Tuesday, May 21, 2013

Letters to The President

It's that time again.  If you'd like to send a comment to President Obama you can do so through the whitehouse.gov website, or click the link here.
Dear President Obama -
I hope that you can honestly say that did not know about what was going on with the IRS, but if you did, you should be ashamed of yourself.  For a free thinker it's easy to understand that one man cannot possibly control the actions of millions of government employees.  Anyone that has ever been a part of a corporate bureaucracy can understand that fact if they are being truthful to themselves.  I think that if most folks considered reality they would realize that your contingent is as zealous as any superstar's.  For that you can be thankful, but the fallout from the dark side of this dichotomy cannot be excused.
Additionally, I implore you to gather the Council of Economic Advisors and come to whatever agreement must be struck behind closed doors with respect to corporate taxation.  These congressional roasts of corporate executives are divisive and tired.  Dragging a company in decline before a group of polarizing figures runs completely counter to the innumerable fiscal initiatives our country presently executes.
If in the course of study genuine underhandedness has arisen then the company should be notified so they can plan the [repercussions] accordingly.  Otherwise, it appears as though you'd like the public to turn against corporations and that will not advance our country or civilization.

On Water.

The hardest working and most voracious reader I know, @smallcapanalyst, sent me an article called Water is becoming a more precious resource.  Quote following, emphasis mine:
Viewed from space, Earth appears to be a watery planet and in fact it is, with water covering 70% of the planet's surface.
But in a cruel irony, most of the water is not the kind people or animals can drink. We require fresh water, which makes up only about 1% of the earth's water, while the vast oceans are filled with undrinkable salt water.
Recall the ridiculous overcapacity in dry bulk shippers accumulated during the middle of the last decade and pictures of those ships anchored in Far Eastern bays during 2010.  To ease the glut some ships were scrapped while others were converted into LNG tankers.  Now that the US looks to become petroleum independent, a wise consideration might be for crude tankers to consider how water will be refined and how they could serve those in need.  Whether tankers carry refining equipment aboard, or move water from refineries at sea or between nations something must meet this implicit demand.

Also considering the demographic and economic gulf facing Japan, they must soon address an abundance of power capacity.  I propose they consider deploying nuclear to distill sea water for export.

Wednesday, May 15, 2013

Monday, May 13, 2013

See what he did there?

One single observation can invalidate a general statement derived from millennia of confirmatory sightings of millions of white swans.  All you need is one single (and, I am told, quite ugly) black bird.
Nicholas Nassim Taleb, The Black Swan - prologue, paragraph 1 

The association of "ugly" with black swan primes readers to spend the rest of the book in fear of the rhetorically imbued negative implications of not knowing an outcome with certainty.  No thanks.

Unknowing is the heart of possibility.  Unknowing is a source of adventure.  Unknowing is infinity - certainty, zero.

Centaur Capital on Investing Dumb and Dumber

Friday, May 10, 2013

Yardeni Chart

Current Themes

  • water
  • quality IPOs
  • inflation resonating from farms
  • organic produce
  • micro caps
  • space

Wednesday, May 8, 2013

Buffet's Career Lessons for Millenials

from businessinsider's Warren Buffett Shares 9 Great Career Lessons For Millennials:
  1. Find your passion.
  2. Carefully choose who you look up to.
  3. Learn how to communicate effectively.
  4. Develop healthy habits by studying people.
  5. Learn how to say "no."
  6. Don't work for someone who won't pay you fairly.
  7. Become involved with growing businesses.
  8. Learn everything you can about your industry.
  9. Young women should seek male mentors.

On Mental Toughness

from a link posted by Mike Bellafiore to Twitter:
... twelve main components of mental toughness which were identified by the participants. These twelve components were; team unity, preparation skills, competitiveness, motivation level, coping skills, confidence maintenance, cognitive skill, discipline and goal directedness, possession of physical and mental requirements, psychological hardiness, ethics and religious convictions (Gucciardi, Gordon et al., 2009).
Mental toughness is having the natural or developed psychological edge that enables you to:
  • Generally, cope better than your opponents with the many demands (competition, training, lifestyle) that sport places on the performer.
  • Specifically, be more consistent and better than your opponents in remaining determined,  focused, confident, and in control under pressure.  [(Jones, Hanton et al., 2002)]

Twelve Main Components of Mental Toughness
  1. team unity
  2. preparation skills
  3. competitiveness
  4. motivation level
  5. coping skills
  6. confidence maintenance
  7. cognitive skill
  8. discipline
  9. goal directedness
  10. possession of physical and mental requirements
  11. psychological hardiness
  12. ethics and religious convictions

Wednesday, May 1, 2013

The Life of Rembrandt


The IPO Market is not Dead.

