Long or Short Capital

In the Q1’06, we wrote a report on how flight attendants were boycotting Flight Plan (See related report Hey Unions, Get Over Yourselves) because it depicted a FICTIONAL flight attendant trying to mess with Jodie Foster. This morning, Northwest’s flight attendant union announced their strike plan, CHAOS. What does it stand for?

The airline’s 9,300 flight attendants are poised to begin random work stoppages starting at 7:01 p.m. (Pacific Daylight Time) if a court ruling Friday doesn’t block a strike. They’re protesting the airline’s plan to cut their wages and benefits by about $195 million a year.

Under their plan called CHAOS — Create Havoc Around Our System — flight attendants will strike in some cities and flight by flight, rather than a widespread strike.

I would have called it Operation RERE which stands for “Who Needs Customers if We Keep Our Salaries at Existing Levels.”

Recommendation: The “if we make our crappy bankrupt company worse, maybe we won’t lose our overpaid jobs” tactic never seems to be that effective as part of a “stay employed” strategy. They would be much better off if they didn’t strike and just switched their outfits to ones like this. Short Unions.

(Hat tip Dealbreaker.com)

To: Kaiser and JD
From: Mister Juggles (who created Mini-Baller Roulette 3 months ago)

Nice work. Way to get it done. Btw, Mini-baller roulette simultaneously fascinates and terrifies me. I think it may be my one enduring contribution to society.

When you try and get in a taxi in Argentina, frequently a man (not the driver) will pop out of nowhere and open your door. Then he will hold out his hand waiting for 2-3 argentine pesos. Little did you know (and thanks to him for reminding you) that opening the door to a taxi is a valuable service worthy of compensation.

In the Ritzy hotels in the US, like, errr, the Ritz, sometimes there will be a “boy” in the bathroom ready to hand you a hand towel. He will have a plate nearby, letting you know, that handing the towel is a valuable service, one in which his specialization adds substantial value worthy of renumeration.

In the Middle East, you are expected to tip about everyone and every camel, even if you have paid them for their service substantially and even if they performed a service that was valueless or unwanted.

In these situations of dubious value tip seeking (“tipeteering”) the potential tippee uses intimidation and/or the threat of shame to coerce payment. This is the point at which tipping debarks from its root as an effective way of incentivizing performance in personal service industries and enters the realm of entrepeneurial racketeering.

This phenomenon is something that can be seized upon by any American service worker, provided that he/she/it has the gumption.

Say you are an associate in a law firm, making good buck. Your partner comes into your office to pick up some documents you have prepared with painstaking effort. Leave a dish out, a little silver plate saying “Tips Accepted.” What do you have to lose? That $20 in his money clip was probably going to be used to wipe his next No.2. And until he uses it, that silver plate will bore a hole where his soul would be if he were human.

Or you’re a sell-side analyst in a one-on-one with the CFO of a somewhat respectable publically traded firm. After he is done debriefing you on what kind of valuation you will give the stock, hold the door for him, make solid eye contact and stick out your hand. Do not stop until he extends some petty cash your way. You’re worth it.

And Doctor’s, let’s just say you have a lot of leverage in this area. Want those sutures taken out? Well, we have a collection plate from which all the proceeds go to the Mercedes Convertible Foundation…

We have been long piratery since our initial report from December (see “Piratery FKA Piracy: Primer to Investing in Cutlasses, Rum and Pillaging“). But the recent cresting of Pirates of the Caribbean 2: Dead Man’s Chest gives pause to our bullish sentiment.

Are we reaching the point of Peak Pirate?

• In the difficult Indian ocean piratery market, the new Somalian Islamist government has seized a pirate stronghold.
• Pirates of the Carrribean 2 is almost through its theatrical run, and it will likely finish as the 6th all time grossing film in domestic box office history, a height unlikely to be reached by subsequent entries in the series.
• The entrance of low cost (and low quality) kitten pirates has proven to be disruptive to pirate operators, creating a low margin environment.

Mass adoption is the ultimate indicator of a fad or an investment theme peaking, and this article paints a peak pirate picture:

Across the United States, from New York City, to Portland, Oregon, the pirate movement has spawned pirate bars, social circles, bands, festivals, magazines and apparel.

