Farewell and Fare Thee Well

Farewell and fare thee all well.  Like Haydn, its time for a break so I may return or may not return.  Time will tell.

I've enjoyed writing here and particularly enjoy the feedback.  I hope it was useful.

Adeiu.... and on this day when Tiger's world is falling apart, some bard perhaps:


Being your slave what should I do but tend
Upon the hours, and times of your desire?
I have no precious time at all to spend;
Nor services to do, till you require.
Nor dare I chide the world without end hour,
Whilst I, my sovereign, watch the clock for you,
Nor think the bitterness of absence sour,
When you have bid your servant once adieu;
Nor dare I question with my jealous thought
Where you may be, or your affairs suppose,
But, like a sad slave, stay and think of not
Save, where you are, how happy you make those.
So true a fool is love, that in your will,
Though you do anything, he thinks no ill.
 
by the way, that is the only sonnet with adieu in it.

68 Years and we seem to have forgotten this.

I am going to abandon the financial news of the day as this is a special day in our history.  I watched the morning news and this didn't make the radar and it should.  Perhaps we are now war weary and embattled on so many fronts but it is important and the plain elegance of Roosevelt's address to congress the next day is memorable in that we have certainly regessed from his rallying cry. Again perhaps because we grow sick of wars and wars without declaration now fought almost precisely half a world away in a foresaken country, endless in its prospects and for the most part so out of sight and out of mind of many of us.

Roosevelt said (the next day):

Yesterday the Japanese Government also launched an attack against Malaya.

Last night Japanese forces attacked Hong Kong.

Last night Japanese forces attacked Guam.

Last night Japanese forces attacked the Philippine Islands.

Last night Japanese forces attacked Wake Island.

This morning the Japanese attacked Midway Island.

Japan has, therefore, undertaken a surprise offensive extending throughout the Pacific area. The facts of yesterday speak for themselves. The people of the United States have already formed their opinions and well understand the implications to the very life and safety of our nation.

As Commander in Chief of the Army and Navy I have directed that all measures be taken for our defense.

Always will we remember the character of the onslaught against us. No matter how long it may take us to overcome this premeditated invasion, the American people in their righteous might will win through to absolute victory. I believe I interpret the will of the Congress and of the people when I assert that we will not only defend ourselves to the uttermost but will make very certain that this form of treachery shall never endanger us again. Hostilities exist. There is no blinking at the fact that our people, our territory, and our interests are in grave danger. With confidence in our armed forces-with the unbounded determination of our people-we will gain the inevitable triumph-so help us God. I ask that the Congress declare that since the unprovoked and dastardly attack by Japan on Sunday, 7 December, a state of war has existed between the United States and the Japanese Empire.

And yet another Ponzi scheme

Lawsuits abound as yet another Ponzi scheme unfolds here in South Florida.  Scott Rothstein seems to be another to fall of this cliff and one has to wonder what goes on the in the minds of some of these folks. One particularly has to wonder what goes on in the minds of investors and in particular why people fall for this stuff and with big bucks involved.
This one is a minor humdinger in the grand scope of recent schemes but $1.2 billion is no chump change, penny anti thing.  Now people want their money back but the twist in the tale (tail) is that more than likely all but a little of the money is gone and the recourse will be to get the money back from those he paid, level the field and try and give everyone something back, although at a fraction.  Unfortunately it will take years as Mr. Rothstein seems to have been a major league spender.

Even in my small home town of Westhampton (yes the Hamptons) in New York we have our own version of this. George Guildi, a local attorney got into the mortgage fraud business in a big way for such a little town (he is actually a neighbor of mine).  He and some of his friends including the owner of Magic's Pub (if you remember Breslin's book on Son of Sam and the recount of him driving to the Hamptons for a victim and spotting some potentials at an outdoor restaurant, that was Magic's) went around buying houses with straw buyers and pocketing a lot of the fees and rents.  We are talking $50 million in real estate here and in a town of 1600 full time residents, that is a mess in the local streets.   I guess 50 mil in a small town equates to 1.2 billion in Ft. Lauderdale but I still am constantly amazed that folks think that they can get away with this for any extended period of time.  Mr. Ponzi should be proud of his idea.  As we say in advertising, it has legs.

All hail Bank of America

The NYTimes ran a good piece on the Bank of America's plan to repay the government (the taxpayers).   I'm not an advocate for or against but let's at least look at how they came up with the $45 billion and why.

First the number is huge. Staggering even.  As the street tells it, BOA isn't out of the financial woods completely as of yet so to think in a year or so that they came up with bank profits to that tune of course made me and others suspicious.  Wouldn't the 45 billion be better served as cash on hand for the purposes of banking as we thought we knew it?  More on that later.

First 18.8 billion will come from selling shares of stock.  Last I looked BOA was trading at about $15.60 so they are going to dump a billion shares into the market? Even on a conversion to common stock basis that is a shoe waiting to drop on the little guy who owns but doesn't know to get out of the way of this or how to anyway.   Do I hear the call of dillution anwhere?  Wait wait, it gets better. Most of the remaining 26 billion comes from profits...but not from banking...rather from their trading areas formerly part of Merril Lynch.  Here is what the street said about BOA in general:

Bank of America (BAC Quote) upgraded at FBR to Outperform. $20 price target. TARP repayment will boost equity levels and remove a major overhang on the stock. Estimates also boosted.

The Times went on to write:

"Bank of America executives have insisted for months that the bank’s underlying businesses were far stronger than those of some other banks and that the Merrill merger would pay off quickly. Indeed, Merrill’s businesses have improved this year as Wall Street’s traditional business of trading and deal making picked up. At the same time, Bank of America’s core consumer lending units suffered greater losses as the economy weakened".   hmmmmmm.

Also nested in this is the desire to be outside of regulators or free from them. Remind me if being outside of scrutiny isn't what landed them in this mess to begin with?  Then there is the issue of compensation. How can BOA land a top notch CEO with some federal regulator screaming about the salary.  The answer is easy. Just put up 45 billion dollars and you can pay every and anyone whatever you please.

