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I’ll Have Another, Please   September 28, 2007

Today marked the last day of the 3rd quarter and the market finished down for the day.

More importantly, today marked the final day of non-adulthood status for my oldest son. Tomorrow will truly be a new day.

This was a quarter that most people will remember for the down markets and the volatility. For many, no doubt, the 50 basis point drop by the Fed came too late.

It was a quarter to remember, but thank you, I’ll have another. Please, may I have another?

For starters, despite the axiom that September is a bad month for the markets, this September was the best in 10 years, with a Dow increase in excess of 4%. How would you like to have a year of Septembers?

After it was all said and done, the Dow still finished up 3.6% for the quarter, although the S&P 500 only made it up by 1.6%.

Ah, but the Szelhamos Portfolios went up by 5.3%, and that was even with a big losing hedge waiting for another dive in the markets.

On the negative side, my professionally managed portfolios rose by only 3.0%, while the retirement account mutual funds actually lost 0.5%. In all, it was still an overall 3.2% return for the quarter.

Although I suppose that I could gloat about beating the indices and my other professionally managed accounts, I would rather be humbled and be left with even bigger portfolios. With all of the extra time necessary to count the money, I wouldn’t have time to be overly upset about not beating the professional guys.

As I think back to the days immediately after the big market drops, there was always a unanimity in opinion. As always, anything resembling consensus is bad. But back then, and also back in February, there were the calls to move into the defensive stocks and the consumer cyclicals. Being a male, I don’t listen to what I don’t hear.

Funny thing. They really didn’t do terribly well, though. For example, I own Altria and Kellogs, both highly touted during market dives. How did they do?

After adjusting for dividends, Altria was up by about 0.5% and Kellogs was up by about 3%.

Oh, I hear you. You say that’s not really fair to look at their quarterly performance. You say I should look at how they performed from the time of the two day 500 point drop. After all, that’s when all of the buy recommendations really started pouring in.

Well in that case, once again adjusting for dividends, Altria was up by about 5% and Kellogs was up nearly 7%. Not bad.

What was especially interesting, though was that the one consumer cyclical that was routinely left off of the recommended list was Procter and Gamble. It was too big and stodgy.

That is until it started propelling forward, then everyone got onto the P&G bandwagon, but by the time they did, P&G became an underperformer. Is anyone surprised?

I happened to already own P&G, as well, and after adjusting for dividends, it was up by about 14%. So I’m feeling better about being old and stodgy, myself.

In the meantime, during that same period, from the close of trading on July 27th until this afternoon’s closing bell, the Dow was up by more than 5% and the S&P 500 was up by 4.7%.

So, now I’m sure you’re wondering how the Szelhamos Portfolios performed in that time, utilizing an aggressive options hedging strategy, because as we all know, it’s all about me.

It was up by 8.5%. And it did that without selling anything at a loss and without following the herd into the consumer cyclicals, which, admittedly, did perform better than the overall market. But not by very much.

But that strategy only worked for me because the market was so volatile with 3 weeks of 200 point swings on a daily, sometimes twice daily basis. Halliburton, for example, repeatedly went up and down around a $35 - $37.50 range, never staying in any one place very long. For me, the timing was perfect, as I traded in and out of Halliburton $37.50 and $40 options, repeatedly, usually with a holding period of less than 3 days. The same with Apple, Ameritrade and some others.

Although I’m currently sitting on a paper loss with the ProShares Ultrashort Dow ETF’s, I did pocket profits on numerous short term trades both on the short and long sides and will continue holding the ProShares Ultrashorts as a hedge, especially as the Dow nears the 14,000 mark, which previously wasn’t considered to be a resistance point.

As it turned out, I made nearly 75 trades in this quarter. Not bad for only 64 trading days. I tried my best to contribute to the economy without really working.

My professionally managed accounts made a total of 34 trades, evenly split between buys and sells. However, the trading pattern before the big losses in the markets, which accounted for 10 trades, was identical, also being evenly split between buys and sells. So as far a strategy goes, I’m not certain there was any exhibited by the underperforming professionals, at least not for this most recent quarter. They do what they do.

But I don’t want to take away anything form my advisor at UBS, Bob Shapiro. He is consistently great, having turned in more than a 20% gain for the past fiscal year ending June 30th. And best of all, during down markets, his portfolios don’t melt away.

I would happily take that quarterly 3.2% gain again and again, for the foreseeable future. As long as inflation stays low, there’s little to complain about with a 13% annualized rate of return, especially since my conservative projections are based on an annualized 7% return.

Since I’m now emotionally committed to another 47 years before retirement, I really won’t need much to help support me in my retired years, given that the life expectancy of a 100 year old is limited, so the extra few percent a year on the rate of return isn’t as meaningful as it once would have been.

In the old days, meaning before yesterday, I would have pointed out that a 13% rate of return will get you to double your money in about half the time of a 7% rate of return. 5 years instead of 11 years.

Over the past year, I’ve considered moving funds away from one of the professional managers because of under-performance, especially during down markets. I think I’ll still give it another year. The one thing that I do know is that I don’t want to add any to the Szelhamos Portfolios, because as it is, I spend way too much time trying to manage the funds that are already there, although I suppose that all that would really be necessary is adjusted the number of shares and not necessarily the number of holdings. Or I could just send it over to Bob Shapiro and sit back.

Back when I first started directing the Szelhamos Portfolios I traded in and out of securities at a fairly rapid rate. Now, I’ve come to realize that you can profit from your holdings even when they go down in value. If an underlying security is good, there’s no real reason to part with it during the inevitable drop in price. Just let someone else pay you will you park the securities with them for a specified period of time. As long as I still have first right of refusal on continued ownership there’s a way to have your cake and eat it, too.

And yes, I’ll have another, please.


No News is Bad News    September 27, 2007

Every now and then it’s just a great day. Go figure.

There were lots of reasons why today should have been a miserable day for the market. A miserable day for the market often translates into a miserable day for me, although the day started out with some really great news.

That news was that mother and surprisingly early delivered child were both doing well. Anxiety filled thoughts could now be put to rest. In general, it’s best for those to be stowed deeply.

As far as today’s bad news goes, let’s actually start with yesterday. The Durable Goods report was a stinker. We’re not producing the stuff required for long term capital investment. That’s always bad news.

In a one man effort to effect future durable goods numbers, my good friend committed to a business expansion that will add short term and long term jobs to the economy, as well as placing orders for not only more durable goods, but also for consumer goods. He is what the economy is about. In order to make certain the costs of the expansion will be offset, I committed to stay with the organization for another 47 years.

But as bad as the official Durable Goods numbers were, the market shrugged that one off yesterday. Sometimes you get a freebie.

But today, the bad news just kept coming. The dollar is again at an all time low. By all that’s right, stuff should just keep getting more and more expensive, at least if it wasn’t for the Chinese. Fortunately, they’ve steadfastly refused to stop pegging their currency to the U.S. dollar. Otherwise, we’d really be feeling it.

But that news was also a non-news event. The market did nothing. I’d call that another freebie. That’s 2, if you’re keeping track.

Then today, oil decides to go up about 3%. Last that I recall, that can’t be very good, either. And so the market did what one would expect.

Oh no, that’s right. It did just the opposite. Sorry. Yet another freebie.

And the housing numbers? You really don’t want to know. They were horrible, and yet, that’s right. We were given a pass. Another freebie.

Since the conventional wisdom is that the market looks forward 6 months, you would think that these pieces of bad news, all of which would seem to have negative long term consequences, would have sent the market for a tumble.

And to top it off, for some reason people expected an announcement on Bear Stearns today, but it never came. That was considered to be bad news for the financials. Imagine. 24 hours after the story broke and they couldn’t pull a deal together. Unbelievable. Could the news be any worse?

At this point I’ve lost track of how many freebies we received today.

But wait, we weren’t done with today’s numbers, because then came along the unemployment numbers.

Remember last month when the Jobs numbers came out. I think of jobs as synonymous with employment. Well those numbers were really bad and the market dived.

So just as the employment numbers were really bad, one would think that the corresponding unemployment numbers would be bad as well.

That’s why I don’t get the big bucks. As it turns out, the unemployment numbers were great. Low unemployment claims. Don’t ask how that was possible, but those were the numbers. Of course, next month we’ll have to deal with the inevitable revisions. Those can be killers, as we found out with last month’s Job’s Report and the revisions that came along with the report.

But today’s unemployment statistics seemed to be just the bit of good news that the market needed to latch onto today as everything just went up.

As it turned out, today was one of those very rare days when nothing was really considered to be bad news.

Maybe it was because the recently revealed Committee to Save the World’s premier member, Ben Bernanke, decided to match last month’s flood of liquidity into the market. It worked so well last time to bolster confidence that, what the heck, let’s do it again.

And it seems to have worked, because First Data was able to secure its $9 billion in funding necessary for the buyout. Just 24 hours ago, everyone was still wondering where the money was going to come from, but no longer.

I didn’t do very much today other than watch in wonder as the green kept overtaking the red numbers on my screen. Consistent with my past pattern of bad calls on the options hedging strategy, I sold some MasterCard October $155 calls. I did so at a time that MasterCard was up by about $0.70.

I felt to be quite the genius when about 30 minutes later MasterCard was down about $2.

That feeling didn’t last very long, as for some reason, and I haven’t seen the news on it yet, MasterCard decided to turn it around and ending closing up by over $5. It’s still below my strike price, but really, don’t you think I would have had the sense to have waited just a bit longer before selling those call options.

For those who are reading this at work, you’ll understand that all of the kicks to the jimmies must have caused the premature action. I should have waited. I could have gotten twice the premium.

For the rest of the readers, there is no explanation for the previous paragraph. You just had to be there. I’d like to deny that I was there, but unfortunately, there were witnesses.

Just as MasterCard was rising, so too were Apple, Goldman, Google, Kraft and Halliburton. Just more examples of poor market timing on my part. Yet, the overall numbers are looking great, now more than 1% ahead of where they were right before the most recent plunges, and those hedging premiums have had something to do with the rebound in portfolio value. Best of all, the market still hasn’t reached its July highs, still being about 0.7% short.

So despite the fact that my flight tonight is delayed by about 90 minutes and I am more anxious than usual to get home, I am comforted by the fact that I failed to follow through on my conviction that the market was going into a tailspin. To remind me of my lack of faith, I’m still holding onto some of those ProShares Ultrashorts, watching those hedges just keep right on falling.

But who cares. They’re falling for a good reason. It’s almost akin to complaining about paying too much in taxes. I’d rather be making a lot and paying a lot in return.

But as I sit here, beginning to feel a numbing sensation near the jimmies, sober thoughts enter to defuse the feeling of elation over all of today’s freebies and further remind me why I haven’t gotten rid of those ProShares Ultrashorts.

As all of these freebies started to add up today, a very strong rule of thumb came to mind.

Payback is a bitch.


Why the Rich Keep Getting Richer  September 26, 2007

There are some everyday expressions that you know just can’t be true.

Not every cloud has a silver lining and lemonade doesn’t even remotely make up for being handed a life of lemons. It is true, however, that the best things in life are free. Take diamonds, for instance.

I’m sure that there are other, probably even better examples, but I’m tired and not able to comb my massive memory banks as well as I would like.

But the rich do keep getting richer. Believe it.

That one is as close to modern gospel as you will ever find. That’s why it’s really not newsworthy if Bill Gates’ personal wealth increases by $10 billion. But it’s really newsworthy, probably page one newsworthy, if Donald Trump was to lose $1 billion in net worth.

When the Texas Hunt brothers, who tried to corner the silver market in the ‘80’s lost it all, that was really big news. If they were to get it all back, eh, not so much.

But It just doesn’t really happen that way. When it does, it’s really memorable.

Sure, there’s always the errant Mike Tyson type, but that doesn’t really count. Had he branched out beyond boxing, like Oscar de la Hoya, then he wouldn’t have the category all to himself. Tyson just had a short term lease on his money.

Today was a good example of how the rich just keep getting richer and how the volatility of the stock market is the vehicle that allows the incredible accumulation of wealth to just keep going unchecked.

Essentially, the stock market is a zero sum gain. Someone’s loss is someone else’s gain. That is the hallmark argument against the equitable distribution of wealth in the socialist state. People were not intended to be equal. At least not in an economic sense. Even if everyone were to get an equal share of the wealth, within seconds the distribution would become unequal again. It wouldn’t take long for someone to figure out how to get more than his share. All it takes is opportunity. And money.

Unless you’ve been hiding under a rock you know that Bear Stearns has been deeply involved in the most recent market drop. We still have no real clue as to how much Bear Stearns lost in the sub-prime debacle, but we know that at least 2 of its hedge funds were closed due to insolvency.

If you were a holder of Bear Stearns stock, you also know that it took a huge hit in that month or so, as the sub-rime news kept trickling out. It wasn’t a good time. Lots of people lost lots of money in Bear Stearns.

As inevitably seems to happen, recent market meltdowns have been nothing more than great fire sales. Although I generally don’t follow this practice, people really in the know always seem to have some cash on the sidelines and at times like this you really understand why that’s such a great idea.

When everybody else is selling in an attempt to cut their losses, there comes a time when someone else will more than happily pick up those very same stocks at bargain prices. That’s exactly what that cash idling in the account is meant for.

That’s exactly what I wasn’t able to do as I watched a great stock, Goldman Sachs, just get lumped in with all of the other losers in the financials sector. As Goldman sank below $170 it seemed like a no-brainer. Pick up more shares. But funny thing. You need to have money to buy shares. Your good name won’t be enough. Goldman Sahs has a good name, but it didn’t keep it from getting dragged down with the rest.

