Long or Short Capital

Like most of you, Long or Short Capital is not entirely immune from the current dislocation going on in capital markets. Also like most of you, Long or Short Capital recognizes that this period of extended dislocation and, more generally, the backdrop of the Great Regression, provide the perfect cover for past acts of corporate malfeasance and accounting shenanigans.

The good news is that you, as subcriberholders under our former dividend policy, have been compensated both in the form of money, and in the form of insightful investable recommendations. But there is bad news. Due to the current capital market uncertainty, especially the difficulty we have encountered in trying to secure a revolving line of credit so that we are able maintain sufficient liquidity, as well as the difficulty we have had in finding (entirely theoretical) potential debtor-in-possession financing (seriously we aren’t going to file, we swear on Madison’s life), we have entered into a cash conservation mode. We will be suspending our dividends, retroactively and futurely.

We have hired a financial advisor to explore our options both with respect both to our capital structure and to maximizing value to our executive team. We have them looking into the appropriateness of soliciting reverse dividends from our subscriberholders so as to improve our liquidity and ease the burden of certain off-balance sheet arrangements that were undertaken to finance my yacht (sometimes referred to as “the corporate yacht” in our filings), as well as my summer yacht.

We appreciate your continued support in these trying times. Personally, I think you can relate to the humiliating devastation I feel as I am forced to go from one mega-yacht I purchased due to my excessive compensation as CEO, one company yacht (in name only, I used it exclusively), and one summer yacht paid for by embezzling LoS capital funds, to only one mega-yacht.

For updates on our dividend policy, always navigate to our Dividend Policy. Thank you.

From an MTV article headlined Robert Plant And Alison Krauss Win Grammy Album Of The Year:

“I’m bewildered,” Robert Plant said onstage as he accepted the Grammy Album of the Year award with Alison Krauss on Sunday night. “In the old days we would have called this selling out, but it’s a good way to spend a Sunday.”

And so are we, and so did we. I wouldn’t buy any stock in the Grammy’s as a guide towards good culture, but the fact that this man, won one NOW, has had us writing calls all morning on Robert Plant, on Age and on the base metal, Led Zeppelin. This is like a musical 9/11 with this having been transformed by a easy listening aural rape into this.

Recommendation: Baby boomers, please go away, lest you ruin even more of the world with your insipid gerriatric tastes, your wanton spending, your unfettered sense of entitlement and your inability to understand the difference between The Google and The Internet (hint: Sergei Brin and Larry Page invented one, Al Gore invented the other (along with Global Warming)).

Some men are born mediocre, some men achieve mediocrity, and some men have mediocrity thrust upon them. With Major Major it had been all three.
-Catch 22

Past Quotes Entirely Relevant to Investing

There are many keys to getting a job in finance, an industry currently in the toilet, albeit a gilded one that does not stink. If you are failing to find a new job or Lehman let you go or Bear bade bye-bye or Goldman gave you a golden parachute or RBS rended you redundant or Credit Suisse cut you loose or you work at B of A, then read on to equip yourself with the paddles you will need in order to navigate shit creek.

The first key is nepotism, or any relationship that transcends logic and reason. If your desired employer is your father, your mother, or a blood relative, or your father is the head of a powerful financial firm, or the former President of the United States, or you are a member of the same secret society as your potential employer, these things will likely secure you a job. Kudos.

Barring nepotism, you may have to fallback to what we call “Actual qualifications” which include past quality work experience at a prestigious (but suitably similar) firm, outstanding marks in your education at a top ten institution and excellent demonstrable abilities (like the ability to jump seventeen feet into the air if you want to work for a basketball firm or the ability to devise opaque pyramidal trading strategies if you want to work for a market-making/investment advisory firm). These things are mostly out of your control at this point, and they are difficult to maximize ex post.

But you do control the next key, differentiation. Although mostly just a euphemism for “don’t be coastal white male from a top fifteen school”, other differentiation is achievable with the right combination of savvy, research and sticktuitiveness. Also gumption. With the economic backdrop of the Great Regression and a hugely competitive job search environment in finance, differentiation becomes all the more important.

One example of differentiation is to “be a woman”.

Another example of differentiation is to come to your interview dressed in a way that says you are an especially serious person who would become an especially serious employee. If a man, this means a well-fitted suit, a bold but elegant tie/shirt combination and a unifying theme that conveys assured sartorial command. If your expected interviewer is a woman, it’s ok to tell your tailor to tighten the fit in your lower mid-section — the woman would likely like to know just what kind of employment package she can expect from you.

