Archive for January, 2007

How to Get it Done – In the Afterlife

Well, Ash Wednesday is coming up so I’m thinking about how some day I’m going to die, and so are you. I thought I should look into some posthumous procedures in order to make sure that I leave this world the same way I’ve lived in it: as a mini-baller. You can imagine my excitement when I found Celestis. Celestis will burn your flesh and bones into a dusty paste and then put it in a vial, tape you to the side of a rocket and shoot you into deep space.

You might think it’s pricey, but you’re wrong. The cost is only $495. Now naturally as a mini-baller I was hoping to pay more and luckily, there’s a premium product. For an extra $800, Celestis will actually put you in orbit around the earth for eternity. Better, closer, warmer. . . but still on the cheap side for my last huzzah. After some reflection I decided I would prefer that the earth orbit me. I sent them an email for an estimate and will report back.

Side-Note: Through a proprietary and patented process we call due-dili, Long or Short has discovered the reason that NASA has a $17bn budget, a staff full of “rocket scientists” and still can’t make a plane that won’t shed ‘suitcase sized debris’ every time it takes off. It’s all a scam. That’s not debris, it’s the dead, and NASA is KILLING IT by taking them to space, or sometimes just really high off the ground.


Shorting the Government, cont.

Situation: The City of New York wants to upgrade its police radio system so that officers can maintain radio contact in New York’s extensive subway system.

Homework: Calculate the City of New York’s ROI subway infrastructure investment based on the following facts.

  • Original project budget was for $115mm and completion in 2003.
  • $140mm has been spent so far.
  • The system does not work. The police currently refuse to use it.
  • Making the system work will probably require at least one more year and a total cost of $210mm.
  • Even if the system does work at that point, the fire department still won’t be able to use it due to compatibility issues between the two department’s radio systems.

Enjoy your tax dollars at work.

Recommendation: Long or Short Capital recommends a simple, strict rule of investing in governments. Only go long a government (or government-related entity) if clear catalysts are in sight; at all other times, short governments…in size. For example, if you happen to know that Hugo Chavez is about to nationalize all the productive private assets in Venezuela, you may take a very short-term long position as long as you remember to realize your gains immediately. However, in general and at all other times, you should be actively shorting all governments.


Four Simple Steps to Becoming a Thousandaire

Our Four Simple Steps to Becoming a Billionaire guide was met with great enthusiasm. For those who wish to start with smaller goals and then build from there, we now offer our Four Simple Steps to Becoming a Thousandaire.

Thousandaire Housing
  1. Go to college. Or not.
  2. Work a max of 40 hrs per week. Do not break this rule under any circumstances.
  3. Have kids with many women. Paying child support is fun.
  4. Treat yourself to a car you can’t afford. Gas inefficiency is a plus.
  5. Remember that money which you save will probably be stolen by those crooks at the bank. Spend all your money now to avoid future losses.

Carnival of the Capitalists 01-29-07

“Capitalist” is a loaded word.

Some people think a “capitalist” is a pig. Some think a “capitalist” is someone who takes advantage of others and exploits any resource he can to get wealthy. Some people think a “capitalist” is someone who believes in hard smart work. Some people conflate it with entrepeneur. Some people think it can be a woman. Still others think “capitalist” defines a type of person who sees fit to crush the weak. The glorious thing about being “capitalists” such as ourselves, is that ALL these things are true. Except the ridiculous part about being a woman; a woman cannot be a capitalist. We looked it up.

This week, we exploit the position as host of the Carnival of the Capitalists to give you the 15 best submissions (of 56 non-spam entries) related to capitalism. These are the best and in a competition with all the other articles, these are the winners. That is not to say the people whose articles did not get posted are losers, but in this case, they did in fact lose and are in fact losers. These are facts. We looked it up.

In no order here are the entries of this week’s “Carnival of the Capitalists”:

Tomorrow’s News Today provided by Avant News: Ford Motor Company Preemptively Recalls 6.1 Million 2011 Models.