So to start you have to have cash to take advantage of the bargains. The more you have on the sidelines waiting for the right moment to pounce, the more you’ll end up with after the panic is done.

And that’s where the rich come in and get richer.

You must have seen Bear Stearns’ rise today. Now first of all, it was a great day all around and best of all, it was consistent from start to finish. From the pre-open to the closing bell and beyond, the market stayed up and finally closed at its high, just short of a 100 point gain.

Mostly, the good news today was the GM – UAW contract agreement. It actually sounds a if they may have come to an innovative solution to GM’s healthcare liability, similar to a social security trust fund. Hopefully, it won’t be too similar to the social security trust fund, because we really don’t need to have that become insolvent as well.

But in GM’s case, the end is in sight. Their big burden is paying for the healthcare of their retirees. But as that generation disappears, they will be replaced by union workers that had lesser levels of benefits than they had, so at some point, unlike the social security trust fund, the amount of expenditures will start decreasing. Innovative. Very innovative.

But today, it was really the action in Bear Stearns that really stood out. And why not. Guess who had started accumulating stock when Bear was being driven all the way down. There’s a reason they call Warren Buffett the world’s greatest value investor.

Whereas in the past Bear Stearns had set a 40% premium for any buyout, they were no longer in the driver’s seat. Their loss is Buffett’s gain.

And Buffett clearly needs whatever he can get. Although it’s not big news when a billionaire accumulates another $10 billion, it is big news when a billionaire’s rank on the wealthiest list falls a notch or two.

And that’s exactly what happened to Buffett a couple of years ago. He gave up his number 1 position to his supposed bridge playing buddy, Bill Gates. I’m not certain what kind of stakes they play for, but whatever it is, it hasn’t been enoug to return Warren to his rightful place atop the hill.

Now it’s time for the Oracle of Omaha to return to his rightful perch and he’ll do it the way he does it best.

Even though he may seem to be a kindly elderly gentleman, this is not a game for Warren Buffett and it certainly isn’t a gentleman’s game. Just as sure as the rich just keep getting richer, the rich aren’t going to get left behind. So in this opportunity at Bear Stearns, Buffett sees his chance to leapfrog past Bill Gates. Sometimes, you’re only one investment away.

Sure, the rich keep getting richer because they take advantage of opportunities that other’s just can’t, but also because the rich have to take advantage of those opportunities. They can’t resist. That redistribution of wealth was intended to come their way, so they have to do whatever it takes to make prophesy come true.

I got a little richer today, but I did nothing to warrant it and I don’t believe that it was prophesized. Sometimes it’s not a question of taking advantage of opportunities as you bottom fish. Sometimes it’s just a case of going along for the ride. Today, I went along for the ride and most everything was up, at least a little.

I did some quick calculations and figured out that just by going along for the ride, at this rate on an annual compounding basis, I could equal Buffett’s wealth in the year Twenty never.

It’s nice to have goals.

Maybe I should tell Buffett and Gates to order that bigger bridge table now.


Staring into the Mirror  September 25, 2007

I’ve set 2 personal records this past week. I must be on some kind of a roll, since just the week earlier I set records for my personal best time in a 5K race. Once you’ve started reaching new heights, it’s hard to accept anything less in any phase of your life. We Americans are a competitive sort and we always climb the mountain that’s placed in front of us.

Me? I’m naturalized, so I can take it or leave it.

This week, however, the records were not good ones. I suppose that even personal lows are records, but I don’t have a good feeling about these most recent events. That’s where the mirror comes in.

Just a few days ago, I think I had the worst day of my life. Not the death of a loved one, not a great personal tragedy, not a 500 point market downturn, I’ve withstood all of those. But still, the worst day of my life. And now, directly related to the events of that day, I find myself staring into a hotel room mirror.

My son used to work the front desk in a couple of hotels and I’ve heard stories about the unspeakable things that happen during those moments of lonely despair, that all seem to start with a sustained period of staring vacantly into the mirror. The anonymity of the hotel room makes a perfect setting for these depths of human emotion, from which there is often no return. How horrible the moment of discovery must be for the hotel staff.

There I stood, in the aftermath of my worst day ever, now all alone, staring into the hotel room’s full length mirror. Who knew what lay ahead? May God have mercy on my soul.

And then it started.

I started to practice the steps to the Rumba. The Rumba!

You see, last week was the first of eight dance classes that my wife and I are signed up for. Weeks 1 through 4 are Rumba-centric. Weeks 4 through 8 are Cha Cha.

After about 30 seconds of demonstration of the steps we were expected to dance. Funny thing, though. I don’t dance. That neuromuscular coordination thing? Never my strong suit. And rhythm? Don’t even ask.

I am not Rumba-centric and never will be.

If Szelhamos had been there to witness the gyrations of the instructor, he definitely would have said his usual: “He must be good in the bed”. Szelhamos always inserted the word “the” into every sentence, and as often as he could. In a sign that there is no need for DNA testing, I found myself thinking the same thing.

Of course, had he seen my attempts at dancing, he probably would have said something polarly opposite and would have demanded a paternity test. He would have been right to pursue the truth.

After about 45 minutes of pure agony at the class, I knew that one of 2 things was going to happen. Either I was never going back, or I was going to be the best Rumba dancer this side of Rooms 104 to 108.

Then I realized that I set my goals sufficiently low, as Room 108 is the Handicapped Access room and Room 106 is closed for renovation.

Nonetheless, I was going to take this thing seriously. On my plane flight this weekend, the plane was pretty empty, so I thought that it would be a good opportunity to practice some of the Rumba leg extensions. I was going to take every opportunity to be ready for this week’s class.

For no apparent reason, someone sat in my aisle, despite the fact that the plane was 80% empty. But that didn’t stop me from practicing my modified form of Restless Leg Syndrome. There was no hotel room mirror, but there were quite a few vacant stares in my direction.

And now it continues, here in the hotel room.

Funny thing, though. I don’t know why that plane passenger is still here with me. Sooner or later, I’ll probably ask, before it gets really awkward.

Speaking of really awkward, the greatest likelihood is that my wife will not be able to be at the next class, because she had to unexpectedly fly to California this morning for a family crisis. Since this is a couples dance class, I suppose that at first my presence without a partner would be awkward, but I’m certain that I could hook up with the Amish appearing couple in the class. With swiveling hips like his, I’m certain that he is open to the challenge and perhaps even a bit intrigued.

Why do I write about the embarrassment of this past week?

Because today was another in a string of boring days in the market. No news, no great events, no scandals. Nothing. Even Ahmadinejad was reasonably low key in his U.N. speech. The best part of today’s news was that prior to his speech and question and answer session at Columbia University, President Ahmadinejad was introduced by the university president as being a petty and tyrannical dictator.

That’s a pretty nice introduction. I can only imagine that the official Iranian interpreter considered his options before interpreting that for the Iranian President. Something about “killing the messenger” probably went through his mind.

Strictly speaking, President Ahmadinejad was correct in denying the existence of Halo 3, as it was not officially released until approximately 8 hours after his speech. Technicality? Sure. But denying the existence of Microsoft’s latest hot release will further ingratiate Ahmadinejad in the eyes of those that seek to destroy the perceived stranglehold that Microsoft has on the gaming world.

Nonetheless, nothing will bring Microsoft down and it’s no surprise that Bill Gates continues to top that list of billionaires.

And so, ultimately, the market did what it has been very good at doing since it gave up this volatility thing. It just wandered around aimlessly.

In the meantime I continued to marvel at how poorly my recent options sales have been. I felt so proud about rolling my September Apple $145 contracts into October $150’s on Friday.

So here we are 2 days later and Apple has gone up to $153.

At the same time I’m behind the 8 ball on most of my open options, but there’s plenty of time to go until the expiration of the October contracts.

No matter what, even though I know that selling these contracts is a pretty good way to enhance returns, it still feels so bizarre to wish for a stock’s price to go down. But so far, the strategy has been working for me.

So far, this year, it looks as if I’ve squeezed out a bit more than an extra 2% in profits by doing all of the options trading. At the rate that I’m going, I’ll finish the year having made more than 200 trades.

Seems hard to imagine that would really give me any time to practice the Rumba.

Now, with the market closed, and the blog almost written for the night, I’m ready to face that mirror again, this time with more confidence, but unfortunately no additional rhythm.

Here’s to a better day tomorrow. A bit higher in the markets and better shifting of weights and swiveling of hips in the mirror.

I’ll take either one of those.


Never Bow to Pressure  September 24, 2007

Great words to live by.

The most obvious example of bowing to pressure is the response to the herd. It’s so easy to do the wrong thing at the wrong time. In fact, at the wrong time, even the right thing will be wrong. Sometimes, regardless of how long you wait, the right time never returns. Even the moths won’t bother with my closet full of Nehru jackets. But I still haven’t given up all hope.

Each time the Dow has plummeted in the past half year, the herd, on very large volume had seen its masses grow and took the newcomers down with it. In a word, stay away when big price moves happen on big volume, or better yet, go in the opposite direction.

Have you seen one of the new Wendy’s commercials? The horde of people just jumping into the cavernous hole in the middle of a field is precisely what the market is about during one of those downdrafts. After all, who in their right mind could resist jumping into a bottomless pit? You don’t need a herd to tell you that’s absolutely the right thing to do.

The people with the red pigtails ignored the herd and lived to benefit from another rally. Unlike the Nehru jacket, the right time for the market has returned on both occasions of the large price drops. You would have thought that the Nehru would make a comeback after Hammer Pants faded away. Another losing bet.

Generally, I’m able to withstand the pressure of the crowd. I’ve never really had a problem walking the other way. The Hammer Pants, incidentally? Very comfortable to walk in.

This time is different. And we all know what happens when the pressure is too great.

I’m about to bow to the pressure, despite my best editorial judgment, giving in to the worst in Yellow Journalism.

So, in response to all of those that requested it, in fact, pretty much demanded it, I give in.

My recounting of the “Sirloin” experience received more response than anything I have ever spoken or written about. Ever.

So here it is. Just one click away, the pictorial evidence of Sirloin’s deed.

Now I feel like I can move on.

So now let’s get back to what pays the bills around here. That is, musings about the day in the market. If I don’t deliver the goods, my overlords aren’t afraid to hold back their wrath.

The big news today was the invited address than Iran’s President Ahmadinejad gave at Columbia University. Historically, despite our preconceived notions, raving psychopaths rarely foam at the mouth. Those that do, rarely are elevated to positions of leadership.

With that twinkle in his eyes, 20 years from now, you could almost envision President Ahmadinejad as a gleaming grandfather, upon the news of the birth of a grandchild. Unfortunately, you could also envision him ordering his daughter to be put to death for indecently exposing a portion of her body during the birth process.

What was she thinking? Obviously a tool of the American infidels.

But because of Ahmadinejad’s special relationship to his deity, he would be able to get his daughter posthumously reclassified as a virgin, thereby allowing her to atone for her birthing indiscretion, as she joins the other 71 in rewarding another raving psychopath in the afterlife.

See? There’s no such thing as a bad deed.

But that news did little today. After a few hours of gains, the market just turned mildly lower.

Despite a plunge in MsterCard, for no known reasons, the nice advances in Google, Goldman, Apple and NYSE more than made up for the mildly negative tone of the market, and MasterCard in particular. But as usual, as went Goldman, so went the Dow. Goldman eventualy gave up almost all of its gain and the market closed near its lows for the day.

MasterCard had been down about $1.50, at which point I bought back the options that I had just sold. As MasterCard approached the breakeven line, I was feeling pretty smart about the timing of my decision, having made a small profit on the transaction.

But before I could count those pennies, MasterCard just jumped right into that big hole, pushing the stocks with the red pomny tails right out of the way. Had I held on to the options and bought them back later in the session, that profit would have been counted in nickels instead of pennies. There would have been enough additional profit to purchase condiments.

Since I’ve been negative on the prospects of the markets, it’s no surprise that the options that I’ve recently sold, all at a time that I thought we were at a near term top, are all in the red right now. Halliburton, Google, Apple and Goldman have all had surges in their prices. I still have until October 19th to execute a strategy, but if I lose any of these positions, they will be at good prices. So I won’t feel too bad, at least not as bad as the guy who thought it would be a good idea to invite President Ahmadinejad to speak at Columbia.

Now that it’s warming up near the Arctic Circle, his new assignment shouldn’t be overly onerous.

Interestingly, speaking of bowing to pressure, you would have thought that Ahmadinejad would have let the rhetoric fly already with regard to his inability to get permission to visit Ground Zero.

Maybe he is just being responsive to the sensitivities of those that have suffered horrible personal losses.


I don’t know if “the other cheek” is a concept that he is acquainted with. I doubt it, so the rhetoric will probably fly tomorrow when he addresses the U.N.

Personally, I think that Mayor Bloomberg should issue an executive order furloughing any ex-New York City policemen convicted of brutality and assign them to the U.N. security detail. Rehabilitation has to start someplace..

But with that Hungarian now the President of France, maybe the world tide is turning a bit. What good are screws if you can’t tighten them? How else are you going to generate the kind of pressure that can’t resist a bow or two?

Other than more of an impetus to increase oil prices, how much downside could there be to tightening those screws? Especially since the entire world seems resilient to oil prices. What was predicted when oil hit $50 never came true, nor did it at $60 and $70.

Everyone just keeps humming along on their growth train. Taking wise advice, the economies of the world haven’t bowed to the pressure of high oil prices, and who knows, maybe everyone, including Russia and China have had enough of the one country that seems to want to rain on everyone else’s parade.

