Long or Short Capital

From a friend, I received this forward yesterday morning:

Subject: No gas on May 15

NO GAS…On May 15th 2007

Don’t pump gas on MAY 15th

In April 1997, there was a “gas out” conducted nationwide in protest of gas prices. Gasoline prices dropped 30 cents a gallon overnight.

On May 15th 2007, all internet users are to not go to a gas station in protest of high gas prices. Gas is now over $3.00 a gallon in most places.

There are 73,000,000+ American members currently on the internet network, and the average car takes about 30 to 50 dollars to fill up.

If all users did not go to the pump on the 15th, it would take $2,292,000,000.00 (that’s almost 3 BILLION) out of the oil companies pockets for just one day, so please do not go to the gas station on May 15th and lets try to put a dent in the Middle Eastern oil industry for at least one day.

If you agree (which I can’t see why you wouldn’t) resend this to all your contact list. With it saying, ”Don’t pump gas on May 15th”

The idiocy in this message is rampant. You cannot drop the price of gas by $0.30 by having some small % of drivers effectively defer their purchases a day. Drivers do not even make up the whole gasoline market! And that’s a 10% move in price per a gallon! Also the concept of “protesting gas prices” is akin to “protesting gravity.” These things aren’t set to gouge you, they are set to balance supply and demand for people who need gas even more than you do.

Then we get to the math. There are 78 million “internet network members” and it costs $30-50 to fill up a tank so that it would cost $2.3bn (since when is $2.3bn close to $3bn????) to the “Middle Eastern oil industry”. Except that the avg consumer fills up their tank about every other week, or 1 in 14 days. So if everyone who was likely to fill up their tank on May15th were to not fill up their tank on May 15th, ceteris paribas, there would be a ~$165 million impact. But what would this impact really entail? It’s likely that the majority of the people who didn’t buy gas on May 15th would have to buy it at some point, right? Or else how are the going to get to their job as Chief Pastry Engineer at Au Bon Pain? So say that 90% of that gas is deferred until at most two weeks in the future. Now we are down to a $16.5 million impact.

Who would this hurt? The “Middle Eastern oil industry”? Probably not, whoever that is. The most likely people hurt would be retail gas locations which are frequently run by individual entrepreneurs. These storefronts are are the dominant source of gasoline for consumers. Say there are 150,000 retail gas station in the US. On May 15th, they would have a normal business day except they would lose some small percentage of their normal volume despite having the same overhead costs. This volume would be mostly recouped later in the next two weeks. They would lose money. About $120 each. Way to stick it to the man…the middleman.

Recommendation: In order to combat the FUD of anti-market practitioners, we urge all Americans and all patriots to fill up your tank on May 15th. In fact, fill up all your tanks, your lawnmower, your scooter, your jetski, your gas power snow blower, everything that consumes gasoline should be topped off on May 15th. Let’s see how high we get these prices to go. Make May 15th national gas day. For every person you forward this post to, Microsoft’s Bill Gates will pay you $245 in naira.

We Spaniards know a sickness of the heart that only gold can cure.
Hernándo Cortés

Past Quotes Entirely Relevant to Investing

Mexico was “independent” indepedent after 1821 and none of the relevant dates associated with this independence fell in May. So unbeknownst to many tequila addled revelers, they are not drinking to Mexican independence. No, Cinco de Mayo is the celebration of a man, the Mexican Abraham Lincoln, my buddy Benny Juarez, and his success in dealing with the 18th century credit card countries.

Post 1821, Mexican government was volatile and fiscally imprudent. They didn’t have the tax collection revenue to support all the spending they were doing, so by 1861 their credit score was crap and they were way late on their payments to France, England and Spain. They wanted to handle it the right way, so they called up those countries and let them know “Hey, we can’t make the payments now, but we will work out a payment plan starting in two years so we can get our house in order. We’re good for it, our new president is Benito Juarez and he is basically the shit.” France, England and Spain sent armed representations to Mexico, and England and Spain walked away appeased after some negotiations.

France however planned to foreclose on all of Mexico because that was just how Emperor Napoleon III did things. They came en force and this was back before they were soft. The Mexicans needed to demonstrate to their collection agents that they weren’t gonna go down without a scuffle, and that collecting on their debt was bad business for any credit card country. General Zaragoza, who every US schoolchild doesn’t learn about, led a collection of Indians and Mexican soldiers to fight back and crush a French force that was 15-25x as large. That is an exaggeration but it is true. It was like the Alamo, but if we won and were also Mexican. It was a rough and tumble few years, but this victory, Benito Juarez and later the support of the United States, brought Mexico into good times.

The above is 100% truth 74% of the time.

Or at least short the kids graduating from this school. Their teachers have banned Legos on the grounds that they promote capitalistic behavior. These kids are going to have no clue when they graduate when they have to enter the real world which happens to be mostly capitalistic. And every child economy needs lego exchange, well defined lego property rights and functioning lego markets if it ever hopes to experience sustainable growth.

