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Monday, July 23, 2012

LAST POST ON PFG, AS BRUCE WILLIS SAID IN ARMAGEDDON, "PREPARE THE WORLD FOR BAD NEWS"


I sat in on the CCC conference call today on PFG, and I have to say it was great. They covered a number of issues related to all of this, and had some seemingly very competent attorneys on the call. Without re-hashing all they discussed, I will summarize my take on all of this, and what I plan on doing.

First, it is becoming pretty clear that this is going to be the biggest loss as a percentage of the funds of any of these things that have ever taken place. I say this because it is becoming increasingly clear, he just spent the money running his company, and buying a few things that do not add up to that much. I think this is going to take a long time to get back a little. It does appear the best guesses by some smart people in the know here it that about 55% of the funds are unaccounted for. It also appears it is going to be quite a while before anything is distributed here, and also the initial amount is going to be pretty small.

These guys are completely on top of this, and there are class action suits that are already filed. You do not have to do anything to be part of them. As a customer you are already part of it. If they get anywhere, notifications will come to you with paperwork to fill out etc.. Until that time or the time that any distributions take place, I plan on operating on the assumption that this is all gone and my goal is to try and make it back by the time we get some of it back. It appears that bad debt bets are in the 30% range now which tells us they are handicapping 50% or 60% of it as the best case in their world. Keep in mind that at the same stage, MF offers were in the 70% range at this point, so that tells us this is likely much worse than MF. This is not news we already knew this.

At this point it is time to move on. I will plan on writing off this whole thing, and that should allow me to go back in time and refile prior years to get some money back to help offset this. The Madoff rule should apply here. Other than that it is time to get back to business and make some money again. I won't and neither should any of you, let this set back ruin our lives. I just won't let it happen. Make no mistake he has put me in a terrible spot, I have already changed my life dramatically to scale back the way I live. I have given up things I have had for 20 years, it is what it is. He has done his damage now and it is up to us to fight back and shrug it off. I am not going to be talking about this in here any more after this post. There will be things in my other blog about regulators once that is up, but this won't be discussed here any more than possibly to refer to a post over there etc..

There was a bond buy generated at tonight's open in the system, I sure hope it takes a loss. I would like to start the service after a loss or two. Once the first of the month comes around and people have subscribed, I will not be talking about the service other than after the trades are over. It would not be fair to those using it to have others get the signals for free. I will review it in here after the fact for those who might be interested in the future.




Here is the crash in Soybean Oil, what a monster move for the night session here. Now I will be looking to see if we can bounce over the ensuing sessions. If it just falls off a cliff which it could here, I will miss the trade. I still maintain that selling below a small inside bar like that in a strong uptrend, is a low percentage entry. Once it broke below the ledge I have drawn in and retraced back into the range, it made more sense to short there. I am not convinced this is going to crash here but you never know, it has a good start if it is going to do so.




In the world of second guessing the bond signals, which I mentioned in yesterday's post I do not do very well, this would be one I would not be crazy about. I say that because for the most part I don't have a single other thing I look at that says to but this right here. As a result from a discretionary stand point I would not do this, but I am not using discretion with this system. It is a system, it says to buy, so buy it is. The exit as always is the first profitable opening with a $1600 stop.

On a house keeping note, I have moved half my money out of TradeStation to Knight. I am just not comfortable with another private company after PFG, and unfortunately TS falls into that category. Once the first half is moved, the other half will follow. I have no reason to believe there is anything unsafe at TS, just being prudent. I have had money there for years and never had any real problems other than pissing matches over fills. If you have equity money there it is covered by SIPC, if you have futures, we now know that is not covered by anything, and is really only safe in Canada. I still don't have an answer about opening accounts there, hopefully I will soon.

Good Trading







6 comments:

klh said...

One firm I have heard of for some time is called Country Hedging - I think they may be small enough and "honest" enough not to run this risk - but that is all sentimental speculation:) I am staying at open ecry for now.

Vikas said...

Looking forward to your emails about the service Chris :). Speaking of Soybean oil, I was short yesterday and covered for like 15 ticks right before the huge crash happened! Could not believe my eyes, and I was kicking myself for missing out.

I caught the ride down in it this morning though :-)

Chris Johnston said...

The head of the Merc says they should hold all the funds to avoid all of this happening again. Of course that is the answer, I can't wait to see all the politicians block that. They want these things to happen. Nice work on the Bean Oil trade.

Michael said...

Hi Chris,

Just wanted to mention that Don Miller is an activist in regards to future endeavors...He was caught in MF Global debacle. He has a voice... twitter: millerdon

Chris Johnston said...

Thanks Michael I know who Don is, I used to read his blog but got tired of all the tangents he went on constantly almost never talking about trading.

Anthony Carusotto said...

I want to trade but due diligence seems pointless.