If the world, with the U.N. as its proxy acts the right way on this one, get ready for a rally like we've never seen before.

And if that happens, I’ll get whatever spray paint Sirloin left over and really make my feelings clear where it does shine.

And Hours to Go Before I Sleep  September 21, 2007

I may be shallow, and not just on a self-proclaimed basis, but even I know that those weren’t the exact words of Robert Frost.

But they’re close enough.

No, I’m not referring to the time left to go until the end of triple witching, or actually, more correctly, quadruple witching, thanks to the advent of derivatives upon derivatives. Before you know it, derivatives will become grandparents. Quintuple witching? One can only hope.

No, what I’m counting down is the time it will take to finally return home after today’s inaugural dance class. Cha Cha Cha.

I’m certain that tomorrow, as I prepare for my Day of Atonement prayers, I will have to ask for forgiveness for my flagrant disrepect of the performing arts.

Unfortunately, I’m no longer immobilized from the 5K debacle, so I can’t use that as an excuse. My grandmother isn’t ailing, either and as hard as I tried, I couldn’t find any other races scheduled for today.

I don’t usually eat lunch, but I thought perhaps I could count on that trusty stomach to get me out of the commitment. Its never failed me before. Old reliable, I call it.

And so I went to the local gas station and loaded up on self serve hot dogs. I put on lots of mustard and raw onions. But that was a couple of hours ago already, and still nothing. Not even the slightest cramp. That’s just unacceptable. Damn that Nexium. Why can’t the little blue pill work as well as the little purple pill?

Even with the market looking quite good through the first few hours of trading, my mind really can’t focus on the market. Although I’ve made two trades, including getting out of the Apple September $145 options and into the Apple October $160 options, I’m just not feeling it.

With Goldman finally surging back to its July levels, I sold some October $230 options. The last time I sold Goldman options they were for $240, so I’m willing to settle for less, but by the same token, I lowered my overall cost basis by picking up some more shares during the recent drop, so less could end up being more.

Sure, it’s always nice to make a profit by letting someone else take part of the risk on your stock and then rolling it over and doing it again, I’m still too fixated on the cha cha and whatever else we’re supposed to be learning.

Tonight may be a good night to break in those new Mickey Mouse Crocs. Cha Cha Cha.

 A few months go I watched an episode of 30 Rock. It’s really a pretty funny show, but I rarely got an opportunity to watch the show. For some reason, I refuse to use the DVR, probably because the last thing I need to do is to watch more television.

But in this one episode, the Alec Baldwin character makes a comment about the quixotic NBC page, that no one can quite figure out, hence “quixotic”.

“Someday, my friends, we will either all be working for him, or we will die by his hand”.

Words to remember.

What reminded me of these words?

China. Cha Cha Cha.

For some bizarre reason, Mattel apologized to China for its most recent series of toy recalls. Yes, that’s right. Mattel apologized to China. I suppose from Mattel’s way of thinking, had they not made the toys, China never would have been put into the awkward position of having to paint them with a child friendly substance.

I believe that the exact words of the Mattel CEO were “we sincerely apologize to the People’s Republic of China for engaging in the business of manufacturing and distributing toys to children in order to bring joy into their lives. Our heartless pursuit of this mission resulted in the need to apply pigments to the products in order to add color to the otherwise drab lives of children, thereby endangering their lives and their cognitive growth and development. In the future, if we are permitted to continue to contract with deceitful and sub-standard Chinese contractors in order to continue to engage in the manufacture and distribution of products, all products will only bear the colors of the Chinese People’s Army and will bring great honor to the blessed memory of Chairman Mao.” Cha Cha Cha.

The Mattel CEO says one thing to Congress and then quite another to China. T the very least, if this CEO gig doesn’t work out for him, he could certainly have a future as an elected official.

As we look at rising commodity prices, the falling dollar, astronomic trade deficits on our end and double digit growth, dubious trading partners and an aggressive expansion of military, nuclear, missile and space programs on their side, China may be that quixotic page.

Neither scenario is good for us.

As we enter into the last hour of trading, the Short Interest Report has been released. It confirmed what I thought yesterday. That being that there has been a large drop in short interest this past week, meaning that at least one impetus for continued stock price increases is lessened.

Yet, on record first hour volume we are still maintaining a 75 point advance with only 45 minutes remaining. Not bad, but things can change quickly these days, especially during an Octuplet Witching Hour. Apparently, derivatives have the gestational period of a hamster.

At this point, I think it’s time for a nap. Maybe when I wake up I will realize that this has all been a dream.

Cha Cha Cha.


The Three Tenors  September 20, 2007

Now that Luciano Pavoratti is gone, it’s time to assemble a new group of Three Tenors. Sorry Placido, your time has passed. It’s time to pass it to a new generation. As for the other guy, I don’t even remember his name, so I couldn’t send him his termination notice. But he’ll get the word. It really needed to be a clean sweep of the old talent.

Too bad Cheney’s not a tenor.

Little did anyone know that the baton would be passed so quickly and the handoff would be enacted so perfectly. But we were ready for a change and there really wasn’t much reason to put it off any longer.

But there on Capitol Hill, answering questions for the recently assembled “Sub-prime Crisis and Solution” committee sat the heirs to the throne. There were Ben Bernanke, Henry Paulson and Alphonso Jackson. As Secretary of HUD, you’ve probably never heard of Alphonso Jackson, but in the late sixties and early seventies, after having being kicked out by his own singing family for inappropriate behavior, he landed with and sang backup for the Cowsills. You couldn’t miss him. He was Andy Williams’ favorite.

And, yes, you’re right. If that family threw him out for “inappropriate behavior”, you just know that it had to be something more than a mere wardrobe malfunction. Oh, those Jacksons. I suppose that even they have behavioral standards.

Tito, I know you read this blog. I’m talking to you. Call me.

By the way, in case you also don’t know what HUD is, it is an acronym for Ghetto Development. And is pronounced “Hood”.

To be honest, the new trio of tenors was probably an octave or two below where I remember the vaunted Three Tenors being, but they captured my attention better than the original guys ever did. There is something special about financial testimony being given in Italian and in full operatic regalia.

Everyone knows who Bernanke and Paulson are, but Jackson carries the group through the strength of his instrument, a voice that sings directly to the beings in heaven. Unfortunately, he seems as dumb as a rock, unaware of the subtleties of politics. Someday he’ll learn never to give out actual numbers, they tend to erode the feel good atmosphere associated with meaningless generalities. It’s all about the “feel good” perception in this massive head game.

For example, when the statement is made that reductions in the fed rate will reduce the number of foreclosures, everyone feels good about that. But when the Secretary of HUD chimes in that only a small number of foreclosures will be averted, all of a sudden that good feeling is evaporated and angry stares are directed, well, you know where. You would almost think that this Jackson was a child molester, too. Not so.

Fortunately, in his true diplomatic way, Bernanke was able to point out just how difficult it is to actually put a number on that kind of thing. Although Jackson seemed to have no difficulty coming up with 225,000.

Whew, just in the nick of time, before anyone actually came to the realization that it was all just smoke and mirrors, came Bernanke to the rescue.

Unlike those times when Ben Bernanke is giving congressional testimony, there were no great reverberations in the market as he answered the committee’s questions. We’ve either tired of the process or the committee doesn’t know how to ask those great self-serving and probing questions that get to the answers that make markets move.

Throughout the early morning and through the committee’s meeting, the Dow just meandered in a small range, maintaining the pre-open losses in the futures, reflecting the boring committee hearings.

The only real excitement came after an inane question by a congressman who more than insinuated that Paulson was harboring some animosity toward the committee and its oversight function. He came right out and said so.

It seemed to me that the reason for that allegation was that the previous congressman asked a question that had a 7 minute preamble. That question was directed to Ben Bernanke, who answered it in about 8 words.

The congressman then asked Paulson to answer the question, and Paulson sat up and said what any normal human being would have said, given the situation.

“What was the question?”

The congressman passed on repeating it, knowing that it was such a worthless question. He just needed something to put at the very end of his preamble, or what I like to call, his pre-ramble. Knowing that he couldn’t repeat his rant, it would have made him look even more ridiculous to just put the question out there with no adornment.

It was nice to see that Paulson had tuned out and zoned out.

As Paulson tried to respond to the inane insinuation about harboring animosity, the congressman interrupted him and said that was not his question, and then he proceeded to ask a truly worthless question. As usual, there was no shortage of those this afternoon.

You could see Paulson arch his back and bite his lower lip.

What he should have done was to take a page out of his old Dartmouth football team playbook and just clipped the guy. Maybe stomped on his face, as well. Why not? At most it would be a 15 yard penalty. I think there would have been bipartisan support, too.

Anyway, in a show of solidarity, when Bernanke and Jackson were posed the same question, they started by stating that they harbored no animosity toward the committee.

By the time Jackson made that statement, committee chairman Barney Frank interrupted and said “we’re past that, let’s just focus on the question”, as if anyone cared.

If there wasn’t animosity before, there was now.

And so, that being the last question, the committee closed its session with lots accomplished. Basically, they did no harm to the markets, and that in itself can be quite an accomplishment.

As it turned out, the market just took a breather the rest of the day.

Despite the fact that Goldman reported spectacular earnings, their third highest ever, the stock couldn’t maintain its earlier $3 gain, on top of the $25 or so gain the past couple of days.

And guess what kind of investments helped propel Goldman to such great numbers.

You got it.

They were short on sub-prime mortgages.

That’s why they’re Goldman and Bear Stearns isn’t.

Likewise, Ameritrade gave up its gains and most of yesterday’s, as well, as the brokerages took some off the table after a great week that started on Tuesday afternoon, thanks to Uncle Ben.

Tomorrow, as the proverbial “triple witching” day would usually be filled with the prospect of fireworks, but these days, there’s definitely very little that’s going by the playbook. Since it looks as if the shorts have finished covering their positions there’s not much reason to suspect that there would be any big upside push, especially since we’ve digested the big earnings news.

After the bell, both Nike and Oracle came out with their earnings reports and they were a bit better than expected, but I don’t think that they will be enough to propel the market. If Goldman’s numbers couldn’t do it today, I think it means that we need a little respite. It’s been a very tense week, albeit, a really good week.

I will look forward to tomorrow. I hope that Apple makes a run at $145. I can’t wait to sell an October $145 call. As far as everything else goes, I’ll be too busy worrying about tomorrow night to concentrate on the market.

What will I be worried about? Is it because tomorrow evening is the eve of the Day of Atonement, when we must take stock of our actions in the past year and ask for forgiveness, while we begin our fast?

No, it will be the first night of the dancing class my wife signed us up for.

Anyone who mistakes Bernanke, Paulson and Jackson for the Three Tenors certainly won’t be able to translate music into movement.

Count on that.


There’s Got to be a Morning After September 19, 2007

As long as I’m using old song titles as themes, this one seemed perfect.

As far as I know, however, there is no college campus resurgence for Maureen McGovern, unless it’s simmering under the surface. I don’t think so, but I could be wrong. I still think that Meatloaf has that audience to himself. Someday, I’m sure that Maureen McGovern will be either on one of those PBS concerts or hosting one of the Time-Life infomercials.

If Meatloaf ever does either of those, it truly will be the end of time.

Judging by the pre-open futures, the morning after may not be one filled with regret. So far, despite poor earnings numbers from Morgan Stanley, it doesn’t appear as if the usual morning after question will be asked.

“Oh my God, what have I done”?

Neither does it appear that yesterday’s run up in stock prices was a result of systematic drunken frenzy, with subsequent remorse. Not that I have first hand knowledge, but I have friends. It looked as if there might be some follow through from yesterday’s 330 point gain. And as it ultimately turned out, there was conviction to today’s gains. The morning after was looking pretty good. That in itself is a surprise.

I had real trepidation about what today would bring, but I’ve been expecting the other shoe to drop for the last few weeks, and I’ve been wrong. Luckily, I’ve also been frozen in my actions, unable to find the conviction to act on those negative feelings.

But events last night put me on notice that only the unexpected should be expected. As far as I’m concerned, yesterday’s 50 basis point drop itself was unexpected. To me, it seems that the Fed Chairman caved in and may not be as independent as the Fed is supposed to be. I know that’s unnecessarily cynical, but I think a really great message would have been shown if the FOMC said that there was no need for a rate drop because the economy was doing just fine and will continue doing well once we get those greedy sub-prime mortgage vultures out of the system.

It didn’t stop with the rate drop, there were more surprises to come.

No sooner had we discovered that former Fed Chairman, Alan Greenspan did most of his thinking and writing in the bathtub, than we saw him popping up on The Daily Show last night.

The pensive pose on the cover of Time magazine was understandable, but The Daily Show? Did anyone in his right mind ever expect that Alan Greenspan would show up on The Daily Show? I suppose you do what you have to do to sell books. You should see what I have to do to get sponsors onto this blog. Talk about prostituting yourself.

As unexpected as the appearance may have been, it was impressive. For an 81 year old, Greenspan had quite a bit of jump in his walk as he entered the stage. He was also quite good at reining in Jon Stewart. Rarely will you see Jon Stewart unable to steer the interview in the direction that he knows will bring laughs. Greenspan, in his deadpan reaction to Stewart’s attempts, got the laughs, basically by ignoring the attempts to be led.

As unexpected as this appearance was it prepared us for more of the unexpected today, as today was another up day after yesterday’s record rise. By any definition this was certainly unexpected, given our recent history of being unable to sustain upward momentum.

