Long or Short Capital

Updating our foreign exchange rates for humans based on some movemements in the spot market:

• One 24yo Aussie surfer’s life (assets and non-financial liabilities only) = $60,000 AUD

From eBay:

Winning bidder will take ownership of my:
– Name
– Phone number
– All my possessions which includes the following
– Clothes,
– Roughly 300 CDs
– Surfboard
– Laptop (minus certain information with my discretion),
– Pushbike (Has wonky handlebars, may need some work)
– Books,
– Bed
– CD player
– Backpack
– Tennis racquets
– Golf Clubs(which you will have no idea how to use)
– Childhood photos
– Skateboard
– Nice lamp which your ex-girlfriend bought you.

– I will teach you my skills which include the following
– Surfing (Expert)
– Climbing (Intermediate)
– Skateboarding (Novice)
– Handstand Skills (Expert)
– Fire Twirling Skills (Intermediate)
– Devil Stick Twirling (Expert)
(Plus many more)

– Will introduce to all my friends & potential lovers (around 8 which I have been flirting with)
– I have around 15 close friends and around 170 other friends
– I have 2 nemeses.

Recommendation: We are bullish on the 24yo Aussie and expect trading levels to increase to a target of $120,000 AUD. Past that point we think the market will push back due to the lack of clarity in this footnote of the prospectus:

There is some tension with a former ex from a painful breakup which must be inherited.

Those kinds of liabilites can be extremely deleterious to asset values and are notoriously difficult to quantify.

Edit 1/22/07: Auction is down to $7k AUD with 7 hours left on it.

In the small town where I grew up, there exist three seemingly unrelated businesses. Until recently I thought the names were just a coincidence, but now I realize that this series of companies is remarkable in many ways. The companies are:

1. Bang’s ambulance service
2. Bang’s funeral home
3. Bang’s sausage manufacturing plant

I think this is the first example of what I like to call the “vertizontal merger”. Bang is capitalizing on both sick and hurt people, as well as the families of the sick, and of course on the dead. But Bang is also making sausage, which is where the synergies really come to life. Bang is being paid to cart dead people away, and then again to turn them into sausage. This merger has drastically cut costs for the sausage division. But what is so unique about this merger is that the company has simultaneously capitalized on the cresting wave of the American consumer’s willingness to eat just about anything, so long as it is cheap AND delicious, in this case human sausage.

Recommendation: We have already documented the surging “willing-to-consume-feces” demo,” but now that demo has one-upped itself as if to say “excrement is nothing — we’ll pay to eat our own relatives (provided that our relatives are both cheap and delicious.” And Bang’s ambulance/funeral/sausage is there to reap the profits. Right now, I really like any business plan that is based on ruthlessly taking advantage of the American public’s willingess to eat anything which is both cheap and delicious.

Results are available now for all December 2006 Level I takers. I did not not pass. If you passed, congratulations, we are now 1/3rd of the way towards being able to guarantee investment results to clients based on being a C.F.A..

In previous reports, we have shown the light on the rising popularity of pooplet derivatives products and the growth of the “willing-to-consume-feces” demo (see related research below). A new wrinkle has been brought to our attention, a faux pooplet derivative product called Free Range Chicken Poop Lip Balm. This product contains no poop based on its description which says:

This product contains no poop!

Although not specifcally noted, our diligence indicates that it contains no free range chicken either. In fact, this lip balm is made completely out of lip balm.

Despite it being made of solely of lip balm, Free Range Chicken Poop Lip Balm glams onto two seperate idiot demographics:

1. The aforementioned “willing-to-consume-feces” demo.
2. People under the mistaken impression that humanely treated chickens are more delicious than tortured chickens.

These combine to form a large addressable market comprised solely of easily swayed idiots, who are ambivalent between actually consuming what they want and the feeling they are actually consuming what they want.

Recommendation: This data point indicates that there is more strength in poop than we previously believed. We raise our rating of the producers of pooplet derivative products to “Three Flushes” from our previous rating of “Two Flushes and a Firm Wafting“. Initiate faux pooplet derivative products at “Light a Match.”

Relax. The market goes up, the market goes down. But, over the long haul, the market goes up.

-Peter Burke, CEO Global Century Investments

Past Quotes Entirely Relevant to Investing

The results for the TradingMarkets/Playboy 2006 Stock Picking Contest are finally in, with Deanna Brooks amassing a huge return of 43.43% on her portfolio. The premise was to combine models and charity as a way to promote the kind of active investing around which TradingMarkets builds its products. TradingMarkets.com claims to be “a financial information company that works with institutional and individual traders in helping them improve their trading.” I guess “purveyor of black box technical trading products to wannabe day traders” doesn’t sound as sexy.

