Friday, October 31, 2008

Homeschoolers Lumped in With Gays and Minorities

We were looking at that beautiful house today (a distressed one I might add) and had this exchange with the real estate agent:

Agent - Your kids in school?

Mrs. C-Nut - Yeah one goes to [named pre-school] twice a week and [so-and-so] is too young; she's only 2 years old.

C-Nut - Yeah. She stays with me. She's *homeschooled*.

Agent - [uproarious laughter].....Did you see that SNL skit on homeschooling?

C-Nut - [deadpanning] No. [pause] Do you have something against homeschoolers?

Agent - [turning white] Oh, no. Er, ah,....some of my best friends homeschool their kids.

Haha! I love messing with people. You have to remember, I had just met her and until that faux pas she was putting the hard sell on us as prospective buyers.

Some of my best friends homeschool?

I am going to warn all (both?) of my friends that they are not to use us as token associates to round out their social resumes.

We'll refuse to be treated like other non-majority groups. We refuse to be your personal insulation against being called a *homeschooler-phobe* or a *mass schoolist*!

If we're the only homeschoolers you know, then sorry, we're just going to have to part ways.

Hah! The subtitles in that video were in deference to ONE PARTICULAR READER I have in Costa Rica.

Addendum - By the way, that house we saw today is already listed 50k below where it sold in 2003. Brace yourselves for 1998 prices (which were also 1988 prices in much of the country).

91 posts this month....phew!

Teleprompter Broken?

Working Around Morons

As you can see the market rallied hard in the past 30 minutes of yesterday's trading. The Dow shot up near 200pts as the sheeple no doubt piled into their mutual funds on the close.

Out most of the day, I didn't get back to my PC until just after 4pm. At that point I needed to use the *extended hours* trading arm of my broker. But the online interface would not let me *short* the NASDAQ-100, the QQQQ. In fact, it wouldn't let me short anything. So I called the trading desk to see if they'd do it for me. Guy told me, "We don't allow any shorting after the close." Great.

Now mind you, this is a retail brokerage account - but still, no shorting? Why???

How did I not know this? It must have been quite a while since I tried to short something after the close? Either that or they changed the rules, again.

So I told the guy I was just going to buy QID instead. That's the Ultrashort NASDAQ-100 ETF. Because of its double leverage, I bought half as many shares as I wanted to short with the QQQQ. I got long at 64 at about 4:15 yesterday and at 8am this morning I dumped it at 66. It's always nice to make $$$$ while you're sleeping!

Another annoyance was that I had to wait until 8am to sell my shares. This piss-pour brokerage doesn't start its extended session until then.

These days, compared to years past, I trade small and infrequently. Nevertheless, one day these stupid restrictions are going to cost me some serious money. What if Wells Fargo, my biggest short gapped down 20 pts at 7:30am but rallied back to say down 10pts at 8am when I would first be allowed to trade?

Something like that is totally within the realm of possibility. It'd be a complete disaster and the final impetus to transfer my money elsewhere.

They banned shorting of financials - the bears just piled into the SKF.

Then they banned buying of SKF - so we just piled into puts.

And when puts got too expensive - we just sold calls and shorted synthetic stock.

I hate having to constantly work around Morons, but without this species, the good trades would be few and far between.

Facts On Fannie Mae = Homophobia

From the Boston Globe:

Frank is new target of McCain on the trail,

FAYETTEVILLE, N.C. - Much of John McCain's stump speech is devoted to warning voters about the fiscal dangers that would accompany a Barack Obama presidency, but lately McCain has been picking on a lower-profile bogeyman to make his case.

"And he can't do that without raising our taxes or digging us further into debt like Congressman Barney Frank promised to do," McCain said last night, causing a part-time rodeo arena to rumble with boos at the mention of the Massachusetts Democrat.

Frank has found a comfortable home in McCain's speeches in the campaign's closing days, as one of three congressional Democrats McCain picks out by name as he warns his audience to resist Democratic control of both the executive and legislative branches. McCain mentions Frank along with House Speaker Nancy Pelosi and Senate majority leader Harry Reid.

Frank yesterday dismissed McCain's words as "an appeal to prejudice" that he said reminded him of past Republican efforts to raise voter concerns about the prospect of congressmen Charles Rangel and John Conyers, who are black, becoming committee chairs.

"I'm flattered by this," said Frank, who is gay. "But I don't think I'm the single most important member of the House after Nancy Pelosi. There are also a lot of straight white men who are committee chairmen."

Missed that?

Barney Frank is trying to deflect political criticism by branding it HOMOPHOBIC.

Such is the anti-intellectual political climate we live in. Note the diction of *journalist* Sasha Issenberg:

Frank is a *target".

McCain has been picking on a *lower-profile bogeyman*.

A bogeyman? Gee, I wonder whom Sasha is going to vote for?

Here's a homophobic AND racist clip of Congressional hearings on Fannie Mae from 2004.

Bogeyman Barney Frank will appear at the 4:50 and 6:03 marks.

Barney Frank - I don't see anything in this report that raises safety and soundness problems....

And there it is, dropping straight to zero.

Ironically, there's actually homophilia involved in the Fannie Mae fiasco.

