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I know that am destined to burn in the after-life, but there’s probably a special place in heaven saved for those that fuel the eternal flames so needed by the underworld.

Without evil, there would be no good, so you’re welcome.

27 years to the day of the attempted subway robbery heard around the world, one of the 4 assailants took his own life in the squalor of a Bronx motel.

The fact that he didn’t bring his own towels either told you that he wasn’t staying long or that he wasn’t leaving.

I’m from The Bronx, so I know of what I write.

It seems odd not to qualify an earlier paragraph with the word “alleged.” No one was fooled by the claim that the 4 young men were just trying to panhandle from the meek “electronics” expert that day on a New York City subway car.

Everyone knew that they meant to rob the defensless guy just minding his own business on an isolated subway car.

On the day before Christmas, these guys clearly didn’t believe that the meek were going to inherit the earth. And if they were, they were just going to take it away from them.

You may remember 1984. It wasn’t a very good year as far as crime statistics went in New York City. Assaults and violent crime were commonplace and the city was truly at a low point. Even during its fiscal crisis in the 1970’s there was never that feeling of fear to simply go about routine activities.

Like going to work, or going for a walk.Or just riding on the subway.

There’s absolutely no excuse for drawing an analogy between those events 27 years ago, culminating in this weekend’s suicide death of an inveterate criminal and a stock market investing strategy.

The road to hell is paved with people using such analogies for their own personal gain.

Like many others, I was greeted with the news that one of the 4 assailants of Bernhard Goetz, later known as the “Subway Vigilante” had died and had a quick journey back a generation.

As real evidence of a generational gap, neither of my two kids, who have 46 years between them, had ever heard of Bernhard Goetz, but there was a time when he was both reviled and revered.

In fact, you could easily go back and forth yourself with those two opinions on any given day and then do precisley the opposite the next day.

Racist, citizen standing up for his rights, vigilanate?

When confronted by 4 men on a New York City subway, with intent to rob him, Goetz did the completely unexpected. Not only did he pull out an underpowered gun, but he shot and wounded each and every one of the four.

Shades of “grabbed from the headlnes” only in reverse. Goetz recreated the fictional “Death Wish” role played by Charles Bronson a decade earlier and transformed it into real life, only he didn’t disappear into the ether seeking out more evil-doers.

Another decade later and Rudy Giuliani was elected mayor of New York CIty.

Racist, citizen standing up for your rights or vigilante?

Giuliani is widely credited with turning New York City around. His first act was to eliminate what he referred to as “quality of life” crimes, like banishing the homeless guys that would make your windshield even dirtier with their squeegies, in the hopes of getting some spare change.

Truth be told, it was Bernhard Goetz who turned the city around and got its citizens to leave the fear behind and retake the greatest city on earth.

Without Goetz, there would be no Giuliani.

You see, I’m a big fan of “Game Theory“.

You may also know it as  “The Prisoner’s Dilemma”.

I believe in it because I’m cycnical. Most people will only do the right thing if there are consequences to mis-reading the boundaries. It took an irrational act by Bernhard Goetz to get rational behavior to return to its rightful place in society.

The essence of the theory is that the unknown leads you to act prudently and to minimize risk. If you believe that in some way your fate may be determined by the actions of another, who has the same self-interests as you, but doesn’t have your interests at heart. It causes you to think like you’re going to potentially be a victim to a criminal, because he’s equally likely to become a vicitom of a criminal.

You.

Criminologists talk about how the certainty of punishment is the best deterrance. The death penalty, for example is never going to be a deterrent if never carried out.

Empty threats? Worthless.

Threats? Worthless, unless occasionally carried out.

Behavioral psycholgists will also tell you that the best way to effect change is to have a variable reinforcer. Keep the subject on their toes. Never let them figure out a pattern.

With Goetz’s action the rules of the road were changed.

No longer was it a sure thing that a seemingly meek guy riding the subway was going to be a sitting duck. Now there was a channce, maybe small, but still, a bit of uncertainty, that the next guy was going to be packing as well.