Dorkins:

We advocate active investing as opposed to buy and hold. We do think [the performance of the playmates] is sort of a reflection on the buy-and-hold industry that shows that anyone can come in and do just as well or better than a supposed expert.

I’m sure he is familiar with statistics which, used properly, would indicate that there would be a high probability that some members of any sample of stock pickers will beat the S&P 500. Frankly, I’m not even sure he is familiar with numbers as the Playboy Model Composite underperformed the S&P 500 by a decent amount without adjusting for risk. Given that most models picked 3-4 random stocks, adjusting for risk would show that investing with the S&P 500 would have been a dominant investing option over investing in a portfolio of Playboy Model PM’s, a shocking and surprising result.

I am sure the majority of this site’s readers have been following the playmates more than their portfolios. Exploiting hot chicks that show their boobs is an excellent way to raise awareness for charity and forcing men to look at the stock market, or at least the boobies which are standing next to the stock market. But it’s apparent that this stunt was not for charity or even to boost the visibility of TradingMarkets.com. It was simply a way for this guy, Ashton Dorkins, to finally see in real life a woman he had also seen in her nude suit, blending his porn with his real life, to create a synthetic sexual experience.

Dorkins also said:

The ones that did very well picked stocks that they are familiar with. That goes back to the point that stock pickers should pick the stocks of companies they understand.

It is true that investors should make long or short choices about stocks which they are familiar with, especially when presented with a stock you are familiar with and a stock which you are not. If the opposite was true, then the yacht Mr Juggles bought with the money he has been paid to get familiar with companies would seem even more ludicrious than it already does. But Dorkins’ statement does not mesh with the reasons Deanna Brooks gave for her decisions:

Hauppauge Digital (HAUP), I’m a tech head my self, so anything that advances something like TV on your computer…you get my drift…

Pfizer (PFE), I like staying healthy and alive (and I think most people do!)

Yamana Gold (AUY), What girl doesn’t like a little bling? I’m hot for gold this year…

Petroleo Brasileiro (Petrobras) (PBR), Ok, I do own 2 hybrids and I’m pro-eco/ recycler/tree hugging liberal, but…oil is making money…(maybe I can buy my next Hybrid with the profits…)

IBM (IBM) Hey I’m emailing you on my computer aren’t I…they (computers) aren’t going away.

Maybe “familiar” is spelled differently in model-speak.

Recommendation: The real lesson of this story? Even if your point is wrong and stupid or your firm’s product expensive and terrible, it never hurts to bring in boobies, the zero downside asset class. Short Dorkins, Long boobies, Long long.

Note: This all presume Ashton Dorkins exists as a live human being. He may in fact just be an amalgam of digital nerds (or Nerd CEOs) which only exists in digital form like that terrible movie with Al Pacino. The name sounds made up, as no parent would give their child the name Dorkins — they would sooner change names or kill themselves than create progeny so endowed.

With the NFL postseason in full-swing, we invited Monday Night Football announcer Joe Theismann to come by and share investing color commentary.

Joe Theismann:
“I’m gonna tell you something. Warren Buffett knows that value investing wins championships; no team can succeed in post-season investing without having a strong ‘going long’ strategy. We had the opportunity to talk to Buffett yesterday before the market opened, and he told us how important he thinks the long game is to investing and he told us how he built his entire empire on it. Establishing the long keeps the market guessing, and allows investors to win big returns. Once an investor has established the long game against the market, the experienced investor can call for play-action shorts leaving the market expecting the long up until the transaction is complete, then running a short trade. So the key to Buffett investing is always going long except when you’re going short.

We also had the chance to catch up with Bill Miller last week during training camp. He told us that he has always focused on investing in stocks that go up and avoiding stocks that go down. Whenever he looks at a company, he tries to figure out whether that company is going to make money, even before he makes an investment. That type of hard work, strategy, and dedication explains why he’s a star. But the thing about Bill Miller that really seperates him apart is that he is also a tremendous person.”

Theismann referred us to his former Sunday Night Football boothmate, Paul Maguire, for technical commentary.

