Archive for February, 2008

Africa is good at doing things

In case you’ve been on the moon, South Africa is out of power. One government-run monopoly produces 95% of the country’s power and they ran out. In 1998, the power company told everyone in the government that they would run out of power in 2007. The government apparently thought they were just kidding and didn’t do a damn thing. So now they’re out. In light (swish!) of this, let’s examine the key points in the investment case for going long South Africa.

1) They have a 25% unemployment rate; sounds bad but the biggest driver of the economy — the mining industry — is booming and will create jobs

2) Oh wait, you need a lot of electricity to mine and smelt metal, no one will spend the billions needed to build a new mine if they can’t get secure power to run the facility. At least there’s some positive political news….

3) The soon-to-be president, who goes by “JZ”, clearly gets it and will fix everything:

“He [Zuma] was acquitted last year of raping an AIDS activist. He testified in his trial that he had consensual sex with the activist, who is HIV-positive, without a condom, but he showered afterward to minimize his chance of contracting AIDS.”

This guy was Chairman of the National AIDS Council in the country with the biggest AIDS problem in the world and he thinks “washing it off” stops AIDS? Really? Don’t you at least have to put some ‘tussin on it?

Recommendation: Don’t analyze South Africa, it’s depressing.

Quotes Irrelevant to Investing

“The currency is the share price of a country.”
-George Glynos, Econometric Treasury Management

Quotes Entirely Relevant to Investing 02-10-2008

Economics…has not truly come to grips with the main difficulty, which is the inordinate importance of a few extreme events.
-Benoit Mandelbrot (ht: Jeremy Grantham)

Past Quotes Entirely Relevant to Investing

On Your Deathbed, You Will Long for Love, You Will Have None, Unless…

Valentine was a saint by some accounts. By other more masculine accounts, Valentine was a cruel master, only interested in ensuring that men were immured in love. At this, Valentine was a complete success. He built his day to be the perfect prison, the Alcatraz of holidays.

Some relationship-ensnared men have tried to escape, oh yes, they have tried. Every attempt has led to either a drowning in the cool rivers of Nosex or a plunging to the steeped tips of Shivintheribwhilesleeping. As your advisor, as someone who is paid to be smarter than you, and most importantly (but least sincerely), as your friend, we implore you not to try to escape. Your best bet is to give in, to roll over and focus on surviving.

Survival requires one thing — buying your girlfriend one of the following: flowers or chocolates or shiny shit. Again, as your advisor and friend, we have helped you out and provided below a handy link to the VERY best supplier of flowers and chocolates in the whole world, Please, for your own sake, not for ours in any way, click the link below and buy something for your girlfriend before you find your lungs suffuse with the frigid waters of the river Nosex.

Translating Corporate Speak: Yahoo

Translating a Yahoo (NASDAQ: YHOO) CEO e-missive may be a fool’s errand for the average person, but our friends at Yahoo have asked for help and we will oblige them with the application of our propietary translation algorithm to the letter of Jerry Yang.

Corporate Speak

Subject: Building on our strengths

yahoos —

first off, I want to thank you for the great job you’re doing staying focused on executing our priorities. there’s obviously been a lot of talk about yahoo! in recent days and we won’t let it distract us from pursuing our transformation strategy.

roy and I have communicated about the thorough review process our board is going through right now. the board is focused on maximizing the value of yahoo!’s tremendous assets for our shareholders. and it is going to take the time it needs to do it right.

as we’ve said, no decisions have been made about microsoft’s proposal. our board is thoughtfully evaluating a wide range of potential strategic alternatives in what is a complex and evolving landscape. and we’ve hired top advisors to assist through the process.

what’s become clear in the past few days is how much people care about this company. we’ve seen a strong show of support from our users, advertisers, and publishers, reminding us how much they love our products and services. and i’ve heard from many of you — and from other friends and colleagues from around silicon valley and across the globe — that we need to do what’s best for yahoo! and our shareholders. i promise you that the board is going to do that.

the microsoft interest highlights the tremendous strength of the yahoo! brand and assets: our half billion users around the world, our leading products and services, our open ad network, our technology, and most of all, our amazingly talented people.

we have a lot to be excited about and there’s more good news to come. yesterday we announced a digital music partnership with rhapsody and our acquisition of foxytunes, maker of the popular music toolbar plugin. today we launched zimbra 5.0, a next generation e-mail and collaboration suite that’s a great milestone in our open platform and starting point strategies. and stay tuned for exciting announcements next week at the mobile world congress.

as we look to build on the progress we’ve been making, i want to make sure you all realize how essential you are to yahoo!’s success. as this process moves forward, we’re going to keep you informed. your hard work and strong commitment are more important now than ever before.


Subject: Building on my fortune

Employees of Yahoo,

Thanks for pretending to focus on work in between sending out your resumes and returning headhunter calls. We know the fax machines are out of toner and are looking into the matter.

As you may know, Microsoft has offered to acquire the entire company for $31. That’s significantly more than our shareholders think we’re worth because, at this point, those guys hate us. We will consider Microsoft’s offer in the context of our many terrible strategic options and our fruitless restructuring plan (note: I may have called this a growth plan last time we spoke).