All of a sudden, the risk-benefit ratio had changed.

In investiing, it’s all about modifying that risk benefit so that you don’t carry all of the burden.

Invest like Goetz.

To one extreme you may have someone like Raj Rajaratnam. He didn’t want to carry any burden and in that regard, he’s just like how we all should be thinking.

Risk is bad, reward is good.

Again, we can do away with the word “alleged” when discussing Rajaratnam, although I continue to believe that insider trading is a victimless crime.

On the other extreme is the kind of person that does nothing to protect himself and just gives in to the whims of the market as it bounces wildly from subway car to subway car taking whatever it needs to fuel its movement.

But let’s face it. You may be honest and well intentioned, but the next guy, maybe Raj Rajaratnam may not have your interests at heart.

I know. Hard to believe. But even if what he’s doing may or not be criminal and may or not leave victims in its wake, you can become a victim by your own apathy.

To get the best deal, you have to think like a criminal confronted by other criminals also seeking to get the best deal.

But just imagine that while you’re talking to the police officers your doing it submerged in a tank of water. Your sound waves travel at only 550 feet per second in your tank, while your compadre in the other adjoining holding cell has unfettered access to sound travelling at a full 1100 feet per second.

He gets to cut his deal first and you lose, because you were a flounder. Don’t blame high frequency trading for your problems, just do something about it, like not worrying about being whip-sawed.

The point is, don’t trust the next guy and don’t come unarmed to the party, even if it is only a snub-nose. The one on the other side of any stock transaction is a faceless and nameless soul, although more than likely “he’s” a fund.

Although the Supreme Court has ruled that corporations are people, it hasn’t extended that largesse to investment funds, they don’t really have souls.

Instead, take the deal. Use hedges to better define your reward and potential punishment. But, you still can’t screw the other guy, because that’s what greed is all about and it gets in the way of rational thought.

Prisoner’s Dilemma shows that a reasonable person realizes that if his counter-part tries to screw him over, he would be met with the same response.

By virtue of the game, that would result in the worst outcome for both, a lose-lose situation

So instead, the aim is to escape only slightly tarnished, knowing that the chances of escaping unharmed is tiny, while the chances of getting hit with a ton of bricks is great if you try to outsmart the system.

Where the analogy falls short is that in Game Theory you assume that your opponent is a rational thinking entity, with a drive for self-preservation.

That’s why the U.S. and Soviet Union never fired those nuclear warheads at one another.

Enemies or not, they weren’t crazy and were too smart to take a risk that had little assurance of reward.

Nuclear arms in the hands of a terrorist, especially one that believes that a better world awaits if the ultimate sacrifice is made puts us in the realm of the irrational, at least by most rational people’s perspective.

The market is supposed to be rational, but lately it hasn’t necessarily been behaving that way.

When faced with an irrational or unpredictable opponent, you have to abandon the Goetz Princple, and instead have to be proactive. Just assume the worst and you’ll be right.

When faced with the dilemma and you will be, just ask yourself, WWGD?

 

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I’ve never done well investing in the technology sector, with a couple of notable exceptions

Let me list my failures: Intel, Dell, Hewlett Packard and Yahoo. There may be some others, but there are times when I buy stocks in companies without even knowing what it is that they actually do.

Probably not a good idea.

Nearly 30 years later, I still recall a close call in the technology sector.

I received an allocation in the IPO for  hot company called Eagle Computer. It was perceived as a real competitor to the IBM PC back in the very early days when a PC cost about $5,000 or more, if you wanted a second floppy drive for storage.

Funny story.

Its charismatic CEO was killed in a car crash on the day of the IPO.

Only an oracle could have foreseen that.

The underwriters actually refunded money to IPO investors and ran their next IPO a few months later without me. Eventually, the proprietary Eagle Computer, bereft of its guiding light, morphed into an IBM clone and then was sued out of existence by IBM along with some other early players.

In hindsight, maybe that’s not such a funny story.

