Ian Cooper WealthDaily.com
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The financial media would have you believe that everything is okay; that a second-half recovery is upon us.

Whatever.

We're nowhere near a sustainable recovery, regardless of what the media says. Fortunately, there's a simple way to profit from it, which we explain below.

Look, we're not here to rant about politics. We're simply pointing out how the financial media is missing the real story with their religious-like faith in Obama. Newsweek editor Evan Thomas, for example, once said: "Obama's standing above the country, above — above the world. He's sort of God.''

Such hero worship could lead Obama to believe his own press. Heck, I'd be inclined to believe it too if I were praised as much.

But what the press won't tell you is we're headed for a minefield of financial catastrophe that could end in a double-dip recession.

The current Administration is re-inflating the old Bush bubble by pumping up asset prices, re-inflating the popped credit bubble, and hoping for some sort of economic recovery that's still a ways off, according Greenlight Capital's David Einhorn.

They're basically kicking the can down the road, hoping for the best.

Einhorn agrees, noting that the Administration is "trying to stretch things out in hope that time will solve the problems." They've "adopted an attitude that "what's good for the banks is good for the economy."

But Einhorn questions that view of "what's good for the banks is good for the economy," "because the best interest of the banks is to buy time so that future earnings can outrun embedded losses, while the best hope for a rapid economic recovery rests on insolvent borrowers. . . A corporation, homeowner or consumer that has more than manageable amount of debt is not going to hire people, invest or spend."

And, unfortunately, no amount of new capital will force banks to provide credit to consumers and businesses that carry far too much debt.

It's also why smart traders are short the market...

...And betting on the possibility of a double-dip recession, as unemployment skyrockets, bank bailout funds begin to dry up, and interest rates rise.

You see, there's increasing concern that when the flow of money dries up (beginning in 2010 when much of the stimulus package is spent), the economy won't be as strong as we think it is. And at the core of the double-dip scenario are the consumers, who have barely left a dent in their debt.

Consumers have witnessed an unprecedented destruction of wealth over the last two years. They won't be prepared to face any more challenges like rising mortgage rates, an end to stimulus spending, and high rates of unemployment.

By the end of 2008, households were on the hook for more than $13.8 trillion in debt. And households owed about 130% of disposable income at the close of 2008, proving a willingness to spend well beyond means.

Add this to crippling credit card defaults, high unemployment, and mortgage reset problems over the next three years, and you'll see we're nowhere near the end of the economic woes.

(As economically pessimistic as this may sound, there are bright spots to be found in this market, too. There's always a bull market opportunity somewhere.)

So how do investors like yourselves profit in a debilitating situation?

One way is to buy LEAPS on the major indices, credit card companies like American Express (AXP) and Capital One (COF), or even consumer discretionary stocks. It's only a matter of time before each of these come tumbling down.

And as we said above, there's a very easy way to profit from the possible "double dip", using LEAPS.

And for those of you new to LEAPS, here's a bit of background from Options Trading Pit. . .

How to Buy LEAP Options. . . and Maximize Your Gains. . .

There are two ways to fully maximize your potential gains. One is to buy the underlying stock in each, diversifying your portfolio. Another is to buy long-term options LEAPS.

Say you're anticipating an advance in the price of a stock option over the next two years, but don't want exposure to time decay issues.

Buy LEAPS.

LEAPS cost only a fraction of owning a stock. And they've been known to rocket higher as the underlying price moves. Say you own a $50 stock, and it goes up $5. Your gain is 10%. But say you own the January 50 calls, for example, at $1 and the stock went up $5. You could now be sitting on 400% gains.
That's how you maximize your potential gains. Not by worrying about time decay, or making scant gains from holding overpriced stocks.

Plus:
Your risk is known.

You can buy LEAPS calls if you think a stock is rising. You can buy LEAPS puts if you think a stock is heading lower. There's a lack of time decay.

You can play "big picture" trends, using commodities such as gold. Say the dollar gets weaker. Investors run to gold as a safe haven, and you own the XAU LEAPS that'll leverage your gains when gold moves in "your" direction.

Smart plays for tough economic times.

Good Investing,
Ian L. Cooper

P.S. My Options Trading Pit readers are gearing up to bank monstrous gains playing the coming "double-dip" crisis. We already banked 57% on the short side of Treasuries this month. And we believe credit cards, prime loans, commercial real estate and broad market weakness are right around the corner. Click here to make sure you get in on the next winning play... and the 48 others I'm guaranteeing after that.

For eight years, he's avoided the herd mentality of Wall Street.

That would explain why he bought housing before the 2004 rise and shorted sub-prime and big housing names before the 2007 fall . . . all while the "experts" suggested doing the opposite.

In 1999, Ian left a job in public relations because he couldn't stand saying good things about companies he didn't like, and he's been a financial analyst ever since. His passion for Wall Street, technical analysis and the idea of fast money fueled the move.

Since then, Ian has written numerous articles on topics as diverse as trading news, mergers and acquisitions, crude oil, housing, and emerging market opportunities.

He's appeared in Investor's Business Daily and Forbes.com and has been a frequent guest on Money Matters with Barry Armstrong, Stock Dr. with Lee Seiler, and On the Money with Mike Stein.

Nowadays, Ian relies on technical and fundamental analysis for investment decisions, and has leveraged his options and stock trading passion to fuel his search for quick profits, which is just what you can expect him to deliver to his readership.