Media Mum on Barney Frank's Fannie Mae Love Connection

From that link:

Frank has argued that family life "should be fair game for campaign discussion," wrote the Associated Press on Sept. 2. The comment was in reference to GOP vice presidential nominee Sarah Palin and her pregnant daughter. "They’re the ones that made an issue of her family," the Massachusetts Democrat said to the AP.

Make sure you click on that link. It's a wellspring of documented Barney Frank shenanigans.

Did you know that Fannie Mae wouldn't list one of its borrowers as delinquent until it was TWO YEARS BEHIND IN PAYMENTS?!?!?!

Thursday, October 30, 2008

Rush Limbaugh Profited From Your Adjustable Mortgage Nightmare

Ah, the adjustable mortgage....

In order for this to be an appropriate product for a borrower, they need to have a considerable cash cushion. They need to have enough rainy-day money where in the event of a housing or mortgage market collapse, they're capable of dipping into their pockets to put the additional money needed down to secure a fixed rate mortgage.

For example, consider the $400,000 adjustable mortgage borrower. Assume they put a *healthy* 10% down on a $440,000 house.

Since then the market has corrected; their house is now worth $350,000. To lock in a new 10% down, fixed rate loan, that buyer would need to pony up $85,000.

Quite frankly, people that buy $440,000 homes do not generally have $85,000 extra sitting around in the bank. Nor do people that buy $220,000 houses usually have $42,500 of rainy-day money either.

I do know one guy who has about a 500k adjustable mortgage on a 700k house. Though he has plenty of cash. In fact, he probably earns 500k in annual income. But other than him, the number of people financially fit enough to borrow on an adjustable basis is almost nil.

Ergo, it follows that the adjustable mortgage is a trap, a con, and snake oil all at once.

I'd only recommend adjustables to my sworn enemies.

On the other hand, Rush Limbaugh has been bombarding his listeners with ads for Quicken Loans and their exotic, non-fixed rate mortgages for years now.

So he's in a profit (obscene?) sharing plan with financial hucksters.

By carrying these ads on his show, he's legitimized a toxic product; he's harmed who knows how many of his listeners naive enough to swallow *you GET to refinance*.

Here would be Rush's defense:

HypotheticalRush - Well, these products saved a lot of money for people as interest rates were trending down....and house prices were rising.


HypotheticalRush - I am not into paternalism. I believe my viewers are smart enough to look out for their own best interests.

Plausible arguments? Well that would be a subjective judgment.

I would never take these ads without, minimally, constantly lecturing my audience about the risks. Even with simultaneous warning, I'm still not sure that I'd take the payola to broadcast such outright hucksterism.

Me? I feel horrible if someone buys a stock or commodity I recommended and loses a few grand.

HypotheticalRush - It's the radio network that chooses advertising. They are a business intent on maximizing profits.

Ah, there's nothing like morality sustained by a couple of *degrees of separation*. Yet they have to maximize profits to pay the host his $400 million contract.

Rush's best defense is probably ignorance. Old, wealthy guys have almost categorically missed the housing bubble.

Meanwhile the marginal buyers, young renters who can afford to buy, who've crunched the numbers and seen a historical chart or two, we've been far more lucid on this matter.

I understand that any media business would have great difficulty turning down the highest bidding advertisers.

But still, they might ask, "How can this exotic mortgage company afford to spend so much on ads?"

And they might do well to remember that snake oil is one of the highest margin products ever invented.

Wednesday, October 29, 2008

Short This Rally?

With the market up a couple hundred points on a rate cut (expected) and follow-through from yesterday...

I just shorted a little NASDAQ-100.

Shorted the QQQQ at 32.95 at 3:21pm.

We'll see what happens. I won't average into this position too aggressively as this market has been far from rational recently.

I wasn't going to make this trade but remembered my vow from yesterday.

UPDATE - Bought it back at 32.02 at 3:58pm. Just about where it closed (though it dipped to as low as 31.77 or so).

The thing about rate-cut euphoria - aside from the 900 pt rally pricing it in yesterday - is that once the announcement is out, the market gets back to focusing on the crappy fundamentals that spurred it in the first place.

Now In The Red

First read Marginalizing A Speculator.

After that I wrote Another Week, Another Hopeless Price Drop.

Down below I have aggregated and chronologized the price history of this *speculation* gone awry:

UPDATE - It's official, house just hit the market at $899,000 on July 24th.

UPDATE - July 30th, price dropped down to $875,000. The seller didn't even give it a week. The open house on Sunday must have been an *empty house*.

UPDATE - August 7th, price reduced to $849,900. Hah, it's only been two weeks!

UPDATE - August 21st, price reduced to $829,900. So as of right now, this *speculator* risked 750k to make 30k. Doesn't sound like any odds I would enjoy playing.

UPDATE - September 30th. Boy, this didn't take long - price just dropped to $809,000. Guy must be watching the stock market (-777 pts yesterday).

UPDATE - October 7th. Down to $799,900. We're at breakeven, officially.

UPDATE - October 24th. Down to $779,000. Now a loser. Great investment pal!

UPDATE - November 16th. Price dropped to $749,000.

Remember if he did in fact pour in $75,000 in improvements, and if he's looking at a standard real estate transactional costs....his breakeven is roughly $800,000.

So he's down twenty grand and counting.

