Author: TheAcsMan

I can still think back to those days when my kids would be put to bed each night with a story.

“Moo. Baa. La La La.”

That phrase will be stuck in my mind until the day I die, as like most parents, I found myself reading the same story over and over, night after night, because that was the story that wanted to be heard.

Whatever it took to get the little darlings to sleep. Whatever it took. Even Moo. Baa. La La La.

I was only talked off the ledge because the nice policeman promised me I’d never have to hear those sounds again.

Instead, it was a book devoid of silly sounds, but sadly chronicling the deaths of brave, hungry, thirsty, polite, sleepy and explorers, leaving only a single smart explorer to survive.

“Six brave explorers came to Egypt alive, one discovered a rare bird and then there were five.”

Different kids, different tastes. Different stories, but with the same need for the comfort that comes with repetition.

It was always so nice when one was ready to move onto a new book. I don’t really recall, but I may have occasionally hastened that process by telling the kids that their mother threw out their favorite book in a moment of unrestrained rage.

Not trusting a parent is part of healthy childhood development. You can look it up.

Even “Atlas Shrugged” would have been a welcome change from some of the Berenstain Bears adventures, especially the dentist one. The Berenstain Bear loving kid of mine didn’t have the same love for my attempts to read to him from more legitimate dentistry textbooks to try and offset the inaccuracies of the Berenstain version of teeth.

Fast forward some 15+ years and that brings us to today.

And here it is. The same old story. Instead of reading the book, all I hear is the constant repeat of the musical refrain, “Greece is the word, Greece is the word, is the word that you heard…”

Greece, the nation that gave the gift of democracy to the world also showed that it could lead the way in abandoning electoral responsibility, as Prime Minister Papandreou called for a national referendum to get approval for the austerity measures necessary to prevent a “hard default.”

I’ve already forgotten what the root cause of the market’s Monday downturn was ascribed to, but today everyone was on the same page.

“Greece is the word, Greece is the word, is the word that you heard….”

I’ve never really gotten to the point of being apoplectic, but I can imagine that Angela Merkel is at that stage.

Have you ever seen what happens when a German head of state gets upset?

What was really a sight was watching the former Greek deputy Prime Minister of Finance, who by the way was part of the more conservative opposition party, refer to the current Prime Minister as being emotionally and psychologically a basket case.

My words, not his, only because he didn’t have the same fluency with American idiomatic expressions as I have.

So today’s market was a reflection of all of the pent up anxieties of the past few weeks that were falsely put to rest late last week.

I’m not certain that InTrade is making book on the likelihood of the Greek populace voting to take the austerity measures that are part of the now infamous “Greek Haircut”, that apparently requires shaving 50% of the head.

I’m guessing that if the vote can ever get pulled off before the Greek government falls, there not much of a chance that people are going to vote themselves into a life that they’d rather not live.

The good news is that each person can decide for themselves whether they want heads shaved in sagittal or transverse planes. If they play their cards right and perhaps use some entrepreneurial spirit, the “Grecian” may yet come to replace the “Brazilian.”

See, you never got that kind of detail out of those stupid Berenstain Bears stories.

The Greek story was so dominant that even Jon Corzine was moved to the back burner. Any other day and news that MF Global may have violated some very basic elements of trust by using some $700 million of their client’s funds for their own in-house and ill fated pursuits.

Sometimes it’s a good thing when some other story pops up.

To this day, ex-Congressman Gary Condit is no doubt grateful for the timing of 9/11. His role in the disappearance of young intern and romantic liaison was all but forgotten as he quietly stepped away from the spotlight.

Of course, the opposite can just as easily occur. Just ask Farrah Fawcett.

Figuratively, of course.

He fame long ago faded was rekindled with the effort to document the ravages of her anal cancer and subsequent death.

Unfortunately for her, her producer didn’t clear her passing with Michael Jackson’s itinerary for that day.

So Corzine got a pass and may still be on the short list to replace Timothy Geithner as our next Treasury Secretary, unless of course someone on the search committee has an “aha moment” and remembers that Corzine was the guy in charge when MF Global went bankrupt and stole their clients’ money.

That may be a bit harsh and things still remain to be sorted out.

What is clear is that Corzine bet and he bet big and he bet wrong.

Corzine used to be one of the big boys at Goldman Sachs, co-CEO with Hanry Paulson. There’s a reason that the Goldman people are called “the smartest guys in the room.”

What Corzine failed to take into consideration was that he had left the room and apparently the other kids took all the smarts with them. People marching up and down Wall Street may disparage Goldman Scahs and may blame them for the financial meltdown, but last I looked, no one was accusing them of stealing money or dipping inappropriately into anyone else’s pockets, as your old weird uncle used to urge you to do with him.

While Corzine was being trivialized, news from Greece threw the market into spasms of optimism interrupted by spasms of pessimism.

Word that the idea of a referendum would never occur helped the market recoup about 100 points from its low.

Further word that Papandreou might be psychotic or having some kind of a breakdown was comforting to the markets.

When it was all said and done it looked as if only some form of chaos was in the near term crystal ball, so the market just gave up.

Not capitulated, just gave up and called it a day. A bad day.

I picked up some more shares of Riverbed Technology and marveled at how the ProShares UltraShort Silver ETF that I owned, some of which is hedged, has been serving as the perfect antidote to both the fleeting feelings of elation and depression.

Those feelings come and go because it’s just a reflection of the same old story that is the big picture. The book, as it were. The book that encompasses Greece, Corzine, the Yen Carry Trade, High Frequency Trading and so much more.

That story of that book is that what goes up must come down and must then go up again, only to come down in time to do it all over again.

Strangely, I never tire of that book, only the stories in it.

To me, the details of each breaking business or economic story now all sound the same.

Moo. Bah La La La.

All I care about is that at the end of each day I’m not one of those investor explorers who doesn’t live to see another day.

I’ll do like that smart explorer who just stayed in bed and avoided the predictable traps. Who needs excitement?

Just make mine a La-Z-Boy and make certain the Moo Lah, Moo La La stays safe with me.

 

 

 

Views: 25

The past week was all about superlatives. Best of all, the superlatives were all headed in the right direction.

It really didn’t matter that so much of that direction was dictated by rumor after rumor. People who were smart enough to do the stupid thing and not take profits when common sense dictated otherwise were well rewarded on paper.

With the close of trading on Friday we were hearing all kinds of statistics centering around the market’s performance this October.

By all accounts we had seen the single best performing month since 1618, or in meteorological terms “ever since records have been kept”

It was that good. You actually had to go back to when Native Americans were occupying Wall Street to have had as good a month as we’d just experienced.

Even the old adage “buy on the rumor and sell on the news” couldn’t bring the market down after the rumor of breaking an impasse over the Greek financial crisis came into being.

At least to a degree, as today the Greek Prime Minister announced that the final details of the debt agreement will be put to a referendum. So, that certainly makes it a done deal.

What could possibly go wrong?

But in October jut about everything went right, as long as your standard is that you need at least a 17% gain.

Shorts were reportedly being squeezed, talk of IPO’s was beginning to burn up the airwaves and people were clicking on the ads on this site.

That final indicator seems to be a very accurate one. People click on financial related ads when they’re feeling good about multiplying the wealth. When the market is going down no one in their right mind clicks on an “Open an E*trade Account” ad.

Even Groupon was looking rehabilitated and in some corners was being compared to LinkedIn, with regard to the reception its IPO would be expected to receive.

 

 By some measure, those all may be sufficient to mark a near term market top. And so, today, perhaps befitting the fact that it’s Halloween, the market just gave a middle finger to those superlatives and proceeded to lose almost 2.3%.

The diagnoses for the drastic response today came quickly.

“Risk aversion is once again taking hold in markets,” said Brown Brothers Harriman & Co. strategists in a market commentary following this anti-climatic end of the month day.

That’s why those guys get the big bucks. They are able to instantly recognize once they’ve been run over by a truck.

There must have been a really sharp curve in the road, because clearly none of us ever saw that truck coming. Otherwise we would have stopped buying and buying and stopped driving stock prices higher and higher.