“As part of our continuing Way Forward policy,” the spokesman, Philip Vaughn, said, “which encapsulates our commitment to economy, responsibility and quality assurance, Ford Motor Company will preemptively recall every vehicle we plan to produce in the next year. By holding the recall before a single consumer ever gets behind the wheel of one of our cars, Ford is proving its commitment to these important values.”

Charles Green speaks to how American Idol is empowering incompetents:

One contestant, asked why he believed his (miserable) performance rated a “yes,” replied, “because I love it [the song].” If I believe, it will happen.

It’s the same in business. Empowerment is great—to unleash organizational talent. But empowering incompetents is absurd—an attempt to defy reality….

The “just believe” message is ubiquitous: in self-help books, sports (“I guess the other guys wanted it more than we did”), movies (“if you build it, they will come”), fuzzy-think gurus (“start believing and acting like you’re already a millionaire, and you will get there!”).

Axed Idol contestants blame the judges, anyone but themselves. The reality-distortion field is huge.

James Hamilton of the excellent Econbrowser asks What would Milton do?, especially appropriate on Milton Friedman Day.

And what about right at the moment? Friedman was concerned not just that excessively rapid money growth would cause inflation, but also that decreases in the money supply were often the cause of an economic recession. By that standard, if M2 had been growing less than 1 or 2% over the last year, the Friedman perspective would lead me to have additional concerns that the Fed had gone to far in the recent tightening episode.

SoxFirst puts forth that maybe companies going private or out of business as a result of Sarbanes-Oxley isn’t a net positive for the public.

The disturbing part about that trend is that it undermines one of the great strengths of the markets in the US, Canada, Europe and Great Britain and Australia with the rise of the citizen investor.

The Big Picture gives a real life example of a tax credit that could be straight out of Catch 22:

It is ironic – and patently unfair – that a technology could be denied credit precisely because the company has the ability to pull it off.

Photon Courier points to evidence of an ultracap capacitor energy solution coming to market:

EESTOR’s system claims an energy storage capacity of 280 watt-hours per kilogram: this compares with 120 for lithium-ion and only 32 for lead-acid gel batteries. It is, however, still far below the energy storage per kilogram achieved by gasoline, even when the poor conversion efficiency of the engine is taken into account. Still, if these numbers–cost as well as energy density–can really be achieved, then the implications for transportation and for other energy-related fields could be pretty profound.

The Digerati Life examines their own investment portfolio, which looks a lot like LoS’s portfolio but with substantially less returns and substantially higher risk:

Interestingly, the growth of this portfolio — the total increase being 40% in the last 20 months — is attributed mainly to two reasons: stock market gains and stock option sales which we were forced to apply when my spouse resigned from his corporate job to strike it out on his own.

Lip-sticking provides some commentary on how to market to women, but oddly not one mention of the Pink Dollar:

Do you talk to the women you want to sell to? No, I mean really. Not just announcing new products or writing sales copy or mouthing off in your blog. Do you talk to your female customers on a regular basis? Do you have monthly events to which you invite customers – giving away ‘free’ stuff, including spa coupons, or dinner coupons, or mall coupons – and then create a conversation around a topic that is important to them? Do you do this? Or, do you read blogs and newspapers and magazines and think you have us figured out?

SportsBiz undertakes the implications of DirecTV’s pan-sport exclusivity with MLB soon to be undertheir belt:

All signs now point to Major League Baseball following the path first laid out by the NFL and moving its Extra Innings package of virtually unlimited games broadcast with local announcers exclusively to Direct TV, in return for a mere $700 million.

Overseas Property points to budding enthusiasm for Brazilian real estate:

Budding property hotspots continue to garner international investor interest with up and coming locations such as Morocco and Turkey making their presence felt in the survey. Brazil property however has risen from obscurity to second place behind Bulgarian property to overtake property in Dubai, whose marketing overdrive has assured its potential overseas property all-star status.