I was spooked by the reliance on a single individual and continue to be so.

Technology seems to be highly linked to charismatic individuals.

Okay, sometimes, like Bill Gates, they’re not really charismatic, but in his own way, he was. Who else could turn mosquito netting into a sexy way of saving lives?

Ballmer?

Yeah, I’ve had Google, Apple and even Research in Motion but I seem to remember the failures more vividly.

The investing successes in technology include a company that I really don’t have any idea of what they do and have happily been in the dark for years.

Riverbed Technology.

The “Technology” part of their name gives me some idea of their sector, but that’s all I really need to know.

When it comes to technology, there really is a powerhouse and it’s Oracle Corporation.

As a powerhouse, Oracle is the baby of another powerhouse, Larry Elllson.

Oracle is involved in absolutely everything and they compete furiously with absolutely everybody. Ellison never pulls punches and isn’t really known as a diplomatic sort.

He qualifies as charismatic and he certainly lives that manner and portrays himself as such. He lives hard, plays hard and competes like there is no tomorrow.

I used to have an Uncle, that whenever I introduced him to a friend of mine, would reach into his pocket and pull out one of those free little calendar books that he would get each year from the Jewish Funeral home, to whom he had pledged his business.

He would go to the back of the book and look up where that friend was from and would announce something to the effect of: “Calcutta? 10,000 Jews.” or “Pittsburgh? 60,000 Jews.”

He wasn’t much into popular cilture, but would have loved the game “Dead or Alive, Jew or Not?”

People don’t like Larry Ellison, but he probably foresaw that as he continued to fine tune his personna.to make himself even less likable.

My uncle would probably have liked Larry Ellison purely on the basis of heritage and business success.

Investors may have liked Ellison’s results, but some of the more recent ones may take exception to that.

Despite his known penchant for cars, add to his credit not sharing the same fate as Eagle Computer’s Dennis Barnhart.

In fact, I found it surprising that he would partially share the stage with another high profile technology person Mark Hurd, fresh off the controversy at Hewlett Packard, even though it was clearly a finger in the eye of HP.

But Ellison was an Oracle. The Oracle of Redwood Shores.

He clearly knew that the wall was approaching and there had to be someone else to pin the blame upon.

In fact, at an earlier earnings report, even though Mark Hurd had only joined Oracle a very short while earlier, Ellison credited Hurd with the great quarter.

Magnanimous, no?

No. Set up, yes.

Easier to share the credit than to take all of the blame. But still, it’s unlikely that Ellison would turn too quickly on Hurd, becasue memories are still too fresh and remember the circumstances with which Ellison bought Hurd to Oracle.

Too much personal aura at stake to put him out to dry.

Instead, today, Oracle spread the pain by predicting that technology spending was suffering from delayed business spending.

In other words, macro-economic issues rather than company specific.

Well, that’s one way of deflecting responsibility and perhaps shielding the executive offices from criticism.

Oracle’s prediction spread gasoline on the sector and I got a burn along the way.

A past trading success of mine was VMWare.

Actually, I should correct that, and as Larry Ellison so graciously gave credit to Mark Hurd, I should give credit to my son for turning me back onto VMWare a few years ago when it was hovering at about $18.

I saw “back onto” because I recall when VMWare was spun off and was never able to find an entry point to buy shares. Then, I remember watching it do the 2007 plunge along with everything else.

But one Thanksgiving Friday I picked up those shares and eventually parted ways at about $45 plus a fair amount of option premiums.

Today VMWare, my beloved RIverbed Technology, of which about 70% of my shares are hedged, and another of my son’s favorites, albeit unrequited, CommVault got felled in the quake of The Oracle’s prediction. In fact, my son picked up some shares of VMWare this afternoon, hoping to ride it back to $90.

Not me.

Today wasn’t a good day for “The Cloud,” which has to also include Amazon, just as this hasn’t been a good year for oracles.

The world famous Oracle of Omaha, Warren Buffett has had a few mis-steps.

