Archive for December, 2007

Quotes Entirely Relevant to Investing 12-30-2007

“Which explains why the busts and reversals we deem inevitable are also the least preventable, and why they startle us, if briefly, when they come — because they were were inevitable for so long that they should have come already. That they haven’t, we reason, can mean only one of two things. Thanks to technology or some other magic, we’ve entered a new age when the laws of cause and effect (as propounded by Isaac Newton and Adam Smith) have yielded to the principle dream-and-make-it-happen (as manifested by Steve Jobs and Oprah Winfrey). Either that, or the thing that went up and up and up and hasn’t come down, though it should have long ago, is being held aloft by our decision to forget it’s up there and to carry on as though it weren’t.”
Walter Kirn in November 2007’s The Atlantic

Past Quotes Entirely Relevant to Investing

Peak 2007?

Time and time again, people say we are running out of 2007. These cries began as early as January; by July, some were even claiming that there was less 2007 remaining than the amount of 2007 which we have already consumed. They call this condition “Peak 2007”.

Time and time again, people say we are running out of something, but science always shows that all these chicken little cries are for naught, as profit incentive combine with human ingenuity to preempt any shortage or problem. We didn’t run out of food as feared in the 60’s and 70’s since technologies to improve crop yields were disseminated to the third world. At the turn of the 20th century experts forecast a dire shortage of coal. And 2007, we are not going to run out of you.

Three reasons to think we won’t run out of 2007:

Technological Innovation: As the supply of 2007 dwindles, its price rises. Entrepreneurs, seeing the opportunity for wild profits, begin researching ways to manufacture new 2007, synthetically replicate 2007, or increase the efficiency of 2007 use by a multiple factor. These entrepreneurs are greedy, hungry for mega yachts, and one of them is bound to succeed.

Cap & Trade program: It’s likely that the UN Council on Annus 2007 will institute a cap & trade program to protect the remaining 2007. Under this scheme, rich nations like the US will be able to continue living in 2007 while paying other, poorer nations to live in less desirable years. Guatemala, for instance, has been living in 1916 for 91 straight years.

Conservation: As 2007 is supposedly running out, we find that people are finding ways to more efficiently use the 2007 they have and improving the amount of 2007 used per a unit of living. People will find that it only takes 1 unit of 2007 to get drunk rather than the previous notion that it took 2-3 units of 2007 to get drunk.

Recommendation: Long 2007, don’t stop believing in 2007.

Does Science Say It’s Christmas or Not?

There is only one way to make the scientific distinction between whether it is Christmas or whether it is, in fact, not Christmas:

Quotes Entirely Relevant to Investing 12-23-2007

“I’ll begin with a brief note about the stock market here. Suppose you’re considering riding a unicycle on a high-wire that by most evidence is not secure, but it’s possible that the wire might hold up for a while. If you keep riding, people will throw small bills at you until the moment the wire breaks. Once the wire breaks, you will be injured and will probably lose whatever you gained initially. Would you keep riding?”
John Hussman, Portfolio Manager of Hussman Funds in his Weekly Comment

Past Quotes Entirely Relevant to Investing

Short Long

Why are things so long? Why does any conference call last more than 20 minutes? Why is any report longer than say 20 pages? Why are history books more than 50 pages? Why does your story not end sooner? Because they are too long. Using my “Why Quantity” investing screen on Bloomberg, I sent our analtern (analyst intern) to research length. His findings are that everything is at least 25% too long and range up to 1000% too long. Examples:

  • Conference calls are, on average, 57% too long
  • Meeting are 123% too long
  • Academic books are 432% too long — many could be boiled down to two pages without any loss of signal
  • Reports to bosses are 231% too long, 488% if you adjust for the cost of time for the average boss
  • Porn stars exhibit length which, based on our baseline, is 20% too long and frequently frightening
  • Foreplay is both too long AND too short; 100% too short based on what you tell your partner pre-foreplay, and 100% too long based on your perspective during foreplay
  • A relationship over three months long is approximately X minus 3 months too long, wherein X is the length of the relationship in months (LoS will have more detail on this fact in a future research report)

Recommendation: As an exhibit of the pervasiveness of the Too Long problem (and opportunity), this research article would have been too long if I had continued with the above list. There continues to be a premium on brevity, which makes it profitable to be Long Short. In addition, we recommend being Short Long.

Make the World Better by Buying Stuff Not For Others

Last year, we gave you, our readers, the gift of efficiency by providing you all with a guide to things you want to own. Even though prior to reading our guide, you hadn’t known you wanted these things, you quickly realized yet again that we are a better judge of what you like than you. Those things are still things you want to own, trust us, we did the research and we’re smarter than you.