InsureBlog gives a point by point commentary on the healthcare portion of this week’s State of the Union:

But many Americans cannot afford a health insurance policy.

Actually, most CAN afford health insurance. They just need to be reasonable in the way they approach managing their money and risk.

Moneyandfinance talks about the Social Security tax in the context of tax brackets:

By looking at hard numbers we can try to remove politics from it and see its effect on people and society. Increasing the social security tax rates will burden even more our lower income people and will create an ever flatter curve. Not doing something to fix social security now will create bigger issues to solve that will make society do hard decisions: like increasing retirement age or increasing social security tax, burdening people even more.

Searchlight Crusade gives an example of what happens to your home equity during a foreclosure which given the current real estate climate is worth knowing:

So if you cannot afford your payments, and you’re looking down the road at a trustee’s sale, it is usually in your best interests to get the property sold before that happens.

Small Business Trends shines the light on pet industry trends for 2007 — expect strong growth as baby boomers continue their self-indulgence using their pets as a proxy.

3. Growing interest in pet health care.

This includes non-invasive surgeries, human medical devices and services being applied to pets, super-premium foods aimed at specific ailments, and alternative therapies, such as acupuncture, massage, and behavioral therapies. High end diagnostics, such as MRIs, will become more widely available for pets, with the price dropping accordingly. Online veterinary pharmaceuticals will become more main stream. Pet lovers want, and are demanding, the same treatment options for their pets as they can get for themselves.

Last but not least, Innovation Zen points to a lead indicator as to who will win the format war between HD-DVD and Blu-Ray — Can Porn Affect Innovation:

The question then becomes: will the adult movie industry play an equally important role on the format war between Sony’s Blu-Ray and Toshiba’s HD-DVD?

It is not clear yet, but should the answer turn out to be “Yes” Sony will need a lot of lucky to avoid losing again. Most of pornographic movie producers, in fact, are going with the Toshiba HD-DVD format after Sony refused to give Blu-Ray licenses to porn movies.


Quotes Entirely Relevant to Investing

Colonel Korn was the lawyer, and if Colonel Korn assured him that fraud, extortion, currency manipulation, embezzlement, income tax evasion and black-market speculations were legal, Colonel Cathcart was in no position to disagree with him.

Catch 22 (page 211)

Past Quotes Entirely Relevant to Investing


Everybody’s Gonna Get Laid Except You


Fact: Your girlfriend and/or your potential girlfriend and/or your mistress needs flowers to sustain her existence. It’s a mission critical input without which she may perish. So if you can’t source flowers for her, she will go to most proximal male asset who CAN source flowers for her. This would be disastrous for you personally and professionally.

Fact: Flowers are more available now than they will be on Valentine’s Day in 2 weeks.

Fact: Anything can happen to the flower supply in two weeks. If bird flu mutates into a virus capable of flower to flower transmission, who is to say there will be any flowers available on the spot market.

Considering this, we are downgrading any male firm with an unhedged exposure to the flower market to “Less likely to get some” from “Probably getting some“.

Recommendation: Buy your girlfriend / “friend” / mistress / boss / potential girlfriend flowers immediately. It’s our pleasure, being that we are smarter than you, to provide you with the link to the shop above to hedge your flower exposure and prevent personal ruin. Reserve your flowers today. This is in no way a latch ditch effort to juice our 2nd quarter (ending Jan 31) financial results.


Drinking Game for CFA Exam Prep Classes

Note this games requires a flask filled with booze, a CFA prep class and an inner sense of self-destruction.