PLUS the carrying costs of his *investment*. Even using a 3-4% cost of capital, he's hemorrhaging an additional two grand per month on that - figure 7-8 grand so far.

Jinxing The Celtics

Last year, I deprecated the acquisitions of Kevin Garnett and Ray Allen. Not in my wildest dreams did I think that team would dominate all season and win the first Celtics NBA title since Larry Bird's juggernaut in 1986.

So this year, undaunted, I will again call it like I see it and...

...JINX my favorite team.

This year, I predict they will be better than last year. Sure the core, Pierce, Ray Allen, and Kevin Garnett will be a little older and a tad less hungry. Sure, they may get hit with injuries - though this risk is ever-present for the entire league.

BUT, this team's chemistry has to be better with a year under their belt. I expect younger players: Rajon Rondo, Kendrick Perkins, Tony Allen, Glen Davis, and most especially Leon Powe to all be better.

The nerds at ESPN pick the Lakers to win this year. Scroll down this previous post to see how poorly they predicted the NBA Finals.

How Often Do You Go?

Here's a clip from Curb Your Enthusiasm - The Lefty Call

I watched it the other night and laughed my tail off. This just HAS to be one of Larry David's best episodes, ever.

I had thought that Curb Your Enthusiasm was done in 2005 when Larry died, sort of.. Lo and behold, they came back in 2007. I guess I missed it because we dumped HBO - on account of the *recession*. Now we have it back with our $176 per month all-in cable bill from Comcast.

I think competition in the way of Verizon FiOS is coming though. An adjacent town just got it; and just this morning I saw a bunch of Verizon trucks running wire down our Main Street.

I am definitely going to switch over to save the whopping $7 per month or so.

Note that I have moved into Comcast-only territory since my previous post on Fios.

Tuesday, October 28, 2008

Bear Market Rally - Dow Up 889 pts

If I am going to be taking *snapshots* of this volatile market, I may as well memorialize today's levitation.

The Dow was up about 400 pts today when I:

1) Posted this comment on Rich Karlgaard's blog (timestamp is Pacific Coast Time) -

2) Left my computer to take my kids to the library.

Obviously, in that last hour or so the market rallied another 400+ points.

Regarding 1) - Monday the market sold off a few hundred points - into the close. It was violent and had to be extremely discouraging for the bulls. Every time the market has tried to rally it's gotten kicked back on its tail. Yesterday proved to be the capitulating capitulation. Any long who got shaken out on Monday just HAS TO BE pissed seeing Tuesday's 900 pt rally.

Now as for today...

Once the folks (and traders) saw the market firming up, they all stampeded to add to their mutual funds. Since mutual funds give their investors the closing price, all the sheeple ended up buying the market at 9,065 - a full 10% higher than they could have owned it had they bought in a day earlier!

Meticulous readers are aware that CaptiousNut got long on Thursday at good prices. This rally wasn't at all hard to predict; BUT it was hard to plan for.

In one of my better stretches (mentally anyway) I haven't gotten long ANYTHING in quite some time. In fact, I could very easily have bought a whole lot more than I did last week - as my gun was *fully loaded*. This is how I *planned* to capture today's rally. More *premature* traders, like Mark Cuban, were just getting back to even today.

Late last week, I got long the NASDAQ-100, the QQQQ, at 28.39, 29.04, and 29.15 with sells at 30.00, 31.81, and 31.80. The last two sales were at 5pm today. Cha-ching.

On Friday I also doubled my OIH position, adding an 83.00 buy to my 85.32 stock.

Today I also *covered* my 11.83 DELL stock with November 13 calls - sold for 92 cents.

I hope the market opens or trades up big tomorrow - I'll short the bejesus out of it!

The Skim Biz Takes A Hit

From my ultra-cynical perspective, the finance and banking business has always been just a giant skimming operation.

All bankers and financiers do is facilitate large transfers of money so they can skim off a piece of the action. The most palpable example may be the real estate agent. The idea that a $700,000 housing transaction is subject to a $35,000 facilitation fee is, of course, thoroughly disgusting, but also quite illustrative of the lucre involved in the skim biz.

Investment banking with its *underwriting fees* would also serve as a great example.

Anyway this is short post. All I wanted to discuss was *asset management*.

Consider that most asset managers skim a *percent of assets* off every year from investors that they use, ostensibly, to run their businesses. It could be .5%, 1%, 2%, or more. With equity markets down 40% YoY, it follows that - without even counting redemptions - the skim pool, at least on the equity side, will be approximately 40% lower for 2009.

Who does this affect?

Well, it affects all the analysts, portfolio managers, and support staff at firms like Fidelity, Putnam, State Street Bank, etc. - to at least name some large local employers.

How Happy would your New Year be if you had to make do with a 40% salary reduction?

Barney Frank - Unapologetic Shakedown Artist

Here we go again, the Boston Globe and it's favorite Communists are whining about losing the jobs THEY SCARED AWAY.

Investing in New York
Bank of America to shift a big part of its 'wealth' operation away from Boston

In the long rivalry between Boston and New York, score another one for the Big Apple.

Bank of America Corp. said yesterday that a big part of its investment management operation will be run from New York City, following the bank's $50 billion purchase of Merrill Lynch & Co.

