Long or Short Capital

We pride ourselves on not just predicting the market, but shaping it. From underseas futures, to piratery, to sexual harassment, we have taken backwater markets and squeezed the profit out of them for our readers. So if I say I’m a market shaper you will agree. What brings this up? I’ll boil it down for you.

1. I’m amazing
2. I made an amazing James Joyce joke while editing Mr. Juggles’ Overstock research.
3. Subsequently, likely from having read our site, Long or Short Capital, widely known as the no.1 site for satirical financial research on the internet, a separate site, McSweeneys, widely known as not the no.1 site for satirical financial research on the internet but capable of producing material which is still pretty awesome, published an article (FAMOUS AUTHORS PREDICT THE WINNER OF SUPER BOWL XLII) which also featured an amazing James Joyce joke.
4. Comparing the facts in 3. to the facts as laid out in 2. only strengthens the factiness of 1., namely, my amazingness and its existence.

Recommendation: When I say that James Joyce jokes are an appropriate long, you know this not to be false; you know this to be true. Long James Joyce jokes.

The most frequently asked question by our readers is the likelihood of Bernanke finishing the job that Greenspan started: inflating the US economy back into the 70’s. But the second most frequently asked question is whether walruses are more efficient than human beings. To date, my only response has been: I really don’t know…maybe? I mean they have those giant husking tusks, yet they don’t seem to have ever attained any professional employment, or attended college, or, as far as I know, even learned how to speak English. Surely there must be menial labor jobs that Guatemalans do and that walruses could do better, like opening cans or whatever. So why doesn’t the walrus work?

Because the walrus doesn’t have to.

They free ride on mother nature, ignoring the property rights of humans, fishing at their leisure, and destroying the ozone with their flatulence. They create nothing in their life and the only viable industries they contribute to are ones which revolve around their death. Countless non-profits and government agencies assist them and monitor them, likely devoting more money to the average walrus than to the average Namibian. This points to their efficient use of their own walrus capital, carving out a life of luxury wherein they get to eat sashimi every day without ever having to punch a clock.

It’s even less fair when you look at the upper class male segment of the walrus population.

Wikipedia on the Walrus:

The males show off in the water for the females who view them from pack ice. Males compete with each other aggressively for this display-space; the winners in these fights breed with large numbers of females.

Seaworld.org on the Walrus’s mating

Each herd of estrous females is attended by one or more large adult males. According to one study, the ratio of males to females averaged 1 to 23
…
After the mating season, mature bulls return to all-male herds.

Well, I’m not surprised. Not only does a certain privileged subset of the male population dominate walrus society, but when they are done with their walrus orgy, they discard the females and join their buddies in a male-only club, likely to smoke cigars, hunt fish and watch walrus sports.

Recommendation: I am not the walrus, but I want to be.

Cheeseburger in a can

Recommendation: Fundamentally, technically, there is nothing about the Cheeseburger in a Can that does not make me want to back up the truck and load it with cans of Cheeseburger in a Can. People doubted us when we went long Two Girls One Cup (we didn’t release it to the public, but we are assure you that our private funds got in way before the mania), and we see this as a trend towards putting amazing things in cups or cans in order to make things which are even more amazing than the sum of their amazing parts. Long Cheeseburger in a Can.

CIBC May Take $4.1 Billion Writedown, CIBC Analyst Says (headline has changed but the original was as we laid out). This just speaks to credibility of CIBC’s (NYSE: CM) equity research department!! ….or the fact that their equity research department just got laid off.

Recommendation: Short the employment status of anyone who downgrades their own firm’s stock; double short any company who puts their employees in a position where they would have to do so.

1. Become Fed Chairman
2. Lower interest rates until you create an asset bubble. Hold them low until stagflation is in the air and a real estate bubble is floating
3. Stop being Fed Chairman and release a book on how you didn’t do anything wrong and have no regrets. If possible, time it perfectly with the worst real estate market in generations
4. Join the hedge fund which has profited more in % and dollar terms than anyone else has from your mess (which you didn’t create)
5. Build a platinum statue of your muse, Ayn Rand, and sleep with it every night

It also helps if you are mostly unethical.

Addendum: Look at this quote from Greenspan from the WSJ’s Real Time Economics:

“Q: All three of your clients — Pimco, Deutsche Bank and now Paulson — were bearish early on housing and mortgages. Is there a connection?
A: I hadn’t [noticed] until you just raised the issue.”