The truth is that we need the IPO market more than ever, just not at valuations already picked over by the underwriters.  That's a tough act when you have something with the enormous notoriety that Facebook does.  Not so when carpet bombing the public with ZNGA in double digits at their dead top.  By virtue of size these investment banks are arbiters of the business, so when people feel like they're getting screwed, they're getting screwed.

Some recent offerings, like CHUY, demonstrate that you can still go for the ride if you scan the IPO list and do a little homework.

Finally - THIS IS IMPORTANT - this market still handsomely rewards good ideas.  The VC culture is real and accessable.  Chase your notions, especially the good ones.

Notes to the President

Dear President Obama -

The latest macroeconomic market data tell us that despite a policy of ultimate liquidity, the Federal Reserve is unable to devalue into sustainable civil growth.

Too much growth has been pulled forward and for too long, and the present nature of social programs disincentivize legal entrepreneurship.

Consequently, [illegal] drug sales will always be a large entrepreneurial market because of the pleasure seeking behavior exhibited at large by those who have quit on themselves and require less energy to expend on personal advancement. [**]

The Fed cannot be seen as inflexible to the point that their policy creates a sovereign weakness.

Too, Free Markets and individual liberty are hallmarks of American Capitalism.

Please gather your panel of economic advisers and give back to the markets the final years of your term before making this current bastardization a political issue.

It's about the good guys and the bad guys now.  Government doesn't need to be in a market keeping the dogs back from the carcass.  If a race of market participants exist to drive this country into civil disrepair their actions must be exposed, not delayed and exacerbated by the lasting repercussions of the current face of QE.

One cannot print entrepreneurship.  Quantitative Easing was an important and necessary decision into the lows of the last crisis, it should not be another social crutch left to its devices.

** - I feel social programs incite a human characteristic for pleasure seeking by depriving the innate mechanical drive to self-support.  The pleasure derived is meant to replace the satisfaction of personal accomplishment.  In this way, social programs create a number of the victims who end up in jail.

Tuesday, April 30, 2013

On Paper Gold.

The Wall Street Walk

Corporations exist to profit from a product.

Markets exist to imbue ownership in corporations.

HFT exists to facilitate trade in markets.

Traders exist to furnish markets a directional bias.

Governments exist to protect the liberties and borders of their constituents.

Individuals exist to pursue their ends and sustain the species.

Recalling Sicily

Graft or Circumstance?

Gaming Consumer Confidence

(link to The Conference Board PR)

Monday, April 29, 2013

Repost from ValueWalk

S&P 500 Valuation Based on Inflation Data

Since 1978 the SP500 Intrinsic Value Index calculated using the “Prevailing Rate” (Real GDP Rate + 12mo Trimmed Mean PCE Rate) as a capitalization rate for the mean earnings for the SP500 has been a helpful indicator in judging SP500 under/over valuation levels.

Wednesday, April 24, 2013

Couldn't make it up if I wanted to.

These kids had responded to a Craigslist ad my wife put up for a couple of chairs.  When exchanging info the young lady who wants these things so badly explained that they work for the church, and are also following Dave Ramsey.  The deal is already done when an hour later this text comes through:
We were asked to fill the truck up with gas in order to borrow it, would you be willing to take 350 instead of 375?
Am I a sucker buying a bunch of excuses?  Maybe, but I don't think so.  And that's the point about the current situation in our economy.

Oil companies, with their 30% profit margins, are taking all the marginal money that would otherwise go to consumer outlets, especially in light of wage stagnation.  This is the daily economy of everyone else.  The one that serves the other side of the gulf in socio-economic classes.

$25 lost per deal x 300 MM citizens = $7.5 billion lost in principal commerce

Thursday, April 18, 2013

Saw this on SMB Capital's Blog

I don't get it.

For years here and elsewhere I have been advocating a neo-WPA or some other organization to put government money to work hiring people to construct projects benefiting the American people - we got ARRA, an uninventive act funneling money into state Departments of Transportation for fixing potholes.  Generally, though, we are propping markets on the outlook for future growth, stuffing the individual 401k's and pension funds with stocks that now stand to get sideswiped immediately after tax season.

