Archive for June, 2009

Infusium 23

Everything is black and white. A sparse room lined with white tiles. Decrepit but also clean in a clinical way. Women are being herded into the room from a narrow entryway.

Close up on a woman’s famished face. Her eyes are tired, her cheeks gaunt. But she is strikingly beautiful. Her eyes are bright blue. A startling KABRUPT sound as the pipes are carrying something into the room. Water starts showering on her from above, her hair now pulled back in a tilt.

Voice comes over a tinny loudspeaker haltingly:

“Women! Do not be afraid! Let the Infusium 23 enter your hair!”

Floating bottles of Infusium 23 descend down dripping a viscous shampoo into our heroine’s hair. As the Infusium 23 hits her hair, it ceases being black and white and transforms into full color. She is seen shaking her hair in slow motion as its lavishness becomes apparent. Her whole face looks energized and she flashes a large knowing smile.

Narration provided by Miley Cyrus:

“Don’t let your hair be put to a dry death. Liberate your hair with Infusium 23’s new (moistur)ologie line of shampoos and conditioners. Infusium 23’s (moistur)ologie line corrects, restores, and structurizes your hair. It infuses hair with 23 essential pro-vitamin and treatment ingredients, and helps restore moisture for soft, silky feel. Infusium 23 — commit genocide against dry hair.”

Close up on a bottle that is coming towards the screen and growing in size.

End scene

Rejected advertising for Infusium 23.

Morning Madoff Markets

Early morning bid/asks

Sentencing for Bernie Madoff: 57-61 years
Total number of Madoffs sentenced to jailtime by 2011: 1-3
“Life”* remaining for Madoff: 7-9 years
“Life”* remaining for Walter Noel: 3-4 years
Attempts on the life of a Noel male in the next five years: 2-3

*Life here refers to whether someone has not been deemed “legally dead.” As we know from the Kenneth Lay situation, if you time it correctly you can be legally dead but also still living. A great way to free yourself from jail time.

Quotes Entirely Relevant to Investing 06-28-2009

Sometimes in life you have to realize a poor investment and cut your losses. Write that down.
-Van Wilder Sr.

Past Quotes Entirely Relevant to Investing

History doesn’t repeat, or rhyme, IT RAPS

Infectious Greed posted about a blog which is harvesting 1930’s WSJ news pieces and headlines. The natural inclination from reading these frequently spot-on pieces is as a commentary on how history either repeats or rhymes. This natural inclination, just like the natural inclination to be overwhelmingly attracted to Gadget from Rescue Rangers, is wrong. History doesn’t repeat or rhyme, IT RAPS. And this is how it raps.

Jay-Z rapped 99 Problems to this historical current

The year is ’09 and your world is gone
You’ve just realized you’re alone, broke an’ one dumb pawn.
The financial forces y’all trusted are total shit,
That Ben behind the Fed curtain is not legit.
I ain’t trying to see no returns erased with Me.
We’ll head now to your situation, cut to the chase quickly.
Broker calls, “Son, do you know why your statements say zero”
‘Cause I’m young and I’m dumb and from Toledo?
Do I look like a mind reader sir, I don’t know.
Are you jerkin’ me off or should I guess some mo’
“Well you was overweight emerging markets like a schmoe.
Now you’re broke, and can’t afford your new McHouse or car.
Are you hidin’ any cash in your mattress, I know a lot of you are”
‘I ain’t done nothin’ wrong, it is someone else’s bullshit.’
“Well do you mind if I look at your finances a little bit.”
‘Well my car is leased and my house is underwater,
And I know my rights so the Govt gonna bail me out o’ there.’
“Aren’t you dumb like Nails, you some type of retard or something?”
Or a real mouth-breather or somethin’?”
Nah, I ain’t no rere, I passed my GED,
Smart enough to work for Ohio’s DMV.
“We’ll see how smart you are when the squid lord comes”
You got eleven trillion problems and squid is THE one.

Anti-Business: Huntsman

Huntsman (NYSE: HUN) is in the business of making chemicals of some kind. Or rather it was in the business of making chemicals of some kind. Now Huntsman is in the anti-business business wherein they agree to mergers that are so disagreeable, so toxic and so unprofitable that the other side of the merger pays them to go away. The latest anti-business deal Huntsman consummated is one in which Deutsche Bank and Credit Suisse are paying Huntsman cash and providing token cheap financing. This anti-business came about because DB and CS aided and abetted Apollo in weaseling its way out of merging Hexion with Huntsman as agreed in June 2007 which in turn helped DB and CS avoid being forced to provide $15 billion of cheap financing.

