Thursday, October 30, 2008

Chocolate and other things of consequence.

Valrhona is a chocolate provider. I like the Grand Cru from Madegascar. It's a 66% cocoa (bittersweet). It's a lovely chocolate. It's important for you to be exposed to different stuff!

I buy a large bag each year each year to make wonderful chocolate desserts. I also get a big box of high quality milk chocolate too. Together it is about 22 lbs of chocolate.

I sold my last bit of DUG today. I did some Chinese takeout: FSIN, SSRX and WX. Small positions. No stop loss. I do not plan to trade these, but hold them.

My UPW is about .60 from being profitable after falling as much as 22%. Yes, I hung on--but it was in accordance with my plan. This was a hedging position for certain puts that I had. Now those utility puts are gone (at a nice gain). My loss, then was already more than funded .

My son goes to the doc tomorrow. I'm afraid he may be dissappointed---he's thinking that he'll be out of his sling. We'll see. Then we hit the road. Hopefully the market will do nothing too screwy. But I've not much exposure.

Hartford. For those of you who were reading back in April of 2007, I pulled HIG out as the poster child for an insurance company that would be caught up in the systemic risk issues. Yes, wallowing around in minutia of 10-K's has served me well. BUT....I was very early to that trade. It was so obvious that the insurance companies had exposures and Wall Street discounts, right? Just on paper. It took more than 16 months for that fact to inculcate itself into the bee of the brain of Wall Street.

So....if it takes so long for the downside to be realized, then one may reasonably expect that the obverse happens. I'm happy to do as Gary K says, probe. I'm familiar with a great many companies. I bought a few that I'm familiar with today. And, if I want particular exposure to a sector or broad market index, the ETF's are a great way (for me) to do that.

If you do not have a plan for deploying capital, perhaps spending a little time crafting one would make sense. And consider probing. It's time to invoke Musashi:
  • Learn to see everything accurately.
  • Become aware of what is not obvious.
  • Be careful even in small matters.
  • Do not do anything useless.
I'll add a Leisa corollary to that: Thinking without doing is not worth much.
Cigna was clobbered today. Down 22%. Wall Street finally understood that there was no organic growth to be had and that insurers are not recession proof. Again, a long digestion before this thing was blown out of the back end of Wall Street's expectations. I need to remember that the digestion period is quite long at times! Best to wait patiently like a spider. I'm getting better at that.

I'm unlikely to get a post out tomorrow. But to get in the spirit of things, I offer a couple of photos sent by a blog friend.

The Two Edged Sword of Discipline


Golden Age
Giclee Print
by Pihua Hsu
item #: 11728536A


While I'm happy to report that my accounts are in good shape and at their highest balance, the BUT is this: They should be much higher.

There's a huge difference between seeing and taking advantage of an opportunity (buying a position be it stock or option) and MANAGING that position (limiting losses/maximizing profits). That's a general statement, certainly. In truth, it is hard to look back with the benefit of the future having unfolded and judge a decision when the future is murky. Harder still when you have a psychotic market and you've got money on the line. In this context, it is hard to levy an objective judgment on what one could or should have done in the miasma of uncertainty from the perspective of certainty.

But every investor is faced with uncertainty and must find successful ways to manage that uncertainty in order to maximize profits and minimize losses. Essentially, that translates into have a good process (discipline) and sticking with it. A consistent process founded on sound principles will yield better results than being willy-nilly. For example, you will displease the gods of Probability should you play black jack, and sometimes take a hit on 16 and at sometimes pass. You either always do it OR never do it. It's called being consistent, and consistency is always founded on discipline.

As this blog is for heuristic purposes I want to tell you how I committed a double blunder on my HERO. I bought 2000 shares of HERO two days ago. As I indicated, I felt that I had a decent risk/reward. One of my disciplines is that I never buy a stock ahead of earnings. (Well almost never!). I generally look at when a company reports prior to buying. I did not this time. That was Blunder 1.

HERO happened to report yesterday a.m. They beat, but frankly, the outlook for some of these drillers is not all that good. I watched the stock, and I did not feel that the price action was indicative of a really strongly desired stock. I had a very nice gain, and I took it. My 'nice' gain could have been a really extraordinary gain as there was at least $2.05 more in that trade. When you buy a stock at $4.9, two bucks is a rather sizable percentage gain.

I spent a good bit of the day kicking myself. I should have tranched my sales in thirds--something I generally do. Blunder 2!. I'm not excusing that. I strayed off my discipline. But I assuaged my disgust (yes, I really was disgusted), with the knowledge that had I really been following my discipline, that I wouldn't have bought it to begin with! (Oh the things we rationalize to keep us from looking like a dumb ass!).





I will be out all day tomorrow. We begin our two-day odyssey to secure Lacey. As it turns out, a Border Collie from this shelter needs a ride to Richmond, which is just 20 minutes from where I live. Now how strange is that?

The weather promises to be beautiful: high sixties and clear. I'll take my camera and bring a few shots back of the Great Smokey Mountains. The futures look promising, but I don't think that any are fooled by our prospects economically either here or in other parts of the world. So many are calling for a bottom process. A bear market rally is not part of a bottoming process insofar as I understand bear markets. Seems more of a relief rally.

But, these present opportunities in which we can either participate with prudent positions and vigilant risk management or stand aside and watch. I've just enough exposure to feel like I'm participating with UYG, UPW, and SSO. I still have some DUG having sold DIG yesterday.

HERO will likely be $10! But, if my discipline is to not buy before earnings, and to look at both charts and fundamentals, I'll either find an entry or find another opportunity. In fact, holding the thought that there are ALWAYS opportunities in the market to find at better risk/reward than chasing an extended stock is also a good discipline to both hold and more importantly to practice.

I hope that you have a good day.

Wednesday, October 29, 2008

HERO

Hmmm.....I committed a rookie mistake; I bought ahead of earnings. Nice gap up. I sold into it for a nice gain.

P. S. --Though I should have TRANCHED my sells, which is my discipline that I did not follow.

Lucky 13--Revisit


We've not revisited this "Lucky 13". They've only suffered a 26% decline through the close of yesterday--helped immensely by ROH's takeover bid! Click on the label to find the series of posts for this group.

The lesson: Gimmicky but catchy investment strategies all get washed up on the same beach when the liquidity tide heads out quickly.

I think for the average investor, they get so caught up in all the tricks, tips and tools of the trade, that they forget that the economic backdrop and the overall place in the cycle go a long way toward increasing your probabilities of having a successful outcome on a position taken.

I say that with this hard-won knowledge: It's hard to get folks to agree on where we are in any cycle. If you've been following economic commentary, it's only been within the last three months that we have the majority of folks agreeing that we are going into a recession.

Which reminds me.....Brian Westbury, who thought everyone was full of patooky who were dour on the economy is not being trotted out very much.

Tuesday, October 28, 2008

Holy Guacamole!


I have my small double long exposures in DIG, SSO and UPW, accordingly I didn't feel like I was missing the party! I also have DUG, which was my hedge to some of my double longs. This may sound nutty to you, but I don't like to be in and out of positions over the course of the day. There are so many gap ups and gap downs overnight that I prefer to stay in my positions (in the anticipated direction of the gap) with an obverse hedge, so that I'm not killed if the market gaps the opposite of where I'm leaning.

You could rightly ask, "Well why don't you just keep a smaller position in the direction that you think that it will go?" It's a perspicacoius and wholly reasonable question. This is where "Know thyself" comes into play. It's hard for me to chase up positions. It's actually easier for me to sell positions that are down. It's a personal flaw, but sometimes you have to trick yourself.

I bought some HERO today. I've been in and out of this stock with mostly good results. Here's a chart that looks like many oil service companies!