If a woman and the expected interviewer suffers similarly, this means dressing in a way that is both smart and sexy. A Theory pantsuit with a crisp Pink shirt underneath, pearl earrings, and a bag & shoe combination that looks brand new is a combination that will put your best foot forward into that employment door. If the expected interviewer is a man, a tasteful teddy will ensure that they take you literally and a set of Prada glasses will make you seem smart. Smart and sexy.

Besides what you wear, you can differentiate yourself by what you are willing to do. Will you step into a boxing ring with a senior trader who is wearing brass knuckles, if asked? What about drink 4 gallons of milk in thirty minutes or eat 35 McDonald’s cheeseburgers? After the markets close, will you push a broom to help on facilities costs? If a woman, will you sleep with your boss? If an attractively girlish looking man with soft hands and features, will you sleep with your boss with the lights off? Increasing what you are willing to do is an out-of-the-box blank check that a potential employee can give their potential employers as incentive towards being hired.

The last key for you to be left with is to never put anything meaningful, or that you spent time on, or that is actually value-add, after the 600 word mark (or in resume terms, the first page), because frankly, there is little chance anyone is paying attention to you anymore. It’s a great time for a corny joke, or a non-sequitur, but little else. If you, or your idea, cannot fit within 600 words (or in resume terms, one page), than you, or your idea, are most likely preposterously awful.

Well, Grant, we’ve had the devil’s own day, haven’t we?
Yes. Lick ’em tomorrow.
-An exchange between William Tecumseh Sherman and Ulysses S Grant during the Battle of Shiloh

Past Quotes Entirely Relevant to Investing

Nothing to do here other than link you to something hilarious for you to invest in.

Black Swan Formation

After Zimbabwe had been bearing the torch of sensible solutions to incredibly complex resource allocation issues for many years, it appears that the forces of dark may be prevailing in the country. The government is abandoning their full support of the Zimbabwean dollar.

“The Government is allowing the use of multiple foreign currencies for business alongside the Zimbabwean dollar,” Patrick Chinamasa, the acting Finance Minister, announced in [an unsettling] admission that the Mugabe’s regime’s battle to prop up the national currency [was being submarined by the forces of darkness and also by impotent cowards].

This is troubling news in a troubling age. But mollifying the trouble is the fact that leadership in both Zimbabwenomics and Mugabe Efficiency Theory has migrated to America. This leadership has been affirmed almost every week since early 2008, as our economic leaders craft new and powerful ways to harness zimbabwenomics to make America into the great nation it used to be, back when we made things rather than just how it is now when we all we make is money and an incredible standard of living, back in the good old days when we killed Indians, and had black lung and union riots that stopped the economy and killed people, and much higher violent crime rates, and much shorter lives, and much less education, and less social mobility, and more racism and no pizza.

Recommendation: Long the Zimbabwean dollar — it is only a matter of time before the US adopts not just the ideology of zimbabwenomics, but the official currency as well.

Zimbabwenomic forces are following up last year’s smashing success in banning short-selling in certain financial firms with new legislation aimed at effectively scrapping the entire CDS market.

House of Representatives Agriculture Committee Chairman Collin Peterson of Minnesota circulated an updated draft bill yesterday that would ban credit-default swap trading unless investors owned the underlying bonds. The document, distributed by e-mail by the committee staff in Washington, would also force U.S. trading in the $684 trillion over-the-counter derivatives market to be processed by a clearinghouse.

It’s about time that someone put together a way to stop the CDS market cold in its tracks. The instrument’s ability to provide hedging for companies’ debt, improved liquidity in names, and more accurate information about the health of issuers is not only dangerous, but it’s overtly capitalistic (they might as well be called Credit Default Ronald Reagans), which we now know to be a mistake. A healthy economy doesn’t need an unfettered free market system — what it needs is a regulated command economy that ensures that houses (and everything else) are always affordable, especially for people that can’t afford them and that politicians are always in control of all economic and financial processess.

This particular zimbabwenomic reform comes from the chairman of one the most progressive committees in the house, and hopefully he and fellow zimbabwenomicist Barney Frank can push forward appropriate regulation of all markets, specifically, regulation that will prevent them from going down.

As much as 80 percent of the credit-default swap market is traded by investors who don’t own the underlying bonds, according to Eric Dinallo, superintendent of the New York Department of Insurance. Dinallo last year proposed outlawing so-called “naked” credit-default swap trading. He shelved the proposal in November because of progress by federal regulators on broader oversight of the market.