Unsurprisingly, consumer growth could not happen between corporations maximizing profit by laying employees off, and crude furnishing the oil companies with 40% margins effectively starving the rest of the economy of a revenue stream.

All of this has played out in slow motion so plainly, that I feel like everyone sees it, and yet, no one does anything about it!  But finally we have crude backing off to a more sustainable economic level and the market faces unrelenting sell pressure.  I don't get it.

We are early in the consumer credit cycle with home and credit debt refinancing, and the home remodeling and resale market in full swing.  The cost to the consumer of gasoline should come down to a new, higher level than previous good times, increasing vehicle mileage, while lowering expenses to merchandise providers of all stripes.

Falling oil is not prima facie evidence of deflation, just as trailing consumer data isn't prima facie evidence of a weakening economy if on the back of a rising crude spot.  Because merchandise providers don't need to change pricing policies with greater discretionary income coming from fuel economy, the prospects for broad benefit to the American and world economies improve imminently.  A good deal is still a good deal.

I guess the principal purpose of this writing is to declare resentment for the way the market has behaved lately.  It is clear to me that a battle rages in the world between white and black hats.  Now that this economy's millstone has finally been lifted - crude - the market is dumping trailing data.  Why?

Now that a realistic prospect for consumer spending is here, it's hit the bids out of the gate.

I don't get it.

Monday, April 15, 2013

April 15, 2013

(spreadsheet from businessinsider, link)

see also:  link to China Balance of Trade histogram

(chart from zerohedge, link)

Saturday, April 13, 2013

Three Charts

(link to last chart at Hofstra Dep't of Economics)

Friday, April 12, 2013

On Gold, Briefly.

1.  The World Economic Forum hosts an annual meeting in Davos, Switzerland.

2.  Swiss National Bank faces Referendum over Gold Sales - 3/21/2013
The Swiss National Bank (SNB) could be prevented from selling its gold, after the Swiss People's Party (SVP) secured enough signatories for its proposals to trigger a national referendum on the matter.
The proposals – dubbed the ‘gold initiative' – seek to prohibit the central bank from selling gold, force it to hold at least 20% of its total assets in gold and ensure all bullion holdings are stored physically in Switzerland.
Members of the SVP, the largest party in the Swiss National Council, yesterday released a statement revealing they had accumulated 105,279 signatures in support of their proposal, enough to trigger a public referendum.
A spokesperson for the SNB said the central bank has "considerable concerns with regard to the monetary policy implications of the demands in the initiative".
The article goes on to explain that the Swiss would like their Central Bank to reverse from selling to buying, bringing its balance sheet weighting up to 20% from the current 10%.

update:  On 3/24/2013 zerohedge posted a letter from ABN AMRO changing the handling and delivery of gold settled contracts.

Trading Time Machine

While growing from a trading pollywog in the swamps of the OTC I compiled message board posts that pointed to dirty laundry.  See how many indicators you can spot while reading Bitcoin related rubbish.

(as always, you can click to enlarge)

Thursday, April 11, 2013

Kyle Bass on Japan

Kyle Bass presentation, Coming Crisis in Japan, given to the University of Chicago Booth School of Business on March 3rd, 2013.

14:56 - The quantitative analysis that I go through is, in my opinion, irrefutable.  You can't even argue the numbers that I give you because the numbers are the numbers. What you can argue are the qualitative perceptions of the participants, and how they're likely to act going forward. . . . It's just a question of when. When does some qualitative input change the participants behavior? Because when that switch is flipped it happens all at once.

Wednesday, April 10, 2013

Authors as Bumpers, Buffers

Yesterday I saw Kyle Bass on zerohedge.

Commentary via twitter:

Then today Buttercup and I are having a conversation and she has to remind me about the premise of The Hunger Games.  I had heard about this book an anomalously frequent number of times, and so saw the movie.  It didn't stick.  Afterward I visit wikipedia to get the scoop on this franchise.
Collins has said that the inspiration for The Hunger Games came from channel surfing on television. On one channel she observed people competing on a reality show and on another she saw footage of the invasion of Iraq. The two "began to blur in this very unsettling way" and the idea for the book was formed.  The Greek myth of Theseus served as a major basis for the story...
Then I wonder, "How does a story become a social bumper, pushing us away from distasteful outcomes like Brave New World?  Or become a buffer, cushioning the social conscience against bitter, but eventual outcomes like Nineteen Eighty-Four?