Both units are now headquartered in Boston, but officials said the company has yet to determine whether the executives who lead U.S. Trust and Columbia will remain in place and, if so, whether they will stay in Boston.

Bank of America put the Global Wealth business in Boston in 2004 following criticism from political leaders, including US Representative Barney Frank, the Newton Democrat who now chairs the House Financial Services Committee, that it was cutting too many local jobs following its purchase of FleetBoston Financial Group for $48 billion.

Yesterday, Frank said he is "very disturbed" by Bank of America's announcements and said he plans to talk to executives there this morning.

"That was a big deal when they put wealth management here, and I'm very troubled" by yesterday's moves, Frank said, noting the approvals the bank received to complete its purchase of FleetBoston Financial. "I'll be reminding them they gave us certain assurances and got some cooperation in return. I'll be very unhappy if this leads to job losses in our area."

Now, in the fog of all this agitprop and innuendo, it may be hard to discern all the BS in this story. Luckily, y'all have me to translate.

Now when there's a merger - like say Fleet Bank and Bank of America - the role of Congress is ONLY to step in for reasons of antitrust. Their interest is limited to the effect of the business combination on consumer choice.

But not if you're Congressmen and House Finance Committee member Barney Frank. He admits to getting *assurances* after complaining about potential *job losses* four years ago during the Fleet merger. Frank openly confesses he doled out *some cooperation* in return. Can you say *shakedown*?

In other words, the overall public interest be damned. It's all about Barney Frank's personal political interest; it's about keeping jobs for his constituents.

It doesn't really matter if he scares out-of-state ten jobs for every one that he *saves* - and co-opts the credit for.

As all the free enterprises continue to leave (Fidelity, Gillette, BoA, etc), his constituency only firms up.

Wow! - Someone Fired An Overpaid, Entitled Fossil

Cousy Fired From Celtics Broadcasts

"I would have liked to have continued," Cousy said yesterday. "I'm only involved in 10 games a season, so it's not that big a deal. But I would have liked to have been allowed to keep my hand in, especially after 22 years of [Celtics] mediocrity - last year was kind of fun, frankly, and I was looking forward to doing it again. Comcast can choose to do the hiring and firing, but if it's a financial situation, I'm not being overpaid. What they pay me is what they spend monthly for office supplies."

Yeah Bob, but office supplies have positive utility.

For those of you unaware, Bob Cousy was a legendary point guard for the Boston Celtics between 1950 and 1963 - er, a long freakin' time ago.

The 'old coot' is 80 years old now. He's been a terrible, and miserable, basketball broadcaster for decades. His replacement Donny Marshall is soooo much better, soooo much more refreshing.

According to Bob, he is *not being overpaid*. But he was getting $50,000 for a mere 10 games work. Okay, Cooz, it wasn't a financial decision - you were fired for incompetence. Feel better?

Let me tell you something about Bob Cousy. The guy hasn't defecated in years. If anyone ever typified the utterly miserable New England dinosaur it is him. He could sit at my family dinner and nobody would notice that he's not actually one of my dour, annually-smiling, know-it-all uncles.

But Bob is also an arrogant Hall of Famer. Not long ago, when asked how he'd fare in today's NBA he responded, "I'd dominate."

Take a look at him from back-in-the day. What do you think about his bravado?

I think he'd get broken in half in today's game.

For the record, I disliked Bob Cousy even before he yelled at me in front of all the members of Worcester Country Club some twenty years ago. He was getting ready to hit his approach shot when he yelled at me (a caddie) for walking some 25 yards in front of him. I screamed back, "YOU GOING TO HIT WHILE THEY'RE STILL ON THE GREEN!?!?!?" [Everyone was out on the greenside patio.]

Just once I'd like to hear an old guy say, "give the audience a new voice...there's plenty of talent out there...." or "I'd hate to think I'm blocking the way of some young guy."

Yeah, we won't be hearing that from any of these entitled 'old coots' that we've had to suffer.

This firing was long overdue. Thank you Comcast!

(What can we do about that other 'old coot' broadcaster, Tommy Heinsohn?)

As for Comcast, I'd bet they need that 50k in savings these days...

Monday, October 27, 2008

And Y'all Thought The Nobel and The Pulitzer Prize Were Jokes...

American Banker to Honor Kenneth D. Lewis With 2008 Banker of the Year Award

During Lewis' tenure, Bank of America has improved customer satisfaction significantly across every major line of business; annual revenue has increased from $33 billion to $66 billion; annual profit has increased from $7.5 billion to $15 billion; assets have increased from $642 billion to $1.7 trillion; market capitalization has grown from $74 billion to $183 billion; and total annual shareholder returns (including stock price growth plus dividends) have averaged 13.3%, doubling peers, the KBW Banks Index, the S&P 500 and the Dow Jones Industrial Average over the same period.

Now I just added up the dividends for the years 2001-2008 and came up with a total of $13.

BAC stock was roughly $24 in January of 2001; right now it is 21.50 per share. Just assume, even though it isn't, assume that the stock is unchanged under Lewis' reign. A $24 stock that gave off $13 in dividends DID NOT average 13.3% annually over 8 years.

It only averaged 6.77% in annual yield.

What a shock - bankers lying...

Now, in American Banker's defense, their field of candidates was grossly narrowed this year with all the CEO firings.

And rightfully, Ken Lewis should have been canned as well.