It's worth noting, that in the not too distant past, Barron's had an article that HERO might go to $60. I do not buy stocks based on analysts or media people's expectations of price. If you look at most stocks that have fallen from grace, you will still price estimates FAR ABOVE the current price.


One of the things that the Barron's article had noted were the insider buys. Well, all of those folks lost a good bit of money. HERO's chart is NOT one that would indicate a buy by any stretch of the imagination, as it is still in a down trend. However, at 4.84 - 4.91, I felt that even if it went to zero, I'd not get killed! (Plus, I still have DUG).

Given that so much of the unrelenting selling, I think that the market would just go up in absence of sellers--forget about buyers. It seemed to be a good risk reward. I also entered UYG today at $7.67. Same thing--risk reward seemed reasonable. I think that a goose from the Fed and any good news (even if it is absence of bad news) may clear the deck of snarky and tenacious shorts.

Prior to today, and even during today, my UPW and SSO were solidly in the double digit down range. That first digit being a 2. At the close of the day, SSO was still double digit, but it now starts with a 1. UPW is in single digit loss range. My puts, though, helped buffer that. I'm still up for the year marginally in one account and 30% in another. But, it only takes one material mistake to undo all of that!

I hope that you had a good day.

From my friend, G. C. Selden

I absolutely adore Selden's Pscychology of the Stock Market. And though I refer to it many times, I always find that picking out a passage never fails to reinforce something important.


It is generally more difficult to distinguish
the end of a stock market
boom than to decide when a panic is
definitely over. The principle of the
thing is simple enough, however. It
was an oversupply of liquid capital that
started the market upward after the
panic was over. Similarly it is exhaustion
of liquid capital which brings the
bull movement to an end. This exhaustion
is shown by higher call money
rates, loss of the excess of deposits over
loans in New York clearinghouse
banks, a steady rise in commercial paper
rates, and a sagging market for
high-grade bonds.

Morning Post.


I heard yesterday a couple of times this statement which gave me pause: The stock market is forecasting a very serious recession.

Our blog friend, NG, also notes this in the comments section which I think deserves highlighting:

I was listening to a credit fund manager today...

He said that the credit market is currently discounting that 90% of high yield bonds will default. He went on to say that such a rate of default was not even achieved during the 1930's depression.

At such levels by historical norms, this would equate to a DOW of no more than 5000. So either the credit market is right or the equity market is right and the credit market is overreacting.

To the first comment of the market's forecasting ability, I have a one word response: NOT! I do not believe, and I will NEVER believe that the market is a very good prognosticator of anything but rather a barometer of the market participants' current emotion. Accordingly, it makes sense to me now, having seen a full cycle (except for recovery), why markets go up higher than you think (optimism) and why they go down further than you thinking (fear). Somewhere in between there is some rationality.

Some may gasp at that statement, and it may be wrong. But if one is to take issue with it, one has to answer this question: If the market is in delevering, and delevering by its nature means forced selling of assets, then how is that a prognostication of anything? In my simple head it is cause and effect (credit contraction=liquidation). If the market had been prescient, then so many would not have been locked in the jaws of this massive delevering shark.

To be sure, credit is the lubricant of business. So it is fair to say that the contraction in credit, IN ADDITION to the unwinding of the currency arbitrage (carry trades), will have a deleterious effect on economies of the world. Not only are companies delevering but consumers.

Accordingly, the credit markets SEEM to have a better handle on the risks in the credit markets. But let's face it, they were were not so hot in pricing risk in the thick of the CDO orgy. Otherwise, the credit markets would not have allowed a less than 200 basis point spread between these toxic instruments and treasury bonds. Were these market participants any less affected by the optimism? No. They drank from the Kool-aid cup, too. So, I'm going to say that the credit market's collected viscera is gripped by the same fear as market participants.

I remember during the last bubble. I was not a conscious watcher of the markets. Not a whit. But I do remember scratching my head at the calls for "the new business model". The new business model valued sales growth over profitability growth. I would just scratch my head, because I knew that ultimately, a company has to be profitable to survive.

Certainly the appetite for stocks was so voracious, that one could float any sort of crap and have it gobbled up. The band always gets tired at some point and has to take a break. And when the music stops, then the whirling dervish dancers (creditors + investors) catch their collective breath and have an "Oh Shit" moment. (Those are never pleasant). Damage assessment and retrenchment begin immediately.

An astute investor does not dance, but rather maneuvers with great purpose and extraordinary alacrity through the crowd of dancers. Naturally, s/he has one eye to the exit. I don't claim to be an astute investor. I've not mastered the maneuvering, though I've successfully had my hands over the ears to not hear the music. At some point one has to declare, "This is nuts, but there is money to be made!" I'm still working on trying to hold my reticence in abeyance while seizing opportunities. But, that is part of my development.

So we have this final phase to watch for, the bottoming and subsequent resumption (hope!) of the next bull market. I cannot believe that a bottom is formed out of this violence, but rather, it will be formed out of dullness. Until some normalcy comes into the credit markets, potentially, we will be at the continued the mercy of of the great unwinding. Again, the tide charts mean little in a Tsunami.

I'm also mindful of Selden's comment that the news is always the most bullish at the top and the most bearish at the bottom. I'm also mindful that the news has been consistently getting worse--and for those subscribing to this aphorism were those who thought that Bear Stearns was the bottom. Bear Stearns was only the beginning.

Employment numbers and the unemployment rate have the ability to take this market down. But I'll make this prognostication: We'll see the same amount of "the worst is behind us" on these numbers throughout the next year. I think that we'll see the consumer hunker down for a good long time--years. Why? Think of the bolus of baby boomers who just saw their wealth obliterated? So the most affluent age group, is the one that has the most to fear now: reduced housing and portfolio wealth coupled with Social Security and Medicare uncertainty.

Not a difficult conclusion to come to.

Monday, October 27, 2008

The Hour of Dour: 3-4 p.m.

PM Post

Here's Minnah in her customary spot by my computer. She was spayed today (and Wyatt neutered). I just brought them back home. Macy and Daisey had to check them out. Naturally they are sore.

Great craziness in the markets today. Bullish calls are not being rewarded. Rev Shark on Real Money says that bear markets eventually just wear you out. I know that I'm tired.

I sold the last of my AIT and AMMD puts today. They are November puts, and though I'm not bullish, I'm looking for a bounce.

I spent a little time looking at charts today. It's really remarkable how far some of these can fall. If we really are winding some 25 years of excesses, perhaps support levels going back to 2003 or so are too optimistic? I don't know.

I've been cleared to secure Lacey. Likely to be a long drive Friday/Saturday.

Saturday, October 25, 2008

Transports, Tsumani's, Tide Charts and Balanced Equations

As I left today for my dog transport, I saw one of the prettiest rainbows I've seen in a long time. Market shamanism? Will we get a reprieve from this constant barrage of mini world market stock crashes? Whose to know? But it sure is a nice thought.

Here are some pics from today's crew. Herbert is the Yoda-looking fellow. He was a very nice shotgun passenger. It was important to him to be next to me as close as the console allowed. The next two dogs were very nice. The husky/shephard was a male and he rode in another vehicle with Thora, a rottie mix. Thora was a very strong dog. The maltese was in a crate in my backseat along with Fabio. His picture was not available on pet finders. He was a lovely retriever/lab mix--with long black silky fur.

The final dog is Mattie--is she not a cutie pie? She was young and in a crate.
I drove from Richmond to Springfield. It is about an 90 minute drive. With the summer driving season behind us, the northern corridor of 95 is much more manageable. All dogs slept. Not a peep! In fact, I've never had a drive where dogs have whined/barked uncontrollably for long periods of time. Thank goodness. I never did well with whiney babies either.