Probably this is just good business and I'm sure the government (us) is happy to get it's money back and probably BOA can get a hotshot in as CEO and pay him/her a 100 million dollar package to run the ship.  But when the peasants come to headquarters someday as a mob with pitchforks and hoes, spend a little on extra guards at the door because eventually they will come - perhaps second after Goldman - but they will show up.

Hey I can do that...

CNBC had a short segment regarding auto industry management and it brougt the General Motors Institute to mind.  Now called Kettering University it was, until the early 80s, a very special training school for GM engineering and management.

Now that Fritz Henderson has split with the GM board, the reports are that GM will "look outside" for a new CEO.  Amazing.

Things run amuck when business types don't understand the nuances of the core business.  That's a fact and it applies to all business.  CEOs brought in to "set the business right" are all well and good and perhaps their core expertise is in triming waste and streamlining things so the the business management is more up to date.  What that usually means is that 1. people with none productive jobs are let go and 2. people with jobs that are not understood in nuance to upper management are next on the chopping block. Without management that understands the business at its core ... well take a look at GM liquidation stock (MTLQQ.PK).  Berkshire could by it with with pocket change. 

Beware year over year

I am always amazed that marketplace analysts foist "year over year" data on the public. Listening to NPR this morning and "Marketplace", the initial reports regarding Black Friday sales figures indicate that they showed some improvement over last year.  Figures obviously aren't in but if you think back to the day after Thanksgiving in 2008, you might remember that our entire economic world turned upside down prior to that date (if not upside down, at least a horrific shake) so frankly anything that went on this year probably had to look good "year over year".  That's the rub in comparisons.

A look at the Dow about this time last year it was sliding toward the 7500 range and is now at 10,400 give or take.  We would "year over year" jump with glee at a 37% year over year increase and well we should. We could, however do a year over year 5 year and see that we are back to square one.....aside from dividends (which are scant) the Dow is down 4% over the period.

I bring this up, as the time frame for comparisons is the key factor. If we shorten the time frame to this month (Nov. 2009 all of it) we are up 7% that far exceeds the year over year rate amortized over 12 months (roughly double the rate of growth). 

We hear this year over year stuff all the time, housing starts for instance, or new mortgage apps.  Analysts must figure we don't have any memory for times past.  Just beware when someone trots out year over year verbiage.  It doesn't mean much unless you have a memory.

My friend Google

Google must be my friend as he/she knows me very well.  I spent half a day there recently as I have actual business with them and they are, giving justice its due, a wealth of information and data and if you use them right, they can be of great help.  Mostly they are idea people.  I was never sure what they knew about me so I asked to see my profile.

About 7 years ago I was looking at a web page next to a real life friend who was also looking at the same page.  Contents matched but those ads next to it that Google serves up were somewhat different. Digging in, I found the answer to be in Google's free analytics service.  You see, when Google places free analytics on a website (to see visitor traffic, who is coming to see you, how they go through your site, etc.) they capture all kinds of browsing information.  They traded a very good service that most people charge for to obtain tons of information on web use.  And you know that drop down window that asks (on many sites) registration (email address mostly), well Google in their wisdom started the practice of matching up your email to your site visits and not so amazingly they matched up where you appear online via email registration with you IP address and browsing habits. Then they did a huge "sort" on you and out you come, a friend of Google and over time, they have you six ways from Sunday.

Americans spend about 1/2 an hour surfing daily (on average) and at about a page a minute. Do this for 10 years or so and you can imagine the details they have, like them or it or not.  Google is ethical and the people there are smart and on a mission to maximize profits and provide services that, at the inception or conception of the Internet, could only be dreamed about. But they have you usually about 140 columns wide with everything from your sweater size to your choice of golf clubs (xxl and hogan's).  It was all there so they must be my friend.

Tom Turkey

Not for nothing, tomorrow is of course Thanksgiving and rather than fill the space with mind numbing financial talk (although the new unemployment filings are down a bit so that is good news and consumer spending is up slightly (does that include fuel and food???).  Speaking of food, I have a home in the Hamptons on Long Island and shop at the only place in our little village. ..  have for 20 years.  Each summer, with the influx of summer rentals etc. from the city (NY) the market jacks up the food prices and they used to lower them a bit when the big business rush went home and left us alone.  Not so the past 4 years at least. We have restricted diets in our household and we notice the change and it is acute. But back to Thanksgiving...and Tom Turkey... 47 million of the birds will bite the dust to satisfy the holiday.  So here are some tidbits for the table-talk after Uncle Ed tells his boyhood stories for the zillionth time and someone complains that the white meat is too dry.

1. Benjamin Franklin wanted the wild turkey to be the national bird of the United States instead of the bald eagle.  When Jefferson won the argument, Franklin called the Turkey "Tom" - hence tom turkey.
2. Domestic turkeys (turkeys raised for eating) weigh twice the amount of a wild turkey; most are even too heavy to fly. On the other hand, wild turkeys fly and spend their nights in the low branches of trees.
3. Wild turkeys are the largest game birds located in this part of the world.
4. Male wild turkeys act much the same as peacocks when it comes to finding a mate; they puff up and spread their tail feathers to attract females.
5. Turkey eggs are tan with specks of brown on them. The eggs take only a month to hatch and when they do, the poults (baby turkeys) stay with their mother for up to a year.
6. The skin on the head and throat of a turkey can range in color from gray to a bright red depending upon the level of excitement or stress in the situation.
7. The turkey acquired its name by mistake; the English thought it was another bird that came from Africa through Turkey. The birds were not the same but the name stuck with the bird anyway.
8. The skin that hangs over the turkey’s beak is called a snood. The skin that hangs from the turkey’s throat is called a caruncle.
9. The scientific name for a turkey is Meleagris gallopavo.
10. Turkeys can have heart attacks and can drown if it’s raining and they look up.
11. A wild turkey’s field of vision is about 270 degrees.
12. Turkeys can run up to 20 miles an hour with short flight bursts up to 55 miles per hour.
13. Male turkeys gobble while female turkeys make a clicking sound.
14. The biggest turkey ever raised weighed a whopping 86 pounds!
15. Adult turkeys have about 5,000 feathers.
16. Over 45 million turkeys are cooked for Thanksgiving.
17. North Carolina produces the most turkeys annually at 61 million.
18. Most domestic turkeys love to have their feathers stroked.
19. Wild turkeys live to up 12 years while the domestic turkey is slaughtered at 5 months.
20. Turkeys have full color vision and a turkey’s gobble can be heard up to a mile away.
21. The ballroom dance called “the turkey trot” was named after the movements of a turkey.
22. Wild turkeys inhabit every state but Alaska.