But still, would it have killed them to say, "Hey, this year no one deserves the recognition"?

Click here to read what I've previously written on Ken Lewis.

Sunday, October 26, 2008

Movie Rec

The Departed - A cast full of, well, self-absorbed a$$clowns and a story of Prison Break credibility (i.e. low).

But the film proves very watchable due to its many plot twists. Judged in the context of the crap that Hollywood turns out today, moviegoers have to see this one if they see anything at all.

Specifically, I recommend this movie to Taylor.

My First Roadkill

That's right. About two hours ago my Chevy Suburban squashed an animal out in Worcester. It might have been a fox, a dog of fox-like color with pointy ears, or a cat that looked like a fox.

I was not driving recklessly fast, and I did hit the brake. It galloped in full-stride straight under my wheels. My brother will testify in my defense.

Now I didn't stop to identify the animal. Was I supposed to? I had just eaten.

I notified my father and instructed him to verify my kill in the morning. That is....if he can get there before the local Chinese restaurateur.

About 10-15 years ago, my mother actually hit a black bear with her car up near the New Hampshire border. She trembled in her demolished car - too panicked to use her *emergency* cell phone while the wounded bear circled about. State Troopers eventually came and shot the bear. So as a roadkiller I have good pedigree even though I've obviously gotten off to a slow start.

You know, the other day I was just thinking that I had never so much as run over a squirrel.

Hah! All I have to do is think.

Friday, October 24, 2008

Stock Markets Crashing

It's 8am this Friday and after a healthy market bounce yesterday (400pt Dow bounce from the lows), we awaken to a global stock market panic. US stock futures are lock-limit-down. The Dow -550 pts , S&P 500 -60 pts, and the NASDAQ -85 pts.

European stock markets posted hefty losses. At 6:36 a.m. the FTSE 100 Index was down 277 points, or 6.8 percent, to 3811 on the London Stock Exchange. The Dax Index dropped 375 points, or 8.3 percent, to 4145 on the Frankfort Stock Exchange.

Overnight, the Nikkei 225 tumbled 812 points, or 9.6 percent, to 7649 on the Tokyo Stock Exchange.

I would say that I am net long for sure now. Long some oil stocks, long some gold stocks, long DELL, short Treasuries, and long the NASDAQ-100 which I bought just yesterday.

Since I got in the near low on Thursday, QQQQ at 29.04, despite the violent drop right now, I am not down too much on my trade. QQQQ is 28.59 at the moment. Nonetheless, I am pissed. Should have dumped it yesterday afternoon so I could reload here.

Today is going to be a crazy day. I bet we either totally crash (1,000 pts down?) or finish up 500pts. I doubt I'll be doing much either way.

I just covered my long term disinvestment in HSBC Bank. Shorted it at $71 in February; rode it up to $87; and now just bought it back at 53.74 in the pre-market.

UPDATE - The Dow futures looked like they opened down near 700 at 9:30am. Right now (9:34am) they are down 582 pts. I actually bought more QQQQ at 28.39. I felt like I am net long, but my P&L had me essentially flat on a 6% gap down opening. So I figured I needed to buy some more. I am going to have to close my brokerage window now because it's flickering so fast my computer is going to seize up.

UPDATE - The Dow rallied (?) much of the day after its ominous opening. It rallied near to unchanged (down 100?) before finishing the day off 312 pts. I wasn't really watching as I was out all day trying to give my wife some space for her conference calls and I also had to pick up my brother from the airport. I just did get back to my PC at 3:20pm.

At 3:53pm my kibitzing wife persuaded me to dump the QQQQ I bought this morning at 28.39. I sold it at 30.00. A mere twelve minutes later I re-bought it 29.15! In contradistinction to yesterday, the market really got clipped on the close. There must have been a lot of (forced?) mutual fund redemptions today.

QQQQ right back up to 29.40. This ain't good for Mrs. C-Nut's little ego.

Thursday, October 23, 2008

Stealth Inflation

Food, energy, AND stock prices have recently been decimated so inflation is whipped for the time being, right?

Think again.

Try telling someone whose adjustable mortgage is resetting that *deflation* is in the air.

Here's another, albeit, smaller example. My wife takes the train into Boston. Rumor has it that they are going to increase the daily parking fee from $2 to $4 PER DAY. That's a $40 bump per month, or nearly $500 increase for the whole year.

So yeah, I'll save $1,000 this year on gasoline dropping from $4 to $3 per gallon....but then I give half of it right back to the parking attendants from the State of Massachusetts. Read on.

Sometimes my wife takes the boat from Hingham Harbor to downtown Boston. It's only $1 per day to park there. One day I took the boat in with my kids to meet up with her. I asked the guy selling tickets there if I needed to pay for parking this late in the day. He said,

"No. Those guys don't come back. Just in the morning. They steal the money anyway. There's no one watching them whatsoever. They just put the money in their pockets."

He sounded at least angry and at most jealous.

So, in the past three years we've lived in this terrible, cold state all they've done is raise the price of my wife's monthly train pass. They usually say it's to defray *higher energy costs*.

And now, now that energy is *cheaper*, they aren't going to rollback the increases, no they're going to continue to add to them.