As smart as we are, we know we can never rest on our laurels and have provided a version of the guide with entirely new items that you want to own. You should proceed to click through and buy all these items for yourself so that you can enjoy Christmas and reduce deadweight loss as percentage of all Christmas gift related spending. We own or consumed all these things ourselves, so we put our consumption where our internet post is.

As an aside, someone who clicked through and bought something last year also bought these two items: Clearblue Easy- Fertility Monitor Test Sticks, 30 Sticks and Clearblue Easy-Fertility Monitor. Note to the fellas: our ideas are fertile enough to impregnate your lady, so be careful.


A veritable grab bag, but all things that have improved our lives in the LTM. Let us paint the scene of what these things can do for you: A stronger grip, a firmer buttocks, a set of ripped calves (is that a good thing or a bad thing?), and a covenient notebook to record your transformation into an Adonis as you await the perfect reheating of cold pizza in your Infrawave oven. Plus a digital camera which is so small and stylish it just screams “Put me in your pocket and use me to be sketchy.”


Last year we recommended the DS and the Wii, this year we recommend everything but the PS3. People used to think that gaming in your late 20’s and early 30’s meant you can’t get laid and your heart has replaced its bloodflow with Cheeto-flow. Well the last game on our list was developed by this chick and that’s enough for us to say that video games are 100% mini-baller compatible.

Movies and Shows on DVD

It’s Always Sunny in Philadelphia. Watch it. We can’t stress 30 Rock enough. The rest are a combination of the best movies released on DVD in the LTM as well as the best movies named Robocop and The Running Man made in the 80’s.


The common thread is that there is no common thread, except that they are all in this post. We even included a comedy CD!


Shantaram was read by two us us and loved by two of us, despite it being 800 million pages longer than the average book. 100% loved out of those who read it is hard to beat.

And if all else fails, try our Amazon Prime search engine partner.

Quotes Entirely Relevant to Investing 12-16-2007

Two from 30 Rock:

“This corporation has a strict bros before hoes policy.”

“I like a woman with ambition; it’s like seeing a dog wearing clothes.”
-Jack Donaghy

Past Quotes Entirely Relevant to Investing

Injecting Liquidity

Why is liquidity only ever “injected”?

Maybe this is the problem with financials today. Injections are harsh and can hurt — I know I close my eyes whenever the doctor calls for an injection.

Maybe the Fed should try “pouring” some liquidity? My servants frequently pour hot water on my hair when I take my daily bath — it feels quite relaxing. There are so many options with liquidity. What about “stirring”, “folding”, or “squirting” liquidity into the markets? Ben…if something isn’t working, don’t just repeat yourself. Try a new method!

Bloomberg Headlines, 2007 vs the Future

How bloomberg headlines read in 2007:

Crude reaches new high up 2% to 89.30 nearing Goldman $100 target. Citigroup shares fall below $30 on further writedowns of $5bn

How bloomberg headlines will read in the future:

Dollar reaches new record low -2% to 0.011 barrels of oil nearing Goldman target of 0.010. Citigroup shares fall below 0.34 barrels of oil on further writedowns of 56m barrels of oil.

That Time We Halted an IPO

Our crack analysis of the IPO The Best S-1 I Have Read Today proved prescient. Today, United Online (NASDAQ: UNTD) withdrew the IPO due to “market conditions.” According to our proprietary corporatespeak translator, this means “no one fell for our ludicrous ploy.”

Recommendation: When choosing between an investment in Goldman Sachs (NYSE: GS) or Long or Short Capital, remember who brought you the IPO and who told you to short it.

How To Destroy An Analyst by POT

Bill Doyle the baller CEO of Potash Corp (NYSE: POT) recently crushed the spirit of an analyst on a conference call in a swift and brutal way that made even all of us here at LoS (who hate bad sell side research) cringe. The unfortunate recipient of this de-pantsing was Charles Naberg who had recently initiated on the fertilizer industry. He asked an innocent enough question about some capacity expansion on the 3Q call and got a terd-filled sock shoved in his mouth as a reply:

Charles: “Hi guys. Nice quarter. Had a quick question on Lanigan. How is that progressing? Is it still on time for the middle of this year — or this coming year, excuse me, middle of 08? And can you remind me about what the size of that addition is going to be?”

Bill Doyle: “Yes Charlie [ed note: he was introduced as “Charles” and the this is the first time they have ever spoken to each other], to answer your question, what I would tell you is that Lanigan is 1.5 million tons. It’s on budget and on time for next year. You know, essentially the big piece there is the mill. So we see that progressing according to plans.