 

While the Internet was still young...Walmart v. Amazon

Today is, by the way, the 150th anniversary of the publication of Darwin's Origin of Species and in case it isn't bedside reading (or bathroom reading), it obviously dealt with survival of the fittest or at the very least issues of natural selection.  Actually the book was written for the non-scientist and is a great read if you are into that sort of thing.

An article in the NYTimes today (Walmart v. Amazon) is coincidental. I can remember vividly early press and financil reports on Amazon when the CEO was asked if they ever ever ever  could turn a profit and he flatly said he didn't think so.  It was all about distribution, supply, warehousing etc. and a very tough nut to crack.  As to Walmart, I've known one of the Walton kids since about 1980 (brother is that a long story) and it was before he joined the family business which at that point was all about Target v. Walmart.  Walmart's plan was simple. Price.

I encountered  the Walmart price issue first hand in the middle 90s when I headed a  madia planning and buying team for video releases (vhs of theatricals), and we had discussions (if you can call them that) with Walmart regarding the pending release of Babe - the pig movie. 

They were the 800 pound gorilla and would pre-buy a million but at a price that simply had to be the best price or no deal. They also wanted guaranteed advertising (we spent about 8 million $ in 2 weeks) and all kinds of other things. They got it and frankly those million or so units shipped to Walmart were a lost leader both to us and to them.  They could do what they wanted because, simply, they could and there was no one biting at their heels.

Enter Amazon, now, a piddling orphan compared to Walmart but with enormous brand cache and recognition. They have fixed distribution and are doing as well as anyone in this economy.  But what they bring to the table is competition, niche as it may be.  In the 12 years or so of existence, it has morphed into an Internet giant and the online equivilent to the box store Walmart concept.

My issue here, and it relates to Darwin (which you must read) is that all big species faced their greatest threat when they had smaller species to contend with.  These smaller guys disrupted the chain - futzed with the food chain so to speak - and the big guys either had to adapt or die off.  It may take a while but that is the name of the game.  The  NYTimes quote is very telling:

“If you are Wal-Mart, you want to have your proportional piece of this change in consumer behavior,” said Scot Wingo, chief executive of ChannelAdvisor, which helps retailers sell online. “You can even paint a scenario where e-commerce one day is 15 percent of all shopping, and that could really start to erode Wal-Mart’s offline business.”

We are going to put it on display for everyone....

"It was a bargain - we were expecting to pay more," said Hoffman Ma, a Hong Kong hotel executive. "We're going to put it on display in our hotel. It will be free for everyone."

What in the world?  $350,00 plus commission, taxes, etc. so well over $425,000 when things are all counted and they "were expecting to pay more".

We take home several lessons from this:

1.  It was Hong Kong and not Vegas or Atlantic City which wil shed a spotlight on the Vegas and Atlantic City economies.
2.  It was  bought for a crowd drawing appeal item and probably will bring folks into the venue...so we have to ask where is this marvel to excess going to be placed?

This later question is a big issue.  How far would people be willing to travel to view said glove, (as a marketer), be willing to travel to see it? It obviously will be a big draw but let's say that the town of Bay City, Michigan (population 50,000) bought it and put it on Main and Center streets to draw people downtown to shop. And here is the marketing rub.  After a month or so, all of Bay City's shopping traffic will have seen the glove and unless you want to go from afar to Bay City to see it then the glove purchase won't pay out. Or will it?

A study showed that the average downtown Bay City shopper spent just under $60 per shopping visit. That means the glove would have to pay out to the tune of 7,000 new shoppers and not just viewers.  Amortize the  glove's attraction to 10 years and thats about 2 new shoppers a day.  Fairly likely and very possible.

Now with our Hong Kong friend, say he runs a 500 room hotel (for instance) and at Hong Kong rates of $500/night what does he have to pull in? Maybe 1000 more room bookings in total?  Put that to an average stay of 2 nights, meals etc., and he is down to perhaps ONE (1) more booking a day FOR A YEAR to make this pay out.

Nice buy.  A steal actually.  Our Hong Kong friend probably estimates that he will make 10 times profit on his investment and that's not counting street traffic who may dine at the hotel or otherwise use it's shops or facilities in some way.  The word of mouth publicity is probably alone worth the purchase price.

Did you hear that Vegas? Atlantic City? Penny foolish.

Its funny what people like to read about

This isn't a swipe at Sarah.  This is a swipe at news that purposefully gets it wrong or makes lame apologies for "inadevertant mistakes".

I've been in advertising for over 20 years and let me tell you advertisers "watch" where their advertising dollars go.  When the likes of a Glenn Beck call the President a racists it causes viewership trouble and advertisers pull out - not only because of the perceived association with the remarks but because there might be a problem with ratings.  Rarely does a show "shoot up" in ratings because of a fire...they may short term as folks tune in to see what the ruckus is about....but after they do, they generally leave.

Now we have had two Fox News "inadvertent mistakes" in a week.  Let me remind you that the folks in the control rooms of major cable networks usually don't get things wrong...and when a script emphasises "footage" you can darn well be sure that things were checked.

You can't watch the news and have to wonder if the stuff you are seeing in background to illustrate the story is real or not. 

This isn't Sarah's fault. Frankly it is our fault.  Journalism, or what passes for it nowadays, is given special status in the constitution.  The obligation is to "get it right" and don't hide fabrications behind a constitutional protection. Truth is too important.

Morgan Stanley’s Mack: ‘We Cannot Control Ourselves’

I'll just put Mr. Mack's picture over there on the right for a while until I understand him a little better.  You might want to read Sorkin's "Dealbook" at the Times this morning.  Seems Mr. Mack has more to say about regulators and the ability of a firm like Morgan Stanley to "police itself".