The really good analysts can even identify the source of the tire tracks on their back.

I assume that some of those wild horses now roaming the floors of the NYSE are left over from the original occupants who only remembered to close the gate after the horses had escaped.

But beyond that, they get the big bucks because they can also see well into the future, discounting all unforeseen obstacles.

You and I need a straight road ahead of us.

The really good ones see it coming and take decisive action before the apocalypse.

“Although encouraged by what we consider to be a good start, we suspect Europe will require other measures going forward to effectively deal with its sovereign debt problems,” said USAA Investment Management Company in another note.

The rest of us totally forgot that there’s more to the EU than just a faltering and puny Greek economy

To be so talented is such a gift and needs to be shared with the world.

That was the kind of talent that just oversaw the bankruptcy announcement on Monday of MF Global Financial.

Before overseeing the bankrupting of a one time proud company, the guy who got the big bucks oversaw its evolution from an important cog in the wheel to the wheel.

But not any kind of wheel. More of a freestyle wheel. You know the kind. The one unrestrained by shape and form and without knowledge of the road.

Besides losing billions in European bond speculation, an area where reportedly MF Global had little experience or expertise, it now also seems that some $&00 million of client money is missing.

No matter. Just another opportunity for Jon Corzine to reinvent himself, although it’s not too likely anymore that he’ll be heading to become Treasury Secretary anytime soon.

I suppose that was an anti-climactic end to that much envisioned and predicted journey.

The news of MF Global’s descent didn’t seem to hit the markets terribly hard. For the most part the market just stayed in a tight range until the final hour when it just added another 100 points to its losses.

Why did the market do that? Why did it suddenly reverse direction?

Didn’t you read the earlier paragraphs? Investors suddenly became risk adverse and learned that other countries in the EU were basket cases, as well.

The fact that Halloween also marked Jean Claude Trichet’s last day on the job may have led to some sympathy selling.

For me, I just love “down Mondays”.

Those are the days when the market heads downward sharply right after I’ve had lots of options exercised.

In this case, I had the opportunity to repurchase shares of Caterpillar, Home Depot, Mosaic and Netflix below where they had been assigned and British Petroleum and JP Morgan at prices slightly above the assigment level.

That’s like getting things you really wanted on sale.

The fact that the market didn’t reverse course mid-day, as I so smugly believed was also anti-climactic. Even worse, it led to the feeling you get when you buy something and then as soon as you walk out the door, the going out of business sign goes up.

At least for a number of the share repurchases I did get to sell call options as they were on a short lived climb upward. Caterpillar and Mosaic behaved nicely, but for the most part, the other opportunities didn’t materialize.

Sometimes it’s amazing what opportunities do materialize. Sometimes, though it’s hard to understand why they existed in the first place.

Let’s go back to the case of MF Global again.

No one hates bankruptcy more than common stock holders.

Right?

Well, generally that’s true, but there’s another class of investor that may not fare too well, either.

Those are the holders of unsecured loans.

Reportedly, JP Morgan Chase held about $1 Billion of those notes and its shares got hit very hard. All the better time to repurchase shares.

Then, word came out that all but $900 million had been packaged up and sold to investor syndicates.

You know the kind. The kind that bought CDO’s. The kind owned by people in that evil 1%, mindful of the fact that even the original occupiers of Wall Street had their own 1% folk.

That JP Morgan was involved was no surprise. That fact that it repackaged its assets and palmed off the liabilities on others whose own investing greed was exploited, isn’t too much of a surprise.

So, does any of this sound familiar yet?

But what did come as a surprise was that among the unsecured MF Global creditors was CNBC.

Say again?

CNBC is on the line for about $850,000. Peanuts by any measure, but why exactly is CNBC in that kind of position?

Shades of Jon Stewart.

Did that in any way influence or steer its coverage of MF Global prior to this crisis? Once you’re in that kind of position are you any longer an independent arbiter or free to report wherever the facts take you?

I’m not certain I really need to know those answers. Whatever they are, compared to my imagination, the reality would probably end up being the most anti-climactic of all.

My guess is that it represents some payments owed to CNBC for ad time, although that seems like a relatively large accounts receivable for basic cable advertising, but then again, onMonday I was the lone voice defending Sallie Mae, as it, coincidentally enough was one of only a handful of gainers in a 270 point down day.

As far as MF Global’s tentacles go, back in the ancient Lehman bankruptcy days it was the contagion that killed us.

Now the contagion watch is on Europe with little to no concern about what other blocks may fall here in the US.

As nice as it would be to have MF Globals woes end with MF Global, the Schadenfreude that will all suffer from has to believe that lack of contagion is equally anticlimactic.

We all love a good collapse, but “been there and done that” describes the prevailing attitude.

It’s time to return to those great first 30 days of October, get some risk on and ignore reality.

That’s a climax we could all enjoy.

Views: 10

Warning.

I’m starting the week off with a rant of sort.

When I first got started with Twitter about 6 months ago, one of my earliest Tweets was about Sallie Mae.

I really don’t remember what that Tweet was about, but I did get an eye opener in the process of trying to find just the right tone for my stock related Tweet.

Not really being familiar with the world of “hashtags” and not knowing that a stock was represented by the “$” sign, I searched for Sallie Mae Tweets.

I wanted to know how to do this Tweet thing properly, after all. I wanted to do my research, make certain that I had appropriate references and citations and be cogent and poignant within the contxt of 140 spaces.

Oh, and funny, too.

I certainly didn’t want the Tweet to be frivolous or to waste anyone’s precious time.

I was stunned to see the venom out there about one of my favorite stocks. There was nothing funny about Sallie Me in the eyes of people Tweeting about it.

To me, Sallie Mae was beautiful. I wasn’t really prepared to learn just how ugly it was in the eyes of some many others.

I had owned shares, on and off, for about 3 years, always selling call options in the process.

During that time, I’d gone along for the ride from about $6 to $16. It wasn’t straight line, but that’s how I like things. So much better to make money raking in call options that way.

But people hated Sallie Mae. Not the stock, but the company.

When you consider that the word “Shylock” has been around for 400 years, as a sign of society’s contempt for those who seek to earn by lending, it’s not too surprising to learn of the contempt modern day debtors have for those that provide capital at a cost.

They hated the loan process, they hated the bureacracy and they hated the fact that they had to pay back the money they had borrowed for their education. There may have been other reasons, as well, but I gave up reading through the Tweets, I’d gotten the message.

The message was that there really was much interest on Twitter for reading about the merits of the stock, itself.

As the Occupy Wall Street phenomenon finally drew media attention after about a month of toiling in obscurity, there was still lots of uncertainty over the goals of the demonstrators.

Not surprisingly, like the Tea Party protestors and those that participate in World Bankapalooza, there are many people with their own agenda just looking for someone to break wind for them.

You know what I mean. Not that kind of breaking wind.

Among the many posters and placards out there the ones that caught my attention and that of the media were those complaining about their financial plight, post-college.

The refrain was that among the 99% were those with large school loans and either unemployed or under-employed.

And sure enough, the plight of that portion of the Occupy Wall Street protestors made it to TIME Magazine. Not quite important enough for a cover, but still, 5 pages in an ever shrinking magazine is a considerable allocation of space in the post Jobs and Khaddafi worlds.

Sallie Mae, the one time sibling of all deceased things Mae and Mac is in the business of educational loans. One time they were the executors of all of those federally subsidized loans, but when they dropped the “quasi” in the relationship with the government, the moved to the world of private and uncapped student educational loans.

So the bottom line is that people owe Sallie Mae money.

They just don’t like Sallie Mae, at least not the part of Sallie Mae that requires loan repayment.

Sound familiar? If not you need to see some of Marek Fuchs’ work. He does an excellent video series on TheStreet.com,  “They Just Don’t Get….”, fill in the blank with eBay, Microsoft, Netflix or whatever big hitter is in the news, He has the ability to see beyond the moment and emotion. My only complaint is that the bookcase appearing behind him in those videos lacks a certain balance that only a copy of Option to Profit could remedy.