  • 1 drink for every chick who eats something she brought.
  • 2 drinks if chick-who-easts-something-she-brought does so from a tupperware container.
  • 1 drink everytime you think that spending 2-3 hours of a New York night in a classroom is not a good use of your highly scarce free time.
  • 1 drink for every corny joke and/or pun by the instructor.
  • 1 drink for every gunner who asks a question.
  • 2 drinks if someone with a russian or asian accent asks a questions which is entirely incomprehensible and which the instructor has to dance around, answering by not really answering.
  • 1 drink everytime the minute hand of your watch hits 6.
  • 1 drink everytime you can see 10 people or more concurrently using their Blackberries.
  • 2 drinks anytime you get solicited to join a study group / have a drink / celebrate the exam with strangers from the class.
  • 1 drink everytime you spot someone in jeans.
  • 1 drink everytime the instructor gets mad for questions related to the exam.

This should making studying for the CFA something you no longer have to worry about. When I play this game, I generally black out within an hour sometimes less.

More from Our Mock CFA Exam Prep


Do Not Advertise Your Investment Services Like This

This is from an actual Yahoo Publisher’s Network ad I saw when I clicked through yesterday’s report on AT&T / Cingular (if you click on the article you will probably still see the ad at the top):

Goofy Investing Ideas
Investment Ideas that are not based on sound principles.
www.jasmts.com

Here is the screenshot I took:

If someone described that ad as “Perhaps not as effective as it could have been”, I would pause, squint (this makes you, and by extension your opinion, seem smarter) then state that “I do not disagree.”

Things Not to Do in Investment Services Ad

  1. Indicate that your portfolio managers have no track record.
  2. Mention your analysts’ propensity for working while drunk or addled by absinthe (the real kind, from the Czech Republic).
  3. Describe your ideas as “goofy”.
  4. Use the word “goofy” in any context.
  5. Represent that women will be making investment decisions.
  6. Mention positions which are “not based on sound principles”.
  7. Speak of your past investments in a land war in Southeast Asia.

This seems like a pretty easy to follow set of rules, mostly guided by common sense and thousands of years of traditional misogyny.


How to Improve the Value of AT&T (T)

Cingular AT&T Wireless Presented by AT&TThis report is gratis, AT&T (T).

  1. Come out with pink phones with bows on them. Chicks eat this stuff up. Similar to the advice we gave Microsoft (NASDAQ: MSFT) about the “Pink Dollar“. You don’t even have to make the phones work, just make them pretty and expensive then seed them to Jennifer Aniston and Gisele or whoever is on the cover of US Weekly.
  2. Continue with your rebranding of Cingular as AT&T. Although Cingular spent more money (~$5bn) than any other US advertiser over the past 4 years in order to establish itself as a leading wireless brand, the smart move is to toss that out and convince consumers that it is the AT&T brand which should now be associated with wireless operations and the future. As opposed to AT&T’s current association with the dead-end fixed line business that has been at AT&T’s core for decades. It may be true that the few people who already associate the AT&T brand with cellular service had terrible experiences as subscribers of the company’s original, disastrous cellular carrier (which was sold to Cingular). But the key here is to clearly convey to the market that you manage your brands at random, which is a theme reiterated in this report.
  3. To reiterate a theme from earlier in this report, once the public are locked onto AT&T as the name of your wireless division change it from AT&T to Verizony. After you have spent a year as Verizony, cannibalizing people who thought they were signing up for Verizon (NYSE: VZ) and who were subsequently pleasantly surprised that the company’s customer service wasn’t nearly as abysmal as they thought, change your name to T-Mobility.
  4. Use your T-Mobility disguise to persuade Catherine Zeta-Jones to reenact that scene from Entrapment for your executive team. You know the scene. The one with the lasers and a perfect apple.
  5. After changing your name to Mobinilish and become the leading provider of wireless services in Egypt through confusion, sign on to be the exclusive provider for Apple’s (NASDAQ: AAPL) upcoming iBrain product (portable personality uploading/downloading through iTunes). We expect this item to kill as the globe embraces the new social personality portability paradigm.