By the cold calculations of Wall Street, the settlement was an economic success for the banks. Had they originally provided the $15.4 billion of debt originally committed to the deal, they would have faced billions of dollars in loan losses. Now the direct cost to each bank is just over $300 million, a far more palatable figure.

Recommendation: Huntsman’s cash settlements from their anti-business segment (received from Apollo, DB and CS) in the last twelve months are about as much as their entire current market cap. This doesn’t even factor in the additional value received in these transactions from below market rate financing of convertible and unsecured debt. We like the stock in equal measure to the extent they are able to find new anti-business partners that will allow them to grow their nascent and extremely profitable anti-business segment.

Dangerous Fund I

Tinderbox Capital LLC, an incendiary investment management firm and subsidiary of Long or Short Capital LLC, announces its first fund, Dangerous Fund I.

Dangerous Fund I will specialize in positions that lack defensible absolute return theses. Assets will be allocated so as to leverage Tinderbox Capital’s expertise in trades of which they have little understanding, so-called “dangerous” trades. These trades will include vega convergence bets, investments in opaque levered pass-through instruments, naked red/black hedge trades, and proprietary coin-in straddles. Their due diligence process will include a rigorous “bottoms up” analysis that is comparable to the processes of Fairfield Greenwich Group and other top investment management firms.

Tinderbox Spokesman Johnny Debacle:

“We see a clear need for an investment vehicle for people who want to lose all their money. Competitors out there have lost on average 30-40% in this cycle. We think we can lose more, especially with our so-called ‘dangerous’ trades. Our trades are dangerous because we don’t fully understand them. Frankly, we may not understand them at all. Take a vega convergence bet wherein we form a pair trade with options with two assets with similar, but not the same, underlying. We make that trade and we’re pretty sure something happens, we just don’t know what that is. Does anyone? I may not have the details of that trade correct either. That is a core strength of our investment process.

Scores and Scores of bottoms up due diligence will strengthen everything we do. We aren’t content to just sit on our haunches, while someone else just dances about doing work on our junk [bond portfolio]. No, we plan to do that and more, which is what makes our “bottoms up” approach so powerful. We will spend money and get the most bangs for your buck. We will get our hands dirty and our pinkies stinky if that’s what it takes to better understand the trades we make and ascertain their appropriateness.

We know that young risk-seeking investors demand places to put their money to work, places where they can allocate $10,000 and potentially lose it all. This is the niche that Dangerous Fund I will fill. We give you all the risk you will ever need and guarantee that we will potentially lose it all. Additionally, Dangerous Fund I will be appropriate for investors whose portfolios are overweight return and underweight risk and are thus seeking proper balance.

We just need your money to fuel our fire.”

Tinderbox Capital LLC is an investment firm that offers a focused set of investment products to a global institutional and high net worth client base. Tinderbox Capital LLC is currently structured to directly manage strategies in so-called “dangerous” trades. Despite this structure Tinderbox Capital is uniquely unqualified to manage your money well and uniquely qualified to manage your money poorly. You would do well to simply light your money on fire instead because at least then you get the benefit of the heat it generates. Or you could just wait for Dangerous Fund II which Tinderbox Capital LLC is in the process of registering. It will seek to disintermediate the middleman from the process of lighting money on fire by physically igniting investors’ dollars for them. It will charge a traditional 2 and 20 fee structure.

Mexican Cocaine Producers Bumping the Shark

It seems that the Mexican cocaine industry has responded to Chilean cocaine producers’ efforts to win the 2010 Copa della Coca. Mexicans responded to the Chileans’ cocaine baggage by smuggling cocaine in sharks.

The Mexican Navy says it has seized more than a tonne of cocaine hidden inside the carcasses of frozen sharks.

Armed officers found slabs of cocaine inside more than 20 sharks aboard a freight ship in the Gulf coast port of Progreso in Yucatan state.