From the article Why We Banned Legos:

[The children playing with Legos] turned their attention to complex negotiations among themselves about what sorts of structures to build, whether these ought to be primarily privately owned or collectively used, and how “cool pieces” would be distributed and protected. These negotiations gave rise to heated conflict and to insightful conversation. Into their coffee shops and houses, the children were building their assumptions about ownership and the social power it conveys — assumptions that mirrored those of a class-based, capitalist society — a society that we teachers believe to be unjust and oppressive.

Recommendation: Short the Hilltop Children’s Center ETF, in size. For maximum exposure to this trade, travel to Seattle and barter directly with the children. Initial research suggests that 1 snack pack can be turned into 4 Ho-Ho’s and 3 apples can be arbitraged for a bag of Doritos AND 6 gummi worms. Ridiculous.

Amongst all the deals that are fit to print, Deal Book reported yesterday that Citigroup (NYSE: C) has come out with a slogan that they hope can “Make it Happen” like the tagline of Royal Bank of Scotland (LSE: RBS) has made it happen (whatever “it” is). The slogan? A call to mini-ballers world around, “Let’s Get It Done”.

Cititgoup’s new tagline, “Let’s Get It Done”, could double as a rallying cry for the bank’s chief Charles O. Prince III.

Citigroup is expected to introduce the tagline and advertising campaign next Sunday in the company’s first global branding effort since it was formed nearly a decade ago.

…

The new tagline and campaign seems to be a call for action at a crucial time for the company and Mr. Prince.

Sounds familiar. Straight from Point 4 of How to be a Mini-Baller:

4. You say “get it done” all the time. You’re not sure what this means, but you know its important, and when you say it . . . you mean it.

This is a clear call to the mini-baller demographic:

• Want a bank account? Let’s get it done
• Want the best counterparty for your firm? Let’s get it done
• Need insurance or whatever crap? I am pretty sure that we can get it done
• Want a brokerage account? Let’s get it done, our Smith Barney brokerage account is specifically designed for customers who are rich, have low expectations and a deep self-hatred.

Recommendation: The mini-baller portfolio now should have only two stocks in it. RBS and Citigroup. These companies make it happen and get it done, and that’s all mini-ballers need to hear to buy something.

According to the AP, pirate attacks dropped worldwide in the first calendar quarter of 2007.

Pirates attacked 41 commercial vessels worldwide in the first three months of 2007, the lowest figure reported in the past decade, a global seafarers’ watchdog said Wednesday.

The January-to-March figure is a significant drop from the same period last year when 61 attacks were reported, the London-based International Maritime Bureau said in a statement through its piracy reporting center in Malaysia.

It was the lowest first-quarter total reported by the IMB since at least 1998.

Although many sell-side piratery analysts may have been surprised, readers of our research reports would not have been. This report comes on the heels of our 8-21-2006 report titled Peak Piratery: Time To Walk the Plank? in which we urged potential piratery participants to “Do Not Buy”. We of course, were correct and called the piratery market more accurately than any other investment research firm.

As our fiscal third quarter of 2007 comes to a close today, keep this in mind when deciding whether to continue to invest the time into our reports. We make the big bucks because we make YOU make the big bucks.

Norville: What do you do if the envelope is too big for the slot?
Ancient Mail Sorter: Well, if you fold ’em, they fire you. I usually throw ’em out.
-An exchange from The Hudsucker Proxy

Past Quotes Entirely Relevant to Investing

We are trying to find more quality finance blogs than the ones we have listed under “Best Resources”. Slants can include finance, investing, equity research, market commentary, private equity anonymous sardonic memoiring and any content which resembles the content we link to in “Best Resources”. We are especially interested in fresh site that not many people may be reading but are pretty good. The Epicurean Dealmaker is a good example. We do not care about current traffic, only current quality. Submit links below or by our submittal form or you can email them to misterjuggles@gmail.com.

We have read the Stalwart since they started and they are one of a few goto blogs we depend on to do the voodoo that we do so well. They are now back from an almost six month hiatus and we implore you to resume your reading of The Stalwart, if you had stopped. If it is new, commence your reading immediately. You will not be disappointed.

Reader WrigleyDog pointed us towards a press release from Pfizer (NYSE: PFE) today, which was so generic that it can only mean one thing: the company will stop producing anything but generic pharmaceuticals. Here is the press release in its entirety:

Pfizer Focused on Delivering the Value Customers Expect and Shareholders Deserve, CEO Kindler Tells Shareholders

SOUTH BEND, Ind.–(BUSINESS WIRE)–In remarks at the annual shareholders meeting, Pfizer Chairman and Chief Executive Officer Jeffrey B. Kindler said, “We’re operating in an incredibly dynamic industry environment – one that, day in and day out, presents us with a whole range of promising opportunities. To succeed in this environment, we must fundamentally change the way we’ve done business in the past – and eventually transform just about every aspect of our company.