Last evening, I filled out an application to get Lacey. Lacey is in Sylva, NC. According to the Google map that is 428 miles from my home. That is about a 7 hr drive give or take. She was rescued from a kill shelter. They get 7 days, and then their time is up. Animal rescue groups, to include breed-specific rescues, often keep tabs on these animals. Lacey, though clearly an English Setter, did not get picked up by a breed-specific rescue, but rather from a local rescue group. You'd be surprised about the number of private individuals that open their homes and their hearts to foster animals until a permanent home can be found.

I listened to Financial Sense Online today. Frank Barbera was on. I like him and Tim Woods alot. He's looking for a massive rally soon. But the market has been confounding on a daily basis, and seems to not want to behave. I don't think that technicals mean much when we are undergoing massive deleveraging. Sort of like tide charts in the midst of a tsunami--do the tide charts really matter? I would say no.

I'm still of the mind that we are in for a protracted period of difficulties. As I was driving today, I wondered about the plus side that balances the minus of this equation. Money does not evaporate. For every loss; there is a gain. I didn't get very far with that musing.

Friday, October 24, 2008

Cardinal Moons

http://astrocycle.net/Oct_08.php

I heard this mentioned on CNBC. I thought I had referenced it here, but I could not find the post. I think that I posted it on RM. But you can check it out here.

Addition Consideration


I don't go shopping much, as I think it best not to tempt my magpie tendencies. Look at this beautiful girl. She reminds me of my beautiful Lucy. Her name is Lacey. She's a Llewellyn English Setter who was found as a stray. She has already been spayed. She's being fostered in Sylva, NC.

Mark and I are going to talk tonight, but I believe we will try to give her a home.

Nikkei

As I went to bed last evening, I noted that the Nikkei was closed to getting a 7 handle. It got one last night--Asian markets tanking roundly, and our own US futures looking pretty sour.

I'm up drinking coffee with my son. I awoke in the wee hours of the morning with an allergy attack. Somewhere between Benadryl and coffee, I will find some comfort. Certainly none to be had from the market.

I was a little outdone with myself because I unloaded 1/2 of my SSO. I think that I'll be happy with that decision this morning.

Thursday, October 23, 2008

Utilities ETF's: XLU, VPU

XLU % of Holdings
VPU % of Holdings







AMER ELECTRIC POW CO AEP 3.85
AMER ELECTRIC POW CO AEP 2.74
DOMINION RES NEW D 6.15
DOMINION RES NEW D 4.64
DUKE ENERGY CP HL CO DUK 4.97
DUKE ENERGY CP HL CO DUK 3.73
ENTERGY CP ETR 4.84
ENTERGY CP ETR 3.95
EXELON CORPORATION EXC 12.17 EXELON CORPORATION EXC 10.11
FIRSTENERGY CP FE 5.41
FIRSTENERGY CP FE 4.27
F P L GROUP INC FPL 5.99
F P L GROUP INC FPL 4.31
PUB ENTRPR GP PEG 5.06
PUB ENTRPR GP PEG 3.97
PPL CORP PPL 4
PPL CORP PPL 3.31
SOUTHERN CO SO 7.03
SOUTHERN CO SO 4.54









59.47


45.57









I did a comparison of XLU and VPU. Notice that XLU has 59.5% of its holdings in the top 10, while VPU only has 45.5%. EXC is the largest holding in both. They report tomorrow. I have some UPW. I'd like for EXC to surprise to the upside!

I Capitulated

Not on the market, but on my Real Money subscription.  I missed my blog buddies terribly while I was on vacation.  Plus, there was a renewal offer in my box that was at an advantaged rate of more than 50% what they wanted to charge me for just auto-renewing.  It's a poor way to treat subscribers.  But it was low enough, that over the year it represented a small daily charge.

I did lighten my SSO--I've not feel for this market, and I don't want to give up hard won dollars by becoming careless.  I've still some long exposure, but just less.

Wednesday, October 22, 2008

A Small Gloat and a Warning

Prior to going on vacation, I went back and read some of my posts. Largely, it was part of my "look back" to see if I were adding any value to to the blogosphere. I'm just a nobody--and ordinary person trying to make sense of things--but I got it righter than most.

Could I have traded it better? Yes. Could I have traded it worse? Yes. I've concluded that I'm a better observer than a trader. But, it is only my money which is my responsibility.

But rather than end this post with hand clapping and back slapping, I've been reminded that crashes come from deeply oversold technicals, NOT overbought. So be wary. Being deeply oversold is not necessarily the place from which one gets long or short.

I'm Baaaaaaaaaack

That toe that I stuck in the water a couple of weeks ago is feeling like piranha bait! At least I kept 1/2 part of my DUG, and I have some puts (AMMD, AIT, PSSI). But my UPW and SSO are not treating me well, and I'll need to make a decision tomorrow about keeping them or not. Huge daily swings (for good or naught) on a double inverse, hurt. I have to take the good with the bad, though, and they've helped more than they hurt.

I'm listening to Gary. He's through with his 'exploratory' and back to 100% cash.

We had a wonderful time with my B/SIL. I'll post some photos through Flickr, but here is the house that fell onto it's foundation--the creepiest thing about this photo is that without my knowing WHERE this house was, I told my husband "turn here". Twilight Zone indeed, as this is what we say within 45 seconds.

I made a mistake in my last post....IT IS NOT the home that was in Nights of Rodanthe--I misunderstood that the house in that movie was merely being used as a 'pointer'. Sorry.

My animals were joyful (euphorically so) to see my husband and I.

I did not read one word of the deflation articles. I needed a break, and I decided to be a GOOD guest rather than a nerd.

Tuesday, October 21, 2008

Hatteras

We are enjoying beautiful weather down here. Though when we were coming down on Sunday, there was a fierce northeasterly wind blowing and storm surge high enough to take out part of the road @ Rodanthe My B/SIL were 2 hours ahead of us, but they had to wait an hour to pass--some had to wait 4 hours. Mark and I sailed through, so we were only an hour behind.

One of the oceanside homes in Rodanthe (where "Nights in Rodanthe" with Richard Gere and Diane Lane was filmed) collapsed into the water. I've not seen it yet. The road was closed again last evening for a bit when high tide came back around as well as further nort in Buxton. We are staying in Avon.

We looked at the sound yesterday, and I've never seen such a fiercesome body of water in my life. Frightening really. We also saw an SUV cut off on it's own little island--hopefully they were able to get it out. Today is calmer, but not good fishing.

I've been keeping up with my exercise. I ran 2 miles yesterday and rode my bike for an hour today. Riding into the wind ensures some efficacious pedaling and heart rate load! The hot tub sure does feel good on aching muscles and joints.

I've had 1/2 an eye on the markets. I've some UPW/SSO--I also came into the weekend with some DUG--which DUG a little hole! But it was essentially a hedge against UPW/SSO, so I came out slightly ahead! Market has been up/down/up today I see. It's nice to get a break from that as well.

I saw a bit on CNBC where K. Kerkorian said that he had lived one year too long. Or was that Carl Icahn....I get these old billionaire activists confused. However, if one were to adopt me, I'd be the best daughter he could ever hope for, and I'd remember exactly which billionaire he was.

I'm really having alot of fun. I'm trying to be a good guest by taking care of our meals while we are here. Last night we had grilled porterhouse steaks--and they were fanastic--though there is always a worry in (wo)manning a grill that one is not used to. It is not a cut that I normally get, but a combination of the two that I do get (rib/strip). I see that I've been depriving myself. (We try not to eat too much red meat). Grilled asparagus and baked potatoes with some baked bread slathered with goat cheese.