Recommendation: We still think Chile’s creativity and ability to craft “the beautiful coca”, makes them the odds on favorite for the 2010 Copa della Coca, but you can’t count out Mexico or Bolivia. Perennial favorite Colombia is likely to have an off year, but it will come down to the draw.

Author’s note: This story was especially personal for me and difficult to write. As many of you may know, my Mexican grandfather was smuggled into this country in a shark in 1952. That experience would go on to shape his entire life. When he was young, before the shark experience, he was gregarious, charming, the kind of hombre who could saunter into a room and turn it into a fiesta. But after being smuggled in a shark, he was much darker and he’d often drift off into thought mid-sentence, never to return…as if swallowed by a shark. When we’d go to the beach, sitting enjoying churros, his mood would change as soon as I approached the water. “Don’t get eaten by any sharks, Johnny! If you do you’ll never be the same!” he’d shout warningly at me as I stepped into the ocean. I blame that shark for why I never really knew my grandfather.

HT to FuManChu

Quotes Entirely Relevant to Investing 06-21-2009

The chief value of money lies in the fact that one lives in a world in which it is overestimated.
-H.L. Mencken

Past Quotes Entirely Relevant to Investing

More Short Cold E-Mails, Longer Vitriol

An email sent to me on Wednesday

from: Connie Perry < [redacted]>
to: [mrjugglesemail]
subject: ” To Err is Human, To Really Screw Up, You Need a Computer” Popular Campus T-Shirt, CA 1980


We are working with [Author], Director of the [Something Fancy Sounding at Some Place], Haas Fellow in Finance, and author and speaker. We are excited to be working on his new book [Book Title] ([Book details, including ISBN and price, redacted]).

I’ve included a brief description of its content below:

[Author’s] [Book] is a serious yet funny book about how technology, markets, and machines rose to prominence and how the geeks came to rule and still rule the Street. In it he explains the role of technology in the crisis of 2008 as well as ways we can avoid such calamaties in the future. The book is peppered with quirky historical facts and witty comments to balance out how hard it is to see the difference between financial markets and computer networks. There are also some great visuals. [Author’s] conversational style and good humor gives us a better sense of how technology shapes today’s markets. He also takes a serious and insightful look at how Wall Street should participate in the future of electronic finance.

Please let me know if you have any questions, or would like more information.

Thank you and cheers,
Connie Perry
Monteiro and Company
[redacted ph#]

Below are a few of [Author’s] favorite quotes:
“Life would be so much easier if we only had the source code.”
—Hacker Proverb

“A computer does not substitute for judgment anymore than a pencil substitutes for literacy. But writing without a pencil is no particular advantage.”
—Robert McNamara

“Progress may have been all right once, but it’s gone on far too long.”
—Ogden Nash
PS: Here is a link to David in the late 1990’s presenting introductory material from [His Book]: [Youtube link]

Note that not only did she misspell “calamities”, but the emails included a black border on the left, the kind that happens when text is sloppily cut and pasted, or forwarded. My reply:

Connie, do you see that line on the left side of your email? That means you forwarded it, I believe. Not only that, but you in no way sent this to me, a person, with feelings, a heart and my own identity, because you don’t reference my feelings, my heart or my own identity in any way. You blasted this to a group of random people and the result for this poor chap [Author] is that I will never read his book. In fact, if someone asks me about [Book name], I will tell them that it is bllody [sic] awful, and that you are better off buggering a tree than attempting to read its hackneyed prose and its overly wrought conclusions.

Think about this fact the next time you lazily blast a bunch of strangers in a coldly worded spam email.

On an unrelated note, do you want to grab a drink or maybe just cut right to making out a little bit in the back of a town car? Call me.

Her reply came back within a few hours:

Well, well I take a mild offense at “lazy” and “random blast.” With my superior intellect I researched various bloggers whom I believe have feelings, heart and identities that may relate to and with a writer who is covering a very relatable topic. So sorry not to have addressed you as Mr. Juggles, sir in my hello. I guess I’m in a hurry to promote a good book. What a mess I am, doing my job.

Now on an unrelated note, I’d rather read than swap spit with you today. Please don’t call.

And my final reply:

Actually, your note which you marked as “unrelated” was actually “related.” And it’s funny that you indicated that you’d rather read than have to deal with my advances. You and your ilk, the cold-emailers of the world, do exactly the same thing to me, except in an unsolicited fashion. You probe my email account when I’d rather be doing just about anything else. It doesn’t work. Stop doing it. Try developing a relationship with a site, or a person, like by making out in the back of a town car. That is how you serve your clients’ interests.

