Long or Short Capital

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

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.

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

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.

This 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.

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.

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.

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.

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.

Updating our foreign exchange rates for humans based on some movemements in the spot market:

• One 24yo Aussie surfer’s life (assets and non-financial liabilities only) = $60,000 AUD

From eBay:

Winning bidder will take ownership of my:
– Name
– Phone number
– All my possessions which includes the following
– Clothes,
– Roughly 300 CDs
– Surfboard
– Laptop (minus certain information with my discretion),
– Pushbike (Has wonky handlebars, may need some work)
– Books,
– Bed
– CD player
– Backpack
– Tennis racquets
– Golf Clubs(which you will have no idea how to use)
– Childhood photos
– Skateboard
– Nice lamp which your ex-girlfriend bought you.

– I will teach you my skills which include the following
– Surfing (Expert)
– Climbing (Intermediate)
– Skateboarding (Novice)
– Handstand Skills (Expert)
– Fire Twirling Skills (Intermediate)
– Devil Stick Twirling (Expert)
(Plus many more)

– Will introduce to all my friends & potential lovers (around 8 which I have been flirting with)
– I have around 15 close friends and around 170 other friends
– I have 2 nemeses.

Recommendation: We are bullish on the 24yo Aussie and expect trading levels to increase to a target of $120,000 AUD. Past that point we think the market will push back due to the lack of clarity in this footnote of the prospectus:

There is some tension with a former ex from a painful breakup which must be inherited.

Those kinds of liabilites can be extremely deleterious to asset values and are notoriously difficult to quantify.

Edit 1/22/07: Auction is down to $7k AUD with 7 hours left on it.

Results are available now for all December 2006 Level I takers. I did not not pass. If you passed, congratulations, we are now 1/3rd of the way towards being able to guarantee investment results to clients based on being a C.F.A..

In previous reports, we have shown the light on the rising popularity of pooplet derivatives products and the growth of the “willing-to-consume-feces” demo (see related research below). A new wrinkle has been brought to our attention, a faux pooplet derivative product called Free Range Chicken Poop Lip Balm. This product contains no poop based on its description which says:

This product contains no poop!

Although not specifcally noted, our diligence indicates that it contains no free range chicken either. In fact, this lip balm is made completely out of lip balm.

Despite it being made of solely of lip balm, Free Range Chicken Poop Lip Balm glams onto two seperate idiot demographics:

1. The aforementioned “willing-to-consume-feces” demo.
2. People under the mistaken impression that humanely treated chickens are more delicious than tortured chickens.

These combine to form a large addressable market comprised solely of easily swayed idiots, who are ambivalent between actually consuming what they want and the feeling they are actually consuming what they want.

Recommendation: This data point indicates that there is more strength in poop than we previously believed. We raise our rating of the producers of pooplet derivative products to “Three Flushes” from our previous rating of “Two Flushes and a Firm Wafting“. Initiate faux pooplet derivative products at “Light a Match.”

Relax. The market goes up, the market goes down. But, over the long haul, the market goes up.

-Peter Burke, CEO Global Century Investments

Past Quotes Entirely Relevant to Investing

The RIAA filed a $1.65 trillion lawsuit against AllOfMP3.com last week. AllOfMP3.com is Russian website which sold Mp3’s free of DRM to anyone in the world, and apparently did not reimburse any copyright holders. This was legal under Russian law (as most things are, including but not limited to murder, stealing, felching, kidnapping, rape, arson, armed robbery, unarmed robbery and assault) and in our opinion, highly efficient.

The RIAA have waited years to act on this matter, but when they did, they did it with panache. Let’s put $1.65 trillion in perspective.

If AllOfMP3.com has destroyed $1.65 trillion of value or committed acts worth $1.65 trillion in punishment, there is implicit in that the idea that the RIAA stakeholders are worth a minimum of $1.65 trillion plus whatever fair market values would peg them at. A quick perusal of the enteprise values of the constituents of the RIAA make it clear that they are not worth even $100bn, much less 16x that.

Also implicit in the $1.65 trillion number is that AllOfMP3.com has sold somewhere close to $1.65 trillion worth of music in its 3-4 years of mainstream existence. In 2004, there was $30-40bn of total music recording sales (and the RIAA does not represent all of that figure). The GDP of Russia is about $1.5 trillion. In 2005 there were $1.1bn of digital music sales. So in 3-4 years, AllOfMP3.com did the damage worth the revenue equivalent of 40-55 years of total music recording sales or 1x the GDP of Russia.

The RIAA has a resume of distorting reality in an effort to protect its members’ interests. Using the words “stealing” and “piracy” to describe copyright infringement, an act where no one is deprived of their property. Using the assumption that a song illegally downloaded is a sale foregone on a 1 for 1 basis. Never getting on the ball and creating a legal service which makes the digital music as facile as the black market is. Advocating the extension of copyright tenure despite the fact that the time it takes to monetize copyrighted material continues to fall as technology improves and society speeds up. And now suing a website for the entire GDP of Russia.

Recommendation: The smell of desperation is strong, the likelihood of disintermediate is high and we are long irrational acts by the RIAA. We recommend evaluating investments in such potential RIAA moves as:

• Suing for sonic rights to the dark side of the Moon, based on Pink Floyd’s album, and by extention, the entire universe which has ever been blocked by the dark side of the moon.
• Reprogramming Carson Daly’s Prime Directives. Previously these were
  1. Serve the corporate trust
  2. Protect the public from thinking
  3. Uphold corporate interests
  4. Never oppose a media company officer (any attempt to arrest a media company rep results in automatic Carson Daly shutdown)

  The RIAA may append a fifth directive as follows: “5. Conquer Russia and destroy AllOfMp3.com. Crush the insolent.”

• Proposing a bill to congress through one of their many shills requiring that each citizen have a meter attached to their ear which would keep track of how much RIAA content you listen to and charge you for it. Failure to pay would result in their using the installed ear meter chip to broadcast Crazy Town’s Butterfly directly into your brain until you agree to pay or until your head explodes.
• Suing the dead. (Edit: Apparently the RIAA has already sued the dead)