Friday, April 5, 2013

Grab some orange slices and your juice box, it's Story Time.

A family member guested their way into an Easter supper fraught with tension.  Apparently, one of the gals on board had recently been in "la bastille" for writing herself percocet prescriptions, as well as doing the same for a paramedic in a neighboring county.

Facts of the case:
  1. Gal was a nurse authorized to use the pad.
  2. Gal's husband worked in a faraway land, near Iowa.
  3. Husband came home once monthly.
  4. Gal managed the finances.
  5. Couple were falling behind on bills and couldn't seem to "dig out."
  6. At peak consumption Gal topped 15 pills per day.
  7. Estimated quantity of pills acquired 20000+.
  8. Bail cost Gal's folks almost $4000.
Mind you, this information is at least 3rd, and probably 4th hand.

Libertarian Conclusions:
  1. On face, prescribing yourself medications and then taking them should not be legally wrong.  Until the story advanced further, I found myself thinking, "this a typical case of the government protecting people from themselves."  When Gal provides scrips to Paramedic-in-Neighboring-County (PiNC), she becomes a Distributer-of-Controlled-Substance (the bad kind of DoC).
  2. A DoC ruins lives because they do not furnish information about the downside risks to end users.  A DoC may never know the end users, therefore, they harm the end users.
  3. At 15 pills per day, this Gal likely used pills recreationally while on the job as a nurse.  Obviously a callous, dangerous, and risky prospect.
Dad Conclusions:
  1. Without a target (focused personal desire for something), our efforts (waking up and doing work) have no aim (steps to accomplishment), and therefore, no meaning (personal satisfaction).  reference Once, On a Fishing Trip.
  2. The world is tough and lonely.  A virtue of our existence is the combination of a man and a woman, for at least long enough to convince her to "get busy."  Everyone needs someone to be there for them because no one cares about you or your ends until it affects them.  That's reality.  A someone can be a spouse, a fishing buddy, a mentor, a parent, or even a psychologist.  Children cannot and should not be given this responsibility.  Heaping love or frustration on a child is escapism.
  3. Pleasure seeking behavior is also a form of escapism.  What this gal was escaping from we cannot know for sure.  We can be sure that she wasn't going to find the answer in the bottom of a percocet bottle and that people driven by self-satisfaction are less likely to seek crutches.
  4. Don't consolidate your financial assets in the hands of one person.  Also, have a complete understanding of how your efforts are being converted into wealth, and how that wealth is being converted into security.
  5. If you willfully harm other people (eg - feelings, finances, trust) you are an asshole worthy of being socially isolated.
Final Word:  It's never too late to restore balance to your personal universe.  One of this lady's goals can be to pay off the bail debt promptly (righteous) and another to reform her opioid ways (personally useful).  Accomplishing these tough, though manageable goals, will inspire confidence to aim for and achieve still bigger targets.

In the end, if reckless pleasure seeking must be the only way to live then die happy in a rented sports car driven over a cliff.  Don't put yourself or your family through the cycle of angst brought about with dependence.

Want something - Get it.

Thursday, April 4, 2013

Notes from SMB Webinar.

Mike Bellafiore of SMB Capital hosted a webinar this afternoon, Are you a Pro or a Piker?
  • "When they study people who are successful they tend to have strong, successful social networks."
  • "When you see an A+ trade you should be risking at least 30% of your intraday stop.  For a swing trader maybe 2-5% of your account."
  • "I can't stand when I see guys on my desk looking at an A+ trade and don't get enough on with that.  I don't care if you lose money, GET IN A GOOD TRADE."
  • "If you see a trade that you like, take it.  Your job is to take risk."
  • "Not making enough when you're right is what's holding you back."

Monday, April 1, 2013

Once, On a Fishing Trip.

Two kids, maybe 15, drove by in a snazzy little Boston Whaler and I thought, " I would have killed to have that boat when I was their age."  Then I thought, "what would I kill for today 10 years from now?"

Saturday, March 16, 2013

Strong Endorsements

Khan Academy

These offerings advance human civilization.