If I ever get a bookcase, the first thing going on it would be “A Cold Blooded Business.” Probably the only thing, because I don’t read very much.

 Homage? Maybe so, but perhaps I should apologize for using the same concept. I least I spared you the video presentation of my face. Also, I could care less about the business prospect component of Sallie Mae.

It’s hard to believe that at one time I used to march and make my voice heard, but I have a hard time feeling much for that portion of the Occupy Wall Street crowd that is complaining about high professor salaries and high college indebtedness.

Granted, I was lucky to have gone to college and professional school at a time when scholarships were plentiful and loan money could be cheaply obtained.

Eight years of private college and professional school left me with a bill of only $24,000 and 10 years with which to retire the debt. For purposes of this blog I didn’t bother to do a “Future Value” calculation, so let’s just leave it at $24,000.

Even more fortunately, my kids will have no school related debt and they will probably never do a “Future Value” calculation in their lives.

So why do I have a hard time understanding the complaints since I understand the hurdles?

No one delves into the necessary questions behind the protestor posters. Exactly how many years did it take for you to get your degree in a major that has no job prospects, after having changed your major 2 or 3 times?

Really, you turned down an opportunity to go to your local community college while you were still in the process of discovering your true self, thereby turning down the opportunity to get a guarantee transfer of all credits to one of your state university’s 4 year programs?

And save lots of money in the process?

Taking 6 years or more to get an undergraduate degree was funny in Van Wilder, when it wasn’t too common. But it’s all too common now. Tim Matheson, who was a rebel in Animal House, was the establishment in Van Wilder and he laid the law down.

No more free ride.

Once you decided to eat up that low interest rate limit on loans by going more than 4 years you’ve entered into the world of those uncapped interest rate loans.

Hello Sallie Mae

Partied too much to pick up a few extra dollars with a part time job? What, your parents wouldn’t contribute to your educational bills? That seems fairly common, at least you might believe so if you’d read the TIME article.

Why take it out on the poor people at Sallie Mae? They didn’t hold a gun to your head forcing you to change majors, or take that year overseas drinking Dutch beer. That would have been Gunnie Mae.

They didn’t harden your parents’ hearts and wallets. That would have been Uncompassionate Mac.

For that matter, they certainly didn’t shame you into going to college in the first place.

I know that’s been an area of recent controversy. James Altucher has commented and written about how a college education may be quite worthless for some people, as have some successful entrepreneurs.(See Altucher’s “Don’t Send your Kids to College“)

The wisdom there is that if you have the money to pay for college, use it instead to launch yourself into a career, business venture or otherwise.

Of course, if you don’t have that kind of money you can either consign yourself to the predictable path of lowered expectations or indebtedness, for a degree of your own choosing, based on the rants above.

Of course, tuitions are much too high and woefully little is done to prepare students to set their sights on a goal of graduating within the life span of a Great Dane. Colleges don’t offer guidance and neither do parents.

But why blame Sallie Mae?

Oh, I know, because the other option is taking personal responsibility.

In fact, Sallie Mae, in all likelihood, helped many, many people attend college, who perhaps would have been unable to do so in  past and present generations and who ultimately went on to be contributing members of society.

Maybe even in that hated 1%.

Probably quite a few of the protestors have parents in that category, or who at least benefited from Sallie Mae in the past.

Equally likely is that for those having parents who were unable to attend college, thereby likely to earn less over their productive work lifetimes, there would be less ability to pay for their own children’s college education.

I now that all of the above suppositions are unfair. Obviously there will always be significant exceptions to every stereotype and there will be many deserving and well meaning people tagged by that broad brush.

So too should protestors come to understand the facts that indicate that the hated 1% is made of very few of the hated people that they are targeting. Wall Street, banking and hedge fundies are just a speck within that one percent.

Doctors, lawyers and other professionals who worked through the system, paid their dues and paid their bills, while having sights set on a higher goals than just looking to palm off responsibility for bad decisions.

And then there are the lucky ones making truly obscene amounts of money and skewing just about every statistic you can imagine. For every Warren Buffett, there are 100 George Clooneys and Tom Bradys.

As it turns out in a time of economic distress and joblessness, the marketplace has less need for a 6 year educated college graduate with an emphasis on “Classics” and “European Art.”

Now, Sallie Mae will still be hated, regardless, because you always hate “The Man.”

But the crosshairs are pointed in the wrong direction. Lenders have no incentive to see their clients default. They like money too much to accept unacceptable risk.

It’s unlikely that Sallie Mae or the banks holding those student loans have any interest in taking a Greek style haircut, even if a portion is federally guaranteed. Sallie Mae may be “The Man”, but it is decidedly in the long hair camp.

Instead, aim those crosshairs a bit to the right, to draw from the Sarah Palin imagery.

Those who have conveniently forgotten the agreement some 10 years ago to have the Bush era tax cuts sunset. Take some aim in that direction.

Those who cling to the theory of “trickle down” economic theory, which has now had nearly 30 years of laboratory experience to prove that it is not a strategy for all times and situations.

Yeah, aim there, too.

While I agree with the notion that a small segment of our society has helped to compound the economic meltdown, it’s just too easy to place all blame at their feet.

Sure, march around, but do something constructive.

Vote. Call your Congressman and demand an end to dogma and stalemate.

If they don’t move on those demands, then point those crosshairs at their feet and make them dance to something other than loud-mouthed pledge pushers.

But don’t take the crosshairs thing literally, please. That’s just for those on the right.

  

 

Views: 11

Like most people who have a vested interest in life, I woke up this morning to the apparent good news that some kind of an agreement had been reached on the Greek crisis.

Most other natural laws were not being violated, according to the early morning news, but this was a real shock to the sytem of universal truths that we count on to make it from day to day. Otherwise, we’d all be stuck to the ceiling.

You’d be more inclined to believe that had Newton discovered the parachute before the Law of Gravity, things would be very different today for all of us.

Reportedly bond holders of Greek debt will take a 50% haircut. I still don’t completely understand what that means, especially since I’ve always been a bit mystified by the world of bonds and currencies. (See: I Don’t Understand Currencies)

 Britain, which is putting up nothing in the bailout, simply called the EU’s key players “morons”, offered their advice and went back home. Much like Geithner did last month, except without the bangers and mash awaiting him at the airport.

That I understand.

I assume that when it comes to understanding words spoken with a British accent, the EU ministers are every bit as befuddled as when I watch such a movie without sub-titles. This past week it was “Another Year” at the Columbia Film Society.

Good movie, bad teeth

I think. At least about the former. As far as the latter goes, I’m quite certain of it.

So after a series of will she or won’t she episodes, it appears that Greece is safe for now, but will require restraints and some kind of a padded environment.

It’s so difficult to protect one from one’s self.

That final requirement was a victory for the French who demanded that Greece use French drywall in its renovation of the Parthenon and those other crumbling architectural blights, as undersurfacing for the padded elements. Besides, fixing up those walls should pull in lots of international tourist dollars into the Greek economy.

As most people in that upper 1%, upon hearing the news my first thought was obviously related to how can I benefit from this moment in history?

I knew that the answer was “not that much” since many of my holdings were spoken for by the lively options premiums I received on their behalf. Besides, I don’t think Netflix has large European exposure and doesn’t stream much across the pond.

It would have been nice if the EU Finance Ministers at least threw Netflix some sort of bone, perhaps endorsing its plan to split the subscriber base in two.

But that’s fine, because there’s always tomorrow.

Tomorrow is typically when details come and euphoria fades. Reality has a way of dashing hopes and dreams.

Just ask Kim Kardashian.

Sometimes, tomorrow is 30 minutes after earnings are released and guidance is given during the conference call. Tomorrow can come at any time, but it always gets here eventually.

At any rate, today is another of those rare days that I’m working. No windows, no streaming CNBC and no clue what’s going on other than the numbers on the screen, the preponderance of “greens” and an occasional glance at the New York Times website, which by the way, was brave enough to have an article today entitled “Banks Calmed, but Italy Still a Worry.”

