Archive for April, 2009

Long Tequila

The best call you will make tonight will also be the worst call you make tonightI am sick to death of swine flu. It has been putting much more important issues on the backburner, like Bea Arthur’s death, all for a flu that has a well known cure.

Real simple here. Are you infected with swine flu? Drink a shot of Sauza Hornitos. If you don’t think you are cured after one shot, administer successive shots until you are cured. Are you not yet infected with swine flu? Drink a shot of Sauza Hornitos. Not to bog you down with too much science, but it’s important to keep your bacteria condominiums and germ houses as toxic so that any travelling swine flu people don’t want to move into them. Are your hands possibility contaminated with swine flu? Rinse your hands in a light 1800 bath while scrubbing with an exfoliating brillo pad. Are your friends possibly infected? Offer them successive shots of Patron until they are softened up, then light them on fire (only way to sure). You desire to have unprotected relations with a swine? Jose Cuervo combines a swine prophylactic with a forget-me not dose that will ensure that you prevents unwanted memories of undesirable hook-ups. While Jose Cuervo does not strictly endorse this on the bottle and it is not FDA approved for this use (yet), this is well accepted in the greater medical community.

Recommendation: Long tequila, especially as American supplies for flu drugs are drawn down and substitutes are sought. While tequila is a time honored cure for swine flu, we recommend staying far away from Tila Tequila as it may in fact be the SORUCE of swine flu, as well as various other infections.

Quotes Entirely Relevant to Investing 04-26-2009

Life is tough ….. It’s even tougher if you’re stupid.
– John Wayne (HT SCH)

Past Quotes Entirely Relevant to Investing

Disclosure from Counsel on Dim Teithner

As retained illegal counsel for LoSC, I sometimes perform consulting work for other clients. The terms of our engagement require me to disclose the nature of such work to you where it could create a conflict of interest within the firm. Naturally, I really only perceive such conflicts where the nature of the conflict is such that, it would not endanger our attorney-client relationship, or more importantly my ability to pay for my sweet M5 Beemer or to keep my equally sweet mistress in blow and cheap expensive champagne, the only two things she apparently requires for sustenance.

I was recently retained to perform some consulting work by a shadowy figure who identified himself as Dim Teithner. I do not perceive a conflict of interest here but am disclosing it to just in case, if by some remote and far-fetched chance, Mr. Teithner is in some type of adversarial relationship to you.

Mr. Teithner asked for assistance in crafting a marketing campaign to sell a new regulatory initiative. The thrust of the initiative was that Mr. Teithner’s crew would force a business to take a loan, then
refuse to allow payback, instead taking a novel no-stock-controlling-interest in the business that, to my knowledge, has only been tried in Italy-related businesses.

He needed legal review of the following marketing catchphrases designed by his brightest young staffers, aimed at selling the initiative to a marketplace he indicated was unduly (and shockingly) skeptical of his products. The phrases included:

This is the bottom line, because Stone Cold Larry Summers said so.

Show me the puppies!

Timothy 3:16

Can you smell what Barack is cookin’? and,

Suck it!

When I pointed out first that those lines were clearly based on classic professional wrestling catchphrases, Mr. Teithner threatened to “bend [me] over and stress test your o-ring, mother-[expletive]!” Still, I persisted, and reminded him that in light of the contemplated commercial use, the user would be subject to treble damages under federal law for intentional copyright infringement.

Despite Mr. Teithner’s protests that “I AM the law, bitch,” I persisted and suggested other catchphrases that might be more suitable and legally-compliant themes for Mr. Teithner’s campaign, or at any rate belonging to entities less likely to file lawsuit than Vince McMahon, including:

Resistance is futile!

I am the master of your domain.

I drink your milkshake! I drink it up!

Tell me how my ass tastes!

Arbeit macht frei, aber Wir befreien Ihr Geld! and,

All your basis points are belong to us!

It is not clear to me what course Mr. Teithner will choose to take, but I am sure it will be a wise one. As he explained, “alls he’s tryin’ to do, is run a business heah.”

Never Trust an OFF

While remunerative powers of OO are still evident, and if you doubt that fact, google it, confirm it and then realize how wrong you had been. But are there risks or rewards associated with other letter combinations? We don’t want to produce a knock-off of our original analysis, but the answer is a definitive yes.

In December, Bernie Madoff turned himself in for building the largest pyramid scheme in history. In April, Phil Markoff is alleged to have used Craigslist to sell an old couch (pickup only), as well as killing and robbing sensual masseuses. And yesterday, it came out that one Madlyn Primoff made her kids get out of the car and drove off to “teach them a lesson.” What could have tipped off their respective victims? Maybe that these people literally spell out in their very names that they harbor intentions to OFF something.

Going back in history, you see that Nicholas II, last of the Romanov Dynasty (pronounced Roman-OFF), was responsible for destroying Tsarist Russia and his own family. Was it the success of communism, Nicholas’s weak ineffectual ruling hand over an oppressive state full of impoverished peasants, or merely his name that led to all this ruin? While his difficulties offing Rasputin (but note, Rasputin ultimately was killed, a point to OFF’s favor) suggest the former two options, everything else suggests that his fatalism emerged from his name and into fruition.