I had a wonderful Bordeaux (2000 Frosnac; I forget the Chateau) which was very nice. (A ,$20-25 wine bought with a $5 coupon at Total Wine about 5 years ago!). So 4 of us ate a spectacular dinner for about $60 where it would have cost us about $250-300 (to include tip) had we gone out. I just cannot justify spending that kind of money on stuff that is passing through! I'd rather buy a better wine than I would normally enjoy, and cook dinner myself! And....do try an Australian Shiraz---The Greg Norman at BJ's Wholesale is terrific. Shiraz is the NEW Cab--like brown is the new black, though I'm not sure about this season. Perhaps black really is black!

Tonight we'll have pork loin chops sauteed in oil and fresh garlic, and I'll finish it by poaching it white wine. Fresh turnips from my neighbor's father's garden and a garden salad. A Marlborough SB to accompany. Hope everyone is doing well. I'll be back on Thursday.

Saturday, October 18, 2008

Investment Strategy a la X Files: Question Everything

I did my usual tour of Saturday morning information. I listened to Gary K, stopped by Financial Sense OnLine, read Ray Merriman's weekly geocosmics (he reminds that Mercury's retrograde shadow remains until the 31st!)!  I also visited Roger Nusbaum's Blog.  I've not been to Roger's blog in a while.  I used to be relatively active there, and I thought that Roger was always an even-handed commenter on the market.  He still is.

As I mentioned in an earlier post, I felt that we were perhaps coming to some sort of divergence between conventional wisdom and reason.  Accordingly, I'm going to dub this new era of thinking about the Market as the X Files era where we must indeed question everything.

Fear, uncertainty and doubt (FUD) are very powerful motivators in driving our behavior.  At some point in time you have to know when to put those FUD's behind you--or assess that the FUD probability risk factor (FUDprf) indicator is low enough for one to assume some risk. 

If I were a clever gal, I'd write a book called FUD Proof, An Innovative Guide to Investing in Uncertain Times.  Naturally, it would be a shameless rip off of Crash Proof...but .....

I'm somewhere between the space of abject fear and cautious optimism. I'm still going with my deflation prior to inflation theme.  And I think that it is useful to remember Marc Faber's observationi of the large lag time between economic reality v. the market's perception of economic reality. 


Friday, October 17, 2008

Hatteras Bound--Deflation Investigation in the Offing

On Sunday, my husband and I are Hatteras bound. My B/SIL are very generous to invite us down. We will stay Sunday through Wednesday. I'm on the fence as to whether or not I will take my daughter's laptop.

I am printing at the moment Paul Krugman's articles on Japanese deflation. I will take those down with me. I'm sure that the salt air will incite some insights.

Naturally I will be skipping over all of the economic equations!

Thursday, October 16, 2008

From, The Pitfalls of Speculation (P 49)

Summing up, the man who speculates in a
business-like way trades only in standard properties
with whose history, physical condition,
earnings and prospects he has thoroughly
familiarized himself; forms for himself a careful
estimate of normal value and uses this
value as a gauge by which to decide when
prices are too low and too high ; takes into consideration
also the technical condition of the
market, and does not embark with bad company,
even at low prices ; is not misled by the
thrills of inflation, or the chills of depression;
operates, not for the purpose of gathering a
small profit from many transactions, but to
gather a large profit from a few; trades with
responsible middle-men, and, above all things,
is patient. In short, he maps out for himself
an intelligent and well-founded plan of operation,
contemplating all that may occur, and
having mapped it out, follows it.

Very few speculate in this manner, and
very few succeed.

Rambling a.m. Post


The chicken (rooster to be precise) is not to be evocative of how you should be investing in this market, but rather to tell you about a dish that I made last evening: Aji de Galiina (Hot-Pepper Chicken).

I've mentioned in this space before my great love of cooking. And I have a particular fondness for finding old cookbooks, and I do go through them page by page, cover to cover. One such find was the Great Cooks Cookbook (1974). It has luminaries such as James Beard and Jacquis Pepin among others, each master devoted to editing a chapter.

Last night's selection came from "Poultry and Game" by Felipe Rojas-Lombardi. He died in 1991 at the age of 46. He was an assistant to James Beard, and obviously at a tender age when he contributed this chapter to the book in 1974. He was a native of Lima, Peru.

The dish is a simple dish that consists of boiled chicken. Skin and flesh is separated from the bone. Roasted green chiles, onions, bay leaf, chili powder, garlic and basil combined in a fragrant saute to which the chicken--shredded flesh and chopped skin--is added. It is served over potatoes.

I did not roast chiles. I picked red and green chiles from the garden and sliced them very thinly. I then sauteed them over very low heat in some olive oil. They were very robust--deep in flavor and quite piquiant! My family enjoyed the dish very much as did I.

What struck me about the dish was both its economy, simplicity and flavor. Food and religion are not so much different. If one looks at the historical basis and the cultural manisfestations, the underlying themes are very similar. In food, a small portion of protein combined with a sustaining starch is a mainstay. Protein is a very expensive food stuff. Most Americans consume too much protein.

We talk so much about conserving our planet's precious resources, reducing protein consumption ought to be the cornerstone of that effort. It would reduce greenhouse gasses (cows produce mucho methane!), provide a more humane environment for livestock (cattle, pigs, and chickens), by allowing them to live in their normal social structure prior to their being humanely killed (as opposed to being force fed and put in overcrowded, stressful situations), reduce toxix animal waste run off, as well as being kinder to our own bodies.

So when I made this uncomplicated dish, I was reminded of the simple, self-sustainable life that many families/communities shared--along with the animals that nourished them. They lived off of the land--requiring toil and sweat; they took care of their animals who provided them with life-sustaining protein in the form of eggs, milk and meat; and they were economical and practical in their consumption of all things. They had to be.

Many will be returning to economy and practicality--and hopefully our sense of community and helping others will also be incited.

Wednesday, October 15, 2008

Some New Resources To Check Out

The market---geez. Enough said.

I ran across a couple of things today that I wanted to share. On RM, TradyLady shared this new website: J3 Services Group. They are much like the Nasdaq website, but have some downloadable information into Excel, which you know that I would like! (I'll have to update my side bar for them.)

Second, a blogger at Real Money mentioned this terrific graphic by the New York Times about bear markets. Do check it out. You will find it very informative.

DIG--am I so glad to have gotten out of that (but it was just for a quickie, not a long term relationship!). I sold it at $41; it closed at $26.

UPW--I picked up a few shares in this today, but I may be sorry.
SSO--Still have some that are now underwater.

I've put positions on AIT, TWI, PSSI and AMMD--so there is some foil for my longs. But, overally, I'm mostly cash.

I hope that you are faring well. This is a bitch of a market, and I've not heard one person say that it is like anything that they've ever seen.

Volatile Markets: ETF transaction delays and Options B/A Spreads

I wanted to make a few observations regarding the trading environment regarding ETF's and options.  None of this is advice, but merely my sharing with you my process experience, which is the point of this blog.

First on the ETF's.  While ETF's are a very convenient way to trade, you should be aware of three things particularly as they relate to the inverse ETF's (1x and 2x long/short. 

  • Thing 1:  The openings of ETF's in volatile markets can be difficult.  You may notice very wide bid and ask spreads.
  • Thing 2:  It may take as long as 25 minutes to get a fill on the open for either a buy or a sell order which means that you can get significant profit slippage or loss augmentation.  That happened to me twice within this past trading week.  In selling DUG last week, my sell went in at $80.  My fill came in at $74 and more than 20 minutes later.  Yesterday, I lost some points on getting my DIG purchase sold. 
  • Thing 3:  Options on these ETF's may also carry wide bid/ask spreads.

