all :)

Right now, their plan is that I'm supposed to be up to my ears in debt and all vulnerable to swapping the last bit of integrity and self-respect (not to mention freedeom) I have to vote in the next group of connected politicians and their dripping tit of handouts.

Too bad I stepped outside their plan.

So I'm here trading and building my own side business. Both are modest endeavors that tend to support paying the bills vs. upgrading my economic caste. Both are also in service of transitioning out of NE to TX. Better place to be (for me), whether things just get really bad or go Mad Max. I lack self-sufficiency in the lead and land dept.

Thanks for the appreciation. Now is a good time to mention a few basic Pailin "rules".

1. All things in moderation (don't overleverage, never go "all in" - EVER).

2. My economic circumstances and trading goals are likely very different from everybody else's. Keep this in mind if you track my trades with your own money, as opposed to watching from the sidelines and laughing when I lose :)

3. Cover your backside. Watch your risk, losing less is more important than "maybe" making a whole lotta. You never know when your supply line to easy fiat (jobs, bank loans, friends to borrow from, etc.) will dry up.  If you've traded away all your fiat to losses and don't have any physical or other net assets, you're now vulnerable to the dripping tit. You don't want that! A lot of my strategy pre-supposes a long core of physical or PSLV-type equity and double-longing it with paper in a bull trend or shorting paper to hedge that core in a bear trend. Resistance points and use of stops are an essential part of my trades.

4. If there's no obvious trend, there's no obvious trade. Good time to step away and pretend to do your job (if you have one) so you'll get a bonus year-end, or go outside and live a little (cheaply, of course!) You should already have physical, so you're never out of the trade...you're LONG.

5. Short charts are great for short term trades, never forget to watch the longer charts too. Right now, I'd rather get caught buying poorly at 33 than 37. Why? Risk vs. Reward. Risk? 30-32. Reward? 35-37. Look at the 4hr and 8hr Bollinger bands, recent resistance and those two prices...see what I mean?

I'm sure I'll think of more, but the above is a start. When I post trades, I'll try hard to provide relative context for the upside, downside, and size of trade I'm attempting. I don't enter these things to lose fiat, but sometimes I have a different goal in mind too (like shorting to hedge off-market physical long).

Devise, if wifey is working and bringing home more than the cost of those hot showers...you're net positive. Her happiness is an acceptable cost of doing business, an investment that yields returns. Another Pailin rule - keep the workers working, even if it means you have to pay them a little more :)

Now, if she's not earning just consuming... Just kidding!

You're correct, I have saved a lot. But know too that I've been saving at least moderately for 20 yrs and heavily for 15. Also, know that I've foregone many pleasures that my friends and peers have not. Including the "pleasure" of being in an upside-down mortgage that REQUIRES two full-time incomes to maintain.  No thanks :)

I've taken a lot of sh!t from everybody in my life for many years for my frugality, non-traditional investments, and cautious nature. Only the present missus (and likely final one) "gets" it, though I get the raised eyebrow even from her at times. She's a keeper. When I refer to myself as a "cheap b@stard", I take great pride in it. I'm old enough to know myself now, and know that I'm not going to change much either. Improve yes, change no.

At present, I'm 5% short term bonds, 15% cash, 10% physical/PSLV, 70% art. I'm slowly rebalancing from art which has some liquidity, valuation and storage concerns vs. cash and physical. I'm ok on silver, need more gold - physical and PHYS (for captive retirement funds). It's always a process.

Accumulation is your greater strength. But what to do with it? Cash is very dangerous. The only reason my allocation is currently so high is because I don't have income (unemployed) and I'm open to another 2008 deflation in everything w/o QE3. This is cash in hand. I do not know how far The Bernank (and good buddy Timmuh) will let things go. Not keeping any cash in the banks, too bad for them they won't be able to fractionally reserve against me :)

I deposit cash as need to pay specific bills online and otherwise maintain $10 balance to keep the no-fees acct open.

If I was not worried about deflation in near-term and had salary, I would be no more than 3% cash myself. DYODD on that.

For the record, I've got no feeling on 35/36, totally neutral.

34s, I pay attention for a waterfall to blow some stop/losses out. 37s, I "might" put on a short. But I'd be iffy on it.

Right now, I'm gearing up to start putting on some longs in the low 30s. Not necessarily day trades, more of building a line that I'll have a generous trailing stop on when it goes green. A line I'd ride into the 40s. Not yet though, still too early in season..think July-August.

Well, let's not get ahead of ourselves here :)

The way it worked is I started a small "play" business three yrs ago with the intention of trying it out and (possibly) growing it enough to replace my corporate salary. It's grown all right, but only to 1/3 of that corporate salary. Ideally, I would have kept the salary until target was hit before transitioning. My hand was forced against my will.

Just don't want anybody to get the idea I've got it all figured out. I don't. I'm learning here (and other places) everyday too. I'm reading a lot of books, things I should have read years ago too. Intuitively I've been doing the right things, but until reading Henry Hazlitt, Livermore, Mises.org folks, Daily Reckoning, JSMineset, Trader Dan et al, I didn't know "why"? Now I'm figuring that out and tightening up my operation. Miss that salary though :)