And what a day it was. Even though the Dow was only up by 75 points, the rest of the market just thought that it was still yesterday. The Russell 2000, for example, was up more than twice the Dow’s relative rise. This past year the Russell 2000 has really underperformed the Dow and S&P 500. If it decides to catch-up, the Szelhamos portfolios will really soar. As it is, the portfolios are now ahead of where they were at the market top in July. A little rise in the Russell would put it way ahead.

When there are such nice upward moves I look for opportunities to sell out of the money options, trying to capitalize on overinflated options premiums. With that kind of strategy, the underlying sentiment is that the market won’t sustain the short term gains. Usually that works out pretty well, but sometimes you run the risk of selling those options right when a stock is beginning its real upward move. That may be the case of MasterCard. After its $10 gain yesterday, I sold options. I really didn’t expect another $3 gain today, as it is drawing closer to $160.

Today, with Google up about $12, to $547, I sold some October $600 calls. The premium wasn’t overly inflated, but it was still worth risking the loss of my Google shares.

I also sold some November $22.50 Ameritrade options, as Ameritrade had a good morning gain to about $19. In this case, the premium was inflated and I would be ecstatic to lose Ameritrade at $22.50.

I also tried selling some January $75 Altria, but couldn’t get the price I wanted, but I’ll keep trying tomorrow. I wouldn’t mind having any options on Altria exercised, because in addition to the profit, it would rid me of my guilt over owning the merchant of death.

If I make enough profit from these trades, I’ll be able to buy enough paint to give Sirloin’s works two coats of cover-up. Otherwise, I may just have to let his work remain for awhile.

That’s actually what my sons want me to do. They like Sirloin’s work, they think that it classes up the place. When you live in the burbs, I suppose a little ghetto atmosphere can pass for class.

As it turns out, tomorrow will be yet another morning after. I suppose that could go on ad infinitum.

But you really have to wonder whether the market will start factoring in other things, than just the need for a rate cut. Before you know it, there will be calls for more rate cuts and it doesn’t seem like those would be so readily forthcoming, unless something out there is really much worse than we know.

The thing that probably should be factored in is this little thing called “reality”. As we’ve been so focused on interest rates, oil is just climbing like crazy. Interestingly, despite the rise of about $10 a barrel over the past couple of weeks, the price at the pump really hasn’t risen. Continuing along that same paradox, today’s oil and gas reserves data was released. While oil reserves were unexpectedly down, gas reserves were up.

And while all of this is going on, gold is skyrocketing and the dollar is plummeting. What part of this equation is good?

We certainly can’t count on Ben Bernanke to singlehandedly continue to rescue the economy.

If he did, how would he respect himself when the morning eventually comes?


What’s it Gonna be Boy, Yes or No?   September 18, 2007

Everyone who was alive in the ‘70’s knows that question.

“What’s it gonna be boy? Yes or No?”

It was “the question” and it summed up a generation of angst.

As it turns out, Meatloaf is having a resurgence among college students. Who would have guessed? Who across the multi-generations doesn’t know that refrain from “Paradise by the Dashboard Light”?

Just as equally, everyone who was alive in the ‘70’s knows the answer to “the question”.

“Let me sleep on it and I’ll give you an answer in the morning”.

We all know how that situation turned out. Well, at least it turned Meatloaf toward prayer. That’s a good thing.

Well that’s precisely the situation that Ben Bernanke found himself in yesterday evening. Absolutely everyone wanted to know what his interest rate decision would be, but we had to wait for the answer until today. I, for one, could not get a good night’s sleep knowing that I had to wait not until the next morning, but until the next afternoon.

Unfortunately, there was no Phil Rizzuto like interlude to inject a little bit of humor into the situation. Just a lot of talking heads, all trying to read between the lines.

The best you could do was the image that Alan Greenspan evoked yesterday with his revelation that he did all of his best thinking and writing while in the bathtub. Meanwhile, I just thought his skin was wrinkled and saggy from age. So much so, that I never noticed the immaculate hygiene.

I guess you just take a high level of hygiene for granted in a Fed Chairman, but given the scope of his book, he obviously spent a lot of time engaged in personal hygiene. We should all be so clean. I’m thinking of upgrading to an 80 gallon hot water heater and blogging while soaking, myself.

For the last 3 weeks or so I’ve been fully convinced that the market was going to nosedive after today’s announcement. I had been watching the behavior of puts on the S&P 500 in the event that that dive looked like a reasonably sure thing.

My intention was to buy these September puts at the very last minute based on the market behavior the 2 or 3 days prior to the announcement. On Thursday, I laid out the scenario whereby I would pull the trigger. And I was fully expecting to pull that trigger.

The last couple of days, however, just muddled the picture. Instead of a trend up or down in those days prior to the Fed’s announcement, the market went up a little on Friday, went down a little yesterday and had a moderate gain in today’s early trading. The herd just wasn’t going in any direction, at all, so there was no contrarian direction to be taken.

Based on last Thursday’s strong close and the mildly upward trend the past couple of days, I would still have predicted that the market would go down in response to Bernanke’s announcement.

Even in the unlikely chance that he was going to announce a 50 basis point decrease in the Fed rate, it seemed that had already been discounted in stock prices.

Wrong, wrong, wrong.

As it turned out, the Chairman, who is now everyone’s financial darling, announced that the committee was unanimous in recommending the 50 basis point cut. And so the market went on a wild buying binge.

And where was I during this?

I had my day very strategically mapped out. I wasn’t going to lose my chance to capitalize big on this sure thing.

The rate announcement was scheduled for 2:17 PM. I know that sounds sort of odd and random, but who are you going to complain to? Really? 2:17?

I had planned to decide whether to pick up the S&P 500 puts just a few minutes prior to the announcement. I was especially prepared to pull the trigger, because the market had held its 90 point gains all morning and early afternoon. I saw that as the contrarian sign that I had been looking for. I was convinced that I would be picking up some shares of a just in the money September S&P 500 put. The risk – reward ratio looked great.

At that point it was about 1:30 PM.

But then a funny thing happen.

Work got in the way. Who knew that work could be such a great thing? As it turned out, that diversion, that I like to call “work” may have saved me quite a bit.

I never got near a computer screen again until nearly 3:30 PM. I never got the chance to buy those puts. Yet another good reason to keep my day job. It keeps me from make a mess of things.

At that point, as everyone knows by now, the market was up by about 330 points, having added about 250 points after the announcement. The details of which I didn’t get until shortly after 5 P.M.

So I didn’t get to make the money losing trades that I was so convinced would have been the right thing to do.

I was stunned to see the numbers, but I still had to time to read the details of the announcement. I did have time to make one trade, though. With MasterCard up by 10 points, and I believe with more upside potential, I sold some October $160 options.

I wanted to make more options trades, but I had neither the time nor the good price points.

In the meantime, even with a $12 gain in Goldman Sachs, I’m still not even close to a breakeven, unless you factor in previous options premiums. And Google? Another $10. A lovely sight. Going to $600.

I realize that I rarely write about other stocks that I’ve held onto for a long time, because to me, they seem sort of boring. But today was a great day for the likes of Freeport-McMoran, Rio Tinto and Deere. Boring, but even better than everything else did today. Just as work is sometimes a good thing, so is boring.

But now comes the morning after.

We’ll see whether the next part comes true. Will those who believed that a 50 basis point drop would be a sign that things are even worse than thought get into gear? If so, then the good news of the 50 basis point drop becomes perverted and leads us downward on a wave of worry.

At this point, we’re only about 2.5% below our mid-July highs, but I’m only 1% below, thanks to some recent hedging that gave some downside protection.

I suppose that the only thing to do after such a big one day gain is to sit back and watch. Obviously, you hate to think of the potential of missing out on the beginning of a nice ride up, but recent history shows that there isn’t very much short term follow through after these days. Maybe now would be the right time to buy those puts? I don’t think that I have what it takes to make that trade tomorrow, but it’s tempting.

But I’m still not ready to close out positions, because I can’t really think of many good replacements, at least not at these high levels.

That’s why I don’t get paid to write this blog. I don’t need to have ideas.

What I need right now, actually is just some paint.

Now that we know Uncle Ben’s answer, it’s time to get into the next level.

Unlike Meatloaf who immediately starting praying for the end of time, once he gave his answer to that infamous question, I’ll direct my prayer in other directions.

Such as being able to match the obscure shade of the exterior of our house.

I’ve got my priorities straight.


Why Mondays Matter   September 17, 2007

We all know the gruesome statistics.

More people die from heart attacks on Monday than on any other day of the week. And as far as time of the day goes, nothing is more risky than those first couple of seconds after you’ve woken up and are ready to touch your feet to the ground.

So why do I look forward to Monday mornings? It can’t possibly be for the infarct. Even if sudden and fatal, I don’t think that would be terribly enjoyable, despite what people seem to reflexively say after hearing of someone’s sudden demise.

Most weeks, the answer to that question would be really simple. With the exception of those pesky federal holidays, Mondays marks the return to trading and I don’t work on Mondays. Nice. Doubly nice. That’s the kind of excitement that I’m talking about.

The house is empty on Mondays, everyone else is either back at school, or at work. Nice.

So why did I especially look forward to this Monday?

This week, that’s an easy one to answer. Sometimes you need Monday to help you escape from the weekend, and this was a busy and tiring weekend for me.

After a couple of lackluster trading days and the expectation that today wouldn’t be terribly different, you would think that a weekend filled with some kind of excitement would be welcome. But I live for tedium.

On the world front the weekend was also quiet and that certainly helped to continue to set the stage for a buildup to 2:17 PM on Tuesday.

Alright, so what made me doubly wish for Monday to come?

Alright, let’s start with the good news.

I set a personal best record for the 5K run, a time that nearly beat the times of the past 3 winners of the Boston Marathon. And they were Kenyans!

For some inexplicable reason, my younger son and wife convinced me to run in a charity 5K race. Considering that I had never done anything like that before, other than once running to catch a city bus, it seemed inexplicable that I would say yes. I overused the word “inexplicable” to describe this decision, because it really was. Almost as inexplicable as my agreeing to take the couples dancing class that begins either this or next Friday evening.

Needless to say, once the race started, I soon realized that my sole goal would be to finish before the morbidly obese women with the walker and oxygen tank. In the heat of the race and grueling competition, I realized that the wheeled walker and tank may have given her an unfair advantage. As such, it’s difficult to criticize me for what I did. Hindsight has its purpose.

I knew that someday, that lucky clothespin that I always carry, would come in handy. Who knew that the steady flow of oxygen was so vitally important, especially when going uphill? But I’m sure that most everyone would agree that those wheels were tantamount to cheating, and after all, there was a $1,000 first prize at stake.

Anyway, I did pay the price, even beyond the tax deductible entry fee. Basically, every muscle from ankles up to the neck were aching in unimaginable synchrony, and continue to do so, as I type away.

The aching was compounded at yesterday’s Stevie Wonder concert, as I endured endless “bo dunk a dunk” bumping and grinding. Excruciating, but I probably deserved it. Unfortunately, my ability to use that as an excuse probably won’t carry through until the dance classes begin.

But since this blog is supposed to be about the world of finance and money, let’s get right down to it. Let’s forget about all of this trivial, meaningless stuff. The stuff that is my life.

The real issue this weekend, however, was the plummeting value of my home. Without a doubt, its value has probably slowly drifted downward these past few months as everyone across the country has begun to experience. The charity that my son and I ran for, ironically enough, happened to be Habitat for Humanity. Home prices in our community would have to fall nearly 100% for Habitat for Humanity to get anything done in our county.

But what then caused this sudden and unexpected drop in the value of our home? Was it fallout from the run on the British bank? Was it the inevitable result of our liquidity and sub-prime crises? Did someone leak the Fed’s upcoming interest rate decision?

No. It wasn’t any of those.

It was all due to “freedom of expression” and a need to unleash pent up creativity.

Yes, I know, these are the most common causes for decreasing home values, but let me tell you my story. Hopefully Bernanke will read this and act accordingly in formulating the Fed’s interest rate position.

You see, we had a weekend guest. A 12 year old who visited us a few weeks ago with his mother, who is a co-worker with my wife. He was enamoured of the neighborhood, our house, dog and most of all, the backyard trampoline. That trampoline was viewed as a good way to shed some unwanted pounds and make one’s self more attractive to 12 year old females.

He asked if he could one day spend the weekend and my wife agreed that would be a nice idea, particularly since this 12 year old is an extraordinarily polite and agreeable child. Additionally, he likes to eat, which is something that brings joy to any mother, even if its not her own child. Of course, when my wife discovered that the newly purchased box of Rice Krispy Treats was entirely devoid of the 14 remaining treats, all of a sudden, she wasn’t quite as joyful. Don’t mess with that woman’s Rice Krispy Treats.

You’ve been warned.

So this was the weekend for “Sirloin”, as we’ll call him, to protect his identity, to stay with us.

Saturday was uneventful, mostly because I am unaware of anything that went on around me, as I was in bed, unable to move or even twitch, in the aftermath of the 5K.

At about 11:30 PM, my wife awoke me and said, “don’t worry. Everything is OK. It’s not that bad”.

Normally, such words, when delivered in a vacuum, such as these were, would not pique my curiosity. Somehow, I managed to ignore these words, even as she described the late night actions, which involved my son’s clubhouse.

My son had made a very elaborate 2 room clubhouse underneath our deck. When I say elaborate, I may be understating the situation. There is a pull out couch, carpeting, hammocks, a desk and electricity. It is very neatly maintained, as opposed to his room, which is like any other healthy male adolescent’s room, typically dirty and smelly.

Not so for the clubhouse.

As it turns out, “Sirloin” found a can of spray paint in the clubhouse mailbox. Yes, the clubhouse has its own mailbox post and mailbox. It also has a faux security camera that moves in a 30 degree arc and makes a “whirring” noise. I told you that it was elaborate.