In Star Trek, Pavel Chekov (pronounced Chek-OFF) is mostly considered a benign incidental person. Like Earth, he is mostly harmless. But in Star Trek II: The Wrath of Khan, his surname’s ending worms its way into the picture:

By the events of Star Trek II: The Wrath of Khan, Chekov has been promoted to commander and executive officer aboard the USS Reliant. In that film, Khan Noonien Singh uses a creature that wraps itself around Chekov’s cerebral cortex to control him and his captain. Chekov overcomes the creature’s mind control and serves as Enterprise tactical officer in the film’s climactic battle against Khan.

Chekov almost gets Kirk and the Enterprise killed as the worm creature reveals his inner “OFF.” Ultimately, Chekov’s switching sides back to the good guys results in the demise of Khan. A lesson that the power OFF is fickle and uncontrollable, not unlike a 2nd year Med Student at a 3rd rate school.

The bug spray OFF is feared by mosquitoes and ticks alike and it’s not because of the chemical formulation that leads them to paralysis and death. I speak gnat, I’ve heard them tell tales of the terror that lurks inside their thoraxes. Aficionados and hobbyists all know how jerking off leads to diminution in vision. Your office is where all your dreams have gone to die. And while putting is perfectly fine, offputting is quite awful.

Recommendation: This analysis has far reaching implications, but you would not be far off in noting how hard it is to invest by. Suffice to say, be wary of any offer. Short Office Depot (NYSE: ODP) and W&T Offshore (NYSE: WTI).

Where’s Barney? Part 2

Barney is hiding in this crowd, can you find him smoking?

Quotes Entirely Relevant to Investing 04-19-2009

We refused to touch credit default swaps. It would be like buying insurance on the Titanic from someone on the Titanic.
-Nassim Taleb (HT CP)

Past Quotes Entirely Relevant to Investing

Piratery Picture Addendum: Swedish Piratery

Submitted by user The Paleofish

Shivering timbers all night longSwedish piratery firms present a compelling investment case. Consider:

  • Online piratery will surely grow by leaps and bounds with a favorable verdict in the Pirate Bay trial. According to Wired, pirates win either way no matter the outcome.
  • Though headquartered currently in Sweden, these pirates can quickly export their piratery services to more hospitable jurisdictions if need be, mitigating most risk of a guilty verdict.
  • The Piratpartiet, a Swedish political party devoted to piratery, is building toward the critical mass it needs to earn seats in the Swedish parliament. The youth version of the party received Swedish government funding.
  • “Golden Age” market operators are increasingly facing public sector competition for looting/pillaging services.
  • Swedish piracy, in addition to its low-cost online model and co-option of the political process, offers wenching assets that offer extremely attractive yields.

The Piratery Picture

This will sink your portfolioIn January 2006, we put out a research piece titled Update: Short Indian Ocean Piratery. In our recommendation, we said as follows:

Increased pillaging of dhows is a classic indicator that the local pirate market off the Somalian coast is over-saturated. We recommend a Short position on those markets as they are likely to experience an increase in pirate captures and a decrease in local booty margins. This would be a great time to jump into Latin American Pirate Bonds which are currently yielding a juicy and robust 29%.

With news that an Indian Ocean piratery firm was taken into receivership by the US Government and summarily unwound (75% of their workforce was executed, literally), we wanted to reiterate our short recommendation for Indian Ocean Piratery. Even when supplemented with RPGs and AK-47s, cutlasses and skiffs are no defense against a sniper on a navy destroyer. Competition in the region is only increasing, putting ever increasing pressure on margins, while empirically captures continue to rise. If you invest in that this piratery markets, especially directly, you risk having your portfolio get slaughtered.

In August 2006, we came out with a research report that indicated that signs pointed to the fact that the market had reached the point of Peak Piratery. At that time, we rated the entire industry “do not buy”.

More and more it looks like now might be a time to start dipping your portfolio into piratic pillaging. We think the spotlight being put on the Indian Ocean area will present an opportunity in other geographies, including the Caribbean and the Latin American regions (collectively known as the “Golden Age Markets”), as well as for diversified operators like Piratery Corp Inc. The northwesterly headwinds that the industry has been under pressure since mid-2008 have been abating, and we expect that pillaging operations will move closer to 2004 levels of efficiency. The global wench fleet’s useful life has declined and that segment will still be soft in the short term, but as the pillaging operations begin cashflowing again, piratery firms will be able to pour capex into those fleets and revitalize them, pushing that segment back to historical wenching volumes.

Recommendation: Long direct and indirect investments in non-Indian ocean piratery; shares of Piratery Corp Inc and casks of rum look especially attractive. Short Indian Ocean piratery.