I am wondering what this has to say about the human condition.  The illustration bouncing around in my head is of a mother of a diabetic child.  The kid loves candy and she knows it isn't good for him but gives it to him anyway so the kid will feel less deprived. The kid can't help himself and the mom, who is in charge of the kid, sees the short term solution but neglects the long term consequences.

Where do people learn not to abide by common sense and self restraint?  Mack seems to be highly intelligent and by a measure of profits, extremely capable.  Does he, however, ever wake up in the morning and say "no, we shouldn't do that..it would be wrong".

I watched Cramer once on TV when asked the same moral question regarding the duty to society and the duty to the shareholders.  He laughed as if there was no question there worth considering. Suppose I have a lot to learn about the corporate world and the greater good.  Still, I wonder where people learn that stuff.

You just have to pick the "right" school....

So I spent the afternoon at yet another "learn how to trade stocks" seminar put on by some nare-thee-wells who go around the country renting hotel rooms, running late night infomercials, and taking poor innocents' money that they are trying to both save and grow.

I don't like these guys and guys like them one bit.

The entire seminar was one jawdropping "how would YOU like to be in control" question after another.....everything from "make a million" to "never have to work again". 
Just take our two day course and know all you need to know. It's regularly $6000 but if you sign up right now we will cut it to $3,995....blah blah blah.

If you sign up right now you get a 1/3 discount which is like the supermarket where the jack up the price of hamburger and sell it two for one. 

These guys remind me of the school in the picture. Foundation borded up and the upper windows open.  MORAL:  All schools aren't alike.  No two are.  Keep track of Prism Trading School (http://www.prismtradingschool.com/) ... we will never be like those guys.

Mr. Know It All

Remember?  Our good friend Mr. Know It All?...and cooking the Thanksgiving turkey....

Just how many Mr. Know It Alls prance around on our TV sets every night.  The redundit Kudlow, always looking for the silver lining, the hysterical Cramer, the pompous Dobbs, the bloviating Matthews, the incessant Obermann, the churlish Madow, the entire cast of fools at Faux Noise and we haven't even reached talk radio.

So why Bullwinkle's famous turkey bit and why the list of bad actors? Because they have something in common.  Bad advice.  Because they have the floor as  Bullwinkle has the stove, they can say about anything they please and do.  It doesn't matter if they are right or wrong, they have the stove and they are going to do what they want, common sense and facts aside.

So this is a blog about life among traders and trading.  Frankly there is no more honest profession.  These guys are trading real money and if they just do hunches and "I thinks" then they are going to be out money - their money - real money so they can't go into flights of fantasy.  Provacatures need not apply.

A view from Space

Now that the holidays approach I'm reminded of Scrooge and the unfurling of the two child/orphans of man "ignorance" and "want".  Dickens was allagorical enough to realize that these two offspring come in many forms...from poor illiterates to mindless greed types.  Want takes many forms from hunger to Madoff greed.  Ignorance is even more disperate.

So what of this picture?  If I were on the Enterprise and Captain Kirk took a look down at his earth and was asked to pick the "average Joe" from the population...someone who stood right on the mid-line of the bell curve...what or who would he find?
Statistically it would be a rural Chinese making about $3000 a year and there are more than a few million of them.  It would not be an American or a European nor someone from a lost tribe in the Phillipines. Statistically we are in Western China somewhere and this is the guy.  He isn't ignorant. Perhaps just not educated.  He isn't poor by his contemporary standards and perhaps he doesn't "want" in the conventional sense except in times of poor harvest.  So what's the point?

You should read Mr. Krugman's article (click here).  Then think that we have policy makers making huge decisions that effect the very fabric of society - economics and values.  They make them on a basis that is so far removed from the "average Joe" just trying to get by.  We argue about the trade imbalance between China and the US and the Rinimbi v. the Dollar.  Our average Joe's life isn't much effected by the currency "crisis" (opposed to the US's Joe who is creamed by it). 

The point is that the debates swirl at a level that is light years from the persons directly effected by the outcome. The gap or disconnect is huge.  All the average Joe knows is that his life is the same as it was years or decades back yet it is somehow harder and he is less and less connected to those making decisions - the the decision makers are, unfortunately just another set of ignorance and want.

Bowing

It's Monday and part of the country is all over Mr. Obama for bowing to a foreign leader.  Just for fun's sake, here is a little bit about the Japanese "bow" etiquette.

Part of me wants to scream out at him ...when you bow you keep face contact like he is doing. You are looking at his feet.

Remember the Karate Kid?

Show me wax on, wax off.

Show me paint the fence.
Show me side, side.
Show me sand the floor.
Look eye! Always look eye.

Come back tomorrow.

Oh and just one more thing...(health care)

I'll call this "why do people hate their health insurance carriers" and be done with it.  The villian here is Blue Cross Blue Shield  ....better known as "we may be stupid but it's policy".

My wife had two outpatient procedures, both required anesthesia.  She didn't pick the anesthesiologist, just the doctor who performed the procedures at his outpatient clinic. So we get this bill from the knock 'em out docs for about 3 grand as BCBS won't pay anything as the procedures weren't done in an approved place although the docs were approved and the anesthesiologists, whom we didn't pick or have any say about, were out of network although our health care plan says we can go to anyone.

So I call the nitwits at BCBS who explained to me how everything was being applied to out "out of network" deductible.  As we don't have a network I thought that was interesting.  But the real problem was that the clinic where these procedures took place was not approved although it was an extension of the Dr.'s office.
So I trudged up the the notification sent to  BCBS a week before by the doctor explaining to BCBS the where and who.  Yes BCBS had that but they didn't specifically approve the location, and wanted it done in the local Long Island hospital rather then the clinic (at about 5x's the cost mind you).

So this is why I hate BCBS.  8 months ago BCBS stopped partnering with the 3 hospitals that service the east end of Long Island.  They won't pay them until a contract for payments is reached and as I follow this through my old local online paper i find that BCBS is about 6 months late in payments submitted and they pay - now get this - at the last rate which was 2001.  So they pay 180 days late and at 55% of what the hospital submits.