Bank of America comes to mind, but Buffett takes much larger steps and has a much broader time frame. I don’t think the Oracle of Redwood Shores shares the same perspective.

A loss isn’t a loss if it’s only on paper, so I doubt that Buffett is fretting too much. Even I know that paper doesn’t matter, especially if the printing presses are heating up.

Oh, actually another technology investment decision now comes to mind after checking through my archives. Seems that in my managed investment days, about 5 years ago, I owned some Oracle and racked up a 5% gain over two years, well underperforming the market during that time period.

Bleh.

And thent here was the decision to buy calls ahead of earnings almost years ago, just as I was getting started on my own.

Double bleh, but at least I learned something from that, which was that it takes an idiot to try and guess which way the market will react to earnings.

Especially when you know nothing about the stock. Although knowing retailing, movie rental and coffee, didn’t seem to shield me from the effects of purchases of Amazon, Netflix and Green Mountain Coffee Roasters, respectively, a few months ago.

Did I mention that those were bought right before earnings? But at least I had the call option sales to cushion the body nlows

So I guess I can put Oracle into the historical failure camp.

As far as oracles go, my hope would be that when giving guidance they could have foreseen the technology spending slowdown, but just as my own crystal ball is fuzzy, I suppose that even oracles have bad days.

The difference though is that my bad days don’t cause about $20 billion dollars of lost market capitalization.

My ability to see into the future is as good as anyone else’s, but on this one issue, I am by far in a position of superiority.

I can predict that I won’t be fooled into acting upon the thought that Oracle is now value priced.

Even though it may very well be, my Chevy Vega doesn’t let me take those kind of chances.

 

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One of the great tragedies of American history is that an incredibly talented Communist, comedian and comic, Zero Mostel, was blacklisted during the McCarthy Era.

If you’re pretty young or just historically challenged, being blacklisted meant that anyone hiring you was at risk of becoming the same unhireable outcast that you had become, because that would be construed as being a communist sympathizer.

There are probably other bad things that happened then, but Communists really were swines among pigs. As bad as the Czars and the Cossacks may have been, Marx’s heirs took their interpretation of the maniifesto to some pretty nasty places, like Minsk.

Communists were our enemy and they were an anathema to everything our freedom loving and capitalistic society stood for. The only thing that was a bigger anathema were the anti-Communists.

By virtue of that blacklisting, the world was deprived of so much of Mostel’s unique talents for so many years. Luckily, we did get “Fiddler on the Roof,” in Broadway and movie releases of “A Funny Thing Happened on the Way to the Forum,” “The Producers” and coincidentally enough, “The Night they Raided Minsky’s.” before the end came.

“A Funny Thing Happened on the Way to the Forum” was one of my favorite movies. It also starred fellow blacklister Jack Gilford and was Buster Keaton’s final screen appearance.

The the song “Comedy Tonight” pretty much sums up all of the ingredients that can move our capitalist markets.

“Old situations, new complications….something erratic, something dramatic…”

Notice, not a single word about “The Beige Book.” or the “Michigan Consumer Sentiment Report.”

Yet today, there were none of those market movers in the mix.

Instead it was “losses tomorrow, profits tonight.”

Forget about red herrings like “Spanish bond sales receive better than expected reception” or “unexpectedly positive multi-family new housing starts.”

No one cares about those things anymore.

Seriously, we’ve gotten so far removed from actually caring about real economic data. I don’t know why they even bother with that stuff. We all know that the real Ben Bernanke was entombed years ago, as there’s no longer a need for central banking, but we still go through the motions of questioning his hologram a few times each year in front of congressional committees.

Today, the reality was that there was only one thing responsible for the sustained 300+ point gain.

And that was the news of the death of an anachronism.

The leader of communist North Korea, Kim Jong-Il, who was reportedly the single greatest customer of Hennessey Cognac, something that clearly would have bought a sneer of consternation to the eyes of Comrade Lenin, was dead.

