The Producers

I doubt that there’s another pseudo-financial blog that’s actually mentioned Zero Mostel twice in the past month.

Strictly speaking, I wouldn’t be included in that category, since its been nearly two months since I mentioned the legendary comic actor. But I really had no choice in my choice of words. It’s not as if there’s a reasonable alternative to “fortnight” when discussing monthly increments.

At the time, I’m not certain that I really paid appropriate homage to Mostel, since his reference was contained in a blog that was really about the death of North Korean leader Kim Jong-Il and the market rally that his death spurred.

Sometimes getting lumped together takes away deserved focus.

For example, as focused as we were on the last days of a dying Farrah Fawcett, the fact that she ended up dying on the same day as Michael Jackson made her just a forgotten post-script to the story on that day and shortly thereafter..

Then, just as we were ready to pay her the attention and respect that she so deserved, we discovered that she died of “anal cancer.” At that point we wanted to forget about her altogether.


The ProducersBefore it became a smash hit on Broadway, “The Producers” was a movie starring Zero Mostel.

In addition to being an hilarious movie, The Producers was able to make a mockery of an unrepentant New York Nazi at a time when World War II was still a reasonably fresh and painful memory.

In Gilbert Gottfried terms even the passage of a couple of minutes absolves someone from the  “it’s too soon” complaint, but when it came to the Holocaust, 20 years was still too soon.

The fact that Mel Brooks, Zero Mostel and Gene Wilder were all Jewish probably helped to ease some of the discomfort with the concept, and besides, the late Kenneth Mars was a great wacky Nazi.

A few generations later when we all know too well of the enormity of investment related thievery and financial wrongdoing, the scam perpetuated by Max Bialystock almost seems quaint.

He was in the business of “making money out of nothing at all.”

The idea of selling something that you don’t own is repugnant and is, therefore, well suited for modern finance and investing.

We all remember how many stones were hurled in the direction of short sellers. You didn’t have to be a widely ridiculed Overstock CEO to appreciate some inherent evil in selling short.

Imagine that. Selling shares in stocks that you don’t actually own.

When the markets are rapidly melting away there needs to be a scapegoat. That’s the strategy that’s used by every dictator in the world when things aren’t going well. You always look for someone else to take the blame.

Best of all is to select an internal enemy.

They’re nefarious. They’re like termites seeking to destroy the very fabric of everything that we hold dear.

It’s all boilerplate language. Feel free to use at for whatever situation is at hand.

Short sellers fit that bill, especially the onerous naked short sellers.

And of course, when the financial crisis really hit back in 2008, the short sellers were at the center of the blame game, even though it turned out that a derivative of those “making money out of nothing at all” had perhaps the important hand.

You know, the ones that created all sorts of imaginary debt obligations. Repackaged, reshuffled and made to look real.

But that was all so opaque and poorly understood, that the easiest thing to do was to focus on the shorts. Not only by prohibiting their actions in financial stocks, but by also selecting to enforce the existing rules and regulations regarding short selling.

It’s hard enough being a pimp, but once you start enforcing the rules it really gets tough.

Obviously, placing blame on short sellers conveniently overlloked their necessary role of creating liquidity in the markets. Don’t we always get reminded that’s what it takes to make a market?

Besides, which of us wouldn’t want to get in on that scam if we had the opportunity?

How else do you explain the recent story of the person that was renting out foreclosed homes in California, without having the benefit of ownership or any other relationship to the properties or their past or present owners?

The only relationship was the ability to break in and replace the entry locks and then find willing tenants.

And so for the better part of the past week I’ve been moaning about the inability to find anything to spend my pile of money upon.

No bargains seemed avaible. Only stocks moving highre in the absence of any appropriate news to make them do so.

No purchases, no call option sales. No call option sales, no income.

But then, the ghost of Zero Mostel came to me.

“Sell what you don’t own.”

How right he was. How did I not see it? I’d done it before, but really tried staying off the radar screen in the past by doing it very infrequently.

Selling puts and collecting options. That’s what the ghost of Mostel was telling me.

But it felt so dirty, until I realized that selling calls means that deep down I really wanted stock prices to go down.

Isn’t that what the short sellers want?

I don’t want to be like them. I want to be good and highly regarded by my investing community.

At least the part of the comminity that’s not currently awaiting trial.

Zero wa so right. Selling puts would do all of that and more.

When you sell puts you want stock prices to go up. That’s good for everyone except for those investing termites that seek to crumble our system.

Going up is the natural order of things. Remember the 90’s? What goes up goes higher.

And so it began first with my recently beleagured ProShares Ultrahort Silver ETF. But then in rapid succession Chesapeake Energy, MolyCorp, RIMM, RIverbed Technology and Focus Media.

Before I knew it, all of the money in the pile was used up, held as collateral in the terrible event that those share prices actually went down.

Oh, so I wan’t really making money out of nothing at all then, was I?

But still, my heart was in the right place.

Granted, the addiction to spend money on pieces of paper with arbitrary value at best is nowhere near as noble an effort as helping little old ladies feel good about themselves and support the arts, but it’s something.

I am comforted in the knowledge that the ghost of Zero Mostel would impart only sound advice and guidance.

Now on the other hand, Nathan Lane?




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