“We’ve accomplished a lot already. But it’s clear we need to do much more to get to where we want to be. All of our efforts are focused on achieving our ultimate goal – making significant improvements in the company’s performance and generating greater total returns for you, our shareholders.

“While it’s clear we’re operating in a very competitive business environment today, I also believe that we have a very wide and attractive set of opportunities to drive our success in the years ahead and enhance returns to our shareholders.

“We are focused on driving revenue growth, executing better, controlling costs, instilling greater accountability across the company and making sure we deliver the value our customers expect and our shareholders deserve.”

In other business, 12 of the company’s directors stood for and were re-elected to one-year terms. In other voting, shareholders ratified the selection of KPMG as Pfizer’s independent auditor for 2007. No shareholder resolutions received a majority vote.

Recommendation: There is not one thing in that entire speech which could not be recycled by 95% of public companies, which is amazing even for a press release. We think this is clear evidence that Pfizer will eschew its focus on patented pharmaceutical and switch entirely to generics. If Pfizer does this and if they can drive revenue growth, execute better, control costs, instill accountability and deliver value to shareholders, we rate the stock a “Buy this Stock in your Portfolio”.

Related: The Stalwart discusses the disappointing guidance provided by the most generically named company the Corporate Executive Board (NASDAQ: EXBD).

Kellogg Co (NYSE:K), producer of Eggo Waffles of “Leggo my eggo” fame, finally made the logical step to tie-in Lego building blocks to their popular, nutritious, and delicious waffle product. The pronunciations of “lego” and “leggo” are identical and the overlap between the two consumer bases is high; it turns out that >86% of the people who build indoor structures using small plastic pieces also consume waffles regularly.

It also appears that as a secondary goal, Kellogg had hoped to capitalize on the real estate boom by positioning waffles as a substitute for common building materials used in new home construction. This belated effort is doomed to fail, not just because the worm has turned on real estate. I have personally attempted to build structures using their low-cost waffle material and have found that it fails to provide the necessary structural support. These issues are compounded when the waffle building supplies are covered in tasty maple syrup.

Recommendation: Only invest in Kellogg’s or any other cereal company as a housing and construction play, if you are looking for a big bowl of unprofitable investments with the high fiber ability to produce regular, large, soft, bulky investment losses.

Submitted by LoS reader Charlie

As a college student ten years ago, I fell in love with the Wall Street Journal (NYSE: DJ). A black-and-white broadsheet sans frivolity, it was the keeper of reporting and editorial standards that put all others to shame.

Alas, times have changed.

On a flight out of New Mexico on Friday, I had a chance to read my colorful, downsized copy front to back—and learn afresh what a turd this paper has become. On the banner atop the front page: “Record Home? A $125 Million Listing in L.A. W1.” Hmmm…that story was actually on W8.

In the lead article, we get the inside scoop on the fall of Don Imus. “The reaction moved at warp speed as the Internet circulated his racist words to millions of PC screens,” the authors tell us.

And regarding the press conference featuring the Rutgers basketball players: “Without a hint of professional polish, their remarks came across as heartfelt.”

Racist? Heartfelt? Is the front page still for news, or did the trio of female reporters (dare I say dunder-headed ho’s) somehow hijack it for their editorial purposes? Tell you what: you folks stick to the facts, and let us decide what’s racist and what’s heartfelt.

Later in the article, we learn what “a American Express spokeswoman says.” Well what did the copy-editor say? Was it the same guy who edited the story on the departure of Monster’s CEO? (“Mr. Pastore’s couldn’t be reached for comment.”) Or the Naomi Schaefer Riley column on the Taste page? (“The problem is not their own dependency but their willingness to let other depend on them.”)

I once adored you, you mangled beast. Short this stinker.

The best lack all conviction, while the worst are full of passionate intensity.
William Butler Yeats

Past Quotes Entirely Relevant to Investing

According to USA Today:

Californians appear willing to pay $4,000 more for used gasoline-electric hybrid vehicles that have state-issued carpool stickers than for hybrids that don’t.

We expect the markets for carpool-lane stickers to evolve, similar to the way the CDO market evolved for mortgages and other types of consumer debt. We see an opportunity for buying sticker-bearing hybrid cars, stripping off the stickers, and reselling both the sticker and the car separately. By selling the stickers to those who most want to avoid traffic — and the hybrid to those with the highest tree-hugging tendencies — one should be able to realize higher pricing versus the bundled buy that exists now.

The mortgage markets provide a clear path for success: hopefully, the collateralized sticker market will grow until it becomes completely out of control, encourages over-leveraged purchases of carpool lane stickers, and leading to a regulatory crackdown that starts an economic recession.

Recommendation: Short Prius cars, Long carpool lane stickers.