Market Correction: 24yo Aussie Only worth $7.5k AUD

Following up on the end of the auction for a 24yo Aussie surfer’s indentity, the final bid was $7,500 AUD. This represents a steep correction from previous bidding levels. As of yet, there is no explanation as to what caused him to trade off, but all signs point to the selective disclosure and subsequent trading based on material non-public information.


Translating Corporate Speak: Venezuela and VNT

Hugo Chávez, CEO of Venezuela, a leading provider of faux-populism and professional nationalization services, said this about CA Nacional Telefonos de Venezuela (NYSE (but not for long!): VNT) and whether it will be nationalized.

Corporate speak:

Have we taken over CANTV yet? Call the bosses and name a new board of directors.

-Hugo Chávez on his weekly TV show, “Hello President”

Translation:

Yes, we have nationalized CANTV.

Corporate speak:

Don’t come and say the company is worth so much. You guys are crazy. We will pay what the law says and when the government decide

-Chávez on how much should be paid to the current shareholders of the NYSE listed CANTV to compensate them for the nationalization.

Translation:

Being that I am now both the law and the government, expect céntimos on the dollar compared to the market value. You guys were crazy for having your money in a security with a stated high likelihood risk of being taken by me, Hugo Chávez.

Corporate speak:

The National Assembly, controlled by the president’s political allies, is expected to give final approval this week to what it calls the “enabling law,” which would give Chávez the authority to pass a series of laws by decree during an 18-month period.

-From an AP report

Translation:

The National Assembly, comprised of people mostly elected with Chávez’s money, thought that the “enabling Hugo Chávez to be dictator law” just didn’t have the right je ne sais quoi, and thus created the abbreviated title.


Quotes Entirely Relevant to Investing

The great mass of people form their political beliefs with little regard for facts or logic. However, the elites also have a strategy for avoiding truth. Elites form their political beliefs dogmatically, using their cleverness to organize facts to fit preconceived prejudices. The masses’ strategy for avoiding truth is to make a low investment in understanding; the elites’ strategy is to make a large investment in selectively choosing which facts and arguments to emphasize or ignore.

-Arnold Kling, Two Strategies for Avoiding Truth

Past Quotes Entirely Relevant to Investing


How Much Would You Kill a Puppy For?

Inspired by this video about dead puppies, I think I’d kill a puppy for $5000 assuming it belonged to no one. What about you? Everything has a price.


Reply to Reader Comment on Australian Human Exchange Rates

In response to our report on the market prices and expected trading levels of 24yo Australian Surfer’s life, reader Yves Smith asked:

Ahem, I’m surprised at the emphasis on the Aussie’s target price, and the failure to consider that he might be undervalued on a current basis but lack much future appreciation beyond that. I don’t see any sum-of-the-parts analysis, and his most valuable asset has been overlooked (Australian citizenship).

American tend to overestimate the future value of Australians based on their performance overseas (Rupert Murdoch, Nicole Kidman, James Wolfensohn, Mel Gibson, Jacques Nasser). Australians in Australia, particularly surfer boys, peak early. All that sun and booze. Good looking straight men over 30 are surpringly hard to find.

No, I considered those factors which is why the target isn’t more than $120k AUD.

I think when the first single human hostile financial takeover is done in a Western Democracy, you will see Cerberus or some other vulture buying people at valuations levels of $3-4mm minimum assuming regulators allow taking on all of the assets (indentity, experiences, memories). This will be helped by the release of the iBrain, a small stylishly designed personal electronic device by Apple (NASDAQ: AAPL) which will allow people to upload and download their entire existence via Apple’s revolutionary iTunes marketplace. It will not only allow people to share personalities but it will also play MP3s. Expect an announcement at MacWorld 2008.

We see this surfer boy as as similar to a profitable but declining newspaper business which you know will experience secular decline but in the meantime can be profitably milked for cash. And while a 24yo surfer certainly is an early peaker, that type of asset is still a great entrance point for interesting but older gentlemen to access markets of novelty groupies as well the desirable “aimless women under 25” market.


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