Piratery Corp Inc First Quarter Update Call

Jason and the ARGHHHOOOOnauts

Operator: Good morning Ladies and Gentlemen, welcome to the Piratery Corp Inc first quarter update call. Please note that today’s conference is being recorded. Following the presentation, we will conduct a question and answer session. I would now like to turn the conference over to Captain Bigdee Mofapalous.

Captain Bigdee Mofapalous: Thanks be to ye operator wench. Firstly, if it be pleasin’ ye, I would indeed be likin’ to apologize for not releasin’ our Q4 numbers to ye sell-side sons of merbitches. But there be good reason!

Ye see, we failed to report our Q4 due to certain affairs pertaining to our accounting crew. Ye may be awares that on a piratery ship, the sailors be keepin all CPAs n’ all accountin’ staffers in a dingy, dragging behind the boat. Aye it be true, to be keepin them from contaminating the crew with their ways. But we be a courteous folk, and as such, we always dispensed their fair share o’ the rum, as well as one thoroughly depreciated whore, for the purposes of retainin their manity. Well, they got on with their drinkin’ n’ whorin’ to such excess, that they fullly created a reinvention of the double-entry accounting system, if ye know what I be sayin!!!! Whilst all this debitin’ n’ creditin’ was goin’ on and about both entry points, they was entirely forgettin’ to mind the astral calendar and let us pirates be knowin’ that fiscal year 2009 had ended indeed! Verily, an honest mistake which ‘as henceforth been fully rectified, astrally, if ye know what I be sayin’. HAR HAR. HAR!

Aye, and to show ye the good faith, we were intendin’ to be havin’ a PRE-release of our earnings, followin’ on our no-release of Q4 and fiscal year 2008. But we had been bein a-worried that any premature earnings release would spook ye investors, not knowin’ that it just be somethin that be a-happenin’ to a man so accustomed to whorin’ and not knowin’ that our situation held an entirely reasonable explanation! We be apologizin’ for these ‘ere delinquencies as enumerated above.

Secondly, I now be addressin’ our trends, which ‘ave become much less grave in character since our Q3. Aye the headwinds ‘ave abated, and now be blowin’ in an easternly fashion. We no longer be havin’ to tack for all hours o’ the day, a far more sailable sea than than the choppy waters o’ Q3 n’ Q4. Margin hatches ‘ave been batted down, but such’s pirate life in times like these. We be seein’ a resolute stabilization across the board. The wenches still be wenchin’ weakly, but the rate at which their wenchin’ was weakenin’ hasn’t worsened. When it comes to wench segment, we take what spread we can get, and they take what we be givin’ them!!!!

Lookin’ to the horizon over yonder, we’ve not seen nary a sight of the Spanish fleet that aligned itself with Captain Mopling Downstarable, one o’ our biggest competitors on all seven seas. We not be ablin’ to guarantee that nothing ruinous may happen to our fleet, except by assurin’ ye that we be the saltiest piratery dogs in this ‘ere entire piratery industry and that we not be interestin’ in doin’ anything but guttin’ that blubberours blabbering Downstarable from groin to gills!! We look to be flyin’ his intestines on our here flag ship! Expectations bein’ what they be, we point ye towards believin’ that we deliver a firm 4500 in dubloons for revenues in 2009, and earnings per share o’ 1.2 dubloons. Rapewise, 2800 be a good number to model about in ye spreadsheets, with our wench fleet at 2350 after some dispositions of the routine variety.

Operator wench kindly release the lines!

Operator: Your next question comes from Douglass Fairfundoffunds of Credit Suisse. Your line is open, please proceed.

Douglass Fairfundoffunds: Just wanted to say, great quarter guys. Just wanted to say, great quarters guys. Just wanted to say, great quarter guys. Just wanted–

Captain Bigdee Mofapalous: Operator wench, please cut off the line o’ the broken sell-siborg, the automaton be in possession o’ an infernal glitch.

Operator: Certainly sir. Our next question comes from the line of Morgan Crumpacker. Mr. Crumpacker, your line is now open.