As news came of his death, it also became known that Great Leader’s son, Dear Leader,  will repose in the same manner as Vlad the Czar Slayer, in a glass enclosed case. Actually. by all reports Kim Jong-Il was small enough that perhaps he could fit into a cognac bottle.

That would make the roadshow for the Initial Public Offering of the Great Leader much easier and would have been perfect time for the release of Zynga’s new game “Kim Jong-Ilville.

Delightful image. At least the Russian heirs to the Soviet Union had the good sense to finally remove Lenin from his display of honor.

But with a 300 point gain in the market on Tuesday there really was nothing besides an historic death that could be pointed toward as being the culprit for the much whispered and anticipated melt-up.

As welcome as the death of a pariah may be, at least equally welcome is yet another day of absence of European news and rumors of news. Another day of respite from discussion of Hungarian mortgage arbitrage with the Forint and Swiss Franc and the fear that Germany would withdraw from the EU.

In the absence of anyything interesting coming from the other side of the pond lately, I’ve been finding myself in a ranting mood even though I’ve been pretty pleased with the portfolio tally at the closing bell.

The need to rant has been so strong that I couldn’t even bring myself to write about today’s trades.

If you have the slightest interest you’ll have to go to the Portfolio Transaction page to see what I was up to today.

Last week it was all about Dennis Gartman and his position on Gold.

Today he clarified his position by announcing “I’m neutral on gold at this point.”

Not to beat a dead horse, but “at this point” doesn’t do his clients any good for that wonderful period before “this point” when he cut them at the kneecaps.

Today, what really fascinated me was all of the discussion about how great the breakup of the AT&T buyout of Deutsche Telecom’s T-Mobile division was going to be for American Tower.

Fortunately, despite the fact that I often joke about my failing memory, that’s not really the case.

During my first week of blogging, back in April, I mentioned how I had cash available from having had my shares of American Tower assigned.

What was also mentioned was what spurred me to purchase shares of American Tower, which was a stock that I’d heard about in previous years from listening to Jim Cramer during the early days of Mad Money.

What spurred the purchase was the unanimous opinion among the experts that the proposed buyout was going to be very bad for American Tower, due to the presence of both T-Mobile and At&T dishes on many cell towers.

The obvious conclusion was that there would be no need for duplication of dishes, so American Tower would be losing leasing revenue.

Sure enough the conventional wisdom casued a kneejerk reaction and shares plummeted and stayed at those depths for the better part of a day.

On that day I purchased shares and immediately sold calls. The shares were assigned a few weeks later and I never had reason to pick up shares again.

In fact, as much as I hate to shamelessly promote my book, Option to Profit, the AMerican Tower events was used as an example if an opportunity created due to a market over-reaction.

What was most amazing was that just a few days after the consensus opinion, Morgan Stanley came out with an “overweight” position on AMT shares.

Aren’t you glad you pay for an expert?

Well, wouldn’t you know it, now that the buyout is scuttled, the same “Talking Heads” are pushing the thesis that this is great news for American Tower.

Same thesis. Different direction.

Today, American Tower was up about 4.5% compared to 3% for the S&P 500. Pretty impressive, although on Monday American Tower fell by nearly the same amount, well outpacing the S&P on that day.

Obviously, unlike the Dear Leader, I have no clue what the future holds, but i do know that the thesis was wrong the first time around, so I don’t have exceptionally high hopes for a turnaround performance this time.

The other thing that I know with great certainty is that if this had happened on the Pyongyang, after Gartman received his just punishment, something quite severe would have been meted out to the analysts and to those responsible for the analysts having their jobs.

There’s a good chance that whoever supplied the paper on which the analysis was printed would have been punished, as well.

Zero Mostel on the other hand, would have sung a song, cracked a few jokes and then proceeded to sell your shares back to you and those same shares to 20 of your closest friends.

So you tell me. Capitalist or Communist?

In the many years following the death of Zero Mostel the tragedy of the injustice toward him has receded into memory while his art continues to entertain, even though he was never officially rehabilitated.

