Archive for November, 2007

Sell Everything; Hell is Here

Google (NASDAQ: GOOG) closed at $666. Must I remind you that Google is a member of Cramer’s Four Horsemen? He was more right with that allusion than he knew. If you remember your Biblical history, the Four Horsemen are the forces of man’s destruction in the Book of Revelation. 666 is the number of the beast. Add that up and you have The Apocalypse.

The market is, literally, about to go to hell.

Recommendation: Sell through to the end times.


The Cephalopod Story Strengthened

Cephalopods are a favored investment at LoS because there is a better than 50% chance that they are our future. They are some of the largest creatures on Earth but they conduct their business without ever being detected by man, for the most part. What are they doing? What is going on down there? We eschew outright speculation, but will assert that without a doubt they are plotting the conquest of the overland world, most likely effecting a “global warming” and thereby submerging the world’s land and allowing them to slip their tentacles around anything and everything they want.

More evidence of their long-lasting dominance came last week by way of this CNN report on Sea Scorpions:

British scientists have stumbled across a fossilized claw, part of an ancient sea scorpion, that is of such large proportion it would make the entire creature the biggest bug ever.

Eurypterids, or ancient sea scorpions, are believed to be the extinct aquatic ancestors of today’s scorpions and possibly all arachnids, a class of joint-legged, invertebrate animals, including spiders, scorpions, mites and ticks.

And the reason why these creatures are extinct starts with an S ends in a D and has a Q in there — Cephalopod SQUID.

Recommendation: Long squids, short everything else.

HT to reader PBJ.


Quotes Entirely Relevant to Investing 11-25-2007

“I have never met a general partner who was not top-quartile. So I wonder where three-quarters of the industry is hiding.”
Oliver Gottschlag on Private Equity firms

Past Quotes Entirely Relevant to Investing


Happy Turkey Day


Japan Market Insights from my Japanese SalesGuy

“We have the the vague worries which are always bad for stocks.”

“We have the worryness. And the worryness is always good for the multiple contraction.”


Intrigue Bankers, a report from the future

From the future, as of January 10th, 2008:

A brief history of the recent turbulence in the financial services sector is as follows.

In November of last year, Citi downgraded E*Trade and set a 15% chance of bankruptcy. Goldman Sachs downgraded Citi to a sell, forcing Citi to later downgrade GS from a strong buy to a mild buy. They both agreed on the point “Why the eff does E*Trade have subprime exposure?” Merrill Lynch has made plans to downgrade GS because of its heretofore unrevealed defense pact with Citi, but they are looking internally for a way to resolve it in the context of their downgrade non-proliferation treaty with Lehman and GS. Bank of America has been skating by nicely, but has its downgrade silos “hot and ready.” CSFB, in a defensive move, has unVoltronned itself and become two lion-like entities, CS and FB, who have been firing downgrades at all comers in order to safeguard the planet Arus from the forces of Zarkon. JP Morgan is sitting on the sidelines, just happy no one has noticed how fucked they really are. Bear Stearns has been downgraded to the point of not actually existing; nothing remains aside from a glassy plane and the remnants of ridiculously cheap compensation packages.


Sweet Tea, Too Sweet, Time to Short

Sweet Tea was cute, in the way that Krispy Kreme donuts were cute, a sugary Southern treat to Northern palettes. It’s great to have once, after that, eh, not so much. The existence of “Unsweet Tea” is a leading indicator that “Sweet Tea” is in fact, TOO sweet.

Recommendation: An initial estimate is that Sweet Tea consumes 83% of all domestically produced sugar. Due to having recently had some sweet tea, we are borderline comatose and thus can not corrobate this estimate with further empirical data, but we will assume it to be true and thus recommend shorting all domestic sugar producers. Ethanol be damned.


Quotes Entirely Relevant to Investing 11-18-2007

“This guy came in, and I asked what he liked to do for fun. He said, ‘I really enjoy playing hoops.’ I said, ‘We can’t hire the guy. Everyone I knew in college who liked to play hoops was an idiot.'”
Max Levchin, co-founder of Paypal

Past Quotes Entirely Relevant to Investing


Sell Out Saturday: The Most Exceptional Accounts Receivable Factoring Firm I Have Never Used

This is a sponsored post

Whenever Long or Short has accounts receivable factoring needs, which is to say all the time, the firm we have never turned to is Transfac Capital for accounts receivable factoring. Based on extensive research, and even more extensive due diligence, and also some channel checking, and one ill-advised expensive consultant’s report, and the opinion of this magic 8-ball, and you really thought I can’t put in another comma demarcated area because it’s too strung out already, but you’d be wrong, we can conclude that Transfac is the most exception accounts receivable factoring firm which Long or Short Capital has never used. The reason we continue to never use it, is we fear it losing the aforementioned standing in our accounts receivable factoring ranking — if we were to use them, it would entirely discombobulate the rankings.

But when we are facing immediate needs for cash, our piggybank is dry, and the only option we have is to sell our accounts receivables to a third party, we would definitely consider using an accounts receivable factoring firm like Transfac (but not actually Transfac due to the aforementioned rankings concern).

The question on everyone’s minds, “How Is Factoring different from financing from a bank?”, is handled in their FAQ,

TRANSFAC focuses on the credit worthiness of your customers when making funding decisions. Banks will focus on your company’s financial history and cash flow. Additionally, since Factoring is not a loan; there is less debt on your company’s balance sheet. TRANSFAC is able to make quick funding decisions, banks may take weeks or months to approve a loan.