I did try streaming, but had no speakers on the computer available to me. I watched the Herb Greenberg segment with Howard Lindzon, founder of StockTwits, but couldn’t read anyone’s lips, other than the one “motherf**ker” that I believe came from Lindzon’s lips as he was probably discussing someone who he believed didn’t understand the concepts of momentum and trend.

That may have been directed toward me, but you can never be certain.

As everyone back in Europe is self-congratulating themselves for a job finally done, we’ll probably skip the details and wonder what’s going to happen next.

One report I read said that this $1.3 trillion bailout sends the message that there’s resolve to battle the same demons in Italy, Spain, Portugal and Ireland, too.

I’m sure that the Germans love that thought.

They still believe that Mussolini was a drain on their glory and they’re probably anxious to help out an old and reliable ally.

All they would ask in return would be for Berlusconi to give them a few telephone numbers of some of his “aides”. Not for anything fiendish or inappropriate. Perhaps just to see if any needed escorts to their high school proms.

So with all of the difficulty and the various fit and starts to try and resolve the Greek crisis, where are the voices reminding us that the Greek economy is like a guppy in the fish bowl?

I certainly understand the concept of starting small and then exporting the knowledge base and experience to larger, but similar projects, but where is the capital coming from?

With recent reports that US banks are awash in capital, a natural consequence of not lending, and the lure of some lofty European bond returns, I hope that the enticements are recognized for what they are likely to be.

The nomination of Angelo Mozilo, as the United States non-voting representative to the European Central Bank is probably not a good sign.

Just in case, I’ve diverted my non-invested cash into something more safe than our own banking system.

I’ve just stuffed it into those coffers maintained at the Occupy Wall Street rallies, that presumably will be used for food and lodging over the winter, as Occupy Wall Street becomes a profession for some protestors. I’m even happy to support their annual trek down to warmer winter climates, as befits New Yorkers of all percentiles, as they take “Occupy Boca” to heart.

See? College was worth it, after all.

You’d really get that feeling if you bought Sallie Mae after the big hit it took on Tuesday. You would have been nicely rewarded as the reality hit.

Sometimes reality tells us that things are going in the right direction, or that at least things aren’t quite as bad as unbridled imaginations made them out to be.

Sallie Mae may be all that is evil in the world of higher education, but I can guarantee that there are at least some protestors somewhere that have benefited from Sallie Mae’s climb from a few dollars per share up to its current share price.

Of course, that conveniently overlooks the days when it was in the $50 range.

With the market spending much of the day in the 300 point higher vicinity, I did take some time to sell some more options. Halliburton, Rio Tinto, Cheasapeake Energy, Riverbed Technology, Freeport McMoRan and even Netflix.

I also bought some more ProShares UltraShort Silver ETF shares, demonstrating precisely the mechanism that I became so top heavy in these shares. Just little by little, with each rise in silver’s price, ‘ve been accumulating the short shares.

Up until the past few days that’s been a very good strategy, but so far, for this options cycle, I’ve only been able to hedge about 30% of my shares, so the precipitous drop in those shares in now limiting my portfolio gains.

Just a couple of weeks ago it was precisely the opposite.

The reason for the big difference?

Who knows?

But even with silver and gold, it’s appropriate to ask “Now what?”

Although working, I do have Twitter going and occasionally stop by to check.

There are lots of very happy people and only the occasional complaint.

That may be the kind of thing that Lindzon may have been talking about this afternoon, if only I’d had sound.

Although I understand the concepts of trend and momentum, I also understand the inviolate physical law of inertia. It takes a major event to stop momentum, but in the case of the markets, it only takes a trivial and unsubstantiated rumor.

And then there’s gravity, as well. Throw that into the mix.

At the very least, there’s probably little reason to ask “what’s next” when it comes to physical laws of the universe. Remember, Newton never did discover the parachute.

Unless someone corroborates the Italian demonstration of particles faster than light, there’s good reason to believe that there’s nothing next on the universal truths spectrum.

Instead, we’re off to Italy with a discerning and questioning eye, as there’s reason to doubt both the speed of neutrinos and the ability of the Berlusconi government to put forward a fiscally responsible plan.

What’s next? Not the basement, but I don’t think we’re headed for the penthouse quite yet, either.

Reality will be back, as will doubts, finger pointing and cold feet.

What’s next?

Tomorrow. And there’s no telling what that may bring, although trade for disappointment and pain.

 

Views: 11

There’s been so much talk about “haircuts” lately.

Wall Street is good when it comes to descriptive terms that may or may not describe anything. We’ve had quantitative easing (1 and 2), risk on/risk off, kicking the can down the road, dead cat bounce, rip your face off rally and now haircuts.

As best as I can figure, in financial terms, the extent of a “haircut” refers to how much give back is necessary to achieve something resembling financial solvency.

As opposed to the real world of hair cutting where there is no cost differential based on the amount of hair shorn, it appears that the extent of the haircut elicits fevered opinions as the perceived costs are culturally unsettling.

Greeks, apparently are a hairy bunch. Thank goodness Armenia isn’t a member of the EU.

As soon as talk centers on the possibility of Greece perhaps needing to take a bigger haircut than initially thought, there’s more rioting on the streets of Athens.

Retiring at age 27 instead of 25 makes some people very angry. Angry enough to toss Molotov cocktails made from the strange green antiseptic liquid that cleans the instruments of haircutting.

Haircuts do that sort of thing to people.You know how irrational people can be when they get a haircut that doesn’t suit them or that doesn’t satisfy their preconceived notions.

With the remnants of my Jew-Fro, I still aspire to look like Jennifer Ansiton after each haircut, but am serially disappointed.

Speaking of haircuts and serial disappointments, look at poor Jon Corzine, CEO of MF Global.

On Tuesday, MF Global had the fine distinction of losing even more, on a percentage basis, than even Netflix.

Did I mention that Jon Corzine was follicularly challenged?

First he was forced out as CEO of Goldman Sachs, then he leaves after a single term as New Jersey Senator, to use his hands on organizational skills to lead New Jersey during the beginning of the area’s financial meltdown.

Depending on your perspective, Corzine either gets a demerit for bad timing or a slap on the back of the head.

For bad timing.

Did I so neglect to mention that New Jersey was perhaps every bit as much dependent on the health of Wall Street as is Wall Street? The state didn’t fare terribly well during the Corzine administration as Wall Street melted down.

If you want to talk about where Main Street meets Wall Street, look no further than the newly rehabilitated cities of New Jersey.

Of course, there’s always the embarrassing evening when Corzine was at the Islamic Society of Central Jersey and was mistakenly characterized as being Jewish.

That’s not going to help your election chances, at least not among the Central Jersey electorate. It doesn’t matter how often you deny it. His problem was that he didn’t vehemently deny it. He should have had his publicist add an “h” to “Jon”.

 That he was voted out in favor of Chris Christie, who is fully maned and obviously not Jewish, is just coincidental. But you don’t find very many Jews that use the name of the Savior as both their first and last names

After trying his hand at politics, it was back to Wall Street for Jon Corzine.

For a guy that doesn’t have much on top, he took another huge haircut on Wednesday, as shares of MF Global, with many financial interests in Europe just got hammered again.

I feel badly for Jon Corzine, although the worst may be yet to come.

That is, if Dick Bove, who is not one of my favorites, is correct in the suggestion that Goldman Sachs is a possible buyer of MF Global.(See: I Never Liked Dick Bove)

In that case, Corzine may request a cut starting at the neck.

In the wake of Netflix and now Amazon, I’ve gotten a haircut well beyond what I had asked for.

You can’t even begin to tell that there’s a Jew Fro in there somewhere.

I hate haircuts of all kinds.

When I first moved to the Maryland area, I had to find a replacement for the Faleri Brothers, the two raging anti-semitic haircutter brothers, with horrid gingivitis and a penchant for overly small Qiana shirts. To their credit, they did an admirable job with my difficult to maintain mane.

One thing that I learned during that period was that when one makes distasteful comments and has a sharp instrument in their hands, disagreeing is really a question of proper timing.

It had taken me years to get used to them, although I’m not certain why that was the case.

