China – Smoot-Hawley – Pre-Paid Legal Services (PPD)

So what do China, Smoot-Hawley and Pre-Paid Legal Services have in common? For readers unfamiliar with Smoot-Hawley, we’ll digress for a moment to catch them up.

The Smoot-Hawley Tariff Act was signed into law in 1930. Many economic historians consider the Smoot-Hawley Tariff Act to be a large factor in contributing to the worsening the Greet Depression of the 1930’s.

Smoot-Hawley significantly raised the tariffs on thousands of imported goods to very high levels and subsequently set off a trade war with the trading partners of the United States. In response to Smoot-Hawley, the trading partners of the United States retaliated with higher tariffs on goods from the United States and shifted a large amount of trade from the United States to other countries.

Some economic historians argue Smoot-Hawley contributed to the start of the Great Depression, even though the act was signed into law after the Great Depression was already in full swing. But, the Smoot-Hawley act was being drafted before the beginnings of the Great Depression, and financial markets are forward looking, hence the Smoot-Hawley act could have been a contributing factor to the beginnings of the Great Depression, as the marketplace foresaw the catastrophe that was about to happen.

Recently, the United States has been increasing the volume and quantity of its disagreements with China over unfair subsidies and lack of progress on cracking down on illegal pirating. So far the scope and magnitude of trade issues brewing between the United States and China have been fairly limited and small. But if the fervor of the trade issues between the two countries continue to escalate, the financial markets of the world could become spooked, and some significant “volatility” could erupt.

So we’ve taken care of China and Smoot-Hawley, but how does Pre-Paid Legal Services (PPD) factor into this equation. Well, the eventual winner of most conflicts ends up being the lawyers; hence this is where Pre-Paid Legal Services comes into play. A trade war between the United States and China would be a traumatic event with no winners, except maybe the lawyers.

Pre-Paid Legal Services sells memberships providing its member access to legal services. So, if an entity thinks it may be in need of legal services, it can become a member of Pre-Paid Legal Services and in the event legal services are needed, the entity will be provided with the necessary legal services.

We live in an increasing litigious conflict laden society and the need for lawyers will only continue to increase, so the future looks bright for Pre-Paid Legal Services.

Competitors:
Competitors for PPD include: General Electric Co. (GE), Legal Club of America Corp. (LEGL.PK), and MetLife Inc. (MET).

Using PowerOptions powerful stock options search tools we discovered the following position for PPD.

The PPD covered calls stock options position has a potential return of 3.8%, in only 40 days. The position also has downside protection of 3.8%. As long as a position does not decrease more than its downside protection at stock options expiration, the position will remain profitable.

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[tags] China, Smoot-Hawley, Greet Depression, United States, GE, General Electric Co., MET, MetLife Inc., PPD, Pre-Paid Legal Services Inc., covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options [/tags]