I'm sure glad there is no need for health care reform.  Friggin' nitwits.

Just a pondering on health insurance and I'll get off my soapbox.

I was a guest of the Cleveland Clinic these past 3 1/2 days for some medical problems that could simply happen to anyone and does frequently.

First of all hospitals and ERs take everyone - they have to so this is a two part mini-rant.  I had a referral to a regular doctor there who saw me as my symptons went acute and he sent me to the ER and eventually into the hospital.  I would have never gotten in to see the initial doctor if I didn't have insurance End of story. My insurance card was my carte blanche into the system.  Without it I would have been sent directly to the ER.

As it was I spent 18 hours there which, again would have happened insurance or not but now my bill is over $7000 and my insurance will pay but if not the hospital is in the hole 7 grand. So two days in patient in a modified ICU for non-critical but those who require round the clock...bill is now approaching 20 grand. Insurance pays and I'm treated.  Hospital is out only the difference between what my insurance is paying and the limits to my deductable. Now it gets crazy. 

I am discharged and my non-insured ghost either stiffs the clinic for $20,000 or makes an absurd payment agreement but $20k is like a car payment. I went to the pharmacy to get a ton of Rx's. My co-pay is $200 and I'm told that the flat out cost was about $1000. So this is where non-insured people quite frankly go to die.  I'll be out $200 a month for the rest of my life.  A small price to pay to stay alive but I can't miss a day ever.

The poor among us or the uninsured among us simply die.  And judging by how I felt the last while, it would not be a kindly death.  They die leaving a pile of bills and in horrible shape and always one more step to go to get back to just even...never preventive, never proactive, just trying to stay close to the game.

I could go on and on as to who actually pays for the uninsured (we all know that the insured pays or the hospitals just dish it out for free)...but who pays for suffering and death?  Our collective society does. So many would have health care recourse if the programs in place were taken full advantage of but walking into an ER, sick as a dog and then fending through the medicine procurement issue just doesn't seem logical.

Mr. Forbes again and Swine Flu Vaccine for the needy

Treated to yet another dose of Mr. Forbes this morning on MSNBC we find that he is hawking a book ergo he piddle-twiddles with commoners and earnestly explains why free markets are the solution to everything...although caught repeatedly in "you can make it up" facts and figures....I loved the "life expectency rate", in which the US is not a world leader...in fact we are pretty much dead even with Albania.....to which (and this was a health care question)..it's because of guns and auto accidents so Mr. Forbes alleges without which we would be #1....so why change anything.  Of course you can't just push him aside and call him a teller of tales, but that is what he is.

He went on to challenge Canada which puts up better numbers across the board in health care effected expectencies and that is "because all Canadians come to the US to get well".  Yet another red herring. I don't admire anyone in "position" who tosses out bonbons of silliness because they cloud the debate.

It is a bit like our buddies Goldman.  It is perfectly legitimate for corporations or entities to put in for vaccination distribution.  It happens all the time.  That Goldman got 200 doeses as did Lenox Hill hospital seems a bit out of place but I wonder who the PR person is at Goldman....does he, like Mr. Forbes, live on another planet where common sense doesn't matter?...where doing or saying something really dumb is ok just because you can?

I really have to believe there are better decision makers around who can see a situation for what it is and react decently.

Tort reform and the health care bill and of course Steve Forbes

It was a lot of fun watching Steve Forbes and Howard Dean  on TV this morning. Fun because I (and speaking only for myself here) don't much like Mr. Forbes who thinks he has a voice by being the son of Malcom and spending $100 million to garner 1% of the vote.  I don't like him because he is a sloganeer..a shill of sorts....and he gets air time with that big goofy airhead grin and it makes me mad.

Howard Dean caught him this morning after Mr. Forbes recited a laundrey list of why health care reform was such a horrible thing and of course he trotted out Tort Reform.  Mr. Dean pounced stating correctly that  Tort Reform is a state issue and for those who hate federalism why would Mr. Forbes want to negate laws in 50 states that deal with Tort Reform and make a federal law that supercedes it?  Mr. Forbes's response was a deer in the headlights gulp.

But let's look so we are clear.  About half the states have enacted Tort Reform dealing with medical malpractice.  You know what? Tort reform does nothng to drive down malpractice suits. Nada. It does allow more doctors into these states and these doctors by  in large get lawsuits at the same rate as doctors living in state without tort reform.  California has very stringent tort reform. The number of suits filed has actually increased.

The over-riding FACT is that about half the malpractice suits filed in any state are against the same 3.5% of the doctors.  In essence, if you want to cut medical malpactice suits in half toss out 3.5% of the doctors in any given state (average numbers...and the difference state by state is fairly substantial).

So we have Mr. Forbes and others wailing about helath care reform because it doesn't have tort reform tied into it.  The worst part of the non-argument argument is that he gets airtime to voice what can only be nicely described as time ill-spent on the issue.

Mr. Sousa...a little reminder of fervent patriotism

On that awful, unspeakable incident in Texas yesterday....these are the words to Stars and Stripes Forever and here is a recording of it from You  Tube.  I see nothing at all wrong with singing along...a little patriotic multitasking won't hurt on a day like this.

Let martial note in triumph float

And liberty extend its mighty hand
A flag appears 'mid thunderous cheers,
The banner of the Western land.
The emblem of the brave and true'
Its folds protect no tyrant crew;
The red and white and starry blue
Is freedom's shield and hope.
Other nations may deem their flags the best
And cheer them with fervid elation
But the flag of the North and South and West
Is the flag of flags, the flag of Freedom's nation.


Hurrah for the flag of the free!
May it wave as our standard forever,
the gem of the land and the sea,
The banner of the right.


Let despots remember the day
When our fathers with mighty endeavor
Proclaimed as they marched to the fray
That by their might and by their right
It waves forever.


Let eagle shriek from lofty peak
The never-ending watchword of our land;
Let summer breeze waft through the trees
The echo of the chorus grand.
Sing out for liberty and light,
Sing out for freedom and the right.
Sing out for Union and its might,
O patriotic sons.