You know, I read your first entree this week into the potash world. First I would say welcome to the fertilizer world and I did have just a couple comments, Charlie, just because I never have a problem with anyone’s call, you make whatever call you want, but some of the factual information in your report was a little bit suspect and I would say the — you know, the comment about Potash Corporation abandoning our discipline and I don’t know what the line was, something about us being out for pizza or doughnuts — it was cute, but if you follow the history of the company, you’ve got the same management team for the last 20 years and if you check back and do a little research on us, you’ll find that we have always matched supply to demand and it’s not how much capacity you have, it’s how you operate that capacity, Charlie. And the other thing I would say is that you know, you referred to Potash mining as being high fixed cost business. Potash mining is not a high fixed cost business. You know, we can lay people off and shut down the operations. We’ve done that for years and years when the time required it.
Unlike our phosphate business, which is a high fixed cost business, because you’ve got to keep that operation hot, so-to-speak. You’ve got sulfuric acid plans, you’ve got to keep your water pumping capability in the mine site. You just really can’t shut that down. So, there is a difference there that we would be happy to try and explain to you in the future.

[On] Our earnings being highly dependent on biofuels – three quarters of the new demand growth in our business is food demand. We’ve tried to talk about that at every stage and what I would really suggest to you, I think you know, you covered a little bit on the supply side, you didn’t talk at all about the demand end. And I would say go out, visit India, pick any five cities, China, any five cities, and you’ll see the demand for food and it’s a very, very real issue.

You know, the other comment about consumers banking inventory before the Spring season of 2008, that’s just impossible. Just isn’t inventory out there and everybody is hand to mouth at this time. So I would say you know, overall less than a distinguished effort but the good news is that there is nothing but up side for you for the next go round.

Now we have a website question here that I would like to answer.”

Recommendation: Don’t eff with Bill Doyle and don’t eff with POT.

Thoughts As People Attempt to Put Their Carry-On Luggage In Overhead Bins on Commuter Flights

Look at this asshole. This is why a woman could never be president. It’s called planning. Here’s an idea for a plan — don’t make your carry-on weigh more than that which you could hoist over your head. Why? Because you will probably have to hoist it over your head. Asshole.

Upon watching a slightly more attractive woman doing the same thing:

Should I help? I should probably help. I wonder what firm she works for. Lawyer? IR? Pharmaceutical sales rep? Look at the way her body pushes out of the dress. Maybe I should just stay sitting and watch her. Is that creepy? God I’m glad that no one can read my thoughts.

How long does it take to fold a coat? And is that even what he is doing? What ARE you doing old man? Just standing in the aisle idly, while there is a whole queue behind you getting all….queued up and shit. We all have to sit down ASAP! Time is much less on your side than on mine, so why don’t you feel any expediency? I am literally watching you die as you dawdle. What does he know that I don’t? Maybe he gets it. He definitely gets it. What don’t I get? I hate him.

Wait…why does he have wheels on that thing? There can’t be anything more than a laptop in that and maybe some paper. If there was a way to sterilize him I would, for the sake of mankind. A bag has to be the size of half a golden retriever in order to have wheels. Man that would be horrible, how would you cut it in half, lengthwise or widthwise? Maybe it’s not the best measurement. I’ll use a bear head instead. Grizzly bear head. This is the new FAA bag size regulation measurement unit for the retention of manliness and balls. If a bag isn’t as big as a grizzly bear head, you cannot have wheels on it and pull it. Done.

Best S-1 I Have Read Today will go public some time this week. Somehow, they have managed to convince top-tier banks to underwrite this offering. Did the bankers read the S-1 they put together for this company?

From the S-1, here are some excerpts from the company’s description of its business:

We operate leading online social networking and loyalty marketing services under our Classmates and MyPoints brands…Using our interactive tools and features, our members have contributed to our social networking Web sites a substantial number of distinct, relevant pieces of content, such as names, school affiliations, profiles, biographies, interests and photos…On our social networking Web sites, we enable users to locate and interact with acquaintances from school, work and the military…This valuable content also brings existing members back to our Web sites, with a significant number of our members visiting our Web sites on a recurring basis over many years.

Contrast that with a few risk factors the company highlights for this offering:

A significant majority of our paying subscribers are on plans that automatically renew at the end of their subscription period and we have received complaints with respect to our renewal policies. The sales and marketing practices of Classmates Online are currently subject to an inquiry by the United States Federal Trade Commission, or FTC.

Our success is dependent upon our social networking members interacting with our Web sites. Currently, the network effect on our social networking Web sites is limited, and the vast majority of our member activity is within our high school communities. Our members do not visit our Web sites frequently and spend a limited amount of time on our Web sites when they visit. In addition, only a limited number of our social networking members post photographs and information about themselves, engage in message board discussions, view other members’ profiles or participate in the other features on our Web sites. [Ed: our emphasis]

Recommendation: Avoid companies that cite their ongoing failure to execute their business model as a risk factor.

Quotes Entirely Relevant to Investing 12-09-2007

Where there’s muck, there’s brass.
UK expression

Past Quotes Entirely Relevant to Investing

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