The Andy Beal Award For Eschewing Moronism

Morons. They are everywhere. But brilliance, true brilliance, should eschew their limiting grasp. As we think important both the recognizing of brilliance and the eschewing of moronism, we are establishing The Andy Beal Award For Eschewing Moronism. Who is Andy Beal and why is he being so honored? He is someone who eschewed moronism, you moron. He sailed his Beal Bank through the choppy loan waters like an extraordinary seaman, navigating it to the point where it has capital to buy loan assets when everyone else is forced selling.

Beal stopped making commercial loans. “If I see another office condo in Las Vegas or Phoenix, I’m going to throw up,” he said at the time. He started selling, too. At a price of 115 cents on the dollar he unloaded a $75 million pool of loans that had been extended to Kmart, exercise chain 24 Hour Fitness and Regal Cinemas. That translated into a yield for the buyer of a mere 1.35 percentage points over Treasuries. “They were great loans at 85 cents,” says Beal, referring to the price he had paid for them years earlier. “They’re stupid at 115.”

He waited patiently for his time to come.

Beal started coming to work at 10:30 and leaving at 2:30. He challenged colleagues to backgammon games and took hour-long lunches, complaining of being “bored stiff.”

He’s not taking help from the government because their programs are scams on the public, designed to only benefit those who acted most irresponsibly during the boom times.

He’s getting scant help from the government. The Troubled Asset Relief Program does not accommodate a guy like Beal because the maximum amount available is 3% of 2008 assets. Had Beal leveraged up his capital to $25 billion and made toxic loans in the last few years, he would now qualify for $750 million. As things stand he can get only $150 million, hardly worth the trouble given the strings attached.

Finally, he berates the government publicly for its duplicity.

After New York state’s highest court ruled against him in a contract dispute in 2007, Beal took out a full-page ad in The Wall Street Journal asking: “When is a contract NOT enforceable according to its clear terms? When it is in the state of New York.”

Recommendation: Although only a baby compared to its predecessor, The Patrick Byrne Award for Operational Focus and Excellence, The Andy Beal Award For Eschewing Moronism is already incrementally more prestigious.

Where’s Barney?

Can you find Barney in this picture?

Quotes Entirely Relevant to Investing 04-12-2009

Those who trust to chance must abide by the results of chance.
-Calvin Coolidge

Past Quotes Entirely Relevant to Investing

Short Short

Everything is ok. Rest your weary selves. Nothing can go wrong here. Put away your tools of ignorance, and put a nice ash bat in your hands, because you are about to go long. Ignore everything you know. Ignore everything you think you know. Ignore learning new things and observing what actual data says. Just look to the horizon and the dawn of a new cycle as we come up from the trough of the old cycle. Put on some James Taylor. Don’t you find that soothing? Easy breezy. Just go with it, don’t fight it, let the market take you home. No there was nothing in your drink, you won’t wake up in pain tomorrow morning, it will be glorious.

Recommendation: I’m just glad everyone got crazy in the RIGHT direction this time. None of this bear BS. Real men delude themselves long, not short.

Long or Short Capital Audit for Fiscal Year 2008

Submitted by user Bean Counter

To the Board of Directors and Shareholders
Long or Short Capital, LLC

We have audited the accompanying balance sheets of Long or Short Capital, LLC as of December 31, 2008 and the related statements of income, retained earnings, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management, despite repeated claims that the responsibility lies with TARP, TALF, ALF and various other entities and bailout programs. Our responsibility is to express an opinion on these financial statements based on our audits and to enjoy the frequent perks and privileges that management provided us with by utilizing the suspended dividend payments. We conducted our audits in accordance with the lessor of SAAP or auditing standards generally accepted in Zimbabwe (GAAPIZ). Those standards require that we do absolutely no planning, and that we perform the audit to obtain reasonable assurance about whether the financial statements are printed on some form of paper. Preferably recycled paper, as to appear “green” and encourage further investment. This audit includes examining, on test basis, evidence supporting the amounts and disclosures spent by management in “getting it done.” An audit also includes assessing the lack of principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation to make sure that it “looks pretty.” We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Long or Short Capital, LLC as of December 31, 2008, and the results of its operations and its cash flows for the years then ended in conformity with the lessor of SAAP and accounting principals generally accepted in Zimbabwe (GAAPIZ).

Bean Counter & Associates

Quotes Entirely Relevant to Investing 04-05-2009

What Mr Greenspan and Mr Bernanke have achieved is historically quite unique. They have managed to create a bubble in everything, everywhere in the world: in real estate, equities, commodities, art, worthless collectibles; even bond prices continued to rise as interest rates fell due to the loose monetary policy. Since 2007 and 2008 everything has collapsed. But government bond prices continue to rise, and went ballistic between November 2008 and December 2008, when 10- and 30-year Treasury yields collapsed. So my view would be that this was the last bubble they managed to inflate. From here on, the government bond market will fall. In other words, the trend will be for interest rates to actually go up.
-Marc Faber

Past Quotes Entirely Relevant to Investing