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  • Archive for October, 2010

    My Site Attacked by Virus

    Posted by Frugal on 25th October 2010

    Someone planted virus on my site, and after a huge effort, working with my ISP, I finally was able to clean out everything after almost 1 week. My ISP even said that they may be able to trace the hacker. My sincere apology for anybody who got affected by this. I also tightened up the site security and changed all of my passwords. Hopefully, it won’t happen again.

    And if you were using Firefox, you won’t get hit. Internet Explorer however was vulnerable. In any case, virus would be caught by any active virus scanner or shield.

    Posted in Announcement | Comments Off

    Gold going vertical again!

    Posted by Frugal on 13th October 2010

    There seems to be a short squeeze in precious metal market. It looks like it’s going to go a bit higher. I actually sold some, and then get back into the market again.

    So what’s going on with QE2? Since the news won’t be out until Nov 2/3 (the next Fed meeting), potentially the rally could keep going until that time. My guess is that it would be the “buy on rumor, sell on news” deal. Just a brief check for the health on this market:
    1. Gold at new high!
    2. Silver at new high (not yet breaking historical high), AND leading in terms of percentage gain.
    3. GDX at new high!
    4. GDXJ at new high, AND still leading in terms of percentage gain.

    It appears that GDXJ/Silver are still forecasting higher prices to come. Now, it’s investor’s heaven, after suffering thru 2 years of big dip, and coming back to some 6% gain (58.5 / 55). That was the wave 2 in HUI. Now, of course, by extension, you would know what’s ahead in wave 3 according to Elliot wave. Don’t get shaken out! Actually, I will believe in wave 3 until I see it. HUI has been one of the most treacherous index ever. I just cannot believe how many times I’ve got cheated on the false breakouts. Regardless, I’m betting my money on a real breakout. Furthermore, I’m preparing to “back up the truck and load up”.

    The performance of gold is quite lackluster relative to BIDU or AAPL. But there is a season for everything, and “apples” do fall from the tree. I may pick some up, but it’s just not time yet.

    Posted in Gold/Silver | 3 Comments »

    Surprising resolution of mortgage paper fraud coming?

    Posted by Frugal on 10th October 2010

    There is a serious mortgage paper fraud bubbling to the surface. I was aware of this several years ago, but I was not aware of the magnitude. It is so serious that I think it can easily turn the whole world up side down (for the second time, I guess).

    Some background first. The US bankers and Wallstreet or more properly called “fraudsters” first selling all the worthless “mortgage-back” securities back by phantom 100% financing loans from 2005 to 2007, cheating the entire world out of savings. They turned the world up side down with the financial crisis, and then had Paulson from Goldman Sachs being the US treasurer at that time, saving their ass with taxpayers’ money, transforming or rather downloaded all the worthless mortgage paper onto Fannie Mae, Freddie Mac, and AIG. Of course, everyone thought that was a great mission accomplished.

    Now, when they try to foreclose homes, but lawyers demand to see the promissory notes, they find out, “Damn, where is that piece of crap?” Imagining all the homes that cannot be foreclosed on, due to missing documentations for the promissory notes? All the mortgage-back securities now will be truly back by NOTHING!

    Here is what I will venture to guess the potential outcomes.
    1. The only way to foreclose these homes will be through non-judicial foreclosures (including California, the home fraud center). Rather than getting nothing for the mortgage paper, it’s far better than getting something for it. Once the avalanche starts rolling, every bank will start scrambling to sell the homes out of the flood gate. Home prices will fall by another 20% in the coming 2/3 years. Or at the minimum, the shadow inventory of the homes on bank’s balance sheet will dramatically rise.

    2. If this is not resolved through Congress passing a new law, back-patching the shoddy works by bankers, and the news start to spread around the whole world, US dollar will drop to a new dramatic low. Imagine another 3 trillions loss (out of 11 trillion) on Fannie Mae/Freddie Mac backed debts, all USA government owned? By the way, if this event unfolds, stock markets will panic first, but later will reverse to break 52 weeks high. Bonds will plummet for sure. Real estate will go into extended nuclear winter.

    3. New laws get passed through Congress to save the bankers’ ass. Congress initially side with home squatters in the name of protecting voters, until all the law-abiding citizens take the street, demanding fairness. Then Congress realizes that it’s too late to stop the revolution by the majority of the law-abiding citizens, turning to lawless resolutions everywhere.

    Just some crazy ideas. But certainly less insane than what has been going on in US real estate markets. And all of the rotten apples (Wallstreet bankers, home speculators, and all the mortgage “consultants”) are still in there unbelievably.

    Posted in Real Estate, Stock Market | 2 Comments »

    HUI confirming the breakout in gold

    Posted by Frugal on 5th October 2010

    GDX has broken out above $57.50 this morning. I would feel more confident about the breakout if it’s above $58, and that the closing prices stay above $58 for 2 days. But it probably won’t happen until next time.

    Regardless, a new high is a new high, confirming the bullish trend in HUI. Based on how the trading tape looks like, I believe the most likely near term resolution would be another shallow pullback after reaching prices above $58. My best guess is for the pullback to come back to $52.50. But HUI is EXTREMELY volatile. In the past, it can easily pullback 30%, which would put $40.60 in range (using $58 peak price).

    Markets will frustrate the maximum number of people. If I am the “market” (of HUI), that’s what I will do. Too many people got out, and want to get back in. Likewise, I see many new entrants getting into physical precious metals at the current prices. Therefore I would expect price ascent to slow down dramatically, and/or a brief pullback. In other words, I would expect the mining stocks to out-perform physical for the next (up) phase.

    See you at the next top.

    Frugal at

    Posted in Investing | 1 Comment »

    Gold nearing a high

    Posted by Frugal on 4th October 2010

    These days I’m more stressed than ever. Knowing that my gold-related investment could take a (big) fall anytime is not an easy feeling. I’m sitting tight for the moment (but can change my positions anytime).

    My guess is that gold may make a high around $1320 to $1340. The price from last Friday certainly qualified. It is entirely possible that the high is in the rear mirror already. For now, the general stock markets & gold are in sync, taking the cue from the fall in $US (or rise in Euro/etc). Both are quite overbought, I think it’s about time or almost time for both to pullback. For non-daytraders, I think the general trend for both is still slightly bullish. One could continue holding until the year end or early January. There is probably going to be a pullback in the middle, but the animal spirits would probably come back.

    For this time, I believe Hindenburg’s omen will probably fail (to pull back significantly). I’ve never seen this technical indicator so widespread reportedly by various media. The widespread reporting is actually bullish as a contrary indicator. It was even in the Asian newspaper. But of course, the built-up of bearish sentiment could simply delay a necessary fall.

    Probably before the last “lemmings” to take notice and decide to switch from bearish to bullish camp, a bigger correction would still await us ahead.

    If $US index does get to 76, (which I have serious doubts that it would) I would certainly lighten up more aggressively. As long as Bernanke has his wish, a devaluing dollar is good for stocks (& gold). But of course, when pricing your “rising” US assets in international currencies again, the rise would seem much less spectacular.

    Posted in Investing | Comments Off