After my first haircut in my new home at one of those mall franchise places, I was asked by the “stylist” how I liked the haircut.

I always say that I liked it, despite the fact that I could never see what  was looking at without my glasses being placed back on.

Upon telling her that it did, in fact, like the haircut, she then proceeded to ask me if I would be willing to sponsor her brother so that he might emigrate from Hait to the United States.

That seemed like a reasonable reuest, so upon thinking about it for a brief nano-second, instead, I gave her an extra 5% in the tip and never returned.

For the next 15 years I just continued being ill at ease having my hair cut and being handled by people with very sharp instruments near the organ  of mine that I treasured the most.

No. I don’t get Brazilians.

I rarely would go, only doing so when Sugar Momma would threaten not to go out with me in public until I made myself presentable.

About 6 months ago, by special request, Sugar Momma gave me a haircut. She had never done so before, but I had it with trying to make small talk, reading totally uninteresting magazines and constantly being peddled all kinds of hair products.

Long story short? Best decision of my life. In return, I vowed to trim my beard on a regular basis.

No conversation. No tipping. All I need to do is sweep up the curls and sleep with the girls.

Now, Sugar Momma refuses to be seen in public with me because of the tee shirts I choose to wear. They’re not even made of Qiana, but they tend to be Malt liquor centric, as hand me downs from my son, whose friend’s father owned a liquor store.She doesn’t think it appropriate that I be seen in public with such attire.

What can I say? It’s all a work in progress.

As the trading week itself was progressing to the mid-point, Iwas adjusting my selt belt for Green Mountain Coffee Roaster’s earnings announcement in anticipation of yet another haircut. Instead, word came that the announcement wouldn’t come today, as planned.

Given the warnings this week from David Einhorn and others, that can’t be good news.

At the very least Netflix showed a bit of a bounce after Whitney Tilson, the oft wrong Netflix short of past, announced that he was now buying Netflix shares. That sent shares up by about 4%.

4 down and 30 to go, but you still can’t even see a 5 o’clock shadow on my skull.

The one thing that was really reinforced for me after these few days of overly speculative play is that I really don’t like getting my hair cut.

I don’t mind a little trim, as long as my new growth exceeds the removal.

Someday, and that day will come, maybe for Jon Corzine, as well, that I’ll be able to look into the mirror and see the perfectly layered shag so wonderfully worn by Jennifer.

But until then, despite Sugar Momma making the whole process a little more tolerable, haircuts will remain well down my list of favorite things, along with Netflix, Amazon, Green Mountain and any Wall Street words du jour.

But unlike Jon Corzine, I know that when I get clipped, literally or figuratively, it’s coming back.

So no matter how bad the cut, I just take the glasses off and it looks great.

Netflix will be just fine and so will Amazon. Once they come back, or I make up the difference between buy and sell price with options premiums, they’ll be gone.

If it doesn’t work out that way for Jon Corzine, I’d like to be among the first to invite him to me in my personal Hair Club for Men, where no one cares what length of hair you have, the length of your beard or what tee shirts you sport.

Things can only get better.

 

 

Views: 7

 

One of the problems with getting older is that you don’t dream quite as frequently , vividly or with as much imagination.

Maybe you just don’t have the same ability to recall, but something is different. There’s a strong correlation between erosion of dreams and ear hair.

I happen to have been trained and educated as a Pediatric Dentist, but I rarely think about teeth during the course of the day. I certainly don’t dream about teeth or even hygienists, who were often the punchline of a Woody Allen joke.

I’m certain that some people may have dreams, more appropriately, nightmares about me or my ilk. Maybe even about Woody Allen.

There’s no accounting for the excess baggage that some people carry with themselves throughout life.

In what I can only describe as a nightmare, I awoke a bit earlier this morning than usual with a dream freshly painted in my mind.

For some reason, I was actually a Dentist in the dream. I even was wearing one of those short white coats that I never wore in real life. But there I was, left with the responsibility of explaining to someone why they had cavities, but I wasn’t allowed to draw any cause and effect between their horrid diet or lack of anything resembling hygiene and their acquisition of cavities.

I think it was for reasons of national security and the information was on a “need to know basis” only.

Hard as I tried to rationalize a need to disclose the true cause and effect for the odontogenic malady, I just couldn’t connect the dots.

I like cause and effect.

It explains a lot.

Yesterday, I proudly laid out for Sugar Momma my theory on why dogs, our dachshund Laszlo, specifically, bark at joggers, cars and delivery guys.

Getting into a dog’s mind, it occured to me that being somewhat protective of his terrritory, Laszlo’s second instinct is to bark. But that instinct gets repeatedly reinforced as the jogger always keeps on running and the delivery guys never stop and stay for a spot of tea.

In Lazlo’s mind, those intruders weren’t going about their usual activity, they were chased away by his barking.

So, I don’t even like suspending basic laws of cause and effect for my own dreams.

Cause and effect was probably a good way to describe my waking nightmares through Tuesday’s trading and the afterhours.

No doubt, the cause of Netflix’s 35% trading fall was due to the poorly conceived strategy to send DVD renters off into the sunset. Although that strategy makes more sense, than say, The Gap splitting itself into a streaming jeans business and a mail order jeans business, the market didn’t like the fact that the normal attrition of subscribers wasn’t replaced by new subscribers.

The fact that there’s no really good alternative to Netflix for those that chose to leave really points at the serious nature of their corporate miscalculation.

Did I mention that my Doppleganger bought Netflix shares yesterday? I’m not certain which of us bought more shares today, but depending on the outcome of those shares, I still reserve the right to blame “evil me.” The fact that Whitney Tilson, who has been bearish on Netflix since the days of SONY Beta-Max, has now indicated that he is now buying shares can only mean one thing.

Just as everything can only mean one thing. It remains to be seen what that one thing will turn out to be.

The same evil me bought Amazon and Green Mountain Coffee Roasters yesterday, as well.

In what can only be described as a bad case of “deja vous,” Amazon released earnings that exceeded expectations.

Normally that’s a good thing, unless it’s in the wrong direction.

Can you guess the direction?

Green Mountain is on deck for tomorrow and there’s no shortage of reasons to expect disappointing results, so I’m expecting a climb upward.

In yesterday’s blog, I pointed my finger and placed all blame for making these very uncharacteristic trades on some evil Doppleganger.

But in reality, let’s face. I may be in denial and not really want to take the responsibility for breaking some of my own fundamental rules, but the trades were based on something.

No doubt they were based on some sort of dream.

Not the kind that necessarily required deep slumber, but more the kind borne out of wishful thinking. The dream that you would catch an earning’s report just in the right direction and make a quick hit.

My dreams used to be about hitting home runs, now they’re not.

Obviously, neither of those dreams are likely to happen.

But the actions that I took just made certain that today turned out to be another dream turned into a nightmare.

But Netflix, as culturally key as it is, just isn’t enough to move the markets.

Texas Instruments, which also reported disappointing numbers on Monday used to be able to move markets. But no more.

So I can’t really blame the Doppleganger and I can’t blame Reed Hastings or Jeff Bezos for the rest of today’s nightmares.

Silver and Sallie Mae both did their best Freddy Krueggers and I can’t begin to see their association with streaming or peddling online.

Silver skyrocketted, so my ProShares UltraShort Silver ETF’s did the opposite, although I was lucky to sell some calls near today’s high.

But then there’s the Sallie Mae debacle. There’s some rumor about a consolidation of college lenders out there. That was the same rumor that circulated about 3 years ago, as being on the Obama Administration hit list.

In those 3 years, I’ve done reallly well with Sallie Mae and selling its calls. Those days may be coming to an end, but even that has a sense of “deja vous” about it.

If Sallie Mae stays in the $12 range I may join some of the Occupy Wall Street protestors to complain about how worthless all of the education I have is, in the face of my relatively high cost basis on shares of the stock that many borrowers love to hate.

Today’s market as a whole seemed to be surprised that the rumor of a meeting between EU Finance Ministers to talk about a plan, wasn’t going to happen on Wednesday.

That’s what its all come down to.

