Archive for April, 2006

Quotes Entirely Relevant to Investing

The upshot is that the points where defensive or aggressive investment positions are most effective are also typically the points where one will, at least briefly, look like an idiot for taking them.

Hostile Trends, John P. Hussman, Ph.D.

Past Quotes Entirely Relevant to Investing

Beer Diplomacy

Crack reporting from the WSJ undercovers an industry previously unknown to me: Beer Diplomacy. The increasingly multinational nature of business will only increase the demand for beer diplomats and consumer products diplomats in general. We are actively seeking ways to increase our exposure to this sector and will advise readers appropriately.

From the WSJ.
Anheuser-Busch has been a sponsor of the World Cup since 1986. And it didn’t expect to find itself in this bind when it paid an estimated $80 million in 1998 for exclusive alcohol rights to the 2002 and 2006 World Cup tournaments…German newspapers were reporting that beer fans were furious about the prospect of drinking the American brew at the tournament…If Anheuser-Busch insisted on enforcing its exclusivity, it was clear it would annoy some Germans who wanted to drink German beer and generate bad publicity for the company.
So Anheuser officials undertook an unprecedented act of beer diplomacy. Tony Ponturo, Anheuser-Busch vice president of global media and sports marketing and the executive who signed the World Cup sponsorship deal…He proposed letting Bitburger [a chief competitor] sell its beer along with Bud at the stadiums and at some promotional events. In return, the American company would gain the right to use the name Bud, instead of just Anheuser-Busch, on billboards along the fields — and visible to viewers watching on TV at home.

Long: Death Squad Start-ups

Dedicated to providing our readers with the bloody edge of globally diverse venture opportunities, our recent research has revealed that multiple opportunities in the “Death Squad Start Up” business exist. This research supersedes our recent recommendations in the armed piracy sector.

Start up costs are extraordinarily small, given the strength of the U.S. Dollar in the region and the low cost of critical hardware (RPGs, AK-47 models, etc.) many of which are obtainable via salvage efforts at local weapons caches and abandoned armories. Triple digit IRRs with high liquidity are easily obtainable. (Our model shows a 355% IRR in Year 2).

A sample P&L for a typical venture is attached.

Death Squad Startup P&L

References: Build your own Iraqi Police Squad for a Little Cash
Recommendation: Long Death Squad Startups; think Piratery but with more murder and less rum.

Rotten Tomatoes in Movie Theaters for RGC and CKEC

Movie theater chain AMC has talked a lot about the potential causes of box office decline. This slide, filed with the SEC, shows that box office receipts have decline in tandem with the number of rotten tomatoes per movie. Quite frankly, I do not understand why movie audiences enjoy watching movies in theaters with rancid fruit but it begs the question: Why haven’t the movie theaters increased their tomatoes per theater allocation?

Rotten Tomatoes in Theaters

Recommendation: Domestic theater attendance may be trending 3-4% positive YTD, but until we see evidence that this is due to higher rotten tomato/screen ratios, we cannot recommend a long position in any of the publically traded theater companies such as Regal Entertainment (RGC) or Carmike Cinemas (CKEC).

Smurfiest Smurf Investment Vacation Homes in Turkey

What would you say if I said that you could live like a smurf? Would you say was I acting a little smurfy? Or that I was positively smurftastic? If the latter, then we have a great investment opportunity which will allow you to take advantage of the Turkish real estate boom.

Smurf Village located in Akbuk Bay, Turkey, within 500 meters of the Aegean Sea.

There are five discreet reasons to invest in a vacation home within Smurf village:

  1. To leverage yourself to the rising tide of Turkey as it joins the EU and narrows the economic gap to Europe.
  2. Turkish real estate also offers a natural hedge to…the rest of your portfolio. (Note: We don’t actually know what “natural hedge” means)
  3. Gargamel has reached a cash settlement to stop his campaign of smurf terror.
  4. Smurfette will go all the smurf with you; if you liqueur her up with a thimble full of wine cooler, she may even do it smurfy-style. YMMV.
  5. For the smurf of it.

Recommendation: Although not as attractive as the opportunity we saw in 2004’s Cypriot real estate market, the Smurf village has some really smurfy-smurf things that we feel smurf about. Definitely worth doing more smurf dilligence on at This prototype home looks pretty smurfy.