Based on my observation, FAILING TO HOLD OVERNIGHT can put you out of
significant dollars if the market gaps in the predicted direction. My own strategy to deal with these swings overnight, is to carry a hedge (partial or full)--pairing DUG/DIG--unloading the profitable one when the directional has been met and a reversal is underway.   The hedge obviously is underwater, but it is increasing in value if I'm getting slippage on my sell order for the profitable position that I want to close because the direction is changing.  Naturally, the one that is kept is underwater on a absolute basis (but on a relative basis it was neutral if you had a 1:1 hedge).  So long as the direction that you are holding continues to be in harmony with the index, every dollar of loss that you recoup increases your account position. 

This may sound both complicated and even stupid, but FOR ME it equates to peace of mind and not panicking out of a position on volatile openings.  If you have qualified money that you are trading with, you also have to be attentive to the cash settlement times--so you may not be able to sell an unprofitable position prior to settlment if you do not have adequate cash in your account. 

With regard to option bid/ask spread on MANY stocks during last week's dislocation.  I had several put positions.  Admittedly, these put positions were NOT in very liquid options--and I knew that risk.  I had one put position on NPO that had a $5 b/a spread.  Yep.  And my HE puts didn't even have a bid!  Of course, I could fish around in the upper third of the range and get a hit.  But, I was VERY surprised, and I wanted to share that experience with you. Others noted some 'no bids' as well.  So keep this in mind if you are new to options.

Tuesday, October 14, 2008

Real Money Subscription

I've been a Real Money subscriber for several years. Today I canceled my membership which was renewing on October 27. Making the decision was not an easy one. I am an active participant in Rev. Shark's (Jim DePorre) blog, and many of the posters there I consider my virtual friends. I appreciate their friendship and their insights---both are priceless.

But Jim Cramer's (JJC) behavior over this market cycle goes beyond irresponsible. I do not wish to support in any way this site. A bit of cutting my nose off to spite my face, but if I've learned anything, I've learned this:

~~ Experienced investors/traders do not require a guru. They have first hand experience with navigating the market's capriciousness--that strange area between fundamentals and psychology in which stock prices gyrate!

~~Inexperienced investors/traders DO  MAY require a guru. It is likely, however, that they do not know how to judge a guru which puts them at the mercy of impostors. A real guru would say, close your eyes and look within and I'll help guide you. An impostor says open your eyes and ears; look and listen only to me. Such is where JJC operates. [post post comment: And, he failed to see any of this coming. Lauded WB and WFC failing to see their risks from and exposures to mortgages].

Within the last week, JJC has told investors to sell everything that they did not need in five years (panic sell at the bottom). Then on Sunday night, he was saying: "I am reverting to a downside target of 6,700 for Monday and then 4,700 for Tuesday in keeping with the hopeful '87 playbook. " If you followed him, your sphinctometer would have been pegged, or you would have thrown yourself out of the window.

That post did it for me. Of course the DOW could have plunged to those levels, but it went on to post its largest one day gain ever.

I closed some long positions. I have a few short positions and one long SSO position of a modest amount. One account is all cash after closing my HERO and DIG. Somehow, I ended up with a 30% gain in that account for the year, with the few positions that I've held over the last month (both long and short). No need to tempt the fates. I don't think that the market has settled into its long term posture yet. It's falling down, jumping up and sitting and fidgeting. It needs to fidget for a while, I think.

Monday, October 13, 2008

For the Record books

Getting to be a tiresome headline. I'm VERY happy for today's performance. I was seeing some real despair expressed.

Sunday, October 12, 2008

G.U.L.P.

I'm going to try to grab my 15 minutes of fame by fashioning my own acronym for what is going on here: G.U.L.P. It stands for Great Unwinding of Liquidity Period--let us pray that is merely a 'period' rather than an era. It also works because it has a nice double entendre meaning--most investors positioned heavily long are likely gulping and blinking in disbelief.

To the left is an image of a dung beetle (Scarabaeidae). The female pushes little balls of dung in which she lays her eggs. The dung is a stockpile of nutrition and nourishes the hatchlings. The ancients were keen observers of nature, and the industry and efficacy of these efforts were not lost upon them. You can find a brief and interesting synopsis here.

While dung balls work very well for this industrious member of the insect family, I'm not sure how well it will work for the saving of our financial system. I see lots of dung balls being rolled about, and who is to know how many eggs are being laid and what great magnitudes of beetles will hatch? Get some bug spray.

On Real Money last Thursday or so, I posted a thought about a very likely recalibration of historical price to earnings ratios in light of this GULP. Prices are always about supply and demand. Liquidity is always in the background as it influences the level of demand and provides the elasticity in equations that map the price reaction. (I may have that totally wrong, but it made sense at the time I'm writing it!)

Demand + Liquidity = Higher Asset Prices (inflation). Demand without sufficient liquidity is brings about a tempering of prices (disinflation). And the grimmest specter of them all, declining demand coupled with severely contracted liquidity brings about deflation.

Why is deflation bad? Here is the Nikkei since 1985. I would also say that this chart is also a reminder of why buy and hold is not such a great idea either.



Here's a bit from Wikipedia, which states it much more simplistically than I ever could.

Deflation is generally regarded negatively, as it is a tax on borrowers and on holders of illiquid assets, which accrues to the benefit of savers and of holders of liquid assets and currency. In this sense it is the opposite of inflation (or in the extreme, hyperinflation), which is a tax on currency holders and lenders (savers) in favor of borrowers and short term consumption. In modern economies, deflation is caused by a collapse in demand (usually brought on by high interest rates), and is associated with recession and (more rarely) long term economic depressions.

It seems to me that as economic units (earners, investors, spenders, savers, etc) each of us has to make some sense about what the future is to bring for us. There are so many smart people saying "this" or "that" or something in between the two, that it certainly leaves one scratching their head (or impolite places like the baseball players). As a person of reasonable intelligence trying to navigate unreasonable complexity, I have rely on something that never fails to serve: common sense. I'll make a bold statement, too, that common sense may not necessarily be in line with prevailing wisdom.

I'm not in a position to detail where the fissures lie between common sense and prevailing wisdom, but I know that I have a personal responsibility to investigate. Prevailing wisdom is that you buy when there is blood in the streets. Well, a look at the Nikkei chart shows that if you do that, you'll become your own little rivulet tributary. Prevailing wisdom in this market all year was to buy the dips and sell the rips. Well, the waterfall dips have been many. I expect a huge counter rally, but does the news support a sustained rally?

You'll see in my tabs a link to Paul Krugman's articles on Japan. I plan to read these. I'm feeling like I have to read and digest deflation 'stuff', much as I had to read and digest systemic risk and structured obligation 'stuff'. It was worth my time then. I think that it will be worth my time now. And I'll share what I find and hope it will beof use.

Saturday, October 11, 2008

Fidelity Select Sectors

Here's a list of Fidelity's Select Sectors for the year--From best to worst. Only one is green: Money Market.