Devotees are attracted by pirate fashions, the spirit of rowdiness and the opportunity to engage in anti-establishment behavior. It’s unclear where it began, but pirates are clearly in vogue.

“We are in the throes of its real peak,” said Hawkins, 35, who performs as pirate Luc the Lucky in Portland. “Pirates are like the new cowboys.”

The new cowboys? It doesn’t get any gayer than that.

Recommendation: We are rating piratery a firm “Do not buy.”

Great alternative strategy proposed by reader Boyband, in the comments section of our Long Russian Legs report:

Well it all comes down to cost of carry, Russian [women asssets] have a carry rate proportional to a) blondeness and b) leg length (this is a simplified model).

The optimum strategy, I believe is to be short a Russian [women asset] – thus creating funding and long a Pole/Czech [women asset] – who have similar characteristics yet are much lower maintenance thus creating a trade with many of the benefits of being long Russian but with a positive cost of carry.

See our earlier attractiveness analysis on Emily Lechner ( This Girl is Not Attractive So Short Her) and Diana Binachi (Financial Analysis of Diana Bianchi). Passey has a blog.

Clearly a best possible photo. Her face is impossibly well lit, perfectly clear and somehow kept from looking deathly pale. Tasteful cleaveage is a plus, but the the extent of it and the ratio of it to the rest of her body are left without context. Not dependent on the blush of youth. There are hints of the structural and cheek issues which become apparent from looking at a few further photographs. Also it appears that she has used her own hair to make her necklace.

The forehead rears its ugly head, so to speak. Thin lips and a head wider than her face. The ratios are definitely off. And there is a squarish quality to the face not unlike a cabbage patch kid. Again no context for the body. She appears to have eyes for the microphone which may indicate a proclivity for being a hellcat in bed. Or a deep seated love of karaoke.

Recommendation: Jacqueline Passey is not attractive. Our valuation puts her worth at approximately .37 Emily Lechner‘s on our Foreign Exchange for Humans. There is a chance of convergence in the intermediate term as the Passey gains against the Lechner and the Bianchi, due to the latter two’s dependence on nubility, but this opportunity is muted.

Jacqueline Passey is an female econ-blogger of sorts, and one who has pointed out more than once how attractive she is. Good for her to be so confident and self-assured; better for savvy market participants who have the ability to be on the selling side of any Jacqueline Passey transaction.

Quoted from a recent blog entry titled Dating tip: Quality dates Quality.

I’m slim (whereas 62% of American women age 20 to 74 are overweight)

I’m attractive (my new picture has been rated more attractive than 86% of the women on Hot or Not — and the women who upload their pictures are a self-selected sample that is probably already biased towards being more attractive than the general female population)

…

The above list [ed note: much more than what we list here] explains why I typically receive 50-100 (sometimes more) responses whenever I post personal ads. This is in addition to getting hit on almost every time I go out alone (and all that those men know about me is that they like the way I look, they don’t even know about all the other qualities I have that make me more appealing than most other women).

Personal ads responses are mainly dependent upon being a woman asset (or in many cases just pretending to be one). Getting hit on in public requires two ingredients 1) breathing and 2) being a woman. These things are signals of nothing. Just wanted to point that out.

We knew Ken Lay never really died and is still alive. Further confirmation from Wall St Folly via this report on the status of Ken Lay’s post-humous lawsuit:

Lay died on July 5, in Aspen, Colo., of heart disease. Although he was convicted, a final judgment wasn’t issued because he had not yet been sentenced and through the appeals process. Rather than allow an appeal to proceed without him, the court is widely expected to throw out both the verdict and indictment, leaving Lay’s record as though he were never charged.

Lay’s $5 million bond — backed by his children’s homes — also would be canceled at that time. With his conviction vacated, the government also will not be able to seize Lay’s property through the criminal proceedings.