Morgan Crumpacker: Hi, guys. I just want to echo what Doug said in congratulating you guys on a great quarter. I totally agree with him.

Captain Bigdee Mofapalous: ARGH BE GETTIN’ ON WITH IT.

Morgan Crumpacker: Sure. Just a quick question for my model. When you put our your 2007 guidance in 2006, you indicated that 2009 should be the time in which you had fully incorporating the Silver Train acquisition onto your raiding platform. But looking at your ratios for early 2009, I am having trouble seeing whether it’s flowing through or not. How should I think about that?

Captain Bigdee Mofapalous: Aye, your answer be arrivin into the pea brain on ye shoulders in the form o’ a recipe from a good friend o’ my own, one Captain Bethusela Dabringalo Scrotum. To paraphrase, in a time long ago, pirates be long lost at sea, lookin’ for wenches to commence wenchin’ with. They come across one Morgan Crumpacker and decide to be makin’ him into a wench accordin’ to the specifications o’ the sea. But after takin’ to rapin and abusin his carcass, they be hungerin’ fo’ a mighty feast! This be the recipe those sailors did employ indeed! A dead Morgan Crumpacker, a large cauldron, a casket of rum, and equal measure potato beer. Boil off Crumpackers skin, add salt to taste, and stir his carcass to keep it from stickin! Operator wench, next question.

Operator: I am showing no further questions.

Captain Bigdee Mofapalous: Aye, may ye pleasures be manifold n’ may ye enemies die in a ship fire!

Operator:With that, we conclude today’s teleconference. Thank you for joining us today.

Ahmadinejad Is a Zimbabwenonic Scholar

Embrace the futureAhmadinejad has won the Iranian presidential election. Critics of his victory point to this piece of crockery on leaked elections results or to the mismatch between the results and the polling that had occurred prior to the voting. They may even cite the massive amounts of protests as further proof that the Ahmadinejad is not the president, as the voters do not believe the outcome reflected their votes. Proponents of Ahmandienjad as well as students of zimbabwenomics understand that Ahmandinejad is the president and will be the president. The outcome of the election and the context in which it occurred are entirely irrelevant.

In our research report entitled, Using Zimbabwenomics to Win Elections, we outlined the ways in which zimbabwenomics can be used to better understand election outcomes as follows:

Under normal political analysis, there are two result paths from an election, only one of which is victory:

  1. Win the election
  2. Lose the election

From a Zimbabwenomic perspective, there are also two result paths from an election, the difference being that BOTH lead to victory:

  1. Win the election
  2. Lose the election, but actually win the election, because your opponent pulls out

Ahmadinejad understood these basic concepts, and applied them to the Iranian election. He created an offshoot of the second zimbabwenomic path wherein he lost the election, but actually won the election, because he controlled the voting process and had the backing of the Supreme Leader.

As you may know, America had been the rising zimbabwenomic star of the last two years. But these recent events demonstrate that Iran now positions itself as a potential alternative to America as the center of zimbabwenomic thought.

Morningstar Positioned to Rise

OO YEAHMorningstar (NASDAQ: MORN) does a lot of important things, and produces services that people pay them for and other stuff. But none of that will be nearly as important to their share price as the fact that Morningstar employs this woman Catherine Odelbo:

Catherine Gillis Odelbo is president of equity research for Morningstar, responsible for Morningstar Equity Research, Financial Communications and Publications, Morningstar Real-Time Data, and Morningstar® Indexes.

Odelbo joined Morningstar in 1988 as a mutual fund analyst and from 1995 to 2000 served as senior vice president of content development, as well as publisher and editor of stock and closed-end fund research. In 2000, she was named president of retail, overseeing all print and online products for individual investors.

Sounds impressive, right? All that jazz is irrelevant too.

The key to Catherine Odelbo, and the reason you should be so long on Morningstar, all comes down to the remunerative powers of OO. Odelbo is pronounced “Oo-dle-boo”, making it the single most powerful name in the corporate world. That she has risen as high as she has is almost definitely solely due to her devastating front-back OO combo she sports, obviating the entire rest of her resume. Sets you up with an OO, slams it home with a BOO.

Recommendation: Long MORN. Our recommendation on all things Odelbo that exist to today, or will exist in the future, is long. E.g. if she ever gets securitized, or if you find some other way to invest in her, do so without hesitation.