More generally, we think one of the effects of the Great Regression will be that everything naked will take a hit. Naked trading, naked shorting, naked greed, naked people and naked CDS positions were the excesses that got us into this mess. The lesson? We, as a society, need to do it with our clothes on, whatever “it” is.

Recommendation: We recommend an unhedged short on naked trading, naked shorting, and naked CDS positions, basically anything naked. Putting clothes on all such actions ensures that nothing is able to go down. Now is a perfect time to bone up on dry humping in expectation of the new regulatory paradigm.

Here are the Six Sigmas: Teamwork, Insight, Brutality, Male Enhancement, Handshakefulness, and Play Hard.
-Jack Donaghy on 30 Rock

Past Quotes Entirely Relevant to Investing

Dear Colleagues,
When I sent that message earlier, the one that ended with “Sent from my Verizon Wireless Blackberry,” I did not mean to send it to the distribution list to which it got sent. I know that much of my language was not only colorful, but wholly inappropriate, and for that I apologize. Larry, I am sorry for the comparison I made between you and certain feminine hygiene products. Not only was what I said unfair, but truth be told, I am not even clear that they make sense based on my understanding of the working of those products, which is admittedly imperfect. Sarah, I don’t think that you resemble the legume (gourd?) which I used to describe you — you have to understand it was written in the heat of the moment. The same heat of the moment that caused me to reply to the whole distribution list rather than just the one person I intended. As I pack my bags and prepare for what looks to be a long unemployment, a time no doubt when I will be forced to work unpaid jobs either emptying female sanitary waste baskets or harvesting the aforeimplied legumes (gourd?), I just want you all to know how sorry I am. Let this be a warning to all of you that if you let your Blackberry be your greatest lover, the edge which you constantly ride, the constant tether to the space station of your work, that it can totally cost you a job and lead to sloppily expressed thoughts. I am not very good at metaphors but I think you get what I am saying.
-Joseph Wipskittle

Sent from my Verizon Wireless BlackBerry

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as final and total catastrophe of the currency system involved.
-Ludwig von Mises, Human Action (1949)

Past Quotes Entirely Relevant to Investing

In the last 18 months, the market has been beaten torture, waterboarded it and, in the last two and half months especially, electrocuted its testicles. Is it time to go long? I won’t draw this out and torture you: the answer is yes!

Sure, as an information gathering tactic, torture’s efficacy is reportedly low. But have you considered that perhaps the research which demonstrates torture’s weaknesses was performed under duress? Those researchers were being tortured by the anti-torture activists to ensure that they would produce the results that proved the anti-torture agenda, since the anti-torture activists know the very truth they fear — that torture works. Their cunning and humanity are forces to be reckoned with.

But not only does torture work, as I have demonstrated above, but it is also fun. I’ve seen 24, and when Jack Bauer tortures someone, he is not only getting down to business, but also letting off steam. As far as I can tell, Jack doesn’t eat, sleep or take any break while he works. So how does he maintain such a high level of performance? By abusing a powerless person, that is how. It recharges him, like a lifesize stress relief toy or a $5000/hour hooker. Have you ever waterboarded a random stranger or a close friend? If you haven’t I highly recommend it. It leaves no visible marks, probably* won’t kill him/her and will leave you flush with an invigorating feeling of power.

Recommendation: Torture has an important place in our society, and is currently well oversold in anticipation of the Obama. Buy now or you’ll be racked with guilt later when torture comes back big.

*We make no guarantee!

As you may have heard, Palm has launched a new phone.  The launch has Wall Street in a frenzied state of excitation, a state of such frenzy that Palm (NASDAQ: PALM) has “doubled in size” in the last two days.  I think we’ve all been excited by “new palms” before.  But this one is special, it’s the first phone to actually be named after the baby-making fluid which biologically signifies you are really sloppily excited about something.

Recommendation: In our experience the presence of ‘pre’ usually means you are too excited/optimistic about whatever you think is going to happen. In layman’s terms, it means you messed up, usually literally, before you even got down to your business. We stick to our long term fundamental thesis of Sell the foreplay (which usually disappoints), and Buy the afterglow. Here is a video of the pre in action.

I couldn’t help asking him once what he meant by coming here at all. “To make money, of course. What do you think?” he said, scornfully. Then he got fever, and had to be carried in a hammock slung under a pole.
-Marlow describing a fellow European in Heart of Darkness

Past Quotes Entirely Relevant to Investing