So if you are convicted of the largest financial fraud in history, but die in between conviction and sentencing, the conviction will be vacated by the Gov? And your assets are now fully unemcumbered by any legal claim? So Ken Lay died at the time at which it could confer maximum possible benefit to his name and to his family? I won’t even ask what happens if he turns up on a golf course in his Tommy Bahamas shirt in 2 years because double indeminity will prevent him from being charged again, a free man with millions holed away around the world…

Recommendation: Even more Alive!

According to the BBC:

Banned from flights at Heathrow: anything but things like your passport, wallet, glasses (not case), RX medicine (not the bottle). You cannot bring books onto planes. Books. And you definitely cannot bring explosive books like Dianetics which has been proven to blow minds.

But…

Ok on flights at Heathrow: Goods purchased in the Duty Free shops, which allow you to buy just about anything including LIQUIDS (omg!) unless you are on a flight to the US.

I have seen this all over Europe, Latin America and in the Middle East, and I’m onto you….and so are the terrorists.

There are 30mm Canadians in the world, compared to ~300mm USAians, so the sheer volume of Canadian flags is laughable. What do you expect to happen when you’ve got your backpack on and are walking down a street in Istanbul and Mohammad Jihad spots you, and wants to take you hostage? Do you think it will play out like this:

Inner dialogue of Mohammad Jihad: Hmmm, I see that potential hostage, she’d look great in silk pajamas with a bag over her head. Totally alone, I can capture her with ease. Stupid American!
Mohammad Jihad: Excuse me, miss, I am taking you hostage.
“Canadian Girl”: Didn’t you see, I’m Canadian. [points to the Canadian flag patch on her Jansport backpack]
Mohammad Jihad: Oh right, sorry miss, my mistake. I draw a moral line in my terrorist activites between the white people in the western hemisphere who are American and those who aren’t American but merely passively benefit from American policies and have a lower standard of living, a lower GDP per capita, poor quality healthcare and too many Tim Horton’s. Have a good night.

How low in character do you have to be to live in a country whose flag you are afraid to bear? Answer: Very low.

How low in character do you have to be to sport a flag for a country that is inferior to your own by almost every measure except in terms of mooses and hockey sticks per capita? Answer: Even lower.

These are alternative optimization strategies for potential Goose‘s who would be disadvantaged in a chase of the It.

The It selects several sitting participants as Duck, noting his election aloud. At a time of his choosing while proceeding around the circle, he will select a Goose. The Goose is bound by a verbal contract asserting certain implied legal responsibilities on the Goose‘s part. The Goose must tag the It before the It takes the Goose‘s seat. As I understand it, the Goose is not contractually bound to forfeit their property rights to their seat nor is the Goose contractually bound to run either clockwise or counterclockwise. This makes permissable a squatting strategy on the Goose‘s part, as well as a legal claim that the It‘s potential future seizure of the Goose‘s seat is illegal at which point the Goose can seek injunctive relief.

If there was one man, just one man, whom we would describe as the platonic ideal of a Finance Man, it would be Albert Sipzener. Sometimes reality is the greatest satire of all. (Note that the subject of the post is the actual title of the Observer article)

Background on Albert:

Albert Sipzener puts in 60- to 70-hour weeks as vice president of Shikiar Asset Management, an investment company that controls $300 million in assets.

In the evenings, he works as a model.

He teaches, on average, eight spin classes a week. In the past eight years, he estimates, 95 percent of the women he’s dated have come from his classes.

One of those women nearly married him.

Before his classes, in the romantically dark spinning rooms of Equinox, Mr. Sipzener strolls among the 50 or so stationary bikes, doling out pecks on the cheek to the lucky. He has dimpled cheeks and a pointy nose and thick, thick black hair. He’s a bit slouchy, a mellow dude, and always has a bit of stubble.

He spends a good amount of time putting on his trademark bandana. He wears spandex shorts and encourages the packed room to push it to “the max.” Through his headset microphone, he urges his students in a somewhat nasal voice to “cum uhn,” to “focus up,” to “climb the hill.” During the class that he taught on the first day of 2006, he instructed the spinners to “work off the Cristal” and said that he’d been through three bottles himself the night before.

