Taxes According to Beer

A perfect save by the Plunge Protection Team, the government bail out of Fannie and Freddie, shot the market up to a Dow top of 11,279 by 10 a.m.

This allowed traders to make a best buy on the recommended August put at 12.70, and sell to highs of 17.50 within the next hour.

Traders could have also gained first entry to our August call at low as 13.80, not quite near our best buy bottom, but near, by 12 noon.

The government fix was questioned within hours. The market again went back to the 11,000 support line and hesitated.

Holding at 11,000 is a good sign for the market, kind of. The market hits this support line, and traces around it, day after day. Upsurges are short bursts on any trigger, and no amount of what is normally good news affects the market.

This shows a market no longer following cycles, but led by FEAR.

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Subject: Taxes According to Beer - Basic Tax Economics

Suppose that every day, ten men go out for beer and the bill for all ten
comes to $100.

If they paid their bill the way we pay our taxes, it would go something
like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do. The ten men drank in the bar every day
and seemed quite happy with the arrangement, until one day, the owner threw
them a curve. Since you are all such good customers, he said, I'm going to
reduce the cost of your daily beer by $20. Drinks for the ten now cost just
$80.

The group still wanted to pay their bill the way we pay our taxes so the
first four men were unaffected. They would still drink for free. What
happens to the other six men - the paying customers? How could they divide
the $20 windfall so that everyone would get his fair share? They realized
that $20 divided by six is $3.33. But if they subtracted that from everybody
's share, then the fifth man and the sixth man would each end up being paid
to drink his beer. So, the bar owner suggested that it would be fair to
reduce each man's bill by roughly the same amount, and he proceeded to work
out the amounts each should pay.

And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $ 14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued
to drink for free. But once outside the restaurant, the men began to compare
their savings.
"I only got a dollar out of the $20", declared the sixth man. He pointed to
the tenth man, "but he got $10!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too.
It's unfair that he got ten times more than I!"

"That's true!!" shouted the seventh man. "Why should he get $10 back when I
got only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get anything
at all. The system exploits the poor!"

The nine men surrounded the tenth and beat him up. The next night the
tenth man didn't show up for drinks, so the nine sat down and had beers
without him. But when it came time to pay the bill, they discovered
something important. They didn't have enough money between all of them for
even half of the bill!

And that, boys and girls, journalists and college professors, is how our
tax system works. The people who pay the highest taxes get the most benefit
from a tax reduction. Tax them too much, attack them for being wealthy, and
they just may not show up anymore. In fact, they might start drinking
overseas where the atmosphere is somewhat friendlier... (like they did when
Congress passed a high tax on yachts and the industry died here and went to
other countries).

David R. Kamerschen, Ph.D.
Professor of Economics, University of Georgia

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible

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To trade successfully one must overcome market emotions. One must recognize that the markets will most certainly always be uncertain.

To trade successfully the professional trader identifies his or her own edges (their YOU), and thinks out the risk of each trade, and how their YOU will react to the risk.

And then, when trading, nerves of steel and knowing that each and every next moment will be unpredictable. Flowing thru the trade. New Age this may sound, but it is sound. The good trader is simply watching the event, silent witness, and trading what he/she sees as the emotions creating the effect.