I may just start dropping my wife off at the station since it's only .5 miles away. She may get a bike; or decide to walk more (some). Heck if we wipe out parking fees completely it'll be $80 in monthly savings - or a full $1,000 per year if they start charging $4 each day.

Now for Exhibit B.

I just got an email from Interactive Brokers, my commodities/futures broker that they will start charging $55 per month for NYBOT (New York Board Of Trade) market data. That's up from $1 per month.

How's that for a price hike?

How's that for a $648 inflation in my annual cost of living/working?

So just between train station parking and trading data I've given the $1,000 in gasoline deflation right back.

The CPI and PPI have systematically understated inflation for the past several years.

Expect Big Government to systematically overstate deflation in the coming months.

Deranged Dog-Loving Taxpayers

That's by far, the most popular referendum sign in my neighborhood this election. I had no idea what *question 3* was but was compelled to research it once I read "vote for the dogs" on it.

The question has something to do with the humane treatment of canines at Massachusetts racetracks. Apparently, the greyhounds - much like most of us - don't have enough living space. Read if you're interested in the details.

Now, I wasn't even going to bother voting this year but had a change of heart. You see, there are two questions on the Massachusetts ballot that I just have to vote on.

Enough *yes* votes on Question 1, and the Massachusetts state income tax will be eliminated.

THAT, is a biggie.

And I believe that there's another question that would reduce the state sales tax. I just spent 15 frustrating minutes trying to find the referendum questions online and have decided to quit. I couldn't even find them on the Boston Globe website - but I did readily find Question 1 agitprop:

The binding referendum, when fully phased in, would cut taxes by $12.6 billion per year, which amounts to just under 40 percent of the state budget and nearly 60 percent of tax revenue (the budget is also funded by federal revenue and fees). The state budget is how we spend our tax dollars -- on education, health care, environmental protection, public safety, and other public services. (link)

And note the next sentence:

How would you choose to balance the state budget if we lost $12.6 billion in state revenue?

Who is "WE"? There you have it, the Boston Globe speaking on the side of socialists AND in the *first person*.

Apparently the real WE, us, will only *lose*, services and whatnot. The governor is threatening a loss of "snow plowing"; I've heard women talk about "losing public parks"; etc.

Apparently, we'll only lose goodies. We won't lose any government waste. We won't gain any efficiencies. We won't be re-claiming any of our own hard-earned money.

Well, for sure, the staff at the Boston Globe will lose ideologically if Question 1 is victorious - although LOSING is something they are well-practiced in these days. Bob Ryan and his fellow crony-o-saurs been losing money, losing advertising, losing subscribers....for God knows how long now. Today, after another horrible earnings announcement, their parent company The New York Times had its debt reduced to junk status!

We've come a long way from that revolutionary tax rebellion, the Boston Tea Party to what we've had for so long, the Boston Kool Aid Party.

All I am going to do for the foreseeable future is interrogate fellow Massholes about how they voted on Question 1. I will hector the sh*t out of anyone who votes against the income tax repeal - especially if it doesn't pass.

More Golden Analysis

From and Daily Telegraph,

Demand for gold soars as price tumbles - Daily Telegraph (71.71 )

Daily Telegraph reports the onset of a global recession and falling stock markets have triggered a stampede for gold -- the traditional safe haven during times of uncertainty. According to the World Gold Council, exchange traded funds are the main beneficiary of the flight to safety. ETFs experienced their strongest quarterly inflow during the third quarter since the ETFs were launched in November 2004. But the Council added that bullion dealers around the world reported an unprecedented surge in demand for coins and small bars. It said that there had been reports outright shortages of gold and high premiums over the gold spot price. The US Mint temporarily suspended sales of American Buffalo gold 1 ounce coins after its stocks were depleted, while UK, German and Austrian coin dealers have also reported an enormous increase in demand during the third quarter, it added.

The reports of a physical gold (and silver) shortage have been well-documented. In the face of this physical shortage, precious metal futures have actually been dropping precipitously. Gold is down over 30% from its high and silver is less than half it $20+ high spot price from earlier this year.

This only makes sense to the most wacko of gold-nuts who've maintained all along that one should ONLY buy physical metal. For these past few months, they've been absolutely right. Though the physical price has been dropping, too.

So, where do we go from here? A genuine physical shortage just has to be long-term bullish for both metals, does it not?

Though a bear would argue, "Look, even with hoarders loading up on the metals, the prices still are getting hammered. This price action bodes negatively."

I, have no stinkin' clue where the metals are headed long term. Plenty of worrywarts from the previous generation hoarded precious metals; my brother-in-law fondly remembers being instructed by his father to bury a bag of some coins in a hole under their backyard shed. These *prudent bears* and end-of-the-worlders were stuck with these coins and bars and lost money on them for a couple of decades straight.

Now I did nibble on the XAU yesterday at around 77. It's already down to 71. Let's hope I wasn't *waaay too early* - yet again.

Sure their revenues will be lower; and sure, gold miners are terrible investments over the long term; but also keep in mind that *high energy* prices were killing their margins recently. With oil more than halved from its July peak, they should expect some relief in that department.

Bought A Little Dell Stock

Just bought Dell Computer at $11.83 per share.

With its recent steep decline, it now sports only a $23 billion market capitalization. They have $9 billion in cash on the books and very little debt ($2 billion).

