Long or Short Capital

From a contest to write the worst possible opening to a non-existent short story:

Carey, unnerved by an affair that had suffered through weeks of volatility, walked unsteadily, her dress etching complex runes in the fine patina of dust along the antiquated floor, to a rose-scented box of love letters in a vain attempt to find solace, like a security fund struggling to find liquidity in the US sub-prime mortgage market.

HT TQ

With the Olympic background, the Georgia-Russia-South Ossetia squaredance has been getting a lot less attention than it should. Most people don’t even know that Georgia isn’t even in the United States, much less how important South Ossetia is to ensuring that enriched uranium remains affordable for blue-collar Americans. Just as the demand for gas picks up when the so-called “driving season” officially opens, so to does the demand for enriched uranium pickup in the so-called “atomic bomb hobbyist season”. It starts in just one week, with it’s tradititional commencement on the third Monday of August.

Unlike with gasoline, we are confident that there will be no actions in Government designed to help affected consumers, already laden with credit card debt, mortgage debt, second mortgage debt, third mortgage debt, car payments, tv payments, home theater payments, debt surrounding the bowling alley they had installed in their ranch house, inflation, a weak labor market, and Exxon-Mobil’s extortative pricing practices. Expect to see some atomic bomb hobbyists forced to switch to less expensive substitutes, like trinitrotoluene, napalm, or even baking soda.

Recommendation: There will be demand destruction for all enriched uranium stations, in addition to a squeeze on their margins. Short them, but maintain a nimble predisposition. Long-term, it’s harder to get a feel for the direction enriched uranium prices will take. The war situation is bumping up prices now, but if South Ossetia links up with North Ossetia and becomes one with Russia, the market price will likely decrease. But if the land remains in a state of anarchy without actually being at war, still a pseudo-province in Georgia, enriched uranium prices will likely come in back to recent levels.

Buying a house and buying a house on fire are two different things
-Jamie Dimon talking about the Bear Stearns deal

Past Quotes Entirely Relevant to Investing

Citigroup (NYSE: C)

Previous Rating: BFFBAS
New Rating: Whore

Ratings Rationale: Some people can pull off doing everything. Student government, head of the cheerleading squad, phi beta kappa, kappa kappa gamma, Big Sister, 4.0 GPA, pep squad, dance squad, hybrid pep-dance squad, dance team, song girl, TA, model, campus tour guide, designated driver, cocaine addict and the world’s best GF. But for most people who aren’t Melissa, the result is a total disaster…Citi is that disaster!

Citi, girl, I’m really not trying to pick on you but what do you do? Everything? How is that working out for you!?! Credit cards, banking, i-banking, trading, brokering, creepy advertising surrounding a stodgy British pedophile with a magic umbrella?!? ((Masculine Editor’s Note: Travelers P&C is no longer part of Citigroup)

Citi, I know you think you have a lot to offer, and you try so hard which is kinda cute, but I just have to think about myself — I wouldn’t want to rely on you for anything and that’s the sad truth. People have been saying this about you for awhile, they don’t want a friend who is a supermarket, they want one that is an organic farmer’s market that charges ridic premiums and is extremely fashionable to be seen with.

And don’t even get me started on what buying back all those Auction Rate Securities is going to do to your going-out ability. You know those mature never, right? Just like all the boys you have been slutting it out with.

I hate having to do this I really do, because I’m not a mean person at all, everyone who knows me knows how nice I am. I’m sorry, it’s my job. Citi, I am downgrading you two notches from Best Friend Forever But Also a Slut to Whore.