For some bizarre reason, Sirloin decided that it was permissible to take the can of spray paint and write a composition on the side of our home. He was, however, quite neat about it, as no paint drippings were noted on the wall, nor on the couch. As I was always told in school, neatness counts.

Apparently, Sirloin is well versed in the ancient art of Japanese edifice expression, because his writings followed a vertical pattern, as opposed to our more acceptable, horizontal left to right variety of literary graffiti. However, regardless of the orientation I couldn’t find any meaning. But isn’t that sometimes the true expression of art?

So, as I look at the other homes in our community, I immediately sense a drop in our home value. Now, I’m not an expert in this area, but if spelling counts as well, the drop may be even larger that I have calculated.

To his credit, when I came down to the kitchen on Sunday morning, still not having seen the “art work”, Sirloin confessed it all to me. He did so after he asked me if I had a plunger.

More on that some other tangential story line some other time.

As I was taking my blood pressure, fumbling around trying to find a cuff that would go around my neck, I tried to explain to Sirloin, who was very sincerely apologetic, that it is the sin and not the sinner that had my disfavor.

Of course, that’s not really what I believed, but it sounded so pious when I said it. No one could possibly have believed it. But Sirloin did and he was now ready for a breakfast of Raman Noodles, with cheese, and Old Bay seasoning. Although the recipe apparently also called for hot sauce, I couldn’t locate any.

I’m still not over the initial stunned sensation. No, not about the breakfast selection, about the spray painting, I do, however, feel sorry for my wife, who at some point, will probably have to bring up the topic with her friend from work.

As badly as I feel about that, I would love to be a fly on the wall, although based on the behavior exhibited by real life flies, they prefer to congregate in areas in need of plunging.

But more on that tangential story line at some other time.

Maybe next Monday.


It’s a Tug of War  September 14, 2007

Tug of War and metaphor seem to rhyme.

But that’s exactly what today is turning out to be and that is exactly what it is portending for Monday. Stalemate, stagnation, you name it. Nada, nothing, say “when” if you get the idea.

Yesterday I concluded that next Tuesday’s post-announcement trading would be determined by the direction taken with trading today and on Monday, with the idea being that whatever direction trading took over those 2 days, Tuesday would trade in the opposite direction after the Fed announcement.

After a quick 90 point drop, which I initially interpreted as a bullish sign, the market erased that loss and then just meandered around a tight unchanged band.

The one scenario that I never thought of is that perhaps so many people are involved in the Tuesday guessing game that the market will neither go up nor down. Unless Bernanke comes out with a real shocker, there may just end up being equal numbers of people on both sides of the expectations aisle.

It could end up being a stand-off.

And now that I think about it, that’s what makes the most sense. That’s especially so when you consider that absolutely everybody is predicting that Tuesday will be the “single most important trading day” in memory.

With so many people staking their professional seer careers on that kind of outcome, you just know that it won’t turn out that way. Instead of being the single most important trading day in memory, it may end up being a yawner.

What happens afterward may end up being a return to basics. Maybe, just maybe, instead of bouncing around because of one “crisis” after another and reacting wildly to every isolated bit of data, we will focus on what really matters. Things like earnings, economic growth and jobs creation.

Or not.

I think that the “or not” is much more likely.

Now, despite my ability to rationally explain why Tuesday may end up being a yawner, deep down, and maybe even very superficially, I still think that we can only go in one direction. I just don’t know if I have the inner strength to act on that feeling.

Interestingly, despite the potentially bad news today, the market was incredibly tame for a second day in a row. That must be a reflection of the ongoing holiday spirit, that left the trading floor more quiet than usual and left us with a trading volume of about half of a typical Friday.

The bad news today came in 2 forms. One was the retail sales numbers. Once again, they were down. Sales down, profits down. That’s simple enough, but at a time that we aren’t really interested in things like the basics, who cares?

The other news came from England. Remember yesterday’s blog? After saying that it wouldn’t increase liquidity as a response to bail out speculators, the Bank of England did just that.

It prevented a possible run on its 4th largest bank, one that was roughly akin to Countrywide Financial, with regard to its sub-prime exposure.

That news could probably be taken either way. If you’re looking for a sign that a central bank will step in, then the Bank of England just showed that it isn’t unthinkable. If they can do it, so can our Fed.

On the other hand, is this a case of our sub-prime problem doing more than a trickle over the pond? Is there a downside to globalization? If we’re all connected in one great big economy, could we all go falling down like dominoes?

But today, nobody really cared. The markets were open, but it just went through the motions, and who can blame it for doing otherwise? Even if this is going to end up being a stalemate, you can’t take that chance and commit your positions one way or the other. Although, this may be the perfect time to take out insurance, such as puts on the S&P 500, if you are currently fully invested. The problem is that with all of the past volatility and the prospect of more to come, the premiums are high. That means you stand to lose more if the market moves against you and you stand not to make as much if you are right. That just goes back to that risk – reward concept. Or you can do just as in the past. Ride it through the storm. And if by chance the market should shoot up, hey, there’s nothing wrong with being wrong.

At the very least wait until the last possible minute to buy those options, at least you’ll pay less of a time premium, considering that options contracts expire next Friday. The announcement comes at 2:17 PM. I’m still completely up in the air, although I have no doubt that if the market has a big up day on Monday, it will definitely be time to sell. The chances of a big up day on Monday or prior to 2:17 PM on Tuesday, is pretty small, though.

This evening Jim Cramer did a review of the 3 possible Fed decisions and came to the obvious conclusion. No cut, 25 basis points and 50 basis points. Nothing good can happen in the short term. As I pat myself on the back, he used the same reasoning as I have for each of these scenarios, including the irrational reverse psychology herd action in the event of the 50 basis point cut.

Uh duh. Now I know that Cramer is a fan of Szelhamos Blogs. He must be the guy in New Jersey that shows up almost everyday when I look at the Google click reports. Now if only I could figure out who the reader from Viet Nam is.

But what Cramer did really well, and without any assistance from me, was to lay out a plan of action following the announcement. If I do commit to selling positions, his recommendation in the face of a 50 basis point cut is to wait 2 days before getting back in.

In the meantime, nothing can get me down.

That’s because I received something glorious in the mail this afternoon.

Yes, I had been waiting for it and could almost taste it, I wanted it so badly. And today it came.

Ah, that refund check from Comcast.

So sweet.

About 6 weeks after Comcast Liberation Day, but that’s a reasonable period of time. So sweet. So savored.

So really. Who cares whether its no drop, 25 or 50 basis points. My servitude to Comcast is now officially over. Free at last.

What a great way to start a new year.

In a tug of war between Verizon and Comcast, there’s no contest. I can’t even begin to drag Comcast through the mud enough to adequately portray its putrescence.

Unfortunately, those words may come back to haunt me through the wonder of Google archiving, particularly if I slam Verizon 2 years from now in favor of (ugh) Comcast.

It could happen. You never know. That’s what tug of wars are all about. It could go either way in an instant.

Hopefully, come Tuesday afternoon we won’t get dragged through the mud in the final hour and 43 minutes of trading. But as always, just wash up and get in it again.

Happy New Year, Szelhamos.

Big Ben and The Bank of England   September 13, 2007

Quick. This is a trick question. Answer fast.

Which one of these is out of step? Big Ben or The Bank of England?

Time is up.

For those who follow the news, you know that London’s venerable Big Ben is now closed for repairs. There will be no hearing the massive bells for the next several months. That great symbol of Britain is silenced, yet still manages to be right at least twice each day.

But that’s not the Big Ben that I’m thinking about. It’s the American Big Ben. Ben Bernanke. Big Ben Bernanke.

The clock is ticking away as we await that much awaited interest rate decision next Tuesday. We don’t yet know whether our Big Ben is out of step, but we do know that no matter what he announces, there is no way that he will be perceived as having been correct as least twice on that day. No matter what his decision, it will be second guessed as the market will plummet in the aftermath.

On this holy day in the Jewish faith, the newspapers remind us that Ben Bernanke’s grandfather was a Torah reader, in of all places, South Carolina. I believe he was from an area known to be the center of Evangelical Judaism.

Or not.

I would imagine, that whether the Chairman spent any time in a formal religious setting today, or not, he was thinking about his deeds of the past year, as this is a season for introspection. More likely, he was thinking of his future deeds and how he will be inscribed in that proverbial Book of Life.

If there are pictures in the Book of Life, you will probably note that Ben Bernanke’s beard has lots more gray in it than just a single year ago. My understanding is that there is no PhotoShop use allowed in the Book of Life, so what you see, is what it is. If PhotoShop was acceptable, there would, in all likelihood, be an incredible mane of flowing hair and maybe even a pony tail.

Today, it became known that during some recent introspection, Allen Greenspan admitted that he never foresaw the sub-prime crisis, nor understood the significance of a collapse in that market.

As we like to say, “who knew”?

As Ben ponders the imponderables, in the world of finance, such questions as “who shall live and who shall die” can have a sense of immediacy. Just ask American Home Mortgage. They died.

Today’s big news was that CountryWide Financial may yet live, as it announced it has lined up big financing. Its stock price finally moved in the right direction and in a big way. They are The Chosen.

Supposedly, some good news about GM’s upcoming labor contracts also contributed to the day’s continuance of the rally. But that really didn’t fit into my Big Ben and Bank of England theme, so I choose to ignore it.

On the other hand, that other British venerable institution, The Bank of England made it perfectly clear where it stood on the issue of infusing liquidity into the system.

The Bank of England is against doing anything with monetary policy that would bail out speculators. They couldn’t be any more clear.

And with oil closing above $80 for the first time, you guessed it, the market did not do what rational minds would have expected it to do. Rather than go down on this bad news duo, the market spent most of the day in the 150 point gain range, finally giving up a small portion of those gains in the last few moments of the session.

So is The Bank of England out of step? Not really, but they might see things differently if the U.S. liquidity problem trickled its way across The Big Pond. Of course, it would probably have to amount to something more than a trickle to raise the tide on the other side of the pond, but it’s fairly simple for The Bank of England to be purists. What do they care about the health of the American markets and housing industry?

That’s a rhetorical question.

I didn’t spend too much time pondering those imponderables today. I figured that Bernanke could do it all on his own. Instead, the day was spent in quiet reflection.

Only kidding.

I’m too shallow for reflection.

After the pretense of reflection and occasionally checking the ticker and seeing how we are being set up for a big fall in just a few days, it was a day spent with family and friends.

Part of that time was very effectively used in transmitting gossip, drinking some excellent Trader Joe’s variety wine and reliving the way some favorite childhood foods tasted.

Through most of the day I didn’t have a single thought about the markets. It’s almost as if I was embracing the righteous life, but there’s no way that could last for any significant amount of time.

I suppose that since everything was heading up so nicely today, there really wasn’t any reason to get too involved in the minutia of details.

What I do ponder is what to do if tomorrow is another big up day.

Since I still fully believe that we will be whacked on Tuesday, the real question is whether to go to cash in advance of what will be a horrid day on Tuesday.

I’m likely to do that with some retirement account mutual funds, and I’m likely to pick up some hedges, such as more of the ProShares Ultrashort shares or S&P put options.

The other question is when to make the moves.

Jim Cramer always like to talk about relative risk. How much upside potential is there for the downside potential. He usually likes a 3 to 1 or better ratio.

I’m not sure what the ratio here is. It seems as if there is an equal chance that the market may plunge, as there is that it may rocket higher. But the reality remains that with so many of the smart people expecting a rate decrease, it has to already be built into stock prices. Unless they lower rates by more than 50 basis points, what could possibly make the market move higher in the near term?

That’s not a rhetorical question. The answer is “nothing”.

Oh, and the answer to the riddle? Ben Bernanke is in a no-win situation. He will be second guessed to death and blamed for everything imaginable, probably even the resurgence of EBOLA in sub-saharan apes.

But that’s only fair.

The only thing that I know that will ultimately be right back on track is Beg Ben, the clock. In a few months it will be better than ever.

The optimist in me says that the markets will be back better than ever in that time, as well, but I’ve already been right about 2 things today, so I’ve used up my quota.

As a final thought, if tomorrow and Monday are down days, Bernanke’s announcement may send the markets up. I just wanted to throw that in to muddle the picture a bit more. Of course, if the next 2 days are ambiguous, look for a wild Tuesday.

Welcome back volatility. We missed you.


Slow News Day   September 12, 2007

I tried hard today, but I met failure at every corner.

I listened to the radio for any interesting news stories. There were none to be heard. I watched television and not even FOX had any breaking news, and on FOX, everything is breaking news. But not today. Not even a car chase in California. There are always televised car chases in California. I know that I could have spun one into a blog. But not even a stinking car chase.

I scoured on-line, and more of the same. Monotony upon monotony.

The big story today was congressional testimony by the CEO of Mattel regarding toy safety. Not only was that the big news, it was the only news. Who knew that you couldn’t count on quality Chinese goods?

I suppose that I should care about toy safety, but if a 2 year old isn’t smart enough to know better when it comes to ingesting lead paint, I really don’t have that much sympathy. Labels, people, don’t you read the Surgeon General’s warning labels on the toys you give to your kids?

And magnets? Who eats magnets?

Although the characterization of the federal government’s lab facility for toy safety testing as being like a “college dorm room” was amusing, it just didn’t have the stuff that makes for a good blog.

The best part was that there was only a single safety tester, and he is just referred to as “Bob”. On the news tonight, they should Bob in his cluttered room, dropping a toy train onto the ground and watching it smash. High tech all the way.