If Excel was a Drug, I’d Sell it by the Gram

Has Columbia moved up in the ranks of B-Schools? Or will they get trumped when they have to tag HBS in?

Our research has uncovered conclusive video evidence that Glenn Hubbard’s impersonator and business school hanger-ons look incredibly silly when dancing in suits. I eagerely await Dance 360: Business School Edition, which I’m sure will air right after The Apprentice: Dance 360 Edition on the CW.

If Race Car Drives Have Corporate Sponsorships Why Don’t Bankers?

In the past, we have talked about the huge underunderstood markets for Financial Mudpies and Emerging Market Pillows. We believe a similar contagion could break out in the underundertsood Advertising in Finance market.

It’s all about eyeballs and disposable income, so why not place your advert in the areas where both are most concentrated?

The financial profession and its customers have more money than they know to do with, which is leading to private equity firms throwing billions to acquire asbtract financial humor suppliers at Perf multiples. So why don’t advertisers use this opportunity to get there products in front of the people who have all the money and who are demonstrably fiscally irresponsible?

Fact: Wealthy financial professionals do not watch NASCAR but they religiously inspect the outfits of their clients, customers and colleagues.

Get your brand out their and associate it with the success of a really good investment shop. Dorito’s Hussman Funds or Goldman Sachs Capital brought to you by Smirnoff Ice or even Fidelity Funds sponsored by Fidelity Funds. The last example outlines the exponential brand equity increase offered by leveraging one’s own brand as a platform for advertising one’s own brand.

This allows a banker who is closing a deal to sell a wind farm to GS Capital to think, “Yeah, a Smirnoff Ice WOULD be refreshing, why don’t I buy 10,000 of them?” Or “Dorito’s sound delicious; but 40 million Dorito’s sounds like an awesome ego trip.”

Recommendation: Own the finance people’s eyeballs and your product can rule the world.

Why does Google Talk Make the letters “BP” Blue When You Type It? $50 Bounty for the Best Answer

This now confounds us and we need it solved. Mail an email to and tell us why Google Talk makes the text “BP” blue in messages. We will paypal $50 to the best* answer as of a week from now. The criteria are both subjective and objective as determined by our advanced DCF Correctness Model. We reserve the right to republish the theories which are especially awesome, with attribution of course.

The Big V, the Big C and the Big WTF

The UK is a land of fear. Everything is geared to frightening the populace into a frenzied state. The free daily papers consist almost entirely of fear mongering journalism about violence in schools, poisons in foods, death by cellphone radiation, minicab rape, murders of Britons on Holiday, genetically altered crops. All of this is complemented by a steady torrent of T&A, usually on the same page. Mind the gap, mind the taxi, mind the man with the gun, mind the man about to violently rape you, mind the totty, mind the CCTV, mind the et cetera. Big Brother will never stop reminding you to mind while you are in the UK. Even the escalators have stop buttons positioned every few feet, as if escalator rides are a high risk endeavour.

This context will not help you when faced with the Creepy V.

No, this is not an educational ad warning about the dangers of “vagina” to young men (which are plentiful) nor is it an ad for outsourcing child molestation to letters of the alphabet. The Creepy V is the avatar used to market Virgin’s new Cancer Cover product which “can give you a cash lump sum to help you financially if you’re diagnosed with cancer in the future.” I’m not a big believer in insurance other than health and dental, but setting aside the dubious value of the product itself, the marketing is exactly the blend of creepy, offputting and cartoony that really doesn’t resonate with….anyone.

Not only that, but on the Virgin Cancer Cover page they let you watch their TV commercial (bottom left) which gets its fact completely wrong. It depicts Cancer as an entity which will do the following: pull the tablecloth out from your dinner table, steal your newspaper, take away your lawnmower and break down your door. As far as I know, these are not medical symptoms of getting cancer.

Recommendation: Virgin Group may be seeking to be the brand to rule all other brands, but when your advertising takes on an alphabetical theme similar to the Jedi Knights of Overstock (OSTK) and is creepy to boot, it may be time for you to be glad you aren’t public and Long or Short can’t back its truck up to a mountain of your stock’s put options.

Quotes Entirely Relevant to Investing

Martins: Have you ever seen any of your victims?

