More than I Want to Know

In the past I’ve written about just how great the world is these days when you have ready access to data and facts.

The saying “the truth shall set you free” has universal application and no doubt is understood well by the leaders of closed societies. Just try opening a North Korean Facebook account and you’ll see.

That kind of easy access to information has changed the way that I think about insider trading. I no longer look at it as a crime. Instead I look at it with envy, wondering what I had done wrong to not have had the same doors opened up for me. After all, what kind of a moron can’t get his hands on “insider information” if they actually put their mind to it?

SausageYears ago Upton Sinclair made us realize that sometimes details are really not worth finding out about. No one really wants to know how sausage is made.

But do stay away from the kind of people who do want to know and don’t want the details spared.

Definitely stay away from the one’s who make it in their basement.

The free and steady flow of information can cut that way for most of us. We’re just better off not knowing and comfortable in our relative ignorance.

I’ve never watched that cable show that highlights the world’s most dirty jobs because I just don’t want to know about the details. I just prefer to believe that all of those portable toilets clean and disinfect themselves.

On a more cleanly note, but equally applicable is my recent stream of newfound knowledge. I’ve just started using an analytical program to track viewership on this site. I’d been using Google Analytics for years, but always felt that it was too complex to get the salient information and required too many steps to focus down on the data.

What I mean to say is that I was too lazy to really understand just how powerful the application really was and just wanted it spoon fed to me in easy to digst small portions that somehow would also contain all the nourishment necessary to sustain me for a lifetime.

Now that I use “GetClicky” I see all of the information displayed in very intuitive formats. They even place the lobster bib on for you and will partially digest the information for you before placing it in your brain.

Great, isn’t that what I wanted all along?

Yeah, until I saw that I was getting regular hits from the Department of Justice. I never would have delved deeply enough into Google’s reports to get that kind of information. It was out of sight and really out of mind.

Now it’s right there for me to see with barely a click’s worth of effort.

Did they not like my jokes. Should I have not said anything about Goldman Sachs or Raj Rajaratnam? Was it the insider trading thing? There’s just no way that they’re reading for the sake of reading, although they do seem to come back at the same time each day.

Not that I’m watching them.

I don’t know, but now I’m not convinced that I really want that level of information. I’m not the sort that worries unecessarily, but it’s very similar feeling that you have when you look in the rearview mirror and see a police car behind you.

Even when you know that you’d done nothing wrong, you still get nervous.

I always used to get a kick out of watching COPS every week and seeing just how often the apprehending policeman would ask a suspect why they were nervous.

About a year ago I actually asked a policeman about that phenomenon of being nervous under those circumstances. he laughed and said that when he’d be out of uniform if he had seen a police car in his rear view mirror he would get nervous as well. Just human nature, not because you have larceny in your heart or a stolen wallet in your pocket

So what I’m saying to the DOJ guys, enjoy reading, but stop following.

Not wanting to know too much about things has extended into my overall philsophy about stocks. I long ago gave up the false idea that I actually knew anything. In Option to Profit I plainly admit that I’ve been a lousy stock picker and marched out for all to view some of my biggest stinkers over the years.

I also admitted that sometimes I don’t even know what industry or service the company whose stock I own is involved with.

But I really don’t think it’s absolutely necessary to know the business or the specifics about fall trends or consumer electronic crazes.

I just like to focus on the cyclicality exhibited in the stock proces of many solid companies. The kind that are for the most part, household names or at the very least, not likely to fall off the face of the earth in a day or two.

I’ve often said that I have no clue what Riverbed Technology does, but it’s been one of my favorite and most rewarding plays for 3 or 4 years. Do I really know what factors cause Dow Chemical to go up and down in a tight range?

My son recently clued me in and now I find myself trying to integrate technology news that I hear with what may be the impact on Riverbed’s fortunes.

I don’t like doing that, but it’s also human nature to try and out-think the world with the information that’s at hand.

Sometimes I’ve known too much about a company or have gotten emotionally attached.

There was a time when the west coast chain “Jerry’s Famous Deli” was a publicly traded company. Great corned beef, but lousy stock. I knew exactly what it did, I saw its restaurants consistently packed, but I also conveniently overlooked the terrible cation in its stock, refusing to sell until it was all gone.

What we didn’t know about Crazy Eddie, the Best Buy with attitude,  of a couple of generations ago is what kept that ship afloat. Even their auditors were in the dark. I think KPMG survived.

These days, do we really want to know what’s going on with all of those Chinese stocks?

I don’t.

But neither do I want to own them. What I do want to do is make a habit of selling puts on these companies in the after-math of the inevitable bad accounting news.

I don’t think there’ll be any shortage of those. They may as well just write a template for the stories that are going to come at us fast and furious and just fill in the company names in the blank spaces.

I just sold even more Spreadtrum Communications puts today. Last month it was Harbin Energy. Sure, “Communications” and “Energy” tell me something, but I’d never heard of these companies prior to the latest rounds of breaking bad news.

Those little puppies, which incidentally may go into the production of sausage in some countries, have made more profit for me these past 4 weeks than my standard bearers, as volatility and options premiums have gone down for the likes of DuPont, Dow Chemical and others.

The premise with at least some of these stocks is that the initial round of bad news will drive the price down in a grossly unwarranted over-reaction. After that really large first drop, sell an out of the money put. As the stock price regains some of its loss, sell even more puts, but a higher prices.

If there are weekly options available for trading, all the better.

Of course, some of these companies will become Crazy Eddies of this generation. Make your profit and then move on awaiting the next opportunity.

I will never buy Harbin Energy or sell puts on it, ever again. The same will hold true with Spreadtrum.

But its cousins will be comiong to vist soon. I just don’t know their names or how exactly they got to the point of derision.

But I don’t care, it just feels so good to not own one and not know why I don’t even care..