I took Snugs advise a few weeks back and I am now Spiderless.

I have lost money again - but there was no way I was going to watch the stock go back down to .02 cents again as it did in 2008. That was one painful experience too many. I have learned an important lesson - not to put money into a stock unless I can afford to lose it. I heard people talk about that before - now I know it to be true.

I wish you all well - I may be back again - if the stock goes to anywhere near .04 or less - in its current form - if there is a stock reverse split then I will just watch until it drops - that may be months away. Then again if the stock goes up - I will just watch - but I have no regrets - now I can sleep - and that my friends is the best.

By the way I hope for everyone still with SPQ that I was wrong and that soon the stock climbs like crazy. For me the dye is cast and I am at peace with it.

In the meantime let me leave you with some thoughts a friend of mine sent me a week ago - sage advice if you ask me - he ends with a religious thing - which if you know him is really important to him - and a few others I know:

Too Big To Fail

If you have been reading my notes from time to time, you have read
that the economy is in bad shape and that we are headed for another
crisis. But, some people ask, how come the stock market keeps going
up. And how come we keep hearing on the news that the economy is
getting better. Well as you may have seen the stock market took a
turn for the worse this past week. And the financial news continues
to ignore the disenfranchised and dislocated people and understates
the magnitude of their problems and impact. But, back to the first
question, why did the stock market keep going up and up when there are
so many people out of work for so long. Here’s a little background.
This will help you understand where we’re headed.

Since the beginning of the Financial Crisis the large U.S. banks have
adopted an attitude of we’re Too Big To Fail (TBTF). These banks
lobbied the government and received a massive bail out. They argued
that they were TBTF. They were too important to the financial system
and the economic well being of the country. Not only did they get the
$700 Billion in the now infamous TARP program, the government provided
over $1.4 Trillion in other support provided through guarantees and
access to funds from the U.S. Federal Reserve.

So what did they do with the bail out money and the access to funds
and the guarantees? Did they start to lend money to small businesses
and consumers to get the economy moving again? Did they clean up
their act and get their business on sound footing? No! First of all,
they are still hiding bad loans and investments on their books, so
lending out more money to people who really need it, would be too
risky. If they had to recognize more losses, they would risk
bankruptcy again. So the banks took all of these $trillions kept it.
With some of this money they bought government bonds. So, they could
borrow from the government at 0.25% interest rate and then invest in
10 year U.S. Government bonds at 3.5% and make a nice profit of 3.25%
with virtually no risk. Nice work if you can get it. So why would
they bother to lend to people or small businesses, who might not be
able to pay it back.

So there was the moral hazard. If you don’t have to worry about
failing, what risks will you take to make money? Investing in Gov’t
bonds is good, but boring and not really profitable. The banks still
had lots of cash on hand still, so what to do with the cash. The Wall
Street banks went back to what they do best. Play the stock market.
Now they not only have investors’ money, but they have an unlimited
supply from the government. So they went right back to playing the
markets, with their proprietary investment strategies and using
computer driven trading programs. Playing the markets can be risky
but since it’s not their own money, who cares? If they make huge
profits, the can keep the profits and pay themselves huge bonuses. If
they lose money, it’s OK. They’re TBTF. The government will bail
them out.

Now, when you play poker, the guy with the largest stack of chips is
usually tough to beat. He can out bet you, and he and out last you.
When the Wall Street players got the unlimited supply of cash from the
government, they could easily win, all the time. They could use their
cash to move the markets, they could use their size to squeeze out any
smaller traders who would take positions against them. They ran the
markets up every day using their new clout. Once in a while,
something would spook the markets and there would be a pull back, like
Dubai, or Greece. But once the crisis seemed to fade, Wall Street
went right back to work, with Gov’t money (the tax payers’ money) and
pushed up the markets. The pattern become very predictable. Early in
the day, a lot of the real traders and investors would be actively
working, but as the trading volume settled down mid day, the trade
bots (computer programs) would start. These bots would trade with
each other and slowly move the markets upwards. Every day like
clockwork. Day after day, it was the same. 2:30 PM markets would
start their slow grind up, whether the news was good or bad, it didn’t
matter. Some traders joked that the Dow Jones index would go up to
36,000 by next year (its at 10,000 now) at the pace the bots were
driving the markets up.