The Path is Set

Notable syllogisms:
  • drastic reduction of public debt
  • relieves future generations
  • saves pensions funds
  • avoids further recession
  • historic and permanent rescue

Friday, March 15, 2013


This producer and creator of Jeopardy! also invented the show's iconic Double Jeopardy theme song.

Who is Merv Griffin?

I got to thinking about the nature of the markets this afternoon.  Conclusion:  The market is about pricing companies until values and the environment are right to do deals.  This lead me to understand the credit creation cycle a little more clearly and finally decide that in 2H13 deals should be coming.  I think we are entering an estuary from the rapid river of cheap money toward a more staid, buoyant interest rate era.  Like 2011 when the spectre of not extending Extended Unemployment Benefits caused a sudden drop in Joblessness, the idea of a coming interest rate rise can be the final spark that gets people off the fence to do a deal.  Whether a small business loan, a home refinance, or a leveraged resource base acquisition, ZIRP is hitting the streets, and it will not last if Bernake leaves at the end of the year.  Personnel changes obviously lead to policy discussions.

I like the idea of:
  • space
  • IPOs in general
  • bitcoin adoption
  • electronic medical records
  • legitimate takeout targets, especially a select group of junior miners
  • AAPL - to me, the products are ubiquitous like PCs still are to the desktop market
  • AMX - hard time thinking Carlos has to sell under duress if this is, indeed, a deal making env't
  • AIG - I think it's tracking for 60s, don't sweat this one until you start hearing Berkowitz's name
  • FSLR - early in the game for this trend, it's a growth stock in a strong market env't
  • JCP - see post here, I will be irate if they go to the revolver, but they're going back to what works
I feel that the case for long HLF erodes daily.  Ackman's latest comparison of HLF with recently seized Fortune Hi-Tech Marketing effectively highlights damning similarities and invites the question, "how long can the government ignore its own precedents?"  Whether the company or Icahn himself, someone wants the world to know their checkbook's open at 35.50.

I like that CAT pps is paying for its horse puckey excuses about writing off almost 600 million dollars of goodwill 6 months after closing, and that crude and refiners are coming in.  These symbolize a reasonably logical market in the case of CAT, and one that wants to support consumer behavior.  I'd also like to see the fertilizer companies come in to keep food inflation at bay long enough to let the minimum wage increase get people working again.

As discussed in A Bit of Philosophy, though I feel tail risks currently grow with positive reinforcement of a fresh decline into moral hazard, a civil response is on the map if the good guys don't win this one.

Civil war suits no one.

Thursday, March 14, 2013

Link Dump.

Renowned trading coach and book author Denise Shull suggests that one way to enhance trading performance is by coming to terms with your distractions.  For some that could be as simple as telling yourself, "it's out of my control."  Others may find that dropping everything to clear a distraction is Step 0 in the process to successful trading.

In order to transition from hotmail's unbearable new GUI to separate email hosting, a bit of spring cleaning must be conducted.  So, how about doing a link dump at 11:45 on a Thursday ahead of the largest POMO of the month on tomorrow's monthly opex?

Following are things I have read or started to read and found interesting enough to save for later.  Labels are purposed for speed and the order is descending by time.  All due respect to authors and sites linked.

