UPDATE ON PROLOGIS AND US OIL.

Closed Out Both Investments. I promised to let you know how I did on these trades whether I won or lost. To refresh your memory, I bought US Oil (USO) at 29.39 on December, 29 2007. I sold 10 January 30 calls at 2.24. On January 20 the stock was at 29.7 and those calls expired worthless so I got to keep the 2.24. I could have written another set of calls and collected another 2.00+ option premiums but I decided I wasn't as sold on the short-term prospect for oil prices so I sold my stock on January 23 when the market opened. I got 30.20 per share. My overall profit was .81 on the stock and 2.24 on the options for a total of 3.05 per share. Not a windfall but 10.4% for a 22 day holding period.

Similar good luck on Prologis (PLD). Bought on November 7, at $9.85 and sold 10 December 10 calls at $1.75. (Each call is for 100 shares. When these calls expired in December, PLD stock was down but I was able to get another 1.20 by selling these same calls for January. During late December and early January, PLD shares dropped as low as $2.2. I could have bought more at that low price or sold and took my losses; however, news about PLD success in re-structuring debt and leasing new space, led me to hold on even though I was unwilling to buy any more. In January, the stock rose to over 12 and I had to sell the stock at 10 on expiration date. My total profit on the deal was $3.10 per share or 31.5% over a 60 day period. The fact that the stock rose and fell rapidly during that period, illustrates how important timing is in this process. Some may call this technique similar to playing the slots in Vegas; however, this the best way I have found to make profits in the market. I started doing this in 2004 in a taxable account and have made consistent profits over this period. I wish I could say the same for my retirement accounts, in which I have employed a much more conservative, long-term strategy.

I'm Not Sure How Valuable These War Stories Are To My Readers. I only included them to illustrate how you can use market volatility and options strategies to coax cash flow out of difficult markets. They aren't very exciting and making a 2 or 3 thousand here and there may not interest most of you. For this reason, I will refrain from publishing these trades and their results in the future unless I hear that you find them valuable.

What Is The Biggest Threat To Our Economic Success. A few months ago, I would have said that it was high energy prices. Now I will tell you it is low energy prices. We can afford very little in the way of new exploration for fossil fuels at these prices. We can also afford very little in the way of seeking alternative sources. We are already starting to see the effects of this. Companies who supply drilling rigs and oil field chemicals to major oil companies have gone from having a huge backlog of orders to laying off personnel to cope with the decline in business. Boone Pickens has put his windmill project on hold and plans for a plant to produce cellulostic ethanol in Grand Junction have been postponed until "stability returns to the energy markets." While we can all enjoy lower gasoline prices, it comes at the cost of becoming more and more dependent on buying fuel from companies who hate us.