Other nations may deem their flags the best
And cheer them with fervid elation,

But the flag of the North and South and West
Is the flag of flags, the flag of Freedom's nation.

Hurrah for the flag of the free.
May it wave as our standard forever
The gem of the land and the sea,
The banner of the right.
Let despots remember the day
When our fathers with mighty endeavor
Proclaimed as they marched to the fray,
That by their might and by their right
It waves forever.

Happy Guy Fawkes Day

I was never much into this holiday until I read a very nice and funny quote that went roughly like this:

"Guy Fawkes was perhaps the only person in history who went to Parliment with a constructive mission".

After watching our congress piddle and twiddle, with congressmen not showing up for hearings, to watch them make utter fools of themselves in public and private and to see persons take the plunge on  behalf of party rather than the electorate to whom they are responsible....well...at the risk of homeland security, Guy is looking better and better.

TV ads are a good barometer

An interesting report came out in Mediaweek this week talking about Discovery Communications advertising sales up 5% and the article further notes Rainbow (that's WEtv, Sundance, AMC etc.) was up 18+% .  How good news is this and what does it tell.

First Discovery Channel is and has always been a premium niche  outlet.  They, like A&E, Food, HGTV decided on programming that was consistent in genre and therefore audience.  Discovery never put out a blockbuster series but had a nice mix of specials and regular programs that produced a well defined audience. Reading their media kit, their best performance is for middle to slightly older men, high household income, professional, educated and, if you look at the economy, these are the folks that have a chance to dance through the economic mess.

Media buyers used to refer to Discovery as the Mercedes and Volvo channel as that is exactly the audience/product fit.  Now cars haven't faired well in this recession so that's a bad example.  However if ad sales are up then higher end advertisers are coming back in the game and that is the point of this blog.

Watch advertising on TV and see who and where ads are being bought by and the networks they are being placed on. It is a very good indication about where there is sufficient corporate recovery that enables advertsing spending.

Just a queston or two about "percentage job cuts"

J&J announced today that they were cutting jobs about 7%.  I know buisness is business and all that but here is the issue:  7% seems like an arbitrary number - what we in advertising call a "funny number".

If you took J&J's 118,000 workforce and you went through it job by job to see who could go, who is going to go into retirement, etc., and came up with 8,260 employees that they can do without that is one thing. if they found that since revenues were down 5% and that 5% equaled 7%  of jobs that is quite another.

My conundrum is that management slip ups, bad calls, wrong decisions, etc., that lead to a drop in revenue is reveresed by firing someone at Christmas time or the Holidays or whatever. It still doesn't absolve the management errors that started things.

Nokia also noted a 5,700 job cut. This comes as a result of a 21% decline in sales.  So let me get this straight.  All kinds of people will loose their jobs because marketing screwed up?

That is the point of this writing.  The simple thing to do is to cut jobs and no matter how you sugar coat it, people will hit the street at the worst possible time.  That happens of course as business is business but how do you say "I screwed up in my forecasting so you are fired"?

Another day, a few bankruptcy filings and a few more bank failures

Ah yes its a wonderful life.  We quietly heard about another 9 or so closings Friday putting the year at about 100 or so with two full months to push the totals. In case you need to know the ariel view is of the bank in Lamont, Illinois that closed Friday.  If you go to the FDIC site and read about the latest goings on one thing that might strike you is the number of smaller banks that are going belly up. I mean real small and not so big that they can't fail...just little community banks.  I'm sure there is some bad practices here and there. Probably has to be some loans that perhaps shouldn't have been made and no depositors lost a penny.... but the toll on a small community is enormous as now their local bank is a bigger bank from another city or state perhaps and the "It's a Wonderful Life" doesn't have an angel it can loan out to some people with good intentions that ran afoul of the economy.

Adventures of a Youth in Michigan

Net history resourcing is an interesting thing.  My father was alive and remembers Oct. 29, 1929 when the wheels really fell off the cart but he remembered them getting dicey a year or so before the bad day.

He had a job at Ford Motor in Dearborn, MI sorting the five lugg nuts that were used in all Ford  cars.  There was only a 16th of an inch difference one to another and barrels of these things were dumpted on a centeral sorting table with a bunch of guys counting and sorting them in to little trays for the assembly line.  I guess no one ever thought to sort them to begin with so my father made that suggestion.  He cut holes into a long piece of wood that was mounted on something like a coin sorter contraption and he just fed the bolts down  and they dropped into the right bin below.  It worked like crazy. So Ford management came over, gave him a citation and promptly fired the other 9 guys working with him.  He had armed guards take him off the premises at the end of the shift for his protection. and the death threats made it impossible for him to go backi to work.  So he took a railroad job that his dad got him on the run from Detroit to Grand Rapids just in time for the October 29 Black Tuesday, where he no doubt read this paper                                                                                                                                                                                                                                                                                                                                                                                                                                                 

A can't loose bet in an email

A year or so agao I got an email from a "financial advisor".  This one was in English and not marked from Nigeria so I opened it and read it.  Fascinating proposition.  The author pitched me thus:

"I'm going to send you an email a month with a market prediction for the next month - up or down. I'm willing to bet you that I can get this right for 6 straight months and as proof of my ability I'll give you a half a year's worth of predictions.  If I am ever wrong you  get a course in financial planning for free. If I am right 6times in a row you agree to buy my course for $xx" .

I've seen other propositions like this and really had to think it through...I mean how could anyone pick 6 things in a row and then it came to me...its the law of large numbers at work. No one responds to these things anyway and I didn't but in my email each month like clockwork I got the prognostication sure enough I got 6 for 6.

Here is how he did it.   He started with a purchased email list of 50,000 (about a $300 investment).  The first letter out he sent to 25,000 with an "market up" forecast and 25,000 with a market down.  He got 25,000 wrong and didn't send to them again.  The next month he split the 25,000 into an "up 12,500 and down 12,500". The third month he split the 12500 again and so on.

I got this amazing tally of 6 straight months of him being right as did about 80 people. Probably enough were impressed to buy his offering. 

Numbers are interesting.

How can there be such a diversity of opinion on the economy?