Rumors are a little like dreams. They don’t necessarily have a basis in reality, but they can become their own reality, shaping our actions and creating expanded borders for our fears.

At some point, it might be nice if the rumors would become as rare as the dreams.

I’m perfectly willing to give up dreams of teeth, hygienists and even cotton candy unicorns if it meant that I wouldn’t succumb to the unrealistic dreams of waking life and the man made dreams fired by rumors.

To the Doppleganger out there that has made the past two days somewhat hellish, I have the inner strength to admit that you don’t exist.

I alone am responsible for falling prey to my unrealistic dreams, but I dream of the day that will no longer happen.

  

 

Views: 14

 

 

Did you ever have one of those days where you weren’t quite certain what they did with the real you?

Why would unknowns just barge in and take you away? Even worse, what if they put an evil doppleganger in your place, sent to undo all of what you had done?

Sometimes that can be a good thing, but lately I’ve been pretty good.

As we started a new option cycle I had a chance to reflect on the past month.

Based on the by-laws, I have to reflect, even though I am by every stretch of the imagination a very shallow individual.

The stockade on the front lawn is a visual reminder of what happens when performance isn’t up to standards, so sometimes I’m forced to do some “window dressing” before the end of each options cycle.

But not this time.

Before presenting the findings to the Board, I had a moment of solitude and surveyed the process and how the previous month faithfully reflected the strategies that I had cobbled together over the years.

It’s always a good feeling when you beat the averages, especially when the numbers aren’t very good. Certainly the last cycle was a Jeckyl and Hyde kind of month.

As I finally began the presentation, Sugar Momma, who is a Board member, asked if I had done anything illegal. I suppose that was her way lof expressing how impressed she was with the guidance that I was offering.

I always insist on holding the monthly Board meetings with lights turned off so that she can’t read my facial expressions that might in some way belie the truth.

I looked at her, or at least in the direction that I knew she would be, wondering where in the world she would ever think to have asked that question.

So I asked.

Apparently she does pay some attention to the business news and knew about the Rajaratnam insider trading case, but she clearly never read my opinion on that travesty of justice. Why in the world she would think that those circles would travel down to me, to be in the presence of my La-Z-Boy escapes me, but I think she was being serious.

I reassured her that no insiders were harmed in the generation of the previous month’s profits and submitted to my nightly polygraph with more confidence than is typically the case.

But still, just because I believe that insider trading shouldn’t be a crime, doesn’t mean that I would choose to ignore the fact that imprisonment or such things is very real.

So the nice performance of the past month, complemented by very nice options premiums was all above board.

The only problem was that thanks to the unexpected and unwarranted rally this past Friday, I was now faced with replacing about 60% of my portfolio.

Looking at the Asian market performance before calling it a night on Sunday, I was expecting the possibility of a strong open on Monday.

On those Mondays that I’m in a position to refurbish the portfolio I don’t like up Mondays. I prefer manic selling Mondays and the likelihood of repurchasing some of my beloved babies that were taken from me in that nasty assignment process..

So I was pretty happy when I saw the US pre-open numbers, but that happiness didn’t last, because the market just focused on yet another promise of a promise overseas and capitalized on the lack of news.

Another triple digit gain.

When the real me was taken away and who was behind my abduction are still mysteries to me.

As I looked at the newly reconfigured portfolio after the close of Monday’s trading, I’m not certain who was calling the shots. It clearly couldn’t have been me

First of all, there’s still much left to be spent.

That’s just not like me.

Despite the fact that I know it’s a great idea to keep cash at hand to capitalize on an unexpected bargain, I rarely have the discipline to do that.

Put the money in my virtual pocket and its like every day is hookers and blow.

But somehow, by the end of the day, I still had about 40% of what I started with still staring at me.

So maybe some sense of rationality overwhelmed me and I did the right thing.

But then there’s that other thing.

Looking over the list of shares, the long time holdings had some new neighbors.

I tend to stay within a tight universe of stocks, not bringing new ones in very often. These days, I’ve become even more restrictive, trying to limit new purchases on;y to those stocks that hav eweekly options available for trading.

As far as the news one went, I’d actually owned two of them before, but three really stood out, as they were all reporting earnings this week.

I don’t usually play with earnings. Stocks will go in any direction you can imagine after earnings announcement.

Granted, that doesn’t take much of an imagination, as up, down and sideways are basically the only possibilities.

But even worse, I was looking at new neighbors that have a bit of controversy surrounding their names.

I hate controversy.

Remember that very first episode of “The Mary Tyler Moore Show” when Lou Grant tells Mary “You have spunk….I hate spunk.”

But whoever it was that took my place today could care less about the rules of the road.

I understood why I repurchased shares of the ProShares UltraShort Silver ETF. I was able to get them below where they had been exercised. a 1)% monthly pemium for the near the money strike has been a good strategy with those shares over the past few months.

I even understood why I bought back my Mosaic shares at prices higher than where assigned.

What I don’t understand is how Green Mountain Coffee Roasters. Amazon and Netflix made it in and through the gates.

As Netflix reported after the bell and lost about $30, the $8 weekly options premium didn’t seem like such a great deal in hindsight.

Listening to the universal blasting of the company just strengthens my resolve to find out whatever happened to me.

Having the next day’s expected action around your stock holding described as ugly and messy is a bit un-nerving

Years ago, when I was on the precipice of making a career change, I had to ask someone who certainly knew what a mid-life crisis was all about, whether he thought that I was going through one.

Sometimes you do things and are not quite certain of the reaons behind your actions.

He had a simple set of two questions.

“DId you, or are you thinking of getting a new car; and did you are are you thinking of cheating on your wife?”

In hindsight, the answer to at least one of those questions turned out to be “Yes”, but I can’t really recall which one.

But I can’t look to such a simple excuse as “mid-life crisis” to explain today’s actions.

Once the market opens, I’ll be regretting the Netflix purchase, but unless Apple pulls some amazing streaming delivery system out of its corporate butt as we await the specter of an Apple TV, Netflix may have had a strategic mis-step, but it’s not dead.

Yet.

In the meantime, I still have quite a bit more that needs to be put to work and am hoping that the real me shows up the next few days, although we’ll see how Sugar Momma responds to the new me.

I just love it when she uses some of those advanced interrogational techniques.

What the hell?

 

Views: 10

 

I know enough to know that when someone starts a sentence with the words “In all due respect…,” there’s no great love coming forward. You know the tone. The same one that’s used right before you hear something like “in my humble opinion.”

I tend not to use profanity, except when paying for sex, but when I hear either of those sets of words, my first response is “F**k you, will all due respect.”

Sometimes, I may instead say “In my humble opinion, you can go and F**k yourself.”

And then I stop listening to whatever it is that’s about to be uttered, but I amuse myself with an internal giggle at their expense.

Many years ago, when I was first getting started in life and the greater world of investments, I was very fortunate to have received a cold call from a young man named Bob Shapiro.

To make a long story short, Bob was just starting out with E.F. Hutton, of E.F. Hutton fame and became my stock broker for the next 25 years.

How often have you known a cold call to work out?

I followed him to Smith Barney and then to UBS and to all of the corporate in-betweens and iterations after E.F. Hutton gave up its soul and life.

Sadly, Bob passed away about 4 years ago.

Although I told him that I had, I never did read any of the writings of Bernard Baruch. Bob had recommended that I do so.

If you read my blog on a regular basis, you’ll know by the persistent presence of typos, I don’t even read my own blog, much less the writings of a long dead legendary investor, whose mere mention of his name causes phlegm filled sputum to be hurled outward.

It’s bad enough that there’s an entire summer’s worth of swatted flies on my computer monitor, I don’t need any Baruch related detritus.

I’ll never know whether Baruch had the same penchant for run-on sentences as I seem to have.

Anyway, Bob was a fan and being a man of structure and integrity, he ascribed to at least one one of Baruch’s investing principles. That was to cut your losses once you’ve reached the 10% mark.

Bob practiced what he preached. He was consistent in his application of the rules and he was a good shepherd of my portfolio, using his discretion to trade.