Historic Collapse of Monetary System ...
Nine Financiers
The Only "How To Invest" Book Worth Reading
The Secret to Communicating Memorably
What is a CounterTrend Trade?
22 Tips for Evading Drones
How are those New Years Resolutions going?
Overcoming your Fear of Pulling the Trigger
Not So Fast (Trading Earnings Gaps Down)
Epicurean Dealmaker:  CV
Big Think Video with Annie Duke
5 Tips for being a better Leader
Learn to take a Loss
Do I need to learn to read the tape?
12 Questions for Kirk
Rumored new Energy Secretary is a Nuclear Bull
The Path of Amateurs
Top Caller Dilemma
The Starry Night over NYC
Charlie Munger on Worldly Wisdom
Yahoo, Dell, Netherlands Tax Haven
Scumbag Story Time
3 Secrets to Happy Memories
You are not consistently profitable ... YET
Eliminating Myself from the Market
Recalling the 2008 Financial Crisis
Should this trader make a comeback?
Benjamin Franklin's List
Wyckoff Stock Analysis
14 Quotes from Jim Chanos
Present Crisis Pattern
Astronomy Picture of the Day:  Saturn
Best Rags to Riches Stories
What's your Edge?
How your Buy Order gets Filled
Is the Stock Market a Rigged Game?  (see 'On Trading' at right)
The Price of Collective Trauma
Denise Shull on Tape Reading
Zeke Ashton talks Portfolio Mgmt
Jack Schwager on HF Market Wizards
Bizarre Exchange:  Buffett and Jack Welsh on CNBC
Master of the Knuckle Ball
Buy on Earnings Guidance
Tips for Sales and Trading I-views
Cato Tackles Parenting
Options Hawk: Trading Options Flow
LiquidNet CEO on Bloomberg
The Goat's Kirby Theory Explained
A Study in Global Systemic Collapse
Life Cycle of a Trade
James Altucher is a Sloppy Chip
A 2009 Post from The Goat
30 Things to Stop Doing to Yourself
Family Battle, TV Ministry
A Statistic about the Longterm Unemployed
4 Ways to get Better at Trading
Obama Signs EO to Control All US Resources
About Ramit Sethi
How AAPL Dodges Billions in Taxes
A British Writer takes on Black-Scholes
Revelations of a Trading Veteran
Pro Athletes :: Pro Traders, 7 Traits
Upside Trader's Look at Sectors
SEC Charges OptionsXpress, 5 Others for NSS
April 2012:  7 Reasons MS Bearish on Stocks
A Value Investor's Most Important Perf Measurement
Santelli Talks Bill Gross's Tweets
Bank CEO writes Anti-Wall Street Memo
OG Zerohedge:  Social Dynamics of Trade Desk
BoomBust:  Everyone Knows GS Advice Sucks?
4.5.2012 Reggie Middleton Looks at GRPN
Executives Reveal their Biggest Mistakes
Nail in the Coffin for Efficient Market Theory
Market Thoughts on Jesse Livermore
Olde Skool 'Ask James' Post
Lay Investors:  Embrace Volatility
How to Trade Directional Calendar Spreads
Life is a Gamble, Are you All In?
AMZN is the Secular Short of 2012
One Payday Lender Ruined the Industry
ECB Banker Left Speechless by Question
6 Ways to have a Better Conversation
Trimtabs Guy on Fed Manipulation, March 2012
Linda Raschke's 'Holy Grail' Scan
4 Tips on Tracking Options Volume
Dropbox Founder Simplifies the Cloud
Anti-Consultancy Consultancy
The Psychology of Human Misjudgement
The Power of Introverts
Mark Minervini Podcast Interview

Wednesday, March 13, 2013

Thursday, February 28, 2013


I think the decline of JCP is over-exaggerated, that clearance inventory blowouts could symbolize a "kitchen sink" quarter, and that JCP can finalize its transition by making a few small, corrective changes.

Walking into a store's bright white interior with Sephora prominently featured out front sets a tone that isn't followed through the rest of the plan.  Particularly representative of this failed continuity is housewares.  Who in the world buys housewares from JCPenney?!  Upmarket housewares to a retailer must be like the furniture business to landlords.  It's as though some people are genetically wired to go into the business of beating their fucking brains out, with virtually no chance to survive because margins can't meet consumer turnover in down times.

The JCP architectural concept is confused by the offerings proffered within.  Carry the feel of the front through to the back of the store.  Replace housewares with a lingere shop that feels a little secluded, like the back corner of the video rental store used to be.

Picking merchandise buyers to compete with the Gap, with Victoria's Secret, with Express and Penguin and other retailers will bring the store-within-a store concept to a demographic that is most likely to spend on it.  The only difference between Sri Lankan sweatshop apparel from Express and JCP is that Express doesn't make as many mistakes with respect to color, cut, and style.  Fix your buyers and you fix the store.

Eero Saarinen famously waited until his buildings saw snow in order that sidewalks be placed where people naturally walk.  Ron Johnson should know from his experience at AAPL that Steve Jobs's genius manifests itself in beautiful, instinctive products.

The difficulty in retailing isn't figuring out how to make a dollar selling clothes, and it isn't as simple as offering what most people want most of the time.  Retailing is about offering what most spenders want most of the time.  Wage deflation due to inflation in the cost of economic inputs (gas and food) is real and it isn't going away.  If you're - rightly - going to fight the competition with price, make sure that you are taking share.  To do so you must compete directly:  color, cut, style.