Even if they only earn $1 per share next year (beneath the $1.46 consensus estimate) this stock is trading CHEAP.

I think it's fairly safe to buy some and forget about it for a while.

Wednesday, October 22, 2008

Something To Sleep On...

The Stark Choice Now Facing America

We now sit literally days away, with a high probability, of a credit market "dislocation" that will change American finance and decimate the stock market.

That is, worse - far worse - than what has happened thus far.

Try on for size 2-3,000 points down on the Dow from here. 25% more than has been lost thus far, more-or-less "all at once." The probability of this event is now in excess of 70% - within the next few days to two weeks......

Click the link, read the whole piece.

At Least One Bank Is Honest

$24 BILLION!!!

And the money quote from CEO Robert K. Steel:

"Although this has been a challenging quarter, Wachovia's underlying businesses remain solid and our franchise exceptionally attractive."

Obviously, suitor Well Fargo is trying to get them to write everything down - to *market value* before the merger closes for accounting reasons.

But this just shows y'all how ugly the banks' books really are when marked-to-reality.

I am sure Wells Fargo thinks that Wachovia's problems are *contained* in the toxic junk they bought with the Golden West Financial merger.

I would bet they ain't. Look for Well Fargo to end up losing a ton of money on Wachovia's other businesses and other, traditional mortgage book.

This is no time for a bank to be increasing its balance sheet.

Still Trading

Been doing a few things in my brokerage account.

Except for Wells Fargo (heavily short), and a small short position in HSBC Bank, my account has pretty much been cleaned out and turned over. It's very relaxing to be rid of many of these trades that, although were ultimately profitable, they tortured me for months.

New positions include:

Long SWC at 3.87, as a way to try to play a palladium bounce. I'd rather buy more palladium directly but my commodities account is low on funds.

I got long TBT - the Ultra Short long-term (20 year) Treasury bond ETF. Cost basis = 59.76. This is the *hedge* against the end of the United States.

I got in and out of OIH - the Oil Service ETF. Bought at 88.25 and sold at 114.14 two trading days later.

Then I got long again at 85.31.

I flipped Google the day of its earnings announcement - bought at 311.55 and sold at 337.25. Should of held that one for the earnings release that afternoon as it traded up to 390 or so.

I sold my Jan 75 puts in HBC for 10.50. Sorry, can't find the cost basis for them. I definitely bought them a while ago (at $5 apiece?).

I dumped SRS - my Ultra Short Real Estate position. In at roughly 93.00 and out at 122.

On my Ultra Short Financial position, SKF, as I mentioned before, I dumped my core position. Then on October 14th (the day after the Dow *up 900 pts* day), I got back in at 105. I sold it at 124 - or at least I thought I did shortly thereafter. Turns out I just noticed that they left 76 shares hanging.

The SKF went higher since then, up nearly to 136 as I type this. Heck, an error MADE me $800 or so. This never happens to me! I tried to sell it but apparently my electronic broker won't accept odd lots for that ticker. This is ridiculous. I am closing for crying out loud. If they won't accept an odd lot, then they shouldn't fill me partially in the first place. Doesn't matter, I am comfortable holding this tiny position indefinitely - you watch, I'll make 75 points on it!

Tuesday, October 21, 2008

Mark Cuban, Trader

Apparently, Mark Cuban got LONG the market on October 8th. Here's his call - I'm Going Long Right Now.

He's posted his *buy alert* at 1:06pm, I am guessing he got long with the Dow roughly around 9,400.

From my prior post you can see what happened the very next day:

Looks like he bought some dividend players (energy?) and shorted puts on the Dow.

Ouch. Or should I say "early".

He says he covered his puts and didn't get hurt (how?).

I don't mean to suggest this guy is stupid with his money - it's quite the contrary.

The Dow closed at 9,034 today.

How Could They Ever Go Out Of Business?

Or get robbed?

Avoid Mass-Marketed Magazines

Recently I bought something online and actually filled out a *spammed* customer survey. For my troubles I was granted a bunch of free magazine subscriptions - well for six months anyway. One of the mags my wife and I whimsically chose was Travel + Leisure.

The first issue came and today I perused it at the park. Let me just say that it's drenched in asinine environmentalism. Every third word is *green*, *sustainable*, *eco-friendly*, *local produce*, *low-impact*, *fair-trade nuts*, etc.

I mean, who the heck goes on vacation worrying about this garbage???

What the heck is *Leisurely* about fretting over your *enviromental footprint*???

Inside they had a review of the Element Hotel in nearby Lexington, MA.

Starwood’s first LEED-certified extended-stay hotel, in the quiet Boston suburb of Lexington.

Green Cred: From the outside, this 123-room property may look like your average business traveler’s hotel, but the difference is in the details: oversize windows make use of natural light; the pantry is stocked with treats from the Lexington Farmers Market; hybrid cars get prime spots in the parking lot; and the gym overlooks a solar-heated indoor pool. Rooms are Ikea-style minimalist, with smart space-saving touches such as a recycled-quartz kitchen table that doubles as a desk, and faux-leather stools. Free bikes are available for guests, but the hotel’s splashiest achievement is the inclusion of low-flow waterfall showerheads.

Hybrid cars get prime spots? I'll be they don't have reserved spots for pregnant women. (Charlotte had them all over.)