Sometimes performance disappointed, but Bob never did.

In the intervening years, I still haven’t read Baruch’s works, but I’ve adopted Bob’s belief in rules.

The only thing is that I don’t buy into Baruch’s “10% Rule.”

For starters, I hate to take a loss, unless its being done for tax purposes.

Sometimes, though, I’ll admit that I used “taxes” as an excuse to just get rid of a loser or what I think to be “dead money.”  Invariably, those have been technology stocks. Other than Google, VMWare, Riverbed Technology, Apple and Microsoft, I’ve not had good luck with technology.

Actually, when I lay it out like that, the technology winners outnumber the losers. Dell, Hewlett-Packard and Research in Motion are my losers, but I hold grudges for a long time and human nature makes it easier to remember the dregs.

Part of the reason that I hate to take losses is that during my years with Bob, I saw many stocks recover from that 10% drop and often quite quickly. Beyond that, there were certainly many holdings that might have had paper losses approaching 10%, yet went on to recover and profit. Rio Tinto, a holding that I’ve had since 1994 was one such example.

In the meantime, though, I’ve had plenty of stocks that have had losses in excess of 10% but I’ve nursed them back to health.

Riverbed Technology is one example, but the most recent is Transocean, one of the bad boys of last year’s Gulf Oil spill.

I own shares of British Petroleum, Halliburton and Transocean and I refer to them as my Evil Troika, yet I welcome them to my portfoklio.

My current batch of Transocean has a cost basis of about $58.50 and I’ve owned it since mid-July. After a late day surge, shares closed at $53.

Using that simple rule, I should have banished the shares, even after that promising surge in the final hour of trading.

I suppose that if I included the $0.79/share dividend, we’d be borderline.

Yet there they are. Still sitting there, with a nasty shade of red clearly indicating that its been a loser.

Before today’s surge, I actually sold $52.50 calls expiring on Friday, for about $0.44 cents.

That seems like a pretty bad risk – reward, but as I looked at my history with Transocean going back to the most recent purchase in July, with the premium received today added to all of the other premiums, if assigned, I’ll net a 0.7% profit.

Paltry, sure. But still a profit. Annualized, that’s 2.8%, which is a lot better than the 1.6% S&P 500 deficit thus far this year.

Better yet, to compare apples to apples, during the period of ownership the S&P 500 has dropped from 1316 to Thursday’s close of 1215, which happens to be a 7.6% loss.

I’ll take 0.7% and forget about the annualization. Better yet, those particular shares are in a tax deferred account, so I have no concern about buying them back when they inevitably fall again, since the wash sales rule is moot.

In the past 6 weeks I’ve been up to New York twice to attend funerals and have had a chance to reflect a bit on the lives and memories of friends and family.

I also think about Bob fairly often, despite the fact that we only met a single time.

Strangely, I also end up thinking about Bernard Baruch, a man I’d never met and it’s very unlikely that I ever will. I doubt that he believed in reincarnation and I’m not certain that he and I will end up in the same place when it’s my time.

Thinking about what a different investing world it has become, with immediate access to information, bid-ask differences of a penny and significantly reduced transaction costs, I wonder what Bernard Baruch would teach us today?

In all likelihood, he would be going by the name “Barry Barch” and would be pushing whatever the intangible asset of the day happened to be.

In all likelihood, he’d be recommending sales of options on the VIX futures, which themselves are a measure of the implied neurotic tendancies of investors who are uncertain of what to do in the face of earning’s season reports.

Bob, on the other hand, would probably not follow him in that direction.

In my humble opinion.

 

 

 

  

 

 

 

Views: 24

In recent years, “fundamentalism” has gotten a bad rap.

Remember the old days? Back when we had TV dials, rotary phones and believed in the fundamentals in every aspect of our lives.

Eh, not so much anymore.

Maybe it’s the perception that fundamentalism is associated with terrorist bombings or perhaps related to abortion clinic shootings, but whatever, fundamentals are not what they used to be. Neither are the funadamentaists.

Fundamentalists, those that purportedly live a life style based on fundamental principles, are very egalitarian, though. Not only do they come in all colors, religions, nationalities and walks of life, but they hate all (other) colors, religions, nationalities and walks of life. To me, that exemplifies a blanket lack of bias.

It used to be that fundamentals were simply the basic building blocks upon which more complex behaviors, decisions and actions were based.

How can I put this?

Eh, not so much anymore.

It’s almost as if they took the “fun” out of fundamental and instead focused on the “mental.”

I have to credit Dennis Kneale for inspiring today’s theme. Before your mind runs away with you, he did so, not because of the “mental” part.

I can’t say with any certainty that I’ve ever gotten any tangible added value from following Dennis Kneale on Twitter or watching his segments on FOX Business or FOX News, but I’ve definitely received the intangible value of thinking, when I’d ordinarily be drooling.

So, while I may not be grateful, those around me probably will pick up my slack and thank Dennis Kneale for removing the topic of fairness in our tax system from our dinner table.

Enough about Dennis Kneale. Read his tweets and watch his segments.

Rhetorical question: What’s so fundamentally changed that a 4% move in Intel’s stock price following release of earnings move doesn’t propel the rest of the market upward?

Unnecessary answer to the rhetorical question? Fundamentals are irrelevant.

Now the fundamentalists pictured above would know just how to light a fire under the market, but that’s a pretty ugly allegory so I’ll avoid drawing it to spare sensitivities.

Clearly, the focus on fundamentals in the stock markets has gone the way of the Yeti, except that fundamentals once did actually exist, although there’s not much of an archeological record of them having survived into this decade.

I did some carbon dating of some old brokerage house statements from the 90’s and there clearly was an over-riding theme of investing on fundamentals.

There was a time when every stock market and investing primer started with concepts like Price – Earnings ratios. Trading volume, new highs and lows. Even such arcane concepts as profits.

These days?

Eh, not so much anymore.

I’m not really certain what’s focused on these days, besides the closing level of the Finnish stock market. This afternoon, I noticed the new top banner on CNBC, at about 2 PM that now gives the closing prices of the many European markets.

I don’t even think that information is fundamental to Finland.

Now, I probably shouldn’t be the one to harp on and bemoan the loss of fundamentals.

After Wednesday’s bell, Riverbed Technolgy reported earnings.

I don’t know what they were, but in the after hours Riverbed went up about 9%.

I’ve owned Riverbed numerous times over the past 3 years and have made lots of money just selling options on those shares.

Lots of money.

In yesteday’s blog “Put a Condom on your Portfolio” I mentioned that sometimes the protection is worth more than the assets. Riverbed is one such example, thankfully.

Occasionally, I’ve also made some capital gains on the shares as they were assigned. That may end up being the case this Friday, as about 30% of those shares may be assigned at $25.

The fact is that I don’t even know what Riverbed Technology does or makes.

That would be pretty fundamental.

But I do know that its price moves alot in both directions. I also know that the premium people are willing to pay to leverage their investment through the purchase of options is fairly rich.

I don’t need to know any more. As long as there’s no white powder obscuring the flashing geen numbers on my screen, I’m good. And truth be known, even if there was a faint hint of said powder, I’m still good.

A big topic of discussion today was on the unsettling effect of ETF’s on the markets and commodities, especially the leveraged ETF’s.

One of my past favorites, which I don’t currently own, is the ProShares VIX Short-Term Futures.

To put it simply, this vehicle represents purchasing a derivative of a derivative, which itself is based on the implied volatility of the markets over 30 days.

Then you can compound it a bit more by selling call options, as I did.

Once you get to that point, it’s actually hard to even remember what it is that you want to occur.

The Volatility Index, or VIX tends to go up when the market goes down. Now once you start selling calls on that, you’re actually hoping that….

Never mind. It’s bad enough that I go through that mental exercise with the ProShares UltraShort Silver ETF.

I don’t exactly know what I want to happen, all I know is that whatever has been happening has been good for me.

Why would you want to regulate that? I like being happy. Before you know it, people other than Ron Paul will be clamoring to regulate sex and drugs.

