Why Do We Need Villains?


I rarely write about local events even though my world these days revolves around an area of about 50 square feet, maybe more, if you include the TV’s remote control range. If La-Z-Boy could design an in chamode model I could get that range even tighter.

Fortunately that tight range is by choice as the only tether I have is to the TV, but if I wanted or in a pinch, the only programming that mattered during the day could easily be streamed thanks to E*Trade and CNBC.

I did need to go out the other day to have a repair done on our car after a break-in attempt in the District of Columbia.

Funny thing was that they really didn’t need to smash the window, since I keep my full sized body bong secured to the roof rack for easy access.

In case Howard County police are reading this blog, I’m not being serious. The break-in occured in Laurel, but on the Prince George’s side.

In case PG County police are reading this, it was in the Ann Arundel County piece of Laurel.

And so on.

Without going into too much detail, I wasn’t terribly happy with what I thought was an inadvertent problem caused during the repair process. I tend to be fairly low maintenance and am not one prone to complaints, but I am wary of and will speak out against irresponsible behavior directed at me, as a consumer.

Villains aboundSometimes “speaking out” means raising the questions rather than a ruckus. I wasn’t trying to be a villain and I didn’t think that there were villains stacked up against me. Just people seeking to mutually protect their interests in the name of justice

Since I’m nearing one of those standard retirement ages and haven’t really perpetuated any scams (yet), I’m not really likely to start along that path in life at this point, especially with a local business in a small town.

Of course, there’s really no reason for the people at Win Kelly Chevrolet to know that, as I’m certain that they see their fair share of complainers, maybe even scammers, dealing in an industry that probably has a fair amount of consumer mistrust as the baseline.

Look at all of the people that tried to blame Toyota for what proved to be a non-existent electrical problem.

Long story short, they took every effort to make me, as a customer feel satisfied with the outcome. There were no threats, no yelling, just reasoned discourse from both perspectives. Had they decided to take a different approach or come to a different decision I would have been upset and would have just gone elsewhere for the required service.

And that would have been the end of it.

Instead, they chose to treat me, the customer, in a way that represented an investment in the future. They decided that there was no need for a villain on either side of the tale and were likely more forgiving and understanding than I would have been.

What they did was to create a future customer and a fair amount of good will. I mean, after all, here I am, impressed enough to be writing about them (Helen, Mark and Lyle)

Why doesn’t this happen in the markets?

Why is there always a need to find and identify a villain when things don’t go our way?

In the few years that I’ve been actively involved with managing my own portfolio there seems to be a villain each day the market goes down and an uber-villain when there is a downward trend. Granted, when the market does go up in a significant manner, it’s equally common to try and identify  the root cause, but human nature being what it is, the fervor in pursuit of that cause is much less

Most recently, the villain has been Highy Frequency Trading. Someday, I’ll probably write a blog about that along the same lines as “Why Insider Trading is a Victimless Crime.”

Market goes down? Blame it on leveraged ETF’s.

How about the uptick rule?

Short sellers. Don’t forget the short sellers. It’s amazing that Overstock.com is still around given the conspiracy led by short sellers to see it implode. Hedge funds, too.

Whatever happened to the Yen Carry Trade. I still don’t even know what that means, but that was a biggie about 4 years ago, or so. 400 point drop? Japanese Yen Carry trade. Up 175 the next day? Uh, something else.

Almost forgot about algorithms.

Now, probably the most unexpectedly designated villain is Alan Greenspan who obviously pulled the wool over everyone’s eyes for 19 years. As soon as he left the Federal Reserve it was decided that his policies were responsible for what ultimately became the housing bubble and banking crisis, maybe the Cambodian Killing Fields, as well.

That’s why you should never take vacation from work. Someone is bound to discover that you’re totally unnecessary. Remember Mel Brooks’ great line from Blazing Saddles? “We have to protect our phony baloney jobs, Gentlemen”.

What really amazes me is how any  of these could be identified as an endemic problem, yet suddenly become irrelevent the very next day.

Having a villain to point a finger at is very comforting. The United States is used to being blamed for all of the world’s woes. Every despot throughout the history of the world has known that an external villain must always be identified so that the poor “Schlubs” can be distracted from finding out the truth.

Whoever said “The truth shall set you free” probably knew what he was talking about.

Again, it’s the Mel Brooks concept at play. It really does have near universal application.

In that regard, it will truly be amazing to watch the evolution of the “Arab Spring”. After 60+ years of being fed a single line people may get to see that the enemy was actually within, unless of course the new governments sense a tenuous grip on power. In that case, it’s same old, same old.

As investors or traders, there’s no doubt that introspection is called for, rather than always seeking to place blame elsewhere when things don’t go as had been hoped.

Not having a unifying strategy or even worse, not following your strategies, is a good first place to begin the soul searching.

One of my favorite Tweeters is Eddy Elfenbein, who runs the Crossing Wall Sreet site. He is a buy and hold investor and has an exemplary record, one that is fully transparent. He’s also great with market and economic statistics and is funny, to boot. That’s not easy to do in the context of 140 spaces, even more difficult when 13 of those spaces are taken up by his name.

Yesterday he Tweeted “The sound investing rule that I most often break is that I get frustrated when a stock rallies right after I sell it. So hate that.”

Feelings and emotions are the bane of investing. The real villains are greed, fear and envy. Add frustration and regret to those.

In yesterday’s blog I wrote about some rules of my own that I sometimes consciously break because I have a hard time resisting the temptation that presents itself when there are idle funds in the account.

I was partially successful in breaking old habits on Monday but just couldn’t wait to burn through my cash today.

I continued with my energy theme and bought shares in British Petroleum, Transocean and Chesapeake Energy, as well as picking up additional shares of Riverbed Technology.

Boy, talk about villains. Take yesterday’s Halliburton and mix that with a little BP and Transocean and we’re talking some heavy evil, except for the fact that they’ve been very profitable for me in the past year.

With the exception of RVBD, I got them all at better prices than I would have yesterday, but I actually used the proceeds from call options sales to pick up the Riverbed shares and then used those proceeds to pick up more ProShares Ultrashort Silver ETF shares.

Of course, I still partially fell back into my bad habit of falling victim to my short term pessimism.

Once again, though, I’ll call it a partial victory, as I waited for the prices in today’s newly purchased issues to rebound before selling my calls.

I only blame myself for not waiting longer as the market did an almost 200 point turnaround that would have netted me even better premiums. As it was, before you knew it, the market finished up by only 20 points after a final hour drop of 70.

I was wondering who the talking heads would blame the last hour fade on but instead had to go and pick up my car.

After dropping off the loaner and driving off in my well cared for car I felt good about the dealership and the market’s close, despite the rocky paths taken.

As famed, but now long dead Pogo had said, “We have met the enemy and he is us”.





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