10/10/2008
Select Money Market Portfolio (FSLXX) Money Market 2.39
Select Medical Equipment and Systems Portfolio (FSMEX) Health Care 18.05
Select Biotechnology Portfolio (FBIOX) Health Care 20.46
Select Transportation Portfolio (FSRFX) Cyclicals 26.32
Select Consumer Staples Portfolio (FDFAX) Consumer 27.5
Select Pharmaceuticals Portfolio (FPHAX) Health Care 30.73
Select Construction and Housing Portfolio (FSHOX) Cyclicals 31.55
Select IT Services Portfolio (FBSOX) Technology 31.6
Select Retailing Portfolio (FSRPX) Consumer 32.05
Select Paper and Forest Products Portfolio (FSPFX) Natural Resources 33.55
Select Environmental Portfolio (FSLEX) Cyclicals 34.19
Select Consumer Discretionary Portfolio (FSCPX) Consumer 35.12
Select Health Care Portfolio (FSPHX) Health Care 35.14
Select Banking Portfolio (FSRBX) Financials 35.94
Select Chemicals Portfolio (FSCHX) Cyclicals 36.34
Select Leisure Portfolio (FDLSX) Consumer 36.57
Select Industrials Portfolio (FCYIX) Cyclicals 38.02
Select Gold Portfolio (FSAGX) Natural Resources 39.3
Select Communications Equipment Portfolio (FSDCX) Technology 40.34
Select Multimedia Portfolio (FBMPX) Consumer 40.69
Select Computers Portfolio (FDCPX) Technology 40.77
Select Software and Computer Services Portfolio (FSCSX) Technology 41.78
Select Industrial Equipment Portfolio (FSCGX) Cyclicals 43.13
Fidelity Utilities Fund (FIUIX) Utilities 43.49
Select Defense and Aerospace Portfolio (FSDAX) Cyclicals 43.62
Select Materials Portfolio (FSDPX) Cyclicals 44.51
Select Utilities Growth Portfolio (FSUTX) Utilities 44.56
Select Electronics Portfolio (FSELX) Technology 44.8
Select Networking and Infrastructure Portfolio (FNINX) Technology 45.97
Select Technology Portfolio (FSPTX) Technology 46.25
Select Medical Delivery Portfolio (FSHCX) Health Care 46.69
Select Brokerage and Investment Management Portfolio (FSLBX) Financials 46.74
Select Financial Services Portfolio (FIDSX) Financials 46.74
Select Wireless Portfolio (FWRLX) Utilities 48.26
Select Air Transportation Portfolio (FSAIX) Cyclicals 49.24
Select Telecommunications Portfolio (FSTCX) Utilities 51.01
Select Automotive Portfolio (FSAVX) Cyclicals 51.24
Select Energy Service Portfolio (FSESX) Natural Resources 55.01
Select Natural Resources Portfolio (FNARX) Natural Resources 55.5
Select Energy Portfolio (FSENX) Natural Resources 56.89
Select Insurance Portfolio (FSPCX) Financials 57.33
Select Natural Gas Portfolio (FSNGX) Natural Resources 57.98
Select Home Finance Portfolio (FSVLX) Financials 58.12

Friday, October 10, 2008

Tontine Partners

I found the following letter from Tontine Capital Partners at Michael Covel's website which you can reach here. Apparently they are liquidating along with many other hedge funds. I saw them mentioned on Real Money, Googled them and found MC's piece.

After reading this letter, I've decided not to self-flagellate any more. Read a bit of it and see if you would let them boil water on your stove much less manage your hard earned doe.

Thursday, October 09, 2008

A Rout by Any Other Name

. . . . is still a ^#!$!^&& rout.


I don't have anything to really say about today that you do not already know. Unprecedented---comes to mind. Unprecedented wealth funded by debt ends badly. Whether we are invested in the market or not, we will be affected.

Prudent savers and investors trusting the markets to eek out a reasonable return so that they can live a financially independent life may now have to re-write some of that.

Capitalism and consumerism fed all of this. The indictment is squarely resting there--oh but wait. Aren't capitalism and consumerism the centerpiece of our American value system? Somewhere we squandered the deeply felt and hard-won values of freedom and independence for these two whores that promise only fleeting pleasure and a very dear price.

I've surmised here that underlying concept of the 'NEW MIDDLE CLASS' in emerging markets. Always said do breathlessly and full of hope that the appetites of the rising Asian and Latin American populations would prove bigger than our own. The pay off: lucrative goods and services. Of course, we'd have to inculcate the values of spending v. saving. I still hear the echo of the money managers saying that while the middle class American wasn't really important anymore and the luxury good makers would weather just find. IN fact they would IMPROVE. The chart below--a massive head and shoulder that broke within the last few days--tells a different story.


For those of you who employ technical analysis, I (layperson that I am) encourage you to employ a longer term view--10 year. Would you buy this chart? Looks like some roll over potential there.


What about this chart? Perhaps IBM will find support at $80 or so. Their revenue grew at 5%. I don't see that revenue growth accelerating in the upcoming economic environment do you?


Husband is in West Virginia. Hopefully there will be no accidents. This Mercury Retrograde has been pretty devastating so far. My son's wreck on the first day. Then the market's wreck each and every day it seems. Click on the graphic below to read more about Mercury Retrograde. You may find it interesting to not that RIMM had a major snafu under a Mercury Retrograde (remember when their systems went down). Mercury rules communication.

Currency and Reserves

Bloomberg has this story (click on title below). I've been watching the stocks of the Latin American Complex get ripped apart. I have sector chart with just South American stocks. The banks were the first to lead. Stockcharts is down, otherwise I would put an SDA chart up which is mentioned in the article.


Latin American Banks Dig Into Reserves to Salvage Currencies

By Adriana Brasileiro and Andre Soliani


Oct. 9 (Bloomberg) -- Latin American central banks are being forced to draw on record foreign reserves built up during the six-year commodities rally to stop their currencies from sinking in the worst financial crisis since the Great Depression.


I do not have as good a command on the role of currency refers on foreign stocks. But the charts know! I think that you will find the chart interesting, and if you are like me and do not have as good a command on this issue as you should if you are doing investing in these types of firms, this article may be a wake up call.

I woke up parched. As I laid in bed wondering if I should get up, my brain governed by my parched body seized on the simple fact that I had enough ingredients to make a decent limeade (from concentrate). I'm no good this time of day. But as I was hydrating, I was reading. And...in reading I wanted to share this.

Lesson for you: stay hydrated properly and understand currency risk in changing times. Night, night.

Wednesday, October 08, 2008

Morning Post

When I closed my post last night I closed my post with the Nikkei being down 383. Looks like there was reinvigoration.

Our blog friend, Selden, dead but wise as ever instructs:
The great cause of loss in times of panic is the failure of the investor to keep enough of his capital in liquid form. (p. 71)


What is particularly unfortunate--and you may label me a conspiratorista (I still remember a commenter calling me a recessionista)--is that much of this demise comes from the wealth of average investors. I absolutely believe that there is no more destructive advice than to buy and hold. This is a zero sum game. Someone sold and locked in profits--it is not the Average American's portfolio that participated in that preservation of capita, preservation of profits. It's the most insidious type of wealth transfer that there is. And it is something that NO one talks about.

About face in the futures with the rate cut. Another interesting day ahead.

Tuesday, October 07, 2008

Market Grab

I suppose that the market was not satisfied with giving back thos 500 points yesterday, and snatched them angrily back from surprised investors. I've no great insights, but I know this, that no matter who you listen to, you have to own your investment decisions. Part of me wishes that I had made more money in this environment. But at least I've preserved capital. I was too early to exit some of my juicier positions. OCT DUG 35 calls and SEP DIA 125 puts. Both were bought in April. Both would have been worth mucho dollars--but no, Leisa was afraid of a monstrous rally.

You see, I've had some very expensive puts expire worthless. HIG--I was early to that pig. I had about 5200 in put premium that expired in May of this year. Yep. That's alot of money to me. The BEST lesson that I've learned, and paid handsomely (but not lethally) for is this very simple fact: Reality and the market's perception (or cognition) of reality can be separated from a fairly wide gap. I new that HIG was in trouble last year. Waited a whole year--a faint whiff of trouble but then stability. Now look at it.

I'm a much better observer than a trader! But my capital is intact. I've just enough short and long positions to be balanced. I closed my XLU puts for a nice 130% gain. But I could have waited just a wee bit longer. But as high as the VIX was and as sustained as a downtrend and OCT expiration....the sure thing seemed to be the smart thing.