Amusing, but not truly blogworthy, so I doubt that I will even make mention of it. Maybe in the footnotes. But who reads the footnotes? I don’t even know why I bother with them. But it does contain great information. Very useful stuff.

And so I thought that I could find solace in the markets. There’s always something exciting in the market. That’s really where the inspiration comes from.

Especially with oil breaking that $80 level for a moment, I just knew that would be the slippery slope that would make my short ProShares come alive. If that wasn’t enough, there was always the Goldman Indicator. Goldman was down, surely the Dow would follow.

But not today.

The market just meandered. Up a little, down a little. By the end of the day my portfolios barely changed enough to leave Consuelo her tip for the week. Luckily my sub-prime line of credit is still open. Consuelo likes cash.

So I knew that I would need some other topic for today. And I had plenty of time to search. I only worked for a few hours today and best of all, my flight was on time and I was home well before dinner time. It was the antithesis of the perfect storm.

Everything was going in the right direction.

So after a leisurely dinner and even taking the time to summarize all of the past days’ recently obtained gossip, there was still plenty of time to search for today’s hook.

But now I sit staring at the laptop and the television. Nothing, absolutely nothing.

I did make one trade today, but I may end up regretting it. Last month I had sold Halliburton options several times, each time pocketing profits. I tried to make a similar trade yesterday but could not get the price that I wanted.

This morning, however, Halliburton was up about $0.70 and I thought that would be its peak. It finally ended the day up $0.79, but had been up by more than $1, putting it less than $0.50 away from its October strike price.

So as is always the case, I’m hoping that Halliburton just treads water for the next 5 weeks, just like I hope Apple does the same for the next 7 trading days.

During a moment of boredom I checked the October Apple $145 contract and it was about a $5.50 premium, with Apple at $137. I started salivating at the prospect, so much so that the keyboard shorted out. The only thing standing in my way is that pesky Apple Sept $145 contract.

But I may swap that out tomorrow, at a small profit, in exchange for the October variety.

Trades like that come from boredom.

Speaking of which, tomorrow will be a day of withdrawal. Most of my day will be spent in the guise of prayer and in the pursuit of good food. But to do so, I have to make the Faustian deal. I have to give up my 24/7 relationship with the computer.

I can do it.

But there’s hardly any chance that there will be a second slow news day in a row, until I realized that with tomorrow being the first day of the Jewish New Year, Rosh Hashonah, market volume will be light. But most of all, there will probably be little to no real market activity until Tuesday’s Fed announcement.

I remain convinced that the market will go down after the announcement, no matter what it is.

On CNBC this morning, Steve Leisman did a Fed Governor by Fed Governor roll call to tally what the vote will be. He’s a pretty insightful guy and he thinks that the consensus among the governors will be for a 25 basis point drop. He didn’t project a single “no” vote.

25 basis points won’t do it.

Until then, I’m prepared for more of the same. Nothing much happening, but that’s what I’ll be hoping for tomorrow, anyway. I’ll probably try to sneak a glimpse of the CNBC ticker tomorrow, but then I realized that my sister, who we will be visiting tomorrow, doesn’t have basic cable. Come to think of it, I haven’t visited her neighbors for awhile. What are the odds that they don’t have basic cable.

Under those circumstances I would even watch on a Comcast system.


Losing Track of the Nickels and Dimes   September 11, 2007

This morning was like one of those days when you unexpectedly find a $20 bill in last years’ winter’s coat. Days like that almost make the passing of summer worthwhile.

Last night, while sitting aboard a plane I began writing the days’ blog. As it came to its conclusion, I found myself hoping for a down opening this morning, hoping to capture some more nickel and dimes from those ProShares Ultrashort Dow holdings. As it turns out, those nickels and dimes can add up. I’m thinking of installing a CoinStar machine in my garage. Add that 7% service charge and I could really be raking it in.

Looking at the pre-open numbers, which were all pointing higher, it appeared that those hopes would be dashed, at last in the short term. Remember, Dow goes up, ProShares Ultrashorts go down.

And with these tracking stocks, it’s all about the short term, especially because of all of this volatility. These tracking stocks are just perfect for trading on volatile days, especially since they magnify the move of the underlying index. The only problems are that you have to be right not only on the direction of the move but also on the timing. Not so easy.

When I got into work this morning I turned the computer on and much to my surprise, there was that $20 bill.

That’s a metaphor. The cleaning people did not drop a twenty. Repeat. There was no $20. Focus.

What I found was even better. I looked at my portfolio and saw that I was holding the long ProShares and not the short shares. So immediately I changed courses. Now I wanted the market to open higher. That’s more normal thinking, anyway. I always feel some pangs of guilt when I want to see falling prices. It’s almost un-American.

As it turned out when I went through my trades for yesterday I totally forgot that I traded out of the short shares near the end of the day and picked up more long ProShares. Just more of that same nickeling and diming. A trade here, a trade there. Who has the time to keep track of these things?

What an unexpected gift. What a nice way to start the day. It turned out to be much more than a metaphorical $20.

In that first hour, with the Dow up nearly 100 points, it was time to capitalize on that windfall. Or so I thought.

So I took in more nickels and some more dimes, once again, as I saw Goldman reversing its tracks. Unbelievable. Finally a system that works. As goes Goldman so goes the market.

Then as it has become habit, I bought more of the short ProShares. I was back to hoping that the market would decline. This time I’ll try to keep track of my vast holdings and what direction I’m hoping that the market will be heading. That’s not easy, either.

But as it turned out the Goldman indicator let me down. But then again, nothing made much sense today. For example after OPEC announced that it was increasing daily production by 500,000 the price of oil hit a new high. How’s that again? First supply and demand is thrown to the wayside and now the Goldman Indicator. Nothing is sacred anymore.

As Goldman fell from a $3 gain to a loss, the market did not follow. Instead it thumbed its nose at Goldman and added on another 100 points. And for the moment, I will be thumbing my nose at the Goldman indicator. But that moment may be gone by tomorrow. As we like to say, “the situation is fluid”.

So as the day came to an end the market closed up 181 points. In the meantime, all of those nickels and dimes were going away, on paper at least. That metaphorical $20 is now a metaphorical $15. I may need to check the other pocket to see if there are any other forgotten about metaphors.

What I have come to realize, however, is that the incredible head game that is the stock market cannot be cracked with some algorithm or chart. There are probably an infinite number of scenarios that could describe the market’s action in the aftermath of next week’s fed announcement.

To listen to the experts, there seems to be a consensus that a rate point is already built into stock prices. Where that consensus falls apart is how much of a rate point drop is built into those prices. Is it a 25 point or a 50 point drop that the current level of stock prices is assuming?

So someone will end up being disappointed, no matter what. If they drop it by 25 basis points, it’s not enough. And if the fed drops the rate by 50 basis points, as wonderful as that may be, then everyone will be in full panic mode, because how bad must the economy be if Bernanke drops rates 50 basis points?

It is all a head game.

Since everyone is expecting a rate decrease, it’s hard to imagine that the market will go up after the announcement confirming the decrease. Today, however, there were some brave souls that said that the economy was just fine and that a rate cut was not warranted. They all did agree that if that happened, we would be re-testing those recent lows. Do you miss the old days? I don’t.

The next question is whether Bernanke is into head games. Do you think that he would do the right thing for the right thing’s sake, or would he do otherwise? Is there a chance that he would not drop rates, even if the data says otherwise, just to show that the fed can’t be bullied, influenced or lobbied.

I’ll bet you that Bernanke’s still peeved at George Bush for that announcement he made on mortgage foreclosures a couple of Fridays ago that one upped him.

Today’s upside came as a surprise. There really wasn’t any news today to warrant this kind of optimism. Certainly yesterday’s late drop after a half-hearted attempt to erase some of Friday’s big losses could not have been encouraging.

But that was yesterday. Yesterday was a whole other series of head games.

Tomorrow, who knows what kind of head games there will be. I’ll spend my discretionary moments trying to recapture some of those lost nickels and dimes.

I figure that if I have enough of them, I won’t really have to keep track.


Nickels and Dimes   September 10, 2007

Nobody likes the idea of being “nickeled and dimed”.

Remember the feeling at the closing on a new house? That wasn’t exactly nickel and diming, because the numbers were much larger, but I suppose scale doesn’t really matter. That’s what all men want to believe. Scale does too matter.

There are times, though, when you find yourself wondering if nickel and diming wouldn’t be better than the special “all inclusive” rate. No matter which one you ultimately choose, there’s always a period of self-mutilation as you second guess the decision. Someone, somewhere is making a killing. Forget about the idea of “win – win”. There’s no such thing. Everything is a zero sum game, except for the game of “liquidity”. That game could be won in an instant by the Fed just releasing more money into the system. For a short time, that might qualify as a “win – win”, but it’s the long term that the Fed is worried about. It’s been so long since we’ve had inflation, we really don’t remember how bad it was.

Speaking of “win – win” situations, I remember a few months ago my son and I went to an all you could eat sushi place somewhere on the outskirts of Las Vegas. I think that one of us heard that this area was renowned for its fresh fish. In hindsight, I think I need to check my sources on a regular basis. Maybe after the “big one” Las Vegas will become known for its fine fresh seafood, but right now, California is still in the way.

All you can eat is one of those scenarios where there is always a perception that you can beat the establishment at their own game. I’m sure that somewhere along the line, someone has written a treatise on the economics of “all you can eat”. And why not? I remember reviewing an article in public health school years ago on the economics of tooth brushing. That was a tongue in cheek article, however.

The catch at this restaurant, however, was that you were limited to one hour of eating time and they would charge you extra if you didn’t eat all of your rice. A slight variation on the time tested mother’s deal. Unless you finished your vegetables you couldn’t get dessert.

But given that Las Vegas is full of these “all you can eat” establishments, you would think that there would be some level of quality.

And they did have a level of quality, although it was low, very low.

The management of this restaurant figured out how to get the best of all worlds. Not only did they do an all inclusive, but they figured out a way to nickel and dime you, as well. Similar to the concept first applied to cake.

The real kicker was that the sushi was terrible, the rice was horrid and there was lots of it in those big and fat rolls. Lots of warm rice. And it ended up costing more to do the “all you could eat” than if we had done it by individual piece. One hour of eating time, at first seemed too little, but it was much, too much. We actually found ourselves wishing that the service was slower.

Maybe I should also mention that the clientele was a bit shady. This was one of those places where you make certain that you use your transmitter to unlock the doors while still in the restaurant. We were glad to vacate the premises with everything intact, other than the linings of our stomachs. The real insult to the stomach lining was the sake with the egg yolk at the bottom of the glass. There really wasn’t a need to have a “limit of 1”. One was more than enough.

But there may be a way to turn the concept of nickel and diming to good benefit in this kind of market. As long as losses continue to be on paper only, and as long as I continue to like my underlying positions, all I can do is wait for the prayer for upside, before unloading and settling into a cash position.

We are now barely a week away from the Fed announcement and the consensus is nowhere to be found. The only ones with conviction about interest rates are the ones who are probably going to be indicted somewhere down the line when the inevitable “wrongdoing” somewhere is uncovered.

So what’s a poor soul to do?

I just continued what I had started this past Friday, a day that was as horrid as that Las Vegas rice. On that day I bought and then sold some ProShares Ultrashort Dow stock. Those shares are supposed to move up double the rate of change of the Dow, as the Dow is falling.

And on Friday, the Dow Jones did nothing but fall. I closed out that position near the end of the trading day and, instead, picked up some ProShares Ultra Dow stock. This version is supposed to track in the same direction as the Dow, only at double the rate of change.

And sure enough, in the first hour of trading, the Dow was up 90 points and I sold my shares. As I did on Friday, I used Goldman Sachs as my bell weather. At one point, Goldman was up more than $7. When I saw it starting to fall, I sold my long ProShares. Within about 20 minutes, the rest of the market followed Goldman’s decline.

As that was happening, it was now time to buy back the short ProShares. Ultimately, the market went down from that peak of about a 90 point gain to it’s close at only a 14 point gain.

I didn’t make a lot of money on any of these trades, but adding it all up, it wasn’t a bad days’ work. Volatility can be good for something.

So right now I’m sitting on more of the short ProShares. I suppose that means that I want to see the market open on a down note tomorrow and then I would love to trade out of the position for some long shares. Deep down, however, I’d like to see big losses on the short shares, because that would mean even bigger gains on the rest of the portfolio.

Too bad I can’t be like that sushi restaurant and have it both ways. That’s certainly better than eating the losses.


Twisting Bernanke’s Arm  September 7, 2007

With today’s Jobs Creation report you could hear a ligament pop, although Bernanke probably never even grimaced, I’m sure. He’s got a great poker face. That, he must have learned from Greenspan, although I’ve yet to see him flash that goofy grin. Nothing, though, can beat Paul Volcker’s look of smug confidence, while cradling that cigar in his hands, or better yet, in his mouth. A Fed chairman should always have a cigar, especially when addressing Congress.

Bernanke is probably one of those kind of guys that will find a closet someplace and then, when well out of view and hearing range, let out a really great scream. Sometimes, when you go a bit too far, that arm twist really hurts. I think the measure of a really good Fed chairman is the ability to withstand pain, verbal and physical. I doubt that Bernanke would even pull out a cigar in the privacy of his closet, but he should consider taking that step. You have to start someplace. First in the closet, then coming out of the closet. You don’t even have to light the damn thing. Just wave it around. It’s amazing what a cigar gesticulation can do for your image as a “bad boy”.

So what’s causing all of this angst? The consensus was that approximately 110,000 new jobs were created last month. When ADP came out with its numbers a couple of days ago, they were half of that consensus number, and the market reacted accordingly.