Ratings Methodology:
Hey everyone! It’s me, Melissa Moody…not that other Moody’s you have been reading about. Actually that’s why I’m here I’m just so sick and tired of that other Moody! Their ratings stink, and they don’t know nearly as much as I do about debt, it’s true, I’m maxed out on 4 out of 7 credit cards I know I have a problem but I just can’t stop,ha ha. I can do a better job than Moody’s and that is what I’m gonna do! And let’s face it, their old ratings were too complicated. I mean Aa3, Baa1, Caa2, B1 who knows what that means? My ratings will be simple:

• BFFAE (Best Friends Forever and Ever)
• BFF
• BFFLAF (Best Friends For Like Almost Forever)
• BFFBAS (Best Friends Forever But Also a Slut)
• BFFBIHH (Best Friends Forever But I Hate Her)
• Whore

Sexual Harassment Arbitrage allows attractive women to gain direct and indirect compensation from their Attractive assets, as follows:

Attractive people have a unique arbitrage opportunity. All thing being equal, they are more likely to be hired for a given position than a less attractive peer. But all things remaining equal, they are also more likely to be sexually harassed by their superiors than a less attractive comparable employee. This gives attractive people the opportunity to “double dip,” so to speak. They can gain employment and the ensuing compensation by virtue of their looks; then they can compound their returns by getting sexually harassed and filing multi-million dollar suits[.]

While we stand by this analysis, it comes with a caveat that, like most things requiring logic or fairness or human rights, it does not apply in Russia. There have been only 2 successful sexual harassment cases in Russia since it was the Soviet Union, and a recent suit was dismissed thusly by the ruling judge:

The judge said he threw out the case not through lack of evidence but because the employer had acted gallantly rather than criminally.

“If we had no sexual harassment we would have no children,” the judge ruled.

And then some amazing facts which support my contention that Russia is a place to fear:

According to a recent survey, 100 per cent of female professionals said they had been subjected to sexual harassment by their bosses, 32 per cent said they had had intercourse with them at least once and another seven per cent claimed to have been raped.

Eighty per cent of those who participated in the survey said they did not believe it possible to win promotion without engaging in sexual relations with their male superiors.

Women also report that it is common to be browbeaten into sex during job interviews, while female students regularly complain that university professors trade high marks for sexual favours.

Recommendation: Russian firms can arbitrage sexual harassment arbitrage by hiring exclusively “office hottie” caliber employees. They get full benefit for the 20% bump in productivity without being subject to the increase in sexual harassment related legal costs. The play for women and non-whites and people with ethics is to remain away from Russia.

Dred Scotch: It Seemed Like a Good Idea at the Time.

Recommendation: A classic case of Maybe Not Marketing. With its dark humor, it plays on the learned sophistication of the Scotch drinking demographic with a call to a pivotal moment in American history. But sometimes humor can be too dark.

HT to Kit

Give a man a fish; he’ll eat for a day. Give him a sub-prime fish loan and you’re in business, buddy!
-Stephen Colbert

Past Quotes Entirely Relevant to Investing

Long or Short turned three earlier this week. Three is an interesting age, when you are just getting confident on your feet, forming words and sentences with rapidly increasing complexity, and, if in China and female, celebrating the third year anniversary of your drowning death. As we become literate and eventually attend pre-school, I hope you will bear with us, all the way through the awkward future tween years that lurk ahead. Then you can pretend you aren’t our parents and leave us at a Bangladeshi train stop to be sold into slavery or consumed by anthropomorphic global warming induced rising sea levels.

Regardingly,
The LoS Staff

September 2nd 2008, according to Young Jeezy according to Pitchfork.

This Is Why It’s Hot: Hip-Hop analytics is a powerful , if nascent, tool. Formerly, the medium was known as solely a form of entertainment. The trend has been for leading hip-hop performers to make a transition from “artists” to “businessmen”. 50 Cent has ventured into private equity with his stake in Vitamin Water, while Jay-Z has been involved with a leveraged buyout transaction of his clothing line, Rocawear, amongst other ventures. We think it is inevitable that Hip-Hop itself will also make a transition, from “art” to “analytical tool”. We will stay abreast of all related developments and I will not stick my manhoods in the mashed potatoes*.