Because I've not paid much attention to the market through a full cycle prior to this one, I did not have a full appreciation of (1) how far things can go up; (2) how far things can go down. Of course I've seen these things written, but until experiencing it, I could not appreciate it very well.

Long time readers will remember my uber-nerd project at the begining of the year of loading all the blasted symbols in by each sector. That project has more than paid for itself. HOWEVER, had I a more systematized way to tag things, it would have been all the more better. I'm still of the mind that being spider like--spinning one's web, crafted with fundamental expectations coupled with technical analysis (confirming the timing/accuracy of one's fundamental theses) , and then watching and waiting patiently is really the best mental model for being successful in the market.

I may have to re-do my blogand put a spider theme in it. It's a mental model that I like very much, and Halloween is coming soon and all of that.

I'm slipping into old habits. I'm drinking a glass of wine. Dinner is on the grill--pork tenderloin and baked potatoes. Grilled asparagus will be the accompaniment. I'm enjoying Va's Horton winery, Viognier. It is really nice. I used to enjoy wine nightly. I've not had wine since last Friday. I'm toasting my SIL's father who died one year ago today. Clink.

In another week, I'll be down in Hatteras for a few days. My SIL/BIL generously invited us. They go every year. We've not been on vacation for a bit. It is hard to get my kids' to go at their ages. We are mostly home bodies--but we've taken a few vacations here and there. Frankly, my husband and I do not travel well together. Despite my inate bitchiness (a blogger on another blog accused me of being the bitchiest woman on the blog), I generally try to find the non-confrontational line. But--once I'm on that line...well...it ain't pretty.

Nikkei down 383 as I write and sign off. I hope that you are faring well in this madness.

Morning Post.


Yesterday was an extraordinary day in the market with the DOW plunging 800 points before closing just down 357 or so. Yeah, a 300+ fall in the DOW and I use 'just'. A reminder that everything is relative--Albert Einstein reminded us of the power of that.

I've mentioned here in my amateur musings. In fact, I did a little search of my blog to see when I started to talk about it. I see that I was chatting about it for a while. De-leveraging and de-flation go hand in hand. It's not complicated. How far for how long is anyone's guess. But if we've been building this up for so long (more than 20 years), then... Well, you can connect the dots.

Minyanville had a interesting article which you can access HERE.

Monday, October 06, 2008

Morngin Post

No doubt you are waking up to a financial world in turmoil. Jim Cramer is in outright panic mode--when his show gets canceled on CNBC, we will know that the bottom is finally in. (That is not an original thought on my part. I found this on my blog from August 27, 2007. A simple reminder that I'm not a dolt.

If I had to guess--not that I have any special knowledge, but just for the fruitless task of stating an opinion--I guess that the minute that the market hears some bad news it is going to bolt like a skittish colt again. I don't think for a minute that we've seen the worst of this correction. We have only had investor cognition that the problem in the credit markets really is a problem. Further, if the magnitude is bigger than the market's expectations--and frankly, I don't see much quantification of the magnitude--then that skittish colt is going to hit a yellow-jacket's nest.


This weekend was more event-filled than normal. Unfortunately, I had to put Chloe, my geriatric poodle, down. She's been steadily deteriorating. She was deaf and blind. Her simple, shadow existence was pain-free and revolved around sleeping, piddling on the floor, and eating. Most recently she stopped eating. Yesterday I noticed that her eye had puss coming from it. I suspect that she had an abscessed tooth. She had terrible teeth--apparently a hallmark of poodles.

She hated baths, hated to be clipped and was very particular about her feet. Forget about brushing her teeth. This is a dog that we found in the wild some years ago. She also had two other comrades. One was found dead on the road by a neighbor. My husband, kind hearted soul that he is, buried it and then rescued the other two. We named them Sophie and Chloe. They were the most miserably looking dogs (they are miniature poodles) you could imagine. Scraggly, long nails, detritus in their hair (which continues to grow unless clipped). Sophie was so nasty and smelly I had to take scissors and clip close to the skin as the outside of her coat was a matted mess. But....they were not thin, so obviously they were quite effective in foraging.

These dogs were never able to learn effective potty training. Thank goodness we have no carpet. Sophie met her demise under the tire of my car, running out to greet me. She had done it for years, but this particular time, she ended up under my wheel. It was not a happy day. She died quickly, but not before biting me badly enough through the joint of my left ring finger. I had to go to the hospital and cancel a business trip.

We estimate that Chloe was about 17 or 18. She had a good life, even though she would not submit to the ministrations (grooming) to keep her looking cute. She was a rugged girl from having to fend for herself for however long in the wild. So I buried her under the redbud, next to Greta. I imagine that before my life comes to an end, the red bud will be the hub to the spoke of beloved pet carcasses. Perhaps, even mine (ashes) one day.

Hold onto your hat.

Sunday, October 05, 2008

I'm Outing Myself


No, I'm not gay, but I have here never before published photos of me. You can now put a face with this space. I hope the reality is not too jarring!

Last night was the expiration of the last of my getting-older reminders. Last night was my 30th HS reunion. I'm embarrassed to say that I had to look at lots of name tags, but most fessed up that they had to do the same.

Lest you have to wonder, that is me in the middle of those two good looking fellows, Buster (l) and Allen (r). My husband and I split our social obligations. He attended the party of a dear friend's surprise 50th birthday party. My BIL, who also graduated in this class, was on a fishing trip. So I was on my own.

Well, not quite on my own. The only reason that I went to the reunion was because my best girlfriend from high school was coming down from Northern Virginia. Here's a pic of me and my friend, Robyn, taken at her home. Even at 48, our fathers somehow treat us as if we are still teenage girls. Hers insisted on driving her down to the Richmond Convention Center, the site of the reunion.

After brief consideration I told her that I'd pick her up and take her back to her parent's house. It was in the immediate circle of driving that I would need to accomplish to fulfill my other chauffeuring duty which was to collect my husband from the party.

As another reminder of the ever increasing space between our tender teenage years and our hard-bitten advancing years, I had a hard time finding Robyn's home. Oh, I was on the right street, and as I was slowing down in front of her home, a home that I had been to hundreds of times in my life, it did not quite look like 'it'.

A few doors down, I could see a young fellow 12-13 sneaking a smoke. He was lurking around one side of his home. As he saw me driving slowly down the road, I could see him worming his way around the back--but not quite wanting to turn the corner. No doubt he would be visible to his parents inside. I found it laughable that he thought that in such a neighborhood he could sneak anything outside.

Ultimately, I resorted to calling to get Robyn's parents' phone number, as my call to R's cell phone went unanswered. So I was talked in (embarrassingly) from 3 houses away! Sigh . In fairness, I had LINGERED in front of the right home, but 15 years or so time, the LAST time I had been by there, small trees/bushes become BIG trees and bushes.

I'm not sure how Robyn and I became friends. She was outgoing, I was not. But she had transferred in from another school and was in my Algebra class. Though shy, I did outreach. Our friendship blossomed, and over those two or so years in high school we did fun stuff. Some of that included sneaking downtown the the "Shockhoe Slip" and ordering drinks though we were under-aged. Never once did we get carded. Picking up guys was never our intention. And we never did. We were good girls on an adventure.

We'd find guys, certainly. Rather, they found us. Robyn was always so dazzling with her blond hair and pretty tan, she was like a light to these man moths! And while our potential as a 'coupling opportunity' was degraded rather quickly with these guys, we were unique in that we could hold our own in any conversation. Even better, we had perfect comedic timing. So we'd have these guys howling with laughter. I guess if you're not going to get sex, a good laugh is a reasonable compromise. (I realize that I'm writing that from a female perspective and the testosterone infused opinion on the matter is likely a wee bit different!)