FYI, Lexington, Massachusetts is home to the most enthusiastic eco-pagans in this horrible state.

In the same issue they published some crap on minibars stocked with *food that gives you a sense of where you really are*. Here was their choice beer:

The mini-bars at the Hotel Monaco stock one of Portland's best beers: Drop Top Amber Ale ($5), made at a partially wind-powered brewery near the waterfront.

Partially wind-powered brewery???

Who could care?

Anyways, I'll only drink beer that was brewed by at least 90% alternative energy.

Then on the same page they highlight some mini-bar *seasonal* cheese featured at Vermont hotel (Twin Farms).

In the magazine they say that rooms at Twin Farms *start at $1,200*. Yeah, I looked, they do start there and reach up to $2,800 per night.

Ever been to Vermont? There's nothing there. When you drive through the Green Mountain State, the *seek* button will cycle all the way through the dial without hitting a radio station. I can't in my wildest dreams imagine any hotel being worth near that up there. What comes with the $2,800, a harem? Vermont is hardly scenic (compared to Maine and New Hampshire) and furthermore, it's very had to get to (you'll be driving). Methinks one has to be a complete Moron to spend that kind of money for a night in Vermont.

Now considering all the *save the planet* nonsense in Travel + Leisure, do any of these fools realize how many African kids someone could support for a couple thousand dollars?

I might just throw this magazine straight in the recycle bin trash for the next 5 months.

Morons In High Places

As I broached in my prior post Unfreaking Believable - Main Street's Bailout For Wall Street, financial companies HAVE NOT really cut back on staff or bonuses.

Here's an article from the Guardian that discusses this year's $70 billion Wall Street bonus pool.

Financial workers at Wall Street's top banks are to receive pay deals worth more than $70bn (£40bn), a substantial proportion of which is expected to be paid in discretionary bonuses, for their work so far this year - despite plunging the global financial system into its worst crisis since the 1929 stock market crash, the Guardian has learned.

The sums that continue to be spent by Wall Street firms on payroll, payoffs and, most controversially, bonuses appear to bear no relation to the losses incurred by investors in the banks. Shares in Citigroup and Goldman Sachs have declined by more than 45% since the start of the year. Merrill Lynch and Morgan Stanley have fallen by more than 60%. JP MorganChase fell 6.4% and Lehman Brothers has collapsed.

Much of the anger about investment banking bonuses has focused on boardroom executives such as former Lehman boss Dick Fuld, who was paid $485m in salary, bonuses and options between 2000 and 2007.

Last year Merrill Lynch's chairman Stan O'Neal retired after announcing losses of $8bn, taking a final pay deal worth $161m. Citigroup boss Chuck Prince left last year with a $38m in bonuses, shares and options after multibillion-dollar write-downs.

Here's the most incredible excerpt:

At one point last week the Morgan Stanley $10.7bn pay pot for the year to date was greater than the entire stock market value of the business. In effect, staff, on receiving their remuneration, could club together and buy the bank.

This is why investment banking has always been a horrible investment. When times are good, the i-banks make a ton, but when times are bad, they lose 5 tons. All the while, the employees co-opt the booty for themselves. This is expressly why Bank of America, who's had so much trouble in the investment banking business, SHOULD NEVER have paid $50 billion for Merrill Lynch. Point of fact, only one year ago, a frustrated Ken Lewis said something to the effect that *he's about done with investment banking*. Then of course he runs out and buys Merrill Lynch, with their $55 billion in investment banking losses over the past four quarters.

It was Countrywide Part Deux. After all those years where he swore off *subprime lending*, he turned around and not only bought, but OVERPAID for the biggest junk mortgage originator in the history of this planet (notwithstanding Fannie Mae).

Back to Merrill Lynch. Bank of America SHOULD NEVER have paid that much money for a firm that, in Ken Lewis's own words, might have been bankrupt "on Monday". Watch him in this 60 Minutes clip:

What the heck is it about Ken and his buying firms JUST BEFORE THEY GO BANKRUPT???

I don't know how anyone could watch that video and not conclude that Leslie Stahl is more mentally competent than Ken Lewis. He gloats about the size of his bank; about how he's conquered Wall Street.

Meanwhile shares of Bank of America are mired at a 12-year low.

You watch, when it's all said and done Merrill Lynch will prove a bigger loser than Countrywide.

John Thain, Merrill's CEO, took Lewis for the dope that he is.

He p'wned him!

[Did I use the expression aptly, Taylor?]

(In case you were unaware of how it transpired, John Thain is the one that called Ken Lewis, asking to be bought out - two days before its *Monday bankruptcy*. Dopey Ken said, "Okay, we'll buy you. How much money to you want?")

Credible BS - That's Would Be Me

A few wise souls out there in cyberspace linked to Thursday's Unfreaking Believable - Main Street's Bailout For Wall Street. In fact, this nerve-striking post garnered quite a few hits last week.

One link that I want to highlight was from It's always enlightening to hear fresh opinions on my shtick. Look at this comment:

Click to enlarge if you're blind.

About me he said that:

I poked around on that blog, seems like the guy knows a thing or two about what is going on. If he's BSing, he's doing it in a very believable way.

Those that know me personally will laugh hardest at that nail-on-the-head characterization.