That may explain why only a single Senator showed up for the ETF hearings scheduled on Wednesday.

No, not because it was “Sex and Drugs Hump Day” on The Hill.

Well, it may also be related to the fact that the other committee members thought that this was just another episode of “To Catch a Predator”.

Say what you will about their sincerity and interests in protecting the investing public, but at least our elected officials are capable of learning from their past mistakes. That, and big posters with a bright red “X” over the face of Chris Hansen are plastered everywhere in the Senate corridors.

I still giggle at the close of each committee session when the disclaimer comes on C-SPAN informing the viewers that “no Pages were abused in the hearings of this committee.”

There was some talk about requiring the same kind of documents as are necessary to open margin accounts or trade options.

But as long as the leveraged ETF’s stay in the 3x range, why do so? Since investing is really a zero sum game, where are the profits of the 1% going to come from if the uninformed and incapable hordes are prevented from losing their way?

I certainly understand why it’s necessary for margin accounts. People do stupid things when they invest money that’s not really their own and it’s amazing how quickly equity erodes. I learned that from Bernie Madoff.

Not directly.

Leverage? You want to talk leverage. Just look at the November 2011 premiums for in the money and near the money options. There’s a 40 to 1 ratio.

2 to 1 and 3 to 1 for ETF’s?

So, I don’t really have a problem with uninformed people purchasing ETF’s. I’m informed, or at least have the potential to be so, and I still don’t know what I’m always purchasing, but I do know enough to change course if things aren’t going according to plan.

Sometimes the fact that an investment opportunity just looks good is good enough as far as full disclosure goes.

But what does rankle me a bit is the behind the scenes rebalancing that takes place, particularly in the leveraged ETF’s that in the long run result in an outcome completely counter-intuitive to rational thought processes.

When you have to explain to someone why their leveraged short Oil ETF fell in value, even while the price of oil did just the opposite over the same haul, there’s a fundamental problem.

Although having the right to make a fool of yourself is fundamental, being made a fool of, is not.

 

Full Disclaimer: Some Pages (and two illegal immigrant interns) were harmed in the writing of this blog. Details may be found on a future episode of DateLine.

Spoiler Alert: Kneale’s alibi is filled with holes.

  

 

Views: 5

I’m not a really big fan of chart analysis.

I’m really humbled when I see some of the analyses that are performed by chart technicians as they crunch and manipulate data and then lay it out in simple graphic forms for the rest of us to ogle and admire.

I won’t say that I’m amazed by what they do, but I will say that I’m amazed that 2 different people can see the same exact graphs and draw the same lines and come up with different conclusions.

Using the kind of analysis that is better suited to a Rorschach Test, somehow people see incredible details and images from the saw-toothed lines. Best of all, they even give names to the images that they think they see.

I’ve often wondered why the “p” in “psychotic” was psilent.

With that in mind, you might understand why charts don’t show up very often in this blog site and why I pay very little attention to charting and technical analysis in the Option to Profit book.

The fact that I know nothing about the tenets of technical analysis are just incidental to their absence.

I still think of myself as analytical, but most of the time quantitative analysis is best suited for events that are predictable.

Human emotions and the reactions to external events aren’t very predictable. That’s why it’s easy to have a “fair and balanced” discussion on any economic issue.

Until the least 2 hours of trading on Tuesday, when word came out that there would be a permanent oversight “troika” in Greece and that the EU was prepared to assemble a $2 Trillion bail out fund, the day’s big story was Green Mountain Coffee Roasters.

David Einhorn, who is legend for his early and dismissed warnings about Lehman Brothers, has some concerns about the K-Cup Kings. (See his 110 slide PowerPoint presentation, GAAP-uccino)

He was fairly universally atacked.by the 99% and at least some of the remaining 1%.

GMCR has been one of those “mo-mo” stocks. Not only did it have “mo”, but it had a double dose of momentum.

After a 3 for 1 split, it’s current $80 per share price would have been $240. Not bad, but just a 2 months ago GMCR was at about $110.

There have been lots of questions swirling around GMCR. Accounting issues, patent issues and whether their alliance with Starbucks is really a good deal.

But look at the above graph. Just look at the performance of the Coffee Kings compared to SPDR Gold Trust Shares.

As a disclaimer. I’ve owned both GMCR and Starbucks in the past year and we drink lots of Peets at home, as it reminds Sugar Momma of her care free days in Berkeley.

By comparison, Gold has been a piker. It doesn’t come close to even the laggard performance of Starbucks.

Gold, the basis of all that we hold valuable, the cornerstone of Ron Paul’s economic theory has been, at best, an also-ran, three times removed.

Here’s the thing. It’s repeatedly been ;pointed out that gold is just a rock. James Altucher was the first person that I heard to come right out and say so, at the very peak of gold’s price run higher. But he has also predicted that Apple will be the first $2 Trillion company, making its liquidation a possible solution to the money needed for the EU banking bailout. Although in his blogs he talks abouty a $1 Trillion level, during a CNBC interview he hiked it to double that amount. Either way. enough to buy a few months of banking calm overseas.

The rock part makes it hard to eat.

Without doing the research, I’m certain that point has been made prior to Altucher pithy “It’s just a rock” comments.

I don’t know if Ron Paul has considered that shortcoming. It’s no surprise that you don’t find Godfather’s Pizza offering a gold topping. It may have as much to do with the fact that would be a price buster for the 9-9-9 special, as much as it has to do with its inedible state.

If the eventual GOP nominated team turns out to be Paul-Cain, they’ll have to work that out.

In the meantime, not only can coffee be ingested and help to sustain life, but it also helps to nourish and give life to another useful currency.

Tulips.

Just spread those coffee grounds around the tulip bed and you’ll have an energized bounty of flowering fools.

The next step is Ron Paul’s. I don’t see how he can keep his ground, especially after mentioning that children’s health care wouldn’t be on the chopping block in a Paul administration.

At least not until other areas were eliminated first, since he explained, “we wouldn’t be able to do everything all at once”.

If Green Mountain continues its fast fade, Paul may be spared the painful decision of switching from Gold to Grounds

In the meantime, once the EU news was reported, the market took a decent 90 point gain and quickly turned it in 250, before giving up a little.

Simon Hobbs, of CNBC, who if you didn’t know, was British, has been a consistent voice of reaonable interpretation of European actions during their banking crisis.

His skepticism has, thus far, been consistently appropriate.

His critique of the report in the U.K’s Guardian newspaper seems to have been well placed, as the market began to recognize that the reports were more paper tiger-like than a real full frontal assault.

For the most part, I was a bystander during the day’s trading.

I did sell some JP Morgan Chase calls, but did so prematurely, as the shares went quite higher later in the day as the EU news came out.

No matter. There are still 3 days for more earth-shattering news to hit.

Once the EU news was digested and GMCR was ancient history, all ears and eyes turned to the after hours earnings reports of Intel, Yahoo and Apple.

The big news was that Apple, which always “underpromises and over-delivers”, had its first EPS miss since 2004.

The inital reaction was pretty brutal, with Apple taking a quick $30 hit, which represented a 7% hit.

Cooler heads prevailed and those losses were quickly pared back to about 4%.Certainly those cooler heads prevailed in Goldman Sach’s case, as it reported  poor earnins, but saw its inital 5% drop turn into a 5% gain.

Based on “technicals” one talking head on CNBC posited that Apple was exhibiting “bubble” behavior and that it’s price momentum was indicating that the bubble was about to burst.

He might be right, but we’ll probably never know if he was wrong.

Yahoo and Intel had nice numbers, so hopefully there will be some follow through in Wednesday’s market.

The problem with that line of thought is that it puts too much emphasis on rational market action. Events driven by events and data, rather than tangentially related rumors.

Based on where we seeem to be going, the likelihood of the market responding to real economic news is as likely as Ron Paul burying his gold around Ben Bernanke’s tulip beds.

More likely is that in a Ron Paul administration he would just plant a big kiss on Bernanke’s two lips in preparation for a literal fitting of cement shoes, and then peacefully sip away on some fine Green Mountain espresso brew.

 

 

  

 

Views: 9