Long or Short Capital

The recovery period for an anal fissure is roughly the same duration as the recovery period for taking the CFA Exam (any level). And I do mean roughly. I expect those of you who took one of the three levels are still relearning what certain sensations feel like. The taste of food, the liquid frothy texture of beer, the loving embrace of a stripper and the sisyphean rock that is your employment (keep pushing, you’re almost there, no really, keep going). These sensations are all new again, and you are well on your way to readjustment into life.

For those 65% of you who failed Level I last weekend, I futurely feel sorry for how much of your life you poured down this horrible Chartered drain. For those 50% of you who failed Level II, I used a time machine to send you well-wishing telegrams exhorting you to “Keep your chin up and next time, don’t be such a tard.” And for those 30-50% of you who neglected to pass Level III, I took a worm hole, dropped into your apartment and left a lifesize model of a failure of the last mile — when your opponent is weak, it’s incumbent upon you to go for the throat. CFAs have to be earnt. Then they have to be acknowledged to have minimal value in the real world and to have been a horrible call on the part of the newly minted CFAer.

When an observer with a trained eye looks at Exxon Mobil’s (NYSE: XOM) 3 month stock price chart, an interesting picture presents itself.

For those of you who do not have a CTA, you’d look at that and see a normal chart, nothing that screams “Trade Me.” But for those of us who are more gifted in the technical arts, we hear voices screaming in our heads saying “Buy Buy Buy” in the days surrounding April 20th. That’s because during that span of time XOM was trading within the “neck” range of a text book Bactrian Double Hump & Pump formation. Let me tease it out for you.

As you can see, the chart is clearly showing a picture of a two hump camel. And if you know anything about two hump camels, you know that when you are traveling from butt to head, after you clear the second hump their neck declines precipitously before a rapid ascent. If you can buy a stock in that desirable neck range, you are likely to experience a short term pop. This is a historically* proven tradeable phenomenon. Here is an overlay of an actual two hump camel:

Aside from the neck, after you plateau in the head range you enter an uncharted area. The stock price becomes dependent upon whether the man holding the reins of the camel decides to jump or not, something that is unknowable to even the most gifted technical analyst.

*Definition of “history” employed in this context is not universally accepted, but is permissable under SAAP

A contact named “Lilley” sent me an email with the subject title “Zoo auctions piantings by orangutan”. She had me at “orangutan,” I didn’t even have to open up the attachment called “fluoresent.rtf” that was appended to the textless message to know that I am very long all zoo auction piantings by orangutan. To show that this is a real investable trend, here is an article about orangutan art fetching as much as £14k.

After his death Nonja inherited his paints and carried on the good work, in spite of a boyfriend called Vladimir who eats her artwork if not locked away in his cage.

Keepers believe Vladimir, who tried painting himself but kept making holes on the canvas, is jealous of his girlfriend’s success.

Recommendation: This is not just chatter, but likely insider info, so be careful how you use it. “zoo auction piantings by orangutan” are likely to go way up, sky is the limit for all simian art. Hold’em if you got em, buy’em if you don’t.

We previously published a brief for investors on How to Hold Based on Insider Information that resulted in a lot of our readership profitting substantially. But correspondence we have received from some readers in jail indicates that some investors are unclear on a second important part about insider trading, the often neglected “getting away with it” part of the buy, sell or hold.

1. Have a position in a company which issues tradeable public securities (stocks, options, bonds, etc).
2. Obtain material non-public information from insiders of this same company.
3. Buy, sell, do not buy or do not sell any of this company’s tradeable public securities.
4. Send a letter to the SEC detailing at length the ways in which you are using material non-public inforomation to profit. The at length part is crucial so pretend like you are writing a doctortal thesis that you have to defend against people who will never read it because it was too long and too boring.
5. Profit.

Note: You might recognize Step 4 from How to Commit Financial Fraud and Get Away With It

Many young men and a few young women decide to apply themselves legally by obtaining their Juris Doctor, or as I call myself, JD. But the uptake of this path is generally based on flawed analysis that doesn’t properly align their objectives with their designation investment.

Most men seek the JD to “make a lot of money” which is really just a euphimism for “power over women.” This means you sign up for four years of college and four years of college debt, maybe a few years break doing something like teaching or navel gazing in Tahiti or some shit while you polish your LSATs, then three years of law school with its accompanying three years of law school debt. At that point you have a full on JD appended to your existence, and henceforth get to spend a lot of time to make a lot of money doing something you might not hate but probably will.

Over the entire course of this process the person who sought the opposite designation, the DJ, will be pulling more strange each night than the JD will in his entire life, all with a designation he obtained at no cost.

DJ is the actual opposite of a JD as not only are its letters the reverse of JD but it goes before someone’s name not after. It comes at virtually no cost, requires almost no talent or taste, and lends itself to sleeping in and having anonymous sex with women who not only are not wearing sweaters but likely do not even own sweaters. By sourcing the “power over women” directly the DJ obviates the need for the “make a lot of money” middleman. Plus the soundtrack of their life is actually the soundtrack of their life. They lived a scored existence.