“My trademark is, I always wear cycling shorts, I always wear a bandana,” he said. “In terms of spin, nobody really wore bandanas. Now everybody does it. It’s like they all went out and bought the same bandana,” he said. In summer, he wears cutoff shirts; in winter, long shirts, with T-shirts over. “My alter ego on the bike is a blend of Johnny Damon and David Lee Roth.”

On fashion:

“I’ve done a lot of fashion modeling at different studios, with mostly Italian brands,” he said, “and now I’m segueing more into commercial work.”

That night, his strict Hermè³­only neckwear policy was in full effect. Between Gucci and Ferragamo, on this day he had elected the former, and his toes nestled in the fine leather of weathered loafers.

On Albert:

He was born in Sharon, Mass., where his still-married parents live. His father is a gastroenterologist, his mother a psychotherapist. He played on the tennis team at Brown. He was an analyst at Lehman Brothers and at Bear Stearns. He received an M.B.A. in corporate finance from Columbia Business School in 1999.

On Getting it Done:

“He knows people’s names and he’s very aware,” said Nancy Wishmeier, a consultant at a financial firm. “‘Focus up‘ is a key phrase. He’ll say, ‘Focus up, Nancy?let’s do this.'”

On relationships:

This summer, one deal brokered in spin class fell through. Mr. Sipzener and his fianc饬 Ms. Farmer, called off their engagement. Among the reasons for the breakup, she cited his constant spinning.

“She was a person who wanted me to, you know, free up a lot of time to participate in a number of events in her professional world and that type of thing, and so we had different priorities. Some people like to work from 8 to 6 and go home and read a book or watch TV. Some people like to go to sports bars and watch every Yankees game. And, you know, some people like to book their schedule so they’re constantly busy. And that’s me.”

He paused and fumbled with the soiled bandana in his hand. “So, now I’m a bachelor.”

Virtual dollar tip to Dealbreaker.com.

Ruminations on Russia posed this observation/question to Long or Short.

It was pointed out to me by several westerners coming in to Moscow this weekend that the airports were full of long-legged Russian beauties heading for the flesh spots of Europe. Where, it would seem that Moscow’s business community has decamped to (Moscow is Russia, but Russia is not Moscow). As the incomers lacked the cynicism of a long-term Muscovite, I felt it important to point out to them that they were probably the reserve/replacement high-class hookers heading to the south of France and Sardinia to replace those who have been on duty since early June.

So a question to Mr. Juggles, clearly now is a good time to be long legs, but is it possible to short legs in Moscow and be long them in the south of France?

Mr. Juggles is on a romantic Latin American holiday with Kaiser, so I’ll substitute for them. While it is possible to do the aforementioned pair trade, it is not recommended. Muscovite legs may indeed be experiencing a temporary outflow, but the imminent economic domination of Europe via Tsar Putin’s oil lasso combined with surging demand for nubile russian legs in Moscow ensures that this outflow is not sustainable; fundametal pressure is on the side of the Muscovite legs. The valuations multiples on Russian legs should expand as the price (implied or cash) converges with Western World leg prices; recent acquisition multiples have been bearing this out. We are bullish on attractive Russian women assets as a whole. There is the potential for a virtuous circle, for as the Russian rich get richer, the women around the rich get hotter (and able to command higher prices).

See related research Rallying Ruble, Russia: a Place to Invest or Fear? and If Russians Can’t Do It….

In Jordan, drivers for tours are not legally permitted to also be tour guides. So while it makes sense that a Jordanian driver for a group of 50 Germans, who speaks pretty good deutsche and happens to know a little about Nabatean culture, also lead the guided tour of Petra when the group gets there, he cannot. He will not be allowed. Instead, he will pass his group to a specialist licensed tour guide. While “economists” and other fake scientists may see this as wasteful, what this really does is create jobs. Where 1 job should exist, 2 jobs exist and the proletariat rejoices.

We suspect that this kind of job creation is the perfect way to solve the Middle East’s burgeoning shortage of jobs for the large young cohort which is entering the labor force. Simply take one job, split it in two and you have two jobs. Why haven’t governments thought of this sooner?

I wish that that the government mandated that if you work in finance, you could not also sexually harass female employees yourself, someone else had to do it for you. It would really free up my work day.