I heard a joke on CNBC this morning about a guy jumping out of a window and as he is falling down 50 floors, he passes a window and a guy shouts out "hey...wow how's it going?" to which the fallee replies "good so far". 

Around this little joke is a one guy who says that the sky is falling and things are going to get bad once more and another who is convinced the dark clouds are behing and we are bouncing up all over.  I wonder how this can be...how two market/economy figures can look at the same data and concluded 180 degrees from each other.

This kind of thing drives laymen like me crazy.  Its like investment broker types when the market goes south for a week saying its a good time to buy and when it is surging north its also a good time...so there is never a bad time?  How about saying its a good time to sell once in a while...although buy v. sell recommendations are about 8:1.   It must have been a good time to sell when the market was 14000 and everyone on the street knew there was trouble on the horizon.

I can't figure it out.

Letters from Nigeria

NPR ran a short segment on those famous Email Letters from Nigeria commonly called Cash Upfront letters that spring up in our email boxes ever so often.  I've gotten more than my share and when I do I usually respond with a suggestion of where the author "can put it" but was advised this morning on NPR just simply to delete the emails.  Don't be smart and respond as your email addresss simply gets sold to others and then the real spam starts (I'm talking 100 spams a day.

Also, in case you are wondering why Nigeria doesn't do anything about this cottage industry.....well it brings millions of US dollars into the economy there so why interrupt a good thing.

Oh my.

Sneaky Pete advertising....credit cards

I read the NYTimes editorial on credit cards this morning early just about the time I saw a new 'let us help solve your debt problems' on TV. 

The TV commercial isn't up on You Tube or I would link it.  But the core of the commercial wasn't one of those "we will negotiate you debt" but the thrust was advice to pay off those nasty credit cards and it reminded the audience that bankruptcy offers little protection....so it came to my brain that this could actually be a commercial sponsored by Visa and Mastercard.

Our household got rid of all its plastic 3 years ago and to tell you the truth our lifestyle doesn't need them.  We got into a thing with Providian Bank as they "adjusted" the due date causing us to be late 3 days although the check was mailed on time. Once 'late' our interest went from 5.9% to 28%, our credit limit dropped 3 grand and then as we carried a fairly good balance we were "over limit" so I said nuts, paid them, and melted the card.

The regulatory bill was given 15 months warning so they are trying everything under the sun to poke up the collection including I am fairly sure, fake TV commercials urging the consumer to pay off those nasty credit card people FIRST.

Do these companies really think we are that dumb?

Half a million of this and that

We are getting a bit freaky in our reactions to the horde of money in bonuses on the horizon on wall street.  With unemployment new claims bouncing north of half a million now for months the average Goldman bonus (also half a million but $s not potentially lost homes) looks amazingly out of place.

Part of me says hey free market and part of me says that particulary market cost us trillions in gifts and protections so it long past being free by any stretch of the word. 

The only part of it I really dislike intensely is the argument about "talent drain if we don't pay them enough". May I point out that nearly every company outside of Wall Street and the Financials has lost, by payroll reduction or termination, a "key employee" - someone they can point to the future with - so what makes these guys any different.  You loose, you loose. Although tell me where a broker at the low end of a Goldman bonus - say a million bucks - is gonna go find another job that pays as well.

My guess is that few are willing to leave a job with benis so you can kiss that argument goodby.

Was Shakespeare a trader?

No I didn't write this but you should read it:

Weary with toil, I haste me to my bed,
For then my thoughts--from far where I abide--
The dear repose for limbs with travel tired;
Intend a zealous pilgrimage to thee,
And keep my drooping eyelids open wide,
Looking on darkness which the blind do see:
Save that my soul's imaginary sight
Presents thy shadow to my sightless view,
Weary with toil, I haste me to my bed,
The dear repose for limbs with travel tired;
But then begins a journey in my head
To work my mind, when body's
Which, like a jewel hung in ghastly night,
Makes black night beauteous, and her old face new.
Lo! thus, by day my limbs, by night my mind,
For thee, and for myself, no quiet find.
 
I think that things that are constants are very reassuring.  That when involved with mental work we do that all day and then lay awake at night thinking about what we have already done and what we will do tomorrow.  Traders seem to be like that.  When the market is open they are on high alert and instead of walking away, most seem to think and plan.  Just my impression.  By day my limbs, by night my mind, for you and me there is no solitude.

Some Monday Morning Odds and Ends

After a Sunday shut in during awful storms on Long Island (two days worth actually), I was hammered constantly by sportscasters over and mis-use of the word legendary.  This a sore spot and pet peeve.

A legend is a story or collection of stories and according to the dictionary (not Wiki) but a real dictionary, "a nonhistorical or unverifiable story handed down by tradition from earlier times and popularly ( accepted as historical."  Simply urban fiction becomes tomorrow's fact.  A legend is just that....a story.  A lengendary running back is a much storied running back whose  story may not have much real fact in it.

In this day of blogging and 24 hour news, emails and  text messages we play a constant variation of the game of telephone, creating legends right and left.  Some are purposeful and others are just whole cloth.  Trouble is that truth is in short supply and usually so obscured by legend and spin that one can't find the the pony in the proverbial pile (but it must be in there somewhere).

What does this have to do with trading? A lot.  How to find the pearl in the oyster is a never ending challenge and actually the best traders are usually the best research scholars.  They are satisfied when they can sort out fact from legend.

I come away with one over riding observation as an historian.  The amount of fact that is around us is small but constant.  The amount of legend that clouds our field of view has never been greater.  The work needed to find fact from legend is in ration to fact:legend.

Another Blogger's Take on the Dow hitting 10,000

A blogger whom I greatly admire and post often on is Ann Althouse a law professor at the University of Wisconsin and  a somwhat frequent guest on the NYTimes editorial pages.    Here is her thread:

http://www.althouse.blogspot.com/
The Dow tops 10,000.

And:

A year after accepting a bailout from Washington, a resurgent JPMorgan Chase reported another round of surprisingly strong profits on Wednesday, strengthening its position at the pinnacle of American finance.
... $3.6 billion in profit for the third quarter...

I was happy to read this as it was the same source areas that I drew from. But she has 80,000 hits a day and I have 30.