In closing, carry the initial feel of the stores from the front door to the back corner, and enhance product offerings by choosing better buyers, or go vertical and make your own stuff if the market can't tailor to your needs.

ps - The men's merchandise is very close.  Do away with the contrivances like jackets with pockets on the sleeves, and dump the shapeless sacks of shirts in favor of something that a normal, respectable dude could wear to the office and you're there.  The PGA labeled gear is a great deal, if you can find the few gems that aren't composed of terrible color combinations.

You're on the door step, baby.  Punch through.

pps - Just saw this at BusinessInsider.  Kitchen sink quarter - think about it.

Monday, February 25, 2013

Spot On

This screen cap is taken from a BusinessInsider post about the imminent bankruptcy filing of Energy Futures Holdings (EFH).

When KKR, Trump, Mitt Romney, and their buddies do takeovers and turnarounds they follow the roadmap printed above.  The investment bankers making fees on the deals get rich, and the bond holders ultimately end up with the assets.

Thursday, February 21, 2013

Principles by Ray Dalio

I feel that I got what I wanted by following the same basic approach I used as a 12-year-old caddie trying to beat the market, i.e., by 1) working for what I wanted, not for what others wanted me to do; 2) coming up with the best independent opinions I could muster to move toward my goals; 3) stress testing my opinions by having the smartest people I could find challenge them so I could find out where I was wrong; 4) being wary about overconfidence, and good at not knowing; and 5) wrestling with reality, experiencing the results of my decisions, and reflecting on what I did to produce them so that I could improve. I believe that by following this approach I moved faster to my goals by learning a lot more than if I hadn't followed it.

Monday, January 21, 2013


Definition 2. of "define whitewashed" in Google:  Try to clear (someone or their name) by deliberately concealing their mistakes or faults.

I come back to the computer tonight with the market having taken new highs on an MLK shortened trading session - the first open since Caterpillar bombed the SEC reporting system with a $580MM goodwill impairment on it's most recent acquisition.  An acquisition barely 6 months old.

The company has gotten so large that half a billion dollars - or 10% of their corporate cash, or 73% of this bond issuance due 2015 - can vanish into the vortex of capitalism and the business media deems no bombastic coverage.  Whitewashed.

Empirical evidence is mounting to support a claim that our economy has become so dangerously bifurcated that a social disorder outcome is solely abated by the full faith and credit of the United States for the reason that some of America's largest corporate engines must once again go to the well of accounting shenanigans in order to manage the shock of stifled future revenue and earnings figures.  Shareholders' $0.87/sh one-time "noncash" charge comes with no expected cut to the dividend, and one presumes that a dead hooker went out the door with the dirty laundry on this write down.  But look at this Wikipedia list of all the other deals CAT has done with increasing frequency.  Was she the only one?

At the risk of piecing a strawman, Caterpillar's not alone - I feel Freeport Copper & Gold bought an insurance policy with their December 2012 MMR and PXP acquisitions given the probable decline curves and uncertainty yet surrounding natural gas.  And the Freeport team is experienced.  Would it really be that novel an idea to look at getting into CCJ's backyard by going for DNN?

The wizard behind the curtain of Western Financialism is the full faith and credit of the United States because these corporations are not being held accountable to the economic destruction they currently create.  While the labor force continues to shrink, these companies abuse a toothless regulatory environment therefore driving share price in lieu of real-world fundamentals.  They can do this because the US government's transfer payment system is wide open, creating a situation tantamount to bread at the circus, or payoffs for peace.  Whitewashed.

Now that the battleship runs flank speed into a 3 month can-kicked US Debt Limit, it is imperative for grass roots industry to kick ass.  The Big Boards still lie.  Whitewashed.

For there to be out-sized reward there must be risk, but a scandalous deal should not be allowed to go unpunished by the market.

Thursday, January 10, 2013

A Hypothetical

Let's say you're a FaceBook investor that found the stock market.

Let's say you read Zerohedge a lot and read what you can about the economy.

Let's say you're incredulous about the market ramping whilst unemployment, food stamps, and government moronery run unabated.

Let's say you're putting your money where your mouth is by shorting this market.

To that hypothetical person I would say:
I understand how you feel.  I have been where you are.  Macro economic trading is a hobby like juggling knives or high-diving into inflatable pools.  It takes a long time to become one with the market.  Take your size down and notch some wins.  Do not hold over night.  Carefully record where every penny of your money is going from execution prices to brokerage fees.  Your trading capital is your air.
God Speed.