Greenspanspeak is code for self-serving disingenuousness.

This exchange at Dealbreaker between “girl” and “1-2” got me thinking. By way of background, “girl” and “1-2” had a flirty back and forth with “1-2” putting drinks on the table and girl unexpectedly accepting…and then both reiterating they were serious.

I assume he will show, in the end, no matter what, as he is a guy. But will she show? And what can we deduce about her attractiveness based on whether or not she shows up?

If she doesn’t show up: there is a 32% chance she is really a dude, a 32% chance she is not attractive and doesn’t want to put herself out there, a 25% chance she is average, a 10% chance she is a complicated computer algorithm designed by Russian hackers to add spicy comments to web sites, and a 1% chance she is a smokeshow.

If she does show up: she has enough confidence that her floor would be a 4.5. I’d say there is a 61% chance she is a 6 (pro forma for women in finance, that’s a 9), 8% chance she is below that, 24% chance she is legit hot, and 7% she is a complicated computer algorithm with holographic actualization technology designed by Russian hackers. She isn’t likely to be too hot, because hot women don’t have to meet anyone on the internet when they can meet them…..anywhere.

Distilled to the bottom line
No show: 4 with faux spunk
Show: 6 with genuine spunk

Armed with this, should “1-2” continue his pursuit of drinks? And based on what “1-2” decides, what should “girl” infer about “1-2″…should she continue her pursuit of drinks?

Recommendation:
Screw Game Theory. Literally, screw it.

There is only one way to make the scientific distinction between whether it is Christmas or whether it is, in fact, not Christmas:

isitchristmas.com

Why are things so long? Why does any conference call last more than 20 minutes? Why is any report longer than say 20 pages? Why are history books more than 50 pages? Why does your story not end sooner? Because they are too long. Using my “Why Quantity” investing screen on Bloomberg, I sent our analtern (analyst intern) to research length. His findings are that everything is at least 25% too long and range up to 1000% too long. Examples:

• Conference calls are, on average, 57% too long
• Meeting are 123% too long
• Academic books are 432% too long — many could be boiled down to two pages without any loss of signal
• Reports to bosses are 231% too long, 488% if you adjust for the cost of time for the average boss
• Porn stars exhibit length which, based on our baseline, is 20% too long and frequently frightening
• Foreplay is both too long AND too short; 100% too short based on what you tell your partner pre-foreplay, and 100% too long based on your perspective during foreplay
• A relationship over three months long is approximately X minus 3 months too long, wherein X is the length of the relationship in months (LoS will have more detail on this fact in a future research report)

Recommendation: As an exhibit of the pervasiveness of the Too Long problem (and opportunity), this research article would have been too long if I had continued with the above list. There continues to be a premium on brevity, which makes it profitable to be Long Short. In addition, we recommend being Short Long.

Look at this asshole. This is why a woman could never be president. It’s called planning. Here’s an idea for a plan — don’t make your carry-on weigh more than that which you could hoist over your head. Why? Because you will probably have to hoist it over your head. Asshole.

Upon watching a slightly more attractive woman doing the same thing:

Should I help? I should probably help. I wonder what firm she works for. Lawyer? IR? Pharmaceutical sales rep? Look at the way her body pushes out of the dress. Maybe I should just stay sitting and watch her. Is that creepy? God I’m glad that no one can read my thoughts.

How long does it take to fold a coat? And is that even what he is doing? What ARE you doing old man? Just standing in the aisle idly, while there is a whole queue behind you getting all….queued up and shit. We all have to sit down ASAP! Time is much less on your side than on mine, so why don’t you feel any expediency? I am literally watching you die as you dawdle. What does he know that I don’t? Maybe he gets it. He definitely gets it. What don’t I get? I hate him.

Wait…why does he have wheels on that thing? There can’t be anything more than a laptop in that and maybe some paper. If there was a way to sterilize him I would, for the sake of mankind. A bag has to be the size of half a golden retriever in order to have wheels. Man that would be horrible, how would you cut it in half, lengthwise or widthwise? Maybe it’s not the best measurement. I’ll use a bear head instead. Grizzly bear head. This is the new FAA bag size regulation measurement unit for the retention of manliness and balls. If a bag isn’t as big as a grizzly bear head, you cannot have wheels on it and pull it. Done.