This morning, we find that not only were 110,000 jobs not created, but actually 4 thousand were lost! This was the first time that there was a loss of non-farm jobs in the past 4 years. On top of that, there were major downward revisions for the previous 2 months, in all the sectors across the board. Who knew that counting was so difficult. Maybe they should raise standards and require that the counters have at least a pre-school education.

So was today’s drop in jobs good news or bad news?

As of this moment, minutes after the announcement, and an hour prior to this morning’s open, it looks like bad news. But on the other hand, these numbers would seem to indicate that the data is there to support the decision to cut rates. At this point, that may no longer be good news. It may be more of an entitlement.

Was that another pop that I just heard?

I’m not certain that a body slam was really necessary. A little arm twisting should have been enough. But sometimes you just have to prove your point, and you go a little overboard. Oh, and the stomp on the face, that was really out of line.

This morning, the analysts are now talking about recession and re-testing the February lows.

You can understand the Fed’s call for data, because the anectdotal stuff is all over the place. If you listen to the guys shipping all the goods, they’re worried. They see trends of an economic slowdown. But if you listen to the titans of tech, things are looking great. Then of course, you’ve got those rebounding commodity prices. Can’t maintain those high prices without lots of healthy economic activity.

What’s that? Oh, it’s all in China and India? Strike that commodity prices piece.

Meanwhile, the futures market is plummeting, as are equity prices, other than commodity based stocks. 30 minutes before the open, we seem to have stabilized at a Dow about 110 points below fair value. On the real worrisome side is that one analyst, who’s usually optimistic, has just said, “oh well, there’s always Monday”.

Basically, the market traders are pretty much like 2 year olds. They don’t know what they want. On Wednesday, the Beige Book numbers were interpreted as meaning that the Fed would not cut rates. And so the markets fell.

Today, the Jobs Report numbers were interpreted as meaning that the Fed will cut rates. And so the markets fell.

As one of my favorite comedians of the ‘70’s used to say: “Say what?” Back then, stereotypes were acceptible.

As all of this is unfolding, the latest talk is not whether the Fed will cut rates, but by how much.

At this point, I have to salute my gold bug friend. As gold is soaring he told me a couple of weeks ago that I should be in gold. But even more impressive is that he held out the possibility that the Fed would surprise everybody and cut the rate by 50 basis points.

“No way”, I thought.

At first, I was really impressed, and then I realized his secret. His mother had been visiting for those few days. He filled me in on some of her great cultural insights, but now I realize that he didn’t give her appropriate credit for her financial and economic policy insights. She was the source of wisdom. Let’s see just how much new insights he will have now that she’s gone back home.

I realize that’s just sour grapes talking. I should give him credit for those insights. I’ll take that under advisement.

So I’m getting ready for the open, but it’s not likely that I’ll be doing anything, because at this point the futures are actually about 150 points below fair value. With an impending fast drop at the open, I wish that I had open options contracts. That would be the perfect time to close those out. All I have right now are for Apple and Kraft. Too bad.

Ooooh. There goes another pop. The IMF just announced that they’re lowering global growth forecasts, predominantly due to the United States decreased growth projections.

That one’s got to hurt.

And talk about arm twisting, Goldman Sachs now comes out and says that it expects a 50 basis point drop. That’s probably largely self-serving, since Goldman, to some large degree has had a hand in all of this recent liquidity mess. The fact that they recently set up a regional office inside my friend’s place, should not, however, lead you to believe that they evesdropped on our recent rates conversation. I’m sure that their own analysts came up with that prediction.

In the meantime, Goldman’s stock has just done a $5 turnaround, but the rest of the market isn’t following. Yet. If my thesis from a few weeks ago is correct, right now, at about 12:30 would be a good time to get into the ProShares long. But as soon as I wrote this, Goldman started to fall, so I bought the ProShares Ultrashort Dow shares, instead.

That position only lasted a few hours, as I sold the ProShares Ultra short at a small profit and then proceeded to buy the ProShares Ultra S&P 500 long positions, as Goldman inched back into positive territory. The small gains that I made were good psychologically, but that’s about it.

To add insult to Bernanke’s injuries, Greenspan now comes out and warns that the situation now is like that in 1987 and 1998. Twist the knife, why don’t you? Well, at least he knows how to market his upcoming book. Too bad it’s at the expense of the investing world and the U.S. economy. Whatever profit he might ultimately make from this book, it would probably be in the nation’s best interests for the major financial firms to pony up twice that amount and give it to Greenspan with the stipulation that he go away. No talking, no writing. Just go into the corner and drool. He should have taken a hint from Volcker, who never interfered during Greenspan’s tenure.

I would contribute to that fund. It’s the ultimate in charitable giving.

Speaking of hurting, Apple is taking another hit today, more fallout from the iPhone price drops. This time, it’s because UBS has estimated that the $100 rebates will cost Apple $100 million. That translates into 1 million units sold. Which is exactly where Jobs projected Apple would be. That, in a way, should be good news, unless the Goldman Sachs people were too lazy to try to dig up some real numbers. Maybe they should take a page from Bernanke, and just wait for the data.

But not only is that $100 million tivial to Apple, even in the short term, it is probably the best marketing that Apple could get. How often have you seen a high profile company and its CEO so quickly make amends and do the right thing? Instead of dragging this out and making all kinds of excuses, Apple just did what was necessary to make people happy. And it really didn’t need to. Apple people are incredibly loyal. They are vocal and opinionated, but they’re a lot like conservative republicans. They may not agree with their party’s nominee, but seriously, do you really think that they’re going to go and vote for Hillary? Where else would the Apple people go? Microsoft? SanDisk? Hello???? Can anyone spell “Zune”?

No sarcasm intended here. Great move, Steve Jobs. This will end up being a Harvard Business School case study in how to properly deal with corporate mis-steps.

We spend a lot of time trying to guess what the fed is thinking and trying to figure out what they’re going to do. It’s all so unnecessary.

I think that the Fed chairman needs to communicate better regarding his intentions. But that communication doesn’t have to be verbal. Maybe his hemlines can be the tool to let us know which way interest rates will be going.

Although, I’m not certain that I’m ready to see Bernanke in a pair of Daisy Dukes.

Greenspan? Maybe.


Hemlines and Superbowls  September 6, 2007

Tonight is the start of another football season. My son, who has been a sports agnostic until very recently, participated in his first fantasy football draft. I haven’t seen his roster, but he may have drafted himself as the long snapper. For his sake, I hope no one else selected him. He would be devastated.

His fantasies are different from mine. I don’t think that mine revolve around Peyton Manning, nor having steroid fed behemoths knocking me out of the` way in order to get to the kicker. What in the world motivates a long snapper, anyway?

The Super Bowl and hemlines have a lot in common, though.

Unfortunately, however, my fantasies don’t involve hemlines, either, so that’s not it.

The news came out this morning from the runways around the world that hemlines are falling. Yawn. Right?

Not so fast. Who knows stock market trends more than the fashionistas? Everyone knows that there is no better indicator of movement of the market than the length of hemlines. And there were plenty of people on air today who were perfectly willing to recall the years when the correlation was perfect. Not so many were available to recount the years when the correlation was less than perfect.

Long hemlines are bad news. Short hemlines mean that the market is also heading up. Simple. So simple, yet infallible. Remember the short hemlines of the flappers in the 1920’s? How can you forget? Certainly we all remember the directions that hemlines went prior to October 1929.

And then there’s the predictive value of the Super Bowl. Was the winner a team in the original NFC or AFC. It’s also that simple. You just have to remember whether AFC is bad or good. Not so easy, certainly not intuitive. It’s easy to remember whether short hemlines are bad or good.

You put the two of these powerful indicators together and you’ve got one great market tool. No wonder there are so many beer guzzling gazillionaires.

So the season starts tonight and as the weather cools, those falling hemlines will become more and more apparent. The only problem is that it will still be 5 months before we know the next Super Bowl champion and there are still a couple of months to go before those temperatures start their winter’s plunge.

What’s a savvy investor to do in the interim, without those trusty predictive tools available?

Fall back on interest rate predictions, I suppose.

Today’s news from England didn’t give to much encouragement to those expecting a rate drop in a couple of weeks. The Bank of England did not drop rates, neither did the European Central Bank.

And although the U.S. foreclosure news sounds dire, if you remove the speculators from California, Nevada, Arizona and Florida, foreclosures were actually down.

And guess what? Same store sales numbers were pretty good. Better than expected. Unless Bernanke has a soft spot in his heart for real estate speculators and the people who made 0% down loans to them, I don’t think those fed rates are going down anytime soon.

If that notion kicks in now maybe the news on September 18th won’t be quite the shocker and buzz killer that it is being set up to be. In that kind of scenario you can expect the market to meander for the next 7 trading days. Then regardless of what Bernanke will announce the market will go up afterward.

The scenario just keeps changing everyday. Luckily, hemlines are much more reliable in their staying power. It’s not up and down, up and down on a daily basis.

One of the very few analysts who is not prone to hyperbole is Ron Insana. He has some credibility and tends to be measured in his comments. He believes that rates will go down.

Hmmm. Who am I to believe? Insana or me. Based on my track record, Insana’s the man. But I’ll hedge my bets and hold off on that prediction until the 17th of September. Who knows what data and what action lies ahead over the course of the next few days?

Today was really one of those meandering days even though the market ended on the positive side. Once again, the pre-open futures had no relationship to the rest of the day’s action. It ended up being just a so-so kind of day. For me, my favorite holdings were down, but my favorite holdings change on a daily basis. It’s typically a case of “what have you done for me lately”.

Apple was down again, but had a pretty volatile day, although within a tight range. It had been down as much as about $3, then up by over $1 and then finally finished down on the day.

People still don’t know what to make of the iPhone price drops. I know that if I was an iPhone owner, I would be pretty upset. But if I owned the stock, I would be thinking that Steve Jobs really knows what he’s doing. And come to think of it, I do own the stock.

The details of the downstream revenue that Apple gets from AT&T have never been made public, but there’s nothing like a steady long term stream of income. It’s no coincidence that cell phone companies practically give phones away to get those contracts. Granted that Apple only fets a slice of the cash flow from those contracts, but it has no associated costs of maintaining those accounts. So why not sell more phones at a lower price. As far as customers being mad at Apple, they’ll get over it the second a new cool innovation comes along, because as every Biblical scholar knows, there’s no going back once you’ve taken a bite of that Apple.

I had no real trading opportunities today, but I did sell some Kraft October $35 options. Kraft went ex-dividend today and for some reason it was up about 3%, although I couldn’t find any news. I look at the Kraft stock as a gift, since I received it from the Altria spin-off, even though that’s not the proper way to look at it. I don’t mind losing my Kraft stock. Even though it’s bad fat laden products probably don’t kill as many people as Altria’s fine line of products, it’s Altria that I would rather keep.

Since the announcement regarding the possible spin-off of Altria’s international business, Altria has bounced around. It’s big fat ex-dividend day is coming up next Thursday, so depending on its price on Wednesday, I may sell some options on the remaining shares that I own. That’s a bit of a gamble, since there’s a risk of losing the shares and the associated dividend, if the shares spike beyond the exercise price. But if they don’t, it would be like doubling the dividend.

I don’t expect that I’ll be doing much the next 7 trading days. I wish I had the crystal ball that hemlines and Super Bowls seem to offer. But I’m having trouble with a recurring visual.

One wonders the power of Peyton Manning in a mini-skirt.

Ah, fantasies.


Turning Over in his Grave    September 5, 2007

I’ve always loved numbers and mathematical operations.

In 9th grade we studied Adler’s number theory. It was ecstasy. Irwin Adler. Now that’s a true hero. He wasn’t a crackhead, didn’t snap the necks of the losers of dog fights and rarely exceeded his daily maximum allowed sodium intake.

It’s hard to find people like him anymore.

In 10th grade it was geometry, and I loved doing the mathematical proofs based on those inviolate theoroms. It was always comforting and reassuring to know that there were constants in life. Geometry was that constant. The Greeks had it right.

And that’s exactly why Euclid must be turning over in his grave. He probably does so nearly every single trading day. Poor soul, at least he gets some rest on the weekends and those occasional federal holidays.

Remember this most basic of all truths? 2 points determine a line.

Turns out, that at least in the world of securities trading, it’s not true. Where would we be if such axioms, including “3 points determine a plane” are thrown by the wayside.

Chaos. That’s where. Chaos. Or in market terms, “volatility”.

In the world of the free markets, a single point determines everything. Lines, planes, solid figures, dodecohedrons. Everything. The problem with multiple data points is that it limits your thinking and irrational responses. Single data points are so much more conducive to self-fulfilling interpretation.

Today’s single points were the ADP Jobs Creation Report, Home Sales and the hallowed Beige Book. At the very least, out of respect for Euclid, they should at least deliver these reports simultaneously, so that there would at least be 2 points in play at a given moment. Like that would ever happen.

Whether it’s those indicators, or the Michigan Consumer Sentiment statistics, New Homes, Home Sales, Jobless Claims, Durable Goods, Same Store Sales, Oil Reserves, you name it, they are always single points.

And they are in a vacuum. But in the world of traders, that doesn’t matter. For that brief moment that single point determines not only a line, it determines the universe.

And we live in a world of very short lived universes. Until that next point comes along, everything in the trading universe can be explained by the previous point.

And these points don’t even define parallel universes. They bear no planar relationship to one another. Imagine a series of universes all with different physical laws and different rules of “cause and effect”.

Don’t exert yourself, because that series of universes already exists. It doesn’t require even the remotest of stretches of the imagination.