How now DOW..10,000 and percentages

My expertise is in advertising – certainly not trading. In that area we, very much like traders, live in a sea of numbers e.g., ratings, cpms (cost per thousands), shares, HUTs, PUTs…all that stuff that is so boring and so uncomplicated.




What we are pitched by the networks and cable nets etc., is percentage growths so we look at that very closely. For instance, ION Network showed perhaps a 15% growth year on year in the lower end of the adult 25-54 market. They pointed out that the major networks either stayed the same or dropped, particularly in the lower end, and at as much as 6%. So ION up 15% NBC down 5%...so it makes sense to buy into ION to catch the younger crowd. Right? Wrong.



Percentages, often quoted on the financial networks is horribly misleading and this little thread is to warn you to think about it before it influences.



The market hit 10,000 yesterday. The 5 year high is 14,000 and some and the 5 year low was about 6,600. (I just heard a pundit talk about the S&P up 50% or something this year so case in point).



The DOW is down about 29% from its high and up 50% from its low. It is the “up from it’s low” that makes the difference and is always the suspect number. It is easy to demonstrate. You have $100 and take a 10% loss. Now you are at $90. If you make a 10% gain you aren’t even, you are at $99 and have lost $1.



Percentage shifts that go up at the same rate they go down always give you less money or less of anything. Always. It is simple math. The guy who bought in at 14,000 and saw it go to 6,600 saw a 53% loss. Now the DOW is up 50% from the low and he is still 4,000 in the hole. See what I mean.

The silly season of "online pricing"

An associate of mine, Michael Kingsbury, who is head of sales here at Prism showed me a very interesting slide that he uses in powerpoint presentations. I call it the batteries not included slide and here it is:

The kicker to me is the keeping $25,000 sitting there if you buy just a little bit daily.  Why do they do that? (rhetorical) but if you have accounts that aren't long term buy and hold situations, why would anyone use these folks?

A feisty Bernie Madoff

I just want you to know the lengths that this blog goes to keep you informed.  I heard a snipet on the radio about this fellow getting into a scuffle over of all things, the stock market.

I tracked it down and above is the link.  There must be a certain freedom in Madoff's life now. His fate is sealed and I'm reminded of that old Monty Python movie scene in the Life of Brain where a woman was senteced to being buried up to her neck and stoned to death by the crowd. She started screaming at the judge and jailer who kindly said "stop complaining or you are just going to make it worse for yourself". 

There is a very good blog which I frequent (althouse.blogspot.com) that discussed a fair sentence for Madoff.  The solutions ranged from making him live in a cardboard box (as he has made more than a few...the rat) to having someone knock on his cell at precisey 6pm every night (martini time) and instead of providing libations, punch him right square in the nose...every night for the rest of his life.

One thing for sure, this little scuffle won't likely be his last.

Gresham and Copernicus

Gresham and Copernicus have the commonality about "bad money drives out good money" as our astronomer friend actually came up with the core of it some years before Gresham's Law made the rounds.

I've been reflecting on this for several weeks and came to the realization that I misunderstood.  There is a relative aspect to what constitutes good and bad money.  In the most extreme good would be goverment tender and bad would be conterfeit. In this case people would hoard the good money and not mix the two for fear of by chance picking up a load of the bad stuff.  The bad money drove the good money "out of circulation".  Ok. clear enough, but that isn't what Gresham really meant.

I am now thinking that what was meant was when there were two forms of currency in circulation when both the good and the bad were worth the same under legal tender laws that the good money became a commodity.  Indeed our friend Copernicus was involved in turn coins into melted down commodities.

If a loaf of bread sells for a silver dollar you get a good buy if you pay for it with bad money and you get taken if you buy it with good money.  Perhaps the commodity level is reached when the disparity is such that the value of the good money isn't affected by melting it down into a gold bar as you can't in any way produce a method "intra currency" to swap good for bad.

When I was in Russia during the 80s dollars coming "in country" had to be declared and exit had to equal entry.  You could, however, convert dollars to rubles so that the government effectively decided that the dollar was good and the ruble bad. If you decided to risk it and pay locally there in dollars you got far more than the conversion rate would indicate and as there were laws about citizens there owning dollars these we driven out of circulation - not exactly Grisham/Copernicus's thinking but a modern day equivilent. 

I'll think some more on this and get back to you.

Awash in Natural Gas?

Heard an interesting piece on NPR this morning referencing the World Gas 2009 conference in Buenos Aires.  Of note that I heard but haven't yet verified is that we now import liquified natural gas to satisfy about 1% of our needs. (NaturalGas.org).  With the new fracturing techniques reported early on this blog it appears that the stage is set for all this to change.

Hydrofracturing (forcing water into shale which breaks it apart in lateral fracture lines) seems to be the pot of gold.  We really shouldn't underestimate that potential for helping us out of the energy dependence mess as some experts predict that we will simply overflow with this source.  Not a bad prospect.   Amazing.

Christoffa Corombo

Christobal Colon, Cristoforo Colombu or Christoffa Corombo in his native Genoa...whatever.  Thanks for making the trip.

Clock is ticking

Paul Krugman offered up a column this morning in the NYTimes regarding the slow collapse of American education. Part of it is due of course to the transition of traditional education to more or less trade school education with a heavy emphasis on intense learing and mastering of vertical skill sets - programming, business niches, etc. rather than the broader liberal arts we got when in those ancient times, we went to University.

More troubling is his observation that the less fortunate among us are saddled with woes from this prolonged economic downturn and the university experience, even the community college possibility are foresaken because people can't afford it and these institutions are cutting back.

My point with the clock is that time slips by.  The chances for attendance at a later date just doesn't happen as it is well known that when students leave the lockstep of high school to college, they don't come back later in life to any great degree  unless it is job specific learning.

That is going to cause a gap if prolonged.  Where there has been a steady stream of graduates diverse enough to fuel the need, there is going to be fewer to choose from and a high school education, while once robust, really isn't so hot anymore and these folks are often consigned to working up the hard way if at all.

You may not like what we do in education in this country and there is plenty of oafishness in the system, the fact is that our system is the envy of the world and we probably ought to think about it more.