Melissa Moody’s Ratings Alternative: The United States

The United States Government

Previous Rating: BFFAE
New Rating: BFFBAS

There has been so MUCH gossipy chatter about those other rating agencies (not mentioning names, but Moodys, S&P and that Fitch Bitch) and whether they should or would downgrade the credit rating of our country, the United States of America. But no one has asked me Melissa Moody! And my answer is YES!!!! I would!

I know a thing or two about the rest of the world. I have seen most of Europe. I have stayed in its five star hotels. I have slept with Italian boys who wooed me with vespa trips to hilltops. I have even been to Prague. You would know this already if you checked my Facebook update I did with all my pictures from my JYA. I know what is up. And I know that the US has some shaky credit and the other countries I have been to know it too, because they are so worldly and interesting and have a much better way of life than us.

I also know a thing or two about using massive amounts of credit card debt to stimulate your economy. My sophomore year was very difficult on me. I felt like I had lost a step, gained a pound or two and lost that twinkle in my eye. I tried my own version of stimulus spending, racking up $15,000 in credit card debt to spend on “infrastructure” — a little lipo, a personal trainer and a dozen dresses from bebe that were super sexy. It seemed like I would be able to hot my way right out of slump!!!! But then the bill came. Literally, the bill came and I saw it and I was like “OMG” because I totally had no way to pay it off. And that’s when I started working the street….JK!! No, my dad paid it off and I was like “I love you daddy!”, but as far as I know the US doesn’t have a daddy who can pay off their debt burden, they only have an Uncle and he wears a creepy beard and is probably too busy pointing his old-man finger at people to help out.

I am downgrading the US to Best Friend Forever But Also a Slut. My rating would change upwards if the United States reins in its seemingly unchecked fiscal recklessness, or if it shows it has a daddy who can pay off the trillions in debt they have racked up on their Treasury card, but until that time, they will be notched as a slutty issuer.

Ratings Methodology:
Hey everyone! It’s me, Melissa Moody…not that other Moody’s you have been reading about. Actually that’s why I’m here I’m just so sick and tired of that other Moody! Their ratings stink, and they don’t know nearly as much as I do about debt, it’s true, I’m maxed out on 4 out of 7 credit cards I know I have a problem but I just can’t stop,ha ha. I can do a better job than Moody’s and that is what I’m gonna do! And let’s face it, their old ratings were too complicated. I mean Aa3, Baa1, Caa2, B1 who knows what that means? My ratings will be simple:

  • BFFAE (Best Friends Forever and Ever)
  • BFF
  • BFFLAF (Best Friends For Like Almost Forever)
  • BFFBAS (Best Friends Forever But Also a Slut)
  • BFFBIHH (Best Friends Forever But I Hate Her)
  • Whore

The Know Nothing Generation

One common criticism of attempts to redistribute financial income — for purposes of fairness — is that financial income is generally earned, after some fashion. Is the government also going to redistribute good looks, talents like a great voice or acting ability, or height (from the tall to the short)? I think I read a research paper of some kind where this worked out fantastically well. Depends on your definition of “well” I suppose.

I am glad to see that the current administration has proven faithful to its philosophy and is now distributing jobs without regards to qualification or merit.

The 31-Year-Old in Charge of Dismantling GM

It is not every 31-year-old who, in a first government job, finds himself dismantling General Motors and rewriting the rules of American capitalism.

But that, in short, is the job description for Brian Deese, a not-quite graduate of Yale Law School who had never set foot in an automotive assembly plant until he took on his nearly unseen role in remaking the American automotive industry.

Nor, for that matter, had he given much thought to what ailed an industry that had been in decline ever since he was born.

Recommendation: It appears increasingly likely that a) most jobs will be controlled by Washington in the future and that b) these jobs will be distributed on a semi-random basis, with little regard to qualifications or merit. This provides an excellent opportunity for anyone wishing to find employment, change careers, or remake an American industry according to their hastily conceived notions. If you fall into one of these categories, we suggest you immediately contribute a modest sum to the Democratic Party of Hope, move to Washington, and wait. Develop a special trait such as a “beard that appears and disappears” that will allow you to catch the eye of a patron. Then re-design the industry of your choice. I’ve always had a taste for Plastics, myself. Or maybe Cable.

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