The news today was bad from the very beginning, but the initial news was suspect. That’s because it was the ADP Jobs Creation report. Since it has begun to be released, the ADP numbers have not always agreed with the government releases, which always come 2 days later. ADP claims that its numbers are more accurate that the government numbers. Considering the big revisions that are made every month to the “official” numbers, ADP is probably right, although it’s hard to imagine that the government might be wrong.

Actually, “wrong” is such a nasty word. Let’s just say “inaccurate”.

The real shoe to drop, however, was courtesy of either the Beige Book or Steve Jobs. Your pick.

Let’s start with the Beige Book. The interpretation given to its reports would seem to indicate that all of this liquidity and sub-prime nonsense is having little to no effect on the economy.

To a normal person that would sound like good news. But to the perverse thought process that is the market, no effect on the economy can mean only one thing.

You got it. No reason to drop interest rates on September 18th, and the last 400 points on the upside are all predicated on a rate drop.

Here’s the problem, though. And there’s always a problem.

Between the time the Beige Book was put together and the time that Bernanke peruses all of the data at his disposal, things can change. More time for more data, and as we’ve all learned, the newest data is the only one that matters.

So does that mean that I’ve given up on my plan to sell on September 17th?

No. Right now, I’m not certain what to think. If the wind is let out of the sails before the September 18th announcements, then the only direction stocks can go is up, because any disappointment regarding the decision not to drop rates will have already been built into prices, courtesy of the Beige Book.

The key here is that if prices rebound between now and September 17th, then stick with the original plan, and sell, sell, sell. Otherwise, buy, buy, buy.

That’s pretty clear, isn’t it?

Now as far as Steve Jobs goes, you can directly trace Apple’s $7.50 plunge this afternoon to his presentation this afternoon. This happens with Apple all of the time. The stock always goes up in anticipation of the news regarding new products and always goes down after the release.

So what was so terrible about today’a product releases? Was it the Wi-Fi iPod. No, that sounds good. How about the alliance with Starbucks? Sounds natural to me. Losing CNBC from the iTunes store? Does anyone care about that?

OK. How about dropping the iPhone price by $200, down to $399 and dropping the no frills iPhone line, altogether.

That seems to be the poison pill.

The real problem is that Jobs stuck his neck out too far from his turtleneck enclosure and predicted 1 million unit iPhone sales by the end of this month. By all reports, the iPhone has been selling pretty well, but not 1 million units worth.

So despite the lame claim that this was all part of the plan, Apple has never made a habit of cutting price to spur sales. This time is different, though. They’re cutting price so that Jobs will be right about his projections. T wouldn’t look good to have Jobs be wrong about anything.

And as usual, when it’s time to report the next quarter’s earnings, Apple will go up in anticipation and then go down after the announcement, unless the numbers are truly spectacular. Given that iPhone expectations were lowered today, though, the usual pre-earnings announcement will be subdued. In essence, the actual numbers will come as a nice surprise, and Apple will uncharacteristically rise.

But look, Apple had gone up more than $30 in the last 3 weeks, it was due for a nice fall today. It will be back.

And as sure as that will happen, you can be equally certain that the universe will change at least once, daily.

I’m glad that neither Euclid nor Adler are around to see this. Its not pretty.

May they rest in highly defined places.


Al Gore had No Clue    September 4, 2007

Al Gore’s a pretty amazing guy.

All the talk and speculation about Fred Thompson making his presidential aspirations announcement tonight got me thinking about that other ex-Senator from Tennessee. It’s hard to understand why he’s not in the spotlight all day and all night. It’s Al Gore who should be on the Leno show tonight and then Regis tomorrow. And not just for the pre-show buffets.

Do we really want a bald president? Sorry Rudy, you should have kept the comb over. Then you’d have a chance.

After all, Fred Thompson?

Can you even name 7 of the 23 movies that he’s appeared in? I didn’t think so. How about some of the pivitol legislation that he has authored? Oh, that’s right. There wasn’t any. How’s that for an inconvenient truth?

Meanwhile, I’m certain that most everyone can name all of the presidents that Al Gore has served with as Vice-President. I can even name 7 of the 23 prescription drugs that his son was alleged to have had in his possession a few months ago. Meow.

The guy, though, is truly amazing and has had a greater impact on our lives than anything else that I can think of. I didn’t see his documentary on global warming, but I did see the South Park episode. I believe that painted a fairly accurate description of the threat. The man single handedly brought the world’s attention to global warming and Man-Bear-Pig, perhaps an even greater threat to our continued existence. We may not yet have conquered global warming, but Man-Bear-Pig is toast.

But it’s his other claim to fame that has me really amazed and worried.

I wonder if Al Gore realized that when he invented the internet, George Orwell’s vision would finally come true.

You can’t really blame Orwell for being a few years off in his prediction. Alright, so it wasn’t exactly 1984, but Gore’s invention has ultimately taken away our last shred of privacy. Big Brother is everywhere. Damn you , internet.

How do I know?

Well for starters, within 24 hours the words appearing here will be seen around the globe. Never mind that I write the Szelhamos Blogs for my own entertainment. Who knew that anyone else would be reading these innermost thoughts? Maybe they’re as easily entertained as I am.

Anyway, the blog has been read by people in all states except Alaska, Maine, Mississipi, South Carolina, West Virginia and Wyoming., although there have been 85 visits from people whose locations could not be identified. Who knows, they could be reading over your shoulders at this very moment.

My first thought here was “I didn’t realize that there were 129 states”, but then I realized that Google-ization is just a symptom of what Al Gore has wrought.

If you really want to know the meaning of “globalization”, just consider that Szelhamos Blogs has been accessed in 18 other countries. For some bizarre reason, there is a regular reader in Vietnam. Only natural, I guess. The synergies are obvious. It does, however, confirm that my decision to hire a full-time Vietnamese interpretor was a good one. Just a hunch at the time, but it’s working out well.

Through the miracle of internet analytics, you can find out just about everything you’d want to know about the people accessing your websites. Amazingly, through deep linking analyses, you can even determine if a web surfer is wearing their underwear inside out. Although that is still something more commonly found among video gamers, if you need that kind of information, it’s yours.

There’s not too much privacy out there and more and more the world is looking to store all of the digital data that’s being generated. It’s hard to believe that the words of this blog may live on with the cockaroaches, when all else has perished. So think EMC and Emulex. The time capusles of past centuries are passe’. There’s no need for physical storage. It’s all about the binary code.

EMC just spun off VMWare and that stock has been on a tear. It was still going up during those dreadful weeks when everything else was going down. Not prone to hyperbole, I don’t want to repeat the “VMWare is the next Google” comments that were being tossed around.

It was actually nice to see VMWare down today when everything else was up. That might be healthy. Someone has to be the next Google.

What was really healthy today was the continued climb of the market, with technology and the financials in particular, leading the surge.

But don’t worry. Bernanke D-Day is still scheduled for the 18th of this month and if I see profits between now and then, I plan to unload lots of holdings. That’s why I’m especially happy to see the likes of Apple, Goldman, NYSE and others beginning to recoup their losses.

But just as black is the new black, I think that Google will be the next Google. It took a big step today in its effort to work its way back to its all time high. No, it didn’t really announce anything new or any big breakthroughs. It does those routinely. Those things really aren't news anymore. Apple moves up a dozen points because there’s speculation that it will release information about its new release of iPods.

But it’s different for Apple. It has competition. It has to keep swimming.

Not so for Google. It just went up $10 because it never deserved to go down in the first place. It will keep going, at least until September 18th and then it will start all over again. It doesn’t need to innovate, but it does so just to keep itself entertained.

What it does do that will make Google the next Google is all very mundane. It just continues to make obscene kinds of money. And it’s all made the old-fashioned way.

And I should know. I’m one of those that pays Google to advertise his wares. A far as Szelhamos Blogs goes, I did advertise for about a month, back in the very beginning, but I didn’t really have any outcomes that I measured to determine whether it was worth the cost of advertising. Besides, Szelhamos Blogs is an unintentionally non-profit pursuit.

But with some other ventures, the answer is clearly “Yes”. Anybody can reach millions of people by spending a few dollars with Google. Profit is good.

Through Al Gore’s invention, Google’s penetrance into every civilized home in the world, and internet analytic tools you can measure every little thing that you do and then change course, as necessary, on a dime.

And those dimes add up for Google. Last quarter, it was about 10 billion dimes. That’s a lot of dimes.

Some of those were mine, but they were well spent.

So I really don’t think that Al Gore envisioned me spending all of these dimes just to get unknown, nameless, faceless, but underwear identifiable people, to click onto one of my sites.

You really have to believe that it was an unintended consequence.

But what if Al Gore is Big Brother?

And judging by some pictures of him after the 2000 elections, he may in fact be Big Brother.

Well, I will not be watching Leno tonight. That’s not where my heart will be at.

I’ll probably be checking the last minute statistics on the web sites and how well Google has spun its web to lure clickers to my sites.

Evil Empire, meet Big Brother.

You make a fine pair.


Why I Don’t Use Public Restrooms September 3, 2007

My wife says that I’m quirky.

That must mean that I haven’t reached my financial goals in life, yet.

If I had, she would refer to me as “eccentric”. Wealthy people are eccentric.

If I was far from those goals, she would more likely refer to me as “psychotic”. Or “crazy”. Poor people are crazy. Sometimes even “deranged”. It defies all rules of etiquette to refer to a wealthy individual as “crazy”.

Following the most recent plunge in the markets, I was approaching that “deranged” classification, but only on paper. After a few good days on Wall Street, I’m back to “quirky”. Too bad that today is Labor Day, I needed one more really good day to be fully restored to my usual state of quirkiness.

But, that too, is only on paper. You don’t get your true classification until you cash out. Once I become certifiably eccentric, I plan to cash out and maintain my status, as long as I don’t live beyond age 108.

“Quirky” is just somewhere in-between. Much better than “limbo”, but still, somewhere in-between.

One of my long standing quirks has been to never use public restrooms.

I’m not a germaphobe. Far from it. I revel in filth.

But this Larry Craig story has really opened my eyes and has confirmed my decision to avoid public places of congregation. If you can’t trust public restrooms what can you trust?

All of these years I just thought that the men’s room was a place where musically inclined people met and burst out into impromptu show tune foot tapping. Seems to me that I had heard lots of Ethel Merman and Liza Minneli songs in this environment. It made me sad that I so resisted my parents’ attempts to take tap classes as a child. I’ll bet you a toe tapping child would be popular. I think that I still have those taps someplace. Everyone had taps way back then.

Now, I also realize that it wasn’t my imagination. Those were some of Cher’s greatest hits that I would continually hear all over the country. Toe to tile is a great musical medium. Or so I thought.

I had always felt so inadequate, because I couldn’t keep the tempo or beat. I also didn’t always know the words and there’s really no equivalent to humming in the musical toe tapping world of public restrooms. You either know the routine or you don’t.

I suppose that not using urinals was also related to some other kind of inadequacy, but I can’t quite put my finger on it. Although occasionally the guy in the urinal next to me would offer. Talk about multi-tasking. Tapping, urinating and conversing with such ease. And offering a perfect stranger assistance. Who says we’re not a giving nation. Maybe the tsunami just wasn’t that relevant to us. Did anyone consider that before they maligned our charitable and giving nature?

And I was so hopeful that the couples dancing class that my wife and I are about to begin would introduce some of that rhythm to me so that I too could partake in the stall symphony. I so wanted to belong.

In hindsight, I realized that occasionally bringing my accordian into the stall in an effort to be part of the scene wasn’t all that necessary, nor was it appreciated.

It was all about the toes.

But now I find out that they weren’t musically inclined, at all.

Very well dressed, but not musically inclined. Certainly no appreciation for polkas or waltzes.

Well, it’s all very clear to me now.

Unlike soon to be ex-Senator Craig’s experience, I find the habitues of airport public restrooms to be atonal. They rarely responded to my attempts at tapping out some classic Springsteen.

But now I realize that I chose the wrong genre.

Fortunately, I’ve still kept up my friendship with Lisa Nowak. Despite all of the heartache that she has been through, grounded by NASA and potentially facing criminal charges, she still finds the time to ship me some of those adult diapers. Is that friendship, or what? My wife, though, remains afraid of opening up any of her packages following their skirmish several years ago. But were it not for those care packages, I, too might have to frequent those airport restrooms. But no more. Here’s to you, Lisa.

That makes it so much easier to avoid those public restrooms, as I will be faced with that challenge later this evening, as I set forth on yet another series of flights.

The real bonus is that I will no longer have to carry an inflatable baby and baby carriage on my trips, so that I could use the “Family” rest rooms.

There I could tap to my heart’s content and it always sounded great to me.

So as I sit on the deck this morning basking in another beautiful day’s weather, I find that I am grateful for the Larry Craig story. Otherwise, these federal holidays are such slow news days. If not for Senator Craig, what else would I be writing about today? North Korea’s impending removal from the “Axis of Evil”?

I wonder if the Axis of Evil list is like the S&P 500, where if a company is removed from the list, it has to be replaced? What country would be the likely replacement for North Korea? Maybe Venezuela? I’m certain that the selection formula is highly secretive, almost as much so as Google’s algorithms.

But I’m glad there are these important things to be pondered. Usually, I get very antsy when there is no trading going on, especially when it is for 3 days in a row. When there’s no trading the only excitement I get is watching the interest at work in those money market accounts

But I’m peacefully at ease right now, knowing that my decision to steer clear of those public meeting places was a sound one.

Thank you Larry Craig for affirming my quirk.

Every now and then you need to know that you’re doing the right thing.



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