One of the best aspects of Transfac Capital is their bold choice of a pine green in their web design. It says real, natural, green….AR factoring. It makes you feel like eating a pie in a Twin Peaks setting, warm and welcome, but without the scary backwards talking jazz dancing midgets! We can’t recommend them enough for a firm we have never used.


Henry Paulson’s Retard Strength

Actual quote from a WSJ online header article:

Paulson said the U.S. continues to have a strong dollar policy and the value of the dollar will ultimately reflect strong economic fundamentals

Actual chart of the dollar index, covering periods where the US economy was strong and, more recently, when it was “strong”:

Recommendation: How much gold, silver, and oil can you fit in the bed of your truck?


In-Kind Price Targets

Due to the rapid decline of the dollar, we will no longer use the US dollar as the basis for our price targets in our recommendations. Instead, we will use “In-Kind Price Targets” which employ some independent unit of measurement to compare a firm’s value to.

Example:

Our former price target for Burger King (NYSE: BKC) was $26 by November 13th, 2007. Now, the new “In Kind” price target would be 8.5 Whoppers per share.

Example:

Our former price target for Google (NASDAQ: GOOG) was $650 by November 13th, 2007. Now, the new “In Kind” price target would be 1500 Adsense clicks per share.

Hopefully, this will allow our readers to make better imaginary actions on our recommendations.


How to Deal with the E*Trade Run on the Bank

So of you may have heard how some Citi (NYSE: C) sell-side jockey named Prashant Bhatia (nickname being “Capital IQ”) said that E*Trade has a 15% chance of bankruptcy and faces a potential run on the bank. This is probably the most hysterical piece of sell-side analyst I can recall, but it may be a self-fulfilling prophesy. The best way to create a run on the bank that would lead to a serious dimunition in the E*Trade’s share price is to talk about how you think a run on the bank is likekly to happen and then publish that report as “research”.

Hysteria aside, how does an E*Trade customer protect his assets, if they are above $100,000 (FDIC guaranteed) or $500,000 (SPIC guaranteed)?

I have devised a simple strategy. Assuming a binary outcome that E*Trade (NASDAQ: ETFC) is either 100% effed or 100% ok, the dominant decision is to sell all of your assets and use the proceeds to go 100% long E*Trade. This way either E*Trade stock’s rebounds to its pre-hysteria levels and you have what I like to call a double or maybe a triple. Or you lose all your money that E*Trade would not have been able to give you anyway, so you in effect lose nothing.

Full Disclosure: I now have 100% of my PA long ETFC. Also E*Trade accounts are guaranteed up to $500,000 under SIPC for anything other than loss in the actual value of securities, so let’s step back into the real world.


Is Hotness a Store of Value?

Gisele Bundchen is the richest, most powerful and the most currency-savvy supermodel in the world. Ben Bernanke is the current head of Fed and an afficianado on helicoptering. Below is a short excerpt from a debate between Gisele Bundchen and Ben Bernanke on the topic of the US economy, the weak dollar and the sub-prime loan crisis. Hosted by Jim Lehrer.

Jim Lehrer: First question for Gisele. Gisele you’ve recently announced you will no longer accept payment from modeling jobs in dollars. Can you talk about that decision?

Gisele: Well I was partying at Bugee in London recently and an American was trying to grease the bouncer to get in. He dropped one of the dollars he had in his hand on the ground and the bouncer looked at him and said. ‘Hey, pick up that trash’. I thought it was funny because the same guy had just thrown his cigarette butt on the ground and the bouncer didn’t seem to care about that. I got to thinking – are cigarette butts more valuable than dollar bills? So I changed my policy to protect my assets. Like gold and oil my hot assets have intrinsic value and are immune to inflation, I thought my contracts should reflect that.

J: Ben, your rebuttal?

B: I believe that the Federal Reserve’s success in reducing and stabilizing inflation and inflation expectations is a major reason for this improved economic performance.

J: Ok, good one Ben, but if inflation is under control why is everyone selling their dollars?

B: The Federal Reserve is committed to maintaining low and stable inflation and I’m very confident that we’ll be able to do that.

J: Genius. Gisele, back to you. Exactly how hot are?

G: Well that’s interesting because I’ve been trying to decide that myself. My old answer used to be “pretty f*cking hot”. But when I tried to have my assets insured the insurance company wanted a “more meaningful agency rating”. So I showed my assets to S&P and they rated them AAA which I felt was pretty good until I found out subprime loans have the same rating. Now I’m just a dumb model but come on I’m WAY hotter than a basket of subprime loans –

J: Great points. Ben, would you rather have a basket of subprime loans or have Gisele show you her assets?

B: Decisions of the Fed are made in conjunction with all the members of the board and I am not in a position to comment on future actions. But I will — YES.

J: It was an either or question.

B: I know. My answer remains YES.

Fin


Quotes Entirely Relevant to Investing 11-11-2007

Do you see this? This is the Book of the Dead. All of you are going to be in this book someday, have you thought about that? You’re going to die and all that’s left is your name in this book. So what do you want to do between now and then?”
A Catholic pastor

Past Quotes Entirely Relevant to Investing


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