*Unless it will result in better performance for our clients or it really is that kind of party, than I will stick my manhood in the mashed potatoes.

HT to Pasha

But the glass is 35% full, as that is how many passed Level I of the CFA’s Guarantee of Future Investment Performance Exam. Now I know that 65% of you are dejected and feel beaten down by life, by the capricious nature of your cruel Chartered master and by the implied future whips of the 35% of your cohort who did pass Level I and will likely be your bosses very soon. But do not look so glum! You managed to crash the CFA site server and ensure that many people who passed will have their glory delayed. If you can’t win, make life worse for those who did! Also, drink heavily.

In this troubling article, Struggling in Ohio as the Economy Tightens, the tightening of the America economy is played against a background of the tightening of the belt of many poor Americans (not us, we are very rich). This picture and caption were included.

Angelica Hernandez (left) and her mother, Gloria Nunez, struggle to make ends meet on a very limited budget.

Althought not discussed in the article above, formerly the bare minimum daily diet of an America in the USA was some combination of this (or regional or seasonal substitutes):

• 30 shrimp
• 1 extra-large meat lover’s pizza
• 25 cool ranch fun-size Dorito packages
• 1 Mountain Dew Slurpee
• 1 Cherry Slurpee
• Porterhouse for Two from Ruth’s Chris
• 75 eggs
• 1 lettuce plant
• 1 lb of candy corn
• Cheetos (a quantity sufficient to stain your tongue and fingers orange permanently)
• 3lbs of lobster
• 1 diet coke

This allowed America to be healthy, productive and as happy as the Danes. But not anymore. With the recent surge in food prices, many poor Americans are being forced to the face the nightmare of only being able to survive on a diet consisting of such things as

• Rocks
• Polonium
• The Stuff from the movie The Stuff
• Toxic Chemicals
• Other poor Americans

Recommendation: Of these the last is looking to be the most delicious. Two birds can be killed with one stone were poor Americans to eat one another and if you do the math between the cost of food and the quantity of calories needed to sustain poor Americans, it seems inevitable. This shift in consumption would have a deflationary effect on food prices, effectively eliminating the marginal pressure that poor Americans place on demand, because these poor Americans will already have eaten or been eaten (as it should be in nature). In our analysis, this would lead to a simultaneous gap up in the prices people pay for poor Americans, especially when the market fully factors in how fatty, tender and delicious this meat is.

The play here is to start buying distressed poor American assets and forming farms, ranches or even islands dedicating to housing them and fattening them on low cost / calorie inputs like McDonald’s (NYSE: MCD) dollar menu and corn syrup IVs. Long poor Americans.

HT to Amanda

I, Ryunosuke Tsukue, trust only my sword in this world.
-Ryunosuke Tsukue in Sword of Doom

Past Quotes Entirely Relevant to Investing

Zimbabwe is introducing a Z$100bn bill to circulation. This does not cover one days worth of expenses (Z$500bn) for a person living in Zimbabwe (an unlucky sperm club member). Normally, this would be a terrible thing. However, rampant inflation is a fact of life in Zimbabwe and taken for granted. What the citizens don’t realize is the great lengths their government is going to in order to encourage math skills. For instance, calculating the cost of lunch (Z$100bn) for a week (multiply by 7) including inflation (estimated at 4,500% to 11,000%) requires seriously carrying some digits; the cost for a week is well into the trillions!

Recommendation: Invest in human capital: smuggle waiters, cashiers, and other frequent handlers of cash out of Zimbabwe. These people will be able to mentally manipulate numbers of 13 or 14 digits quickly and accurately. Long or Short estimates that at current inflationary rates, these humans will be able to replace most semiconductors’ calculation power by the end of 2008.

Mankind is divided into rich and poor, into property owners and exploited and to abstract oneself from this fundamental division and from the antagonism between poor and rich means abstracting oneself from fundamental facts.
-Joseph Stalin

Past Quotes Entirely Relevant to Investing