Paul Maguire: [Ed: Maguire used a Bloomberg machine to perform his trademark telestrator analysis.]
“Now I’m gonna show you something, LOOK AT THIS CHART RIGHT HERE, see that line, watch that line, see how it traces up, now look at this, the shape it’s forming, look at that line, here, and there, look at it…BAAMMM! That’s a nice formation. Now I’m gonna show you how that line connects at this point HERE, look at that and forms with those lines over there, watch this, look at this, watch this, LOOK, now what that means is that you watch this, right here is where you are going to want to short. And that’s how investing is played.”

In mid-06, I added a new (additional) computer monitor to my desk thinking – MY PRODUCTIVITY COULD DOUBLE. HUZZAH!

I left my bloomberg ticker screen on one monitor and any work in progress on my other monitor. After three weeks my right eye was twitching which was worrisome since I’ve had the eyes of a falcon since I was two; literally my dad shot a falcon took its eyes out and replaced my human eyes with falcon eyes – it’s sort of like LASIK but more wild. So I went to the doctor and he told me I had an eye problem and it was either because I was using rotting falcon eyes or because there was a red and green flashing screen in my periphery 12 hours per day.

Well I fixed that, now my Bloomberg screen is directly in my line of sight and I moved any models or real work to my periphery at all times. My eyes feel better already. And I always know the most recent price of every stock I follow which comes in very handy for making sound investment choices and stumping your boss.

me: “Hey, Steve, you see what LEN did this morning? . . . Up 120 bps, yeah, bet you didn’t know that”
my boss Steve: “Falcon Eyes, you’ve stumped me again, give yourself a raise”

See? Amazing.

Recommendation:

Phase 1: Get yourself some falcon eyes.
Phase 2: Buy a Bloomberg subscription.
Phase 3: Open your launchpad, fill it with tickers and stare at it all day long.
Phase 4: Profits for your firm and for you.

This post was 80% true story.

If you have not already read Reminiscences of a Stock Operator, you must do it now. Order a copy from Amazon or get it for free online since it has recently passed into the public domain.

Jesse had flair and a dedication to his craft. This quote sums him up. [our emphasis added]

The moment I got to Palm Beach and saw what the misguided insiders were still trying to do, I let them have a second lot of TT. Back came the report and I sold another 2,000 shares. The market behaved excellently. That is, it declined on my selling. Everything being satisfactory I went out and had a chair ride. But I wasn’t happy. The more I thought the unhappier it made me to think that I hadn’t sold more. So back I went to the broker’s office and sold another 2,000 shares.
I was happy only when I was selling that stock. Presently I was short 10,000 shares. Then I decided to return to New York. I had business to do now. My fishing I would do some other time.

The RIAA filed a $1.65 trillion lawsuit against AllOfMP3.com last week. AllOfMP3.com is Russian website which sold Mp3’s free of DRM to anyone in the world, and apparently did not reimburse any copyright holders. This was legal under Russian law (as most things are, including but not limited to murder, stealing, felching, kidnapping, rape, arson, armed robbery, unarmed robbery and assault) and in our opinion, highly efficient.

The RIAA have waited years to act on this matter, but when they did, they did it with panache. Let’s put $1.65 trillion in perspective.

If AllOfMP3.com has destroyed $1.65 trillion of value or committed acts worth $1.65 trillion in punishment, there is implicit in that the idea that the RIAA stakeholders are worth a minimum of $1.65 trillion plus whatever fair market values would peg them at. A quick perusal of the enteprise values of the constituents of the RIAA make it clear that they are not worth even $100bn, much less 16x that.

Also implicit in the $1.65 trillion number is that AllOfMP3.com has sold somewhere close to $1.65 trillion worth of music in its 3-4 years of mainstream existence. In 2004, there was $30-40bn of total music recording sales (and the RIAA does not represent all of that figure). The GDP of Russia is about $1.5 trillion. In 2005 there were $1.1bn of digital music sales. So in 3-4 years, AllOfMP3.com did the damage worth the revenue equivalent of 40-55 years of total music recording sales or 1x the GDP of Russia.

The RIAA has a resume of distorting reality in an effort to protect its members’ interests. Using the words “stealing” and “piracy” to describe copyright infringement, an act where no one is deprived of their property. Using the assumption that a song illegally downloaded is a sale foregone on a 1 for 1 basis. Never getting on the ball and creating a legal service which makes the digital music as facile as the black market is. Advocating the extension of copyright tenure despite the fact that the time it takes to monetize copyrighted material continues to fall as technology improves and society speeds up. And now suing a website for the entire GDP of Russia.