My friendship with Robyn is very special. Geography and family/work responsibilities are life's wedges in interpersonal relationships. The same is true for both Robyn and I. However, though she's not part of my everyday life, and she has not been for some time, she's NEVER forgotten one of my birthdays over all of these years. I cannot say the same. Ultimately, we carry our friendships in the pocket of our hearts, easily reaching in to pull it out when life's wedge is temporarily removed.

Even 30 years post high school, Robyn's and my differences are still the same. Here I am in my unimaginative black dress, and Robyn dazzling, as always, in something both stylish and colorful. And in yet another testament to timelessness of the "things never change" aphorism, Robyn's Dad suggested that she wear her shawl and NOT take it off.

Right.

Saturday, October 04, 2008

Sweet Sadie


I've mentioned in this space my SIL's dog who was diagnosed with terminal cancer. Today, Sadie was transitioned. Her quality of life up until yesterday was quite good: healthy appetite, pain-free movement, enjoyment of her family. Yesterday the cancer felled her, and she was listless and uncomfortable. My SIL made the difficult but compassionate decision to have her put to sleep. Her blood pressure was so low the doc and personnel had difficulty finding a vein.

My SIL had the good fortune to have three of her life long friends with her. They have been getting together for every year since they've graduated from high school. This year, my SIL had the girls over to her home, as it was a fishing weekend for her husband.

So in today's brilliant fall sunshine, these long time friends took turns spading the ground for Sadie's grave.

Friday, October 03, 2008

A.M. Post

681 Days....I'll be joining the prestigious club of 50 year olds. Fifty is the new 30 right? Right! That I have my fitness goal firmly in sight AND I've been systematically pursuing it, I'm feeling good about the approach of that day. That I can run for two miles without keeling over is satisfying. I've been surprised at how easily my body has conjured up the old breathing and moving rhythms. Bodies are amazing things, though they can turn on us rather viciously if we don't care for them.

This a.m. WFC is announcing a stock for stock offer of WB. Should be good for financial stocks. I took a flier on some $20 UYG OCT calls--a small bet on a bounce in financials. Sometimes these 'flier' ideas of mine don't fly. Sentiment is so low we are bound to get a bounce here soon.

I'm waiting for a washer repair person. Hopefully it can be fixed today. I'm very reliant on this machine. We've lots of socks, underwear towels and clothes to process on an ongoing basis. I overfilled it and the door blew open--apparently breaking the latch internally. My husband groused with a litany of "you always...." Oh well. Married life....we can script all of those conversations, can't we?

Wednesday, October 01, 2008

The Line between Objectivity and Emotionalism

On the Myers Briggs test, I am an ENTP. I'm a mild extrovert, highly intuitive, peg the score on the thinking end of it, and I'm mildly erratic on the perceiving v. judging. I NEVER make decisions on how I feel. I guess I'm just a cold fish.

In business life, among the hardships--and I mean life or death--in corporate life--I was not emotional. I always felt clear eyed about what needed to happen. I never doubted my decisions, and I was confident that the end would be satisfactory (not meaning to sound boastful but earnest in my duty). But there were times when that confidence was overcome in my private moments where I felt an abject terror of the consequences of my being wrong. I didn't have those conversations with anyone. Not even my husband. But in this blog format, I can cheerfully tell you my abject terrors!

The singularly most important lesson that I've learned over the last year is the extraordinary lag between when facts are available to the market v. when the market chooses to act (only today did HIG spook the insurers--I wrote about them in April of 2007). I've reasonably side-stepped the downdraft. That's only one half of investing success--and only 1/2 of the hurdle. The second half is stepping in during the hopeless period and bellying up to the bar (I guess you could say "bellying up to the bear"). With respect to market matters, I do not have such confidence as others are able to muster and roll up and jump in with a "damn the torpedoes" type of swagger.

Now, what if my reluctance to wade into this market is not emotion but reason? And what if the 'reason' of others, based on past markets and patterns, is merely emotion? An inversion of the two so to speak. Here's the thing that I have trouble with..... We've had a credit bubble of such magnitude that has built for so many years, how can the global economy possibly rebound without the engine of funding (credit)? How can any bounce be sustained in any meaningful way?

While the credit markets have blown up, we've still some body and psychological blows that have not been dealt, not been felt. We've yet to see evolving unemployment numbers and declining consumer spending over successive (not just 2 or 3) quarters. How many times can WMT be recommended? At what point in time does the consumer just buy groceries and not the higher margin items? How can we have the despair needed to form a real bottom until we see these things?

I'm an ignorant nobody with no fear of being wrong! I will gladly say that if this is the type of bottom that is formed, and I'm too fearful or ignorant to see it, then I'm just a cloven hoof in the crowd. Maybe I'll be referring to this post in the future as an example of where I was wrong in remaining cautious--a common mistake among the average investor. But I cannot see, nor has anyone pointed to, where the liquidity bellows are going to be pumping in a way that is efficacious in providing additional liquidity.

We may be keeping the balloon from deflating, but we are not making it bigger. It's got to get bigger to have growth, unless I have some fundamental misunderstanding of the way things work. We're merely trying to prevent collapse, nothing more. Worse, there is a hole in that balloon: the consumer. How is the consumer to fare with reduced lines of credit, loss of jobs, frozen wages?

Perhaps Larry Kudlow with his prickish smugness has an answer. He's a monologue. (You can insert names of others). Never changes his point of view though circumstances change. Free market and capitalism! Yeah, right. Free market and capitalism gone wild put us in this pickle jar. And the pickle jar isn't Claussen. No this pickle jar is a special one where a mad scientist consigns Nature's aberrations in the horror movies. This pickle jar will be one that every eccentric economist will have on their shelf. Students will look sideways at it for fear of looking at it head on would bring about palsey. That felt better.....

And what we did for the financial institutions--which is to give them enough money to not go under---we will be doing for the consumer. The consumer too will have to de-leverage. The consumer is the smallest unit. Like the financial institutions, the bellows (two-man bellows with Ben and Hank) are fixing over-leverage with the consumer. We will not be creating new funds for goods and services--we'll be creating funds for the consumer to de-leverage. If the financial institutions get this money and then fail to help the consumer, then I believe the worst. Do not forget that the consumer is 70% or so of GDP. Based on what you see, how do you see a reinvigoration of the world economy?

Should the bill pass this evening, we may get a temporary reprieve through a relief rally, but I see a steady drone of bad news coming. But maybe that is emotion and not reason. And I will own my being wrong. And, I'll be jubilant to be wrong. Ebullient, ecstatic and crazy happy in my wrongness. I may change the T to a S (thinking v. sensing) on my M-B score. I truly will be transformed into a different person.

I'd like to reprise with my friend Selden's quote--he's dead of course, and I don't know him, but his lovely little book has been my compass, and I feel close to him:

Historical parallels are likely to be misleading. Every situation is new, though usually composed of familiar elements. Each element must be weighed by itself and the probable result of the combination estimated. In most cases the problem is by no means impossible, but the student must learn to look into the future and to consider the present only as a guide to the future. Extreme prices will come at the time when the news is most emphatic and most widely disseminated. When that point is passed the question must always be, "What next?". (p. 54)

What next indeed. I'm fearful of the answer to that question in weighing the elements and looking to the future, and I do not believe that we've seen the most emphatic news and most extreme prices. Why? Everyday the story gets worse. Another unanticipated stalwart has fallen. Bottoms are not violent--he counsels, too. They are dull. This is violent. Reason? Emotion? I would trust you to tell me.