Recommendation: The fact that so many men continue to shackle themselves to the JD and ignore the DJ is a market inefficiency that will overtime converge. We would change our stance were there to be signs that JD:DJ parity was closer to occurring, such signs being the emergence of three year DJ Schools, an increase in the amount of visible giant headphones, and an uptick in the cases of gonorrhea. For now long me, DJ JD, as I have it coming and going.

This Lemonade Stand operates on the corner of Washington Street and Lincoln Avenue. It was founded in 2009. It’s primary business is as a leading provider of drinks and assorted packaged commercial food items to local customers. The main drink offering is “lemonade” and “cool-aid” both proprietary formulations. This Lemonade Stand charges customers 50 cents for a “small” (approx. dixie cup size) and $1 for a “large” (approx. solo cup size). The main packaged treat offerings are Kellogg’s branded rice krispie treats, priced at retail for $1. Revenue is estimated to be $30 per day. On a non-rent basis they are cash flow positive with 60-70% margins on the drinks and 40% margins on the food; if you factor in the rent attributable to their footprint within the greater property owned by the ParentCo (see org chart), it’s likely This Lemonade Stand is burning cash at a high rate, a situation that is unlikely to abate for at least 15 years.

A Reputation for Poor Quality

This Lemonade Stand was founded on a promise of fresh beverages to “keep you cool” on a hot day. Instead management oversees an operation that merely adds hose water to powdered mix drinks at incorrect ratios. For this they charge above market prices. The lemonade mix is bought in from Crystal Lite, not made from scratch like a premium lemonade ought be. The taste is awful — it has a certain unpleasant bite to it likely from the unholy combination of municipally treated hose water and random amounts of powdered mix. The “cool-aid” is an unidentifiable sugar-free red concoction. Both drinks are of such low quality that many customers pour out their drinks as soon as they are out of view from This Lemonade Stand. While management continues to lean on neighborhood sympathy to eke out what revenue they can, their high costs and reputation for poor quality are causing a flight towards substitutes such as “people’s own fridge” and “nothing”.

Illegal Work Practices

This Lemonade Stand appears to have no business license, no restaurant license, and no permits of any kind. The hygiene of the staff is notoriously bad as they are frequently seen returning from the bathroom with unwashed hands, picking their noses, and leaving their cups on the ground. They make no effort to hide the fact that they source water straight from the hose. Their claim that a portion of their revenue goes to the local animal shelter is unverifiable and possibly untrue. And the baristas who man the stand appear to be no older than 9, clearly not of legal working age. While their customers have been willing to look the other way when it comes to poor quality product, outrageous prices and unclean operations, they are unlikely to tolerate child labor in the long run.

A Study in Unsustainability

While This Lemonade Stand is not currently rated by any of the three two rating agencies(who are we kidding, seriously Fitch give it up), Melissa Moody’s Ratings Alternative Service rated it as BFFLSEBDTTWYMBTARD (Best Friends Forever Little Sister’s Edition But Don’t Trust Them With Your Money Because They Are Really Dumb), one notch above default; such a rating calls into question whether they will remain a going concern. They are burning cash at an alarming rate. To abate that, they would need to increase sales significantly, while improving on the reputation of their offerings enough to ensure repeat business. At present time their liquidity is acceptable, if only because it appears that ParentCo has the will to continue to fund the losses at OpCo. If ParentCo’s cash flows were to come under stress, OpCo would likely be forced to cease operations.

Recommendation: Short This Lemonade Stand, as they are quickly burning through their endowment of goodwill. It has been difficult to find shares to borrow. The market seems to be unanimous in the opinion that This Lemonade Stand is a bagel.

Long or Short Capital is a great place to work and was recently voted the number 45,861st best place to work online.* Prospective employees should know that the fringe benefits here are tremendous. Take the daycare that’s available. If you are a a single father or a working mother, you know how few firms offer daycare. For the firms that do, you know how low the quality is. For the firms that don’t, you know that even a second job wouldn’t cover the $3,000 it costs per month. But at Long or Short Capital, the quality is high and the cost is free. How do we do it?

Firm X sees daycare as a cost center, something to be minimized. Long or Short Capital’s daycare segment, called the The Kid Napping Service, sees daycare as a profit center and we do what we can to push volume through it. Our kids are fully engaged, learning and working at levels well beyond their years, while also receiving much needed “naps” of at least 4 hours per day. Our parents benefit from knowing that their kids will be out of their hair for the entire work day and frequently longer.** Now, we can’t get into the complicated details of how our service works as we take protecting our trade secrets seriously, but suffice to say it involves shackles, sheiks, and boats.

All our employees, from our counsel to our cleaning staff, have benefited from increased productivity due to The Kid Napping service we offer. So, if you have kids and want the pride of being a parent without the burdensome time of actually raising your kid, consider working for Long or Short Capital. We don’t even have to pay you and you don’t even have to actually work here. Just sign our employment contract*** and give us your kid, we’ll handle the rest. Thank you.

* Subcategory of fictional online business/accounting/investment advisory firms.
** Result may vary; absences range from 12 hours to forever.
*** Our standard employment contract contains several disclaimers and releases. Don’t worry and certainly don’t waste your time reading them as they are customary for this type of contract.

I 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.

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).

In 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.

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.