Cephalopods are a favored investment at LoS because there is a better than 50% chance that they are our future. They are some of the largest creatures on Earth but they conduct their business without ever being detected by man, for the most part. What are they doing? What is going on down there? We eschew outright speculation, but will assert that without a doubt they are plotting the conquest of the overland world, most likely effecting a “global warming” and thereby submerging the world’s land and allowing them to slip their tentacles around anything and everything they want.

More evidence of their long-lasting dominance came last week by way of this CNN report on Sea Scorpions:

British scientists have stumbled across a fossilized claw, part of an ancient sea scorpion, that is of such large proportion it would make the entire creature the biggest bug ever.

…

Eurypterids, or ancient sea scorpions, are believed to be the extinct aquatic ancestors of today’s scorpions and possibly all arachnids, a class of joint-legged, invertebrate animals, including spiders, scorpions, mites and ticks.

And the reason why these creatures are extinct starts with an S ends in a D and has a Q in there — Cephalopod SQUID.

Recommendation: Long squids, short everything else.

HT to reader PBJ.

From the future, as of January 10th, 2008:

A brief history of the recent turbulence in the financial services sector is as follows.

In November of last year, Citi downgraded E*Trade and set a 15% chance of bankruptcy. Goldman Sachs downgraded Citi to a sell, forcing Citi to later downgrade GS from a strong buy to a mild buy. They both agreed on the point “Why the eff does E*Trade have subprime exposure?” Merrill Lynch has made plans to downgrade GS because of its heretofore unrevealed defense pact with Citi, but they are looking internally for a way to resolve it in the context of their downgrade non-proliferation treaty with Lehman and GS. Bank of America has been skating by nicely, but has its downgrade silos “hot and ready.” CSFB, in a defensive move, has unVoltronned itself and become two lion-like entities, CS and FB, who have been firing downgrades at all comers in order to safeguard the planet Arus from the forces of Zarkon. JP Morgan is sitting on the sidelines, just happy no one has noticed how fucked they really are. Bear Stearns has been downgraded to the point of not actually existing; nothing remains aside from a glassy plane and the remnants of ridiculously cheap compensation packages.

Sweet Tea was cute, in the way that Krispy Kreme donuts were cute, a sugary Southern treat to Northern palettes. It’s great to have once, after that, eh, not so much. The existence of “Unsweet Tea” is a leading indicator that “Sweet Tea” is in fact, TOO sweet.

Recommendation: An initial estimate is that Sweet Tea consumes 83% of all domestically produced sugar. Due to having recently had some sweet tea, we are borderline comatose and thus can not corrobate this estimate with further empirical data, but we will assume it to be true and thus recommend shorting all domestic sugar producers. Ethanol be damned.

Actual quote from a WSJ online header article:

Paulson said the U.S. continues to have a strong dollar policy and the value of the dollar will ultimately reflect strong economic fundamentals

Actual chart of the dollar index, covering periods where the US economy was strong and, more recently, when it was “strong”:

Recommendation: How much gold, silver, and oil can you fit in the bed of your truck?

So of you may have heard how some Citi (NYSE: C) sell-side jockey named Prashant Bhatia (nickname being “Capital IQ”) said that E*Trade has a 15% chance of bankruptcy and faces a potential run on the bank. This is probably the most hysterical piece of sell-side analyst I can recall, but it may be a self-fulfilling prophesy. The best way to create a run on the bank that would lead to a serious dimunition in the E*Trade’s share price is to talk about how you think a run on the bank is likekly to happen and then publish that report as “research”.

Hysteria aside, how does an E*Trade customer protect his assets, if they are above $100,000 (FDIC guaranteed) or $500,000 (SPIC guaranteed)?

I have devised a simple strategy. Assuming a binary outcome that E*Trade (NASDAQ: ETFC) is either 100% effed or 100% ok, the dominant decision is to sell all of your assets and use the proceeds to go 100% long E*Trade. This way either E*Trade stock’s rebounds to its pre-hysteria levels and you have what I like to call a double or maybe a triple. Or you lose all your money that E*Trade would not have been able to give you anyway, so you in effect lose nothing.

Full Disclosure: I now have 100% of my PA long ETFC. Also E*Trade accounts are guaranteed up to $500,000 under SIPC for anything other than loss in the actual value of securities, so let’s step back into the real world.