As mentioned, our strategic options are manifold and we have made some really tough decisions recently, coming to the conclusion that we need to focus on our home page, our search engine, as well as our communication products like email and IM. This represents a new direction for a company that has historically been characterized by its home page, search engine, email, and IM products. So it will take some time for investors to recognize the transformation of the company.

Please know that I value all of you to the tune of almost $2bn (my current holdings). You, our (remaining and less talented) employees are our greatest and (only remaining) asset. So keep up the mediocre work! I promise to update you when my rich friends and I have decided your fate.

The Yang

ps just for disambiguation sake, I do not have a gambling problem. It’s only a problem if you lose.

Editor’s note: This was written early Wednesday before we had seen the daringfireball version. Also, unlike that version, ours isn’t terrible.

My Get Out of Racism Card

So while everyone in my state was voting HRC or Huckabee or whoever, I said, why don’t I do what’s best for the country? After I laughed, I concentrated on doing what was best for me. I voted for Obama. Why would a WASP do such a thing? The answer is simple — it is a get out of racism card.

Previously, I could only use the “Hey I can say that because I have a black friend (he’s really a mulatto but that counts, look it up)” when saying something that lacked racial discretion or oppressing people on a racial basis. Now I can say “It’s cool, brother, I voted for Obama” or “How can I be racist? I voted for Obama!” or “I’m practically your [n-word], since I voted for Obama.”

The Remunerative Powers of OO

From seed capital of ramen noodles and smarts, Google (NASDAQ: GOOG) now stands on the brink of world domination. How has Google done it? A lot of people think it’s because of their search engine technology, or their system for contextual advertising, or their collection of smarts, or their corporate ethos. But sometimes the answer is a pair of OO staring you right in the face. Google’s performance has been determined by the 2nd and 3rd letters in it’s name, the prominance and potency of its OO factor.

Let’s do a little history of the search engine space; first, coming out of the primordial ooze of the 80’s and 90’s there were many, mostly those who could barely walk (Altavista, AskJeeves, other crap) and amongst them, Yahoo (NASDAQ: YHOO) rose. And who could defeat the incumbent and its OO? Google, a company who knew that they couldn’t put the OO in the caboose. If they wanted to take down the champ, they had to knock him out. So they put the OO right in the middle and the rest is history.

Look at the social networking space. Friendster gave way to MySpace, a beast many thought to be unstoppable –> until Facebook rose to power. There have been hundreds of videosites, none that crushed the others, until a double dose of phonic OO from Youtube. Similar thing occurred with Bluetooth and wireless standards. And HD-DVD? Didn’t have a chance against Blu-Ray.

Why did Microsoft (NASDAQ: MSFT) pay so much for Yahoo in their contemplated acquisition? Clearly, the OO premium. There isn’t much of it out there, so when OO assets are available, they get bid up.

Recommendation: We chastise people who try and make things too simple, but in this case, it IS that simple. OO assets outperform OOless assets. Expect Web 2.0 to be surpassed by the Web 2.OO.

That Humble Post, You Know, The One We Have Never Written

Secret PirateryWe pride ourselves on not just predicting the market, but shaping it. From underseas futures, to piratery, to sexual harassment, we have taken backwater markets and squeezed the profit out of them for our readers. So if I say I’m a market shaper you will agree. What brings this up? I’ll boil it down for you.

  1. I’m amazing
  2. I made an amazing James Joyce joke while editing Mr. Juggles’ Overstock research.
  3. Subsequently, likely from having read our site, Long or Short Capital, widely known as the no.1 site for satirical financial research on the internet, a separate site, McSweeneys, widely known as not the no.1 site for satirical financial research on the internet but capable of producing material which is still pretty awesome, published an article (FAMOUS AUTHORS PREDICT THE WINNER OF SUPER BOWL XLII) which also featured an amazing James Joyce joke.
  4. Comparing the facts in 3. to the facts as laid out in 2. only strengthens the factiness of 1., namely, my amazingness and its existence.

Recommendation: When I say that James Joyce jokes are an appropriate long, you know this not to be false; you know this to be true. Long James Joyce jokes.

Quotes Entirely Relevant to Investing 02-03-2008

All men’s miseries derive from not being able to sit in a quiet room alone.
-Blaise Pascal

Past Quotes Entirely Relevant to Investing

A Billion People…

I get it. China is big. There are a lot of people there and they are increasingly buying stuff. So when you present an investment to me, it’s not useful to tell me how many people there are in China. You see, I know that already. That’s why I own some Chinese companies already, before you came in here. So when I ask you why I should pay 50x earnings for this company, it’s singularly unhelpful to start off by saying: “Did you know there are A BILLION PEOPLE IN CHINA?” It doesn’t make me want to buy the stock, it makes me want to punch you in the mouth or “decouple” your head from your torso.

I’ll tell you what China also has. A BILLION POOR PEOPLE. A whole billion of them (heck there may even be a TRILLION, why not give them credit and round up) all looking to buy no things with their no money. Stick that in your model and regress it.

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