Kim Jong-Il’s rehabilitation started today and he’s off to a great start for which your portfolio can be grateful.

Long die Dear Leader. 

 

 

 

I first started watching Jim Cramer when he was teamed with Larry Kudlow. Their show, interestingly enough called “Kudlow and Cramer” for a reason that has been lost to history, was an evocative blend of financial and political analyses.
I used to watch the show with Szelhamos. He really enjoyed Cramer. Partially that was due to the Lenin-like appearance and probably to some degree owed to the raw emotion and enthusiasm.
I think he also liked Cramer’s teeth.Szelhamos judged everything by its teeth. Horses, people, watches.
He would have loved Mad Money, but never got the opportunity. I can actually just picture the look on his face had he ever had the privilege of watching a chair get flung across the studio.
Cramer blocks my tweets, probably due to a misinterpretation of the title of a blog entry “Why I No Longer Watch Jim Cramer.”  Although it may also be related to the ill-advised combination of toilet paper and egg home decor that I provided one drunken morning when he got the booth I had my eyes on at The Olive Garden.
Because of that, I won’t include the photo of me at what would go on to become the Mad Money studio set, when I auditioned for the part years ago. To see that, you’d have to actually click here.
In hindsight, I should have gone with the goatee, chucked the sports jacket and not sat down.
Regardless, his transition over to Mad Money came at a very critical time during my own investing development and subsequent plunge into managing my own portfolio after 25 years with a trusted broker.
I think that I learned a great many things during the years that I watched the show. In fact, as I used to travel quite a bit back in those days, I actually recorded shows to DVD to carry along with me.
There must be a word for that, but I’m not going to dig up Sugar Momma’s copy of the most recent DSM-IV diagnostic terms.
Crazy is crazy.
Among the things that Cramer preached was doing your homework. He always recommended one hour per stock, per week. Because of that heavy time load, he also had a corollary recommendation that you shouldn’t own more than 10 stocks at any time.
As he used to say, “What are you? A mutual fund?”
Point very well made.
But on deaf ears.
Even though I was always a good student, those deaf ears weren’t really physically incapable, they just had a hard time listening.
You know the kind of person that I am.
The kind that always thinks that they’re right and always has a better way.
Guilty. And annoying.
Actually, in that regard, I certainly don’t think that I have a better way. Beyond that, when it comes to actual performance and credibility, it’s obviously laughable to even entertain the comparison, unless you’re actually looking to accumulate DSM-IV diagnoses.
Here’s the thing.
Even though I always did my homework as a child. And even though I always completed all professional tasks that could be thought of as “adult homework,” I don’t like homework.
It was with that kind of insincerity and hypocriticism that I would exhort my kids to do their homework.
Clearly, they knew what I was all about, as they were able to see right through me and could basically care less about things like homework, practice and all of those other bogus endeavors that are supposed to strengthen your mind, body and skillsets.
When it comes to investing, or more appropriately to trading, I’m an idiot and seek to do nothing to bring myself toward enlightenment. I certainly don’t do homework.
I’ve said before that I’ve owned stocks in the past, including at this very moment, that I have no clue as to what product or service they provide.
For example, Focus Media Partners, which I first sold puts upon, then bought shares and sold calls upon, after taking another cue from Muddy Waters.
Again, a case of not listening, as Muddy Waters’ advice was to flee ownership of shares due to more Chinese accounting improprieties.
Don’t know. Don’t care. I’m agnostic as to that information, but I do like the profits from the hedge trades.
Anyway, at the moment, I own shares in 21 different companies.
One of those happens to be Riverbed Technology, which was first put on my radar screen by Jim Cramer a long time ago.
I didn’t purchase shares when he first recommended, but did so some time after. It is still a mystery to me as to what it actually does, even after about 5 years of reasonably steady ownership. WHat I do know is that shares could go to a negative value and I’d still be in profits because of all of the great option premiums.
I just had some of my Dow Chemical and ProShares UltraShort Silver ETF shares assigned, as well as all of my Sallie Mae holdings. I happen to know what all of those are about.
So there.
With the cash in hand, I picked up shares in JP Morgan Chase and Halliburton at prices lower than at which they were assigned to me two weeks ago.
Funny how that happens.
But I also picked up replacement Sallie Mae shares and became reacquainetd with General Electric, as I hope to double dip on its upcoming dividend and option premium this week.
By my count I lost shares in 3 companies and bought shares in 4 companies.
After a few years of doing that kind of an exchange, you do tend to accumulate stocks in different companies.
Among the many things that I learned from Cramer was to avoid the arrogance of thinking you know exactly when to buy and when to sell. Buying and or selling your entire position at a single time is an exercise in arrogance.
So often, when picking up new shares, I do so in lots, as long as a single lot is large enough to warrant the profitable sale of call options.
So when I may see a position assigned it may not be unusual to see more than one stock take its place, especially if the assigned shares were high priced, as my Amazon and Goldman Sachs shares (used to be.)
But still 20+ different stocks?
Here’s the other thing.
Not only do I not like doing homework and not only am I lazy, but I’m a creature of habit.
I don’t like new things. I’m a terrible stock picker and happily admitted that when on Bloomberg Rewind last month. When I do venture out and about and try out a new stock, it always seems to be a mistake.
In Option to Profit, I talk about my “Old Reliables.” Those are the stcoks whose shares I go back to over and over again.
Why look for opportunities with new stocks, trying to find some hidden gem when your old friends are right there for you?
Like everyone, they have their ups and downs.
When the time comes and one of myr shares are assigned, there you go. Just look toward Old Reliables for one that has cycled down on its luck.
That’s a friend in need who will very often pay you back in gratitude.
How can you lose? You help out an old friend and at a bargain price for that matter.
That’s how JP Morgan and Halliburton made it back today after just a few weeks of being away from the portfolio.
I don’t want to complain or seem like a bad host, but so far today, Halliburton hasn’t behaved well after the morning’s purchase and I haven’t sold any calls.
As far as JP Morgan goes, just because I sold the calls an hour or so after it arrived back home and am hoping to see my shares assigned, there’s nothing personal.
I learned that from a friend many years ago.
Business is business and friendship is frienship.
He didn’t teach me anything about homework, so I took that as a sign of his disapproval, as well.
In the meantime, I realize that I owe Jim Cramer quite a bit. Believing so, is perhaps just a further manifestation of a contrarian attitude, as he’s pretty maligned.
Jealousy will do that.
Homework on the other hand, from my perspective, deserves to be maligned, as long as you don’t mind being an agnostic idiot.