Harry Lime: You know, I never feel comfortable on these sort of things. Victims? Don’t be melodramatic. Tell me. Would you really feel any pity if one of those dots stopped moving forever? If I offered you £20,000 for every dot that stopped, would you really, old man, tell me to keep my money, or would you calculate how many dots you could afford to spare? Free of income tax, old man. Free of income tax – the only way you can save money nowadays.

-From the movie version of Graham Greene’s The Third Man

Past Quotes Entirely Relevant to Investing

When You Know You’ve Been Shorted

My GF: How do I make it so I’m invisible on Google messenger?
Me: But I’m the only person on your Google Talk buddy list…
My GF: So how do I do that?

Recommendation: Market underweight me.

“Smith Barney, Why do you hate your customers?” A Play by JD

A tale of dinosaurs in the age of robots.

“For the customer, who doesn’t enjoy high levels of service and has no respect for their money, Financial Management Account, by Smith Barney”

Smith Barney Does Not Rule

JD: I have a brokerage account with you. A relative used to work there and having a live broker helps for things like buying producers of Japanese toilets or Russian Petroleum on their native exchanges rather than illiquid domestic ADR’s.

Smith Barney: Yes, I am a well-known, venerable brokerage house, built upon the philosophy that customers should be rich, have low expectations and a deep self-hatred.

JD: You are a remarkably mediocre brokerage. You are more expensive than my pal Ameritrade, yet you make everything more difficult and less convenient. You are never galling but consistently incalcitrant. Would a customer like to receive their documents by email? They should expect to receive a link to their document by email, and have it not even work half the time. Does a customer want to have one account number? They ought expect to have Smith Barney CHANGE the final digit on you due to some unannounced internal transfer causing the customer to run around not being able to log in. For you, Smith Barney, it is a privilege for me to be able to look at my account online, like it’s 1997 and real time observation of my portfolio is a gift.

Smith Barney: Smith Barney Access has been named the #1 overall website among Full Service Brokerage firms for the sixth consecutive time, by the semi-annual Watchfire GomezPro Scorecard, for fourth quarter 2005. Watchfire GomezPro Scorecards measure the quality of online financial services offerings, with predominant focus on ease-of-use, customer confidence, onsite resources, and relationship services. Unfortunately, it appears as Smith Barney Access has been named the #Crap overall website by Johnny Debacle of Long or Short Capital.

JD: Let me tell you a story, Smith Barney. Last week, I decided to buy Quicken to tidy up my personal finances. Smith Barney, you don’t have any downloadable Quicken or MS Money files or anything at all, outside of PDF’s. I searched and searched and found that the only way I could get access to Quicken ready account statements, with their QIF’s and OFX’s and what not, was by upgrading to a Financial Management Account.

Smith Barney: The cornerstone of your investment relationship with Smith Barney, the Financial Management Account (FMA®) allows you to consolidate, manage, monitor and access your cash and other assets, simply and conveniently.*

JD: …And it costs $100 per year (on top of already expensive fees which I pay) and offers nothing that Ameritrade doesn’t provide gratis. Smith Barney, why would I want this? Why would I want an extended business relationship with you, who has demonstrably shown to me that everything you do is convoluted, user unfriendly, and limited? I’m a twentysomething living in the digital age and I don’t want to have worry about things that should be taken for granted. You make money off the trading I do with my money. $100 means nothing compared to the unduly non-monetary transaction costs you apply to everything. How do you not see that it’s in YOUR interests, not mine, to make it as easy as possible for me to trade and to manage my trades?

Smith Barney: Plastics.


*Except when compared to every other brokerage.

McDonald’s Gets It

McDonald’s (MCD) is known for supplying products so good that they’re dangerous, whether they be steaming hot coffee or obesity causing french fries. But they should be known more for getting it. Yesterday, McD’s announced that they will be selling exercise DVD’s along with their fast food. They get ’em coming and going. Seriously, there is probably some management consultant who read this news release and subsequently had their head explode Scanners-style as they jubilated “SYNERGIES.”

Recommendation: Long the Hamburgliest company on the planet.

Quotes Entirely Relevant to Investing

Patience is waiting. Not passively waiting. That is laziness. But to keep going when the going is hard and slow – that is patience.

-Leo Tolstoy

Past Quotes Entirely Relevant to Investing

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