Condition Bear Market Rally
S&P Target 940
Hedge XLE 9.96% Closed
Hedge XLF -14.14%

Position Date Return Days Call
AWR 7/5/2011 -3.64% 45 Closed
BKI 5/31/2011 12.34% 144 Hold
CFI 6/22/2011 1.52% 122 Hold
SE 6/27/2011 6.80% 117 Hold
CLH 7/6/2011 1.62% 108 Hold
GCI 7/14/2011 -18.00% 100 Buy
AGO 8/5/2011 0.72% 78 Hold
DISH 8/10/2011 17.11% 73 Hold
GTAT 9/8/2011 -40.29% 44 Hold
CSGS 10/3/2011 10.58% 19 Hold
Cash-Neutral 5/31/2011 0.00% 144

Mousetrap Return -1.02%
S&P Return -2.58%
Hedged Return -5.73%

Mousetrap Annualized -4.13%
S&P Annualized -10.45%
Hedge Annualized -23.15%

Annualized Advantage 6.32%
Hedged Advantage -12.70%

About a month ago we were assured through various stress tests in Europe that Dexia and other banks were healthy.

In the US, the Federal Government was apparently so confident in our own banking system that they felt they could push forward a lawsuit to bring banks back down to earth.

Now, with Greece on the brink of sovereign debt default, the US is hinting at a possible settlement and Europe is saving the “healthiest bank in Europe” with a bailout.

Wait, what? That’s right. Dexia was listed as the HEALTHIEST bank in Europe… http://www.bloomberg.com/news/2011-1...than-weil.html

If the healthiest bank needs a rescue, that doesn’t speak well for the rest.

This week my value stocks got slammed while my financial stocks soared on hopes, prayers, and petitions, of temporary salvation from above. Not much to be done when governments play Deus Ex Machina but to wait it out. In a healthy market people would be buying value; in an unhealthy market people would be buying bailout whispers.

This isn’t going to end well.

Tim