But something changed. Partly it was that economies were coming to
the end of their rope of debt sustainability. Partially, it was the
mood of the people, who were tired of seeing Wall Street pay $Billion
bonuses when they were just bailed out and continued on gov’t life
support. Politicians like to get re-elected, so regardless of who
their buddies are in Wall Street, they needed to start reining in
these bankers, or they populous would revolt (or re-vote, if you
will). Greece reminded us that you can’t go living off debt ,
forever. Then Goldman Sachs became the poster child for all that was
wrong with Wall Street and the politicians started talking tough about
banking reform. (at least until the November congressional elections)
And very importantly, the Fed started to pull back on some of the
money available to banks. Without this the trade bots can’t force
the markets higher. With all of these factors moving quietly against
the market, all of a sudden the market turned.

This past week the markets fell. On Thursday, the markets plunged 10%
in 15 minutes, with all the pent up downward forces coming to life.
Pit traders where in panic mode. Everyone was selling, and no one
buying. The computer programs that were supposed to support the
markets failed and in some cases drove the markets lower. We’re not
yet sure how, but the selling stopped and the markets recovered from
that huge fall, but only for a short time. The markets went right
back to its downward trend. The vulnerability of the markets were
seen. Traders are now jittery. This change in mood is significant,
as it’s the turning point in the multi-year stock cycle, which will
now resume its downward trend. Stocks are now headed for a long
journey downwards.

So over the weekend, the European Union put together a $1 Trillion
bail out package. This package essentially bails out the big European
banks, who are the main debt holders of countries like Greece,
Portugal and Spain. Everyone was relieved and excited and the markets
took off again. They were cheering that they defended the Euro. But
it lasted for all of about 6 hours. By mid afternoon, the Euro was
right back where it was on Friday, at $1.27 USD. I guess a $Trillion
doesn’t go as far as it used to. As for the stock markets, they
stayed up, but for how long. Here’s a hint. When the U.S. Government
announced the $700Billion TARP bail out package in September of 2008,
the market rejoiced and promptly shot up 5% (like today). It lasted
for a day, then the markets fell, hard, for the next month loosing 30%
of its value. It continued on down till it was down over 50%. This
time it will be worse (more on that in my next note).

Too Big To Fail. We see the folly of this attitude and the moral
hazard it created. If you believe you’ll be bailed out, what risks
would you be willing to take? That’s a question I’d like you to think
about a bit. No, you’re not a bank and there’s no one providing you
with an unlimited supply of cash, but I believe we do have a big moral
hazard in our beliefs. Many of us have grown up in the church and in
our faith. We believe in the Grace of God and the fullness of His
Salvation for us. Christ paid the price, so we don’t have to. What
more can we do to add to our salvation? Jesus has bailed us out! We
were debtors, but we are now free! But free to do what? God is too
big to fail us. No matter what we do, He will forgive us. While that
is true, the moral hazard is immense.

So what’s wrong with . . . well you name it … music, jewellery,
drinking, movies. We can go on and on. I’ve asked those same
questions from when I was little. “Why can’t I do that”. “I don’t
see anything wrong with it”. “God won’t care if I do that!”
Besides, God is TBTF. I can take lots of risks with my relationship
with God, because He is TBTF. God will take me back. I can be like
the world, but God’s grace is sufficient for me. He will save me.
We can go down this road for some time taking more and more risks with
our relationship, with our faith and with our love. But somewhere
down the road something will change in us. The risk we run is that we
won’t want the things that he offers. Of course God is too big to
fail, but the question is will we want His salvation. Something will
change in our moods, in our desires. Taking risks with God’s grace is
not sustainable for us. Bit by bit it will move us away from God, all
the while making us think that we are still saved. For the time will
come when they will not endure sound doctrine; but after their own
lusts shall they heap to themselves teachers, having itching ears;
And they shall turn away their ears from the truth, and shall be
turned unto fables. (2 Timothy 4:3, 4)

When we appreciate God’s Grace and understand the price he has paid to
bail us out, should not our response be to see how close we can get to
Him, rather than how far can we stray and still be saved? Shouldn’t
our every desire be to see how much like Christ we can become and
serve Him? If we are still asking “what’s wrong with that?,” we may
need to re-examine our relationship with Him. In these times God is
looking for people that want to be closer to Him than anything in this
world. People that will take risks for Him, not with Him. People
that will be too close to Him to fail. People that won’t fail Him,
when the time comes to stand.

I pray that we will all desire to be more like Jesus.

T