Recommendation: The smell of desperation is strong, the likelihood of disintermediate is high and we are long irrational acts by the RIAA. We recommend evaluating investments in such potential RIAA moves as:

• Suing for sonic rights to the dark side of the Moon, based on Pink Floyd’s album, and by extention, the entire universe which has ever been blocked by the dark side of the moon.
• Reprogramming Carson Daly’s Prime Directives. Previously these were
  1. Serve the corporate trust
  2. Protect the public from thinking
  3. Uphold corporate interests
  4. Never oppose a media company officer (any attempt to arrest a media company rep results in automatic Carson Daly shutdown)

  The RIAA may append a fifth directive as follows: “5. Conquer Russia and destroy AllOfMp3.com. Crush the insolent.”

• Proposing a bill to congress through one of their many shills requiring that each citizen have a meter attached to their ear which would keep track of how much RIAA content you listen to and charge you for it. Failure to pay would result in their using the installed ear meter chip to broadcast Crazy Town’s Butterfly directly into your brain until you agree to pay or until your head explodes.
• Suing the dead. (Edit: Apparently the RIAA has already sued the dead)

Everything should be made as simple as possible, but no simpler.

-Einstein

Past Quotes Entirely Relevant to Investing

This is a sponsored post from ReviewMe

What if there was an online market place for small time venture capital fund raising? Would that be something you might interested in? That is what the The Go BIG Network’s Venture Capital Funding provides. I love markets, so much so that I’ve played Monopoly games wherein we have created ad hoc derivative markets to better match the demand for complex financing of fictional real estate projects. But this market seems to be plagued by that which plagues most Internet marketplaces: Low quality listings. It’s unclear whether this because the quality controls of the site itself are weak or that this is just an unstoppable internet phenomena.

Take two listings available today.

Travel Packages worth $15,000 for one-time fee of only $1,295 /couple Around The Woprld Travel Packages
Recreation – Travel Packages and more…

Not only is this just an advertisement for some crappy spamlike vacation package, but they don’t even misspell “World.”

Real Estate Co. Seeks 250,000 for mulit unit projects Baxter Enterprise Investments, Inc
Funding needed for rehabing projects short term

Keep looking for $250k, because who would fund someone that much who can’t even take the time to review their 10 word title for mistakes.

But this doesn’t address whether this marketplace actually works. Does this market connect venture capital with those who need it? It’s difficult to say. But my gut feeling is that in the modern world, the types of businesses who would use this market are precisely the ones who are not capital constrained to begin with. Most online ideas are likely to be critical mass constrained.

The GO BiG Network itself is essentially a social networking site for VC’s, wannabe VC’s, wannabe VC funded entrepeneurs and wannabe VC funded wannabe entrepeneurs. From their about page:

The Problem We Solve

The startup community is highly disconnected. Startups, investors, job seekers and service providers all need one another to survive and grow yet at the same time they are hindered by their own lack of connectivity. Go BIG allows members of the startup community to connect faster by exposing all of the demands of the startup community in one place.

Recommendation: We peg The Go BIG Network’s Venture Capital Funding as market neutral; no harm to play with it just like the online C2C debt lending site Prosper.com. We can’t be short something that has no downside other than time. The catalyst for an upward revision of our sentiment would be the development of a critical mass market place. And if that critical mass market were to gain critical mass, we would expect this site to be bigger than eBay.

Carson Daly was developed by a secret cabal of corporate interests as a response to worsening corporate conditions in America in the 1970’s. He was the first corporate interest enforcement droid created by this cabal and he operates under a programming rule set called “the Prime Directives” as follows:

1. Serve the corporate trust
2. Protect the public from thinking
3. Uphold corporate interests
4. Never oppose a media company officer (any attempt to arrest a media company rep results in automatic Carson Daly shutdown)

The market says that a position in Gerald Ford is crazy.

It says, “Gerald Ford is just a filler president with no historical appreciation upside. His most memorable acts are pardoning Richard Nixon and being mocked as an incompetent klutz on Saturday Night Live by Chevy Chase.”

I say to the market, “Market, you are crazy. Any man who can get me a bonus vacation day is someone I want to be long. Washington, Lincoln, Martin Luther King, Christopher Columbus, the signers of the Declaration of Independence, the Pilgrims, Valentine, Jesus, laborers and all our soldiers, I am long you all. And I am long Gerald Ford too. And I think he deserves some credit for Presidential seppuku in pardoning Nixon, not to preserve his own honor and not to preserve Nixon’s, but to preserve and protect the institution of the Presidency itself. He took one for us all. Gerald Ford, I am long you.”

Recommendation: Get prepared to be long Jimmy Carter soon.