 

Years ago I remember hearing a factoid that suggested the average person changed careers 3 to 4 times in a lifetime.

Not jobs, but careers.

I have absolutely no interest in trying to track the source of that tidbit down, nor do I care whether it’s really true or not. I’ve always believed that it was and for the longest time marvelled at how that could ever be possible.

The problem, with me, that is, was that I was looking at it with my own perspective. After all why kind of career change does a Dentist make? Sure some go on to specialize, as if that’s really a change.

In the past, I’d thought of pursuing a Law degree on an MBA, but the likelihood would be that armed with either of those, I’d probably still be involved in some aspect of healthcare, so it wouldn’t be much of a change.

In my own sort of smug way I could envision a guy pumping gas in New Jersey switching careers and perhaps instead loading shipments with funny sounding names in an IKEA dock,

Now that’s a career change.

The other day, as I do just about everyday after first checking the futures, the New York Times Obituary pages and Dilbert, I read James Altucher’s blog.

I’ve mentioned and referred to him a number of imes before, so I won’t do it all over again, except to say that his recent blog “My Lawyer is Dead” struck me with a single line:

“….this is what I do. It’s too late for me to do anything else.”

I don’t know how old the professionally unhappy attorney was at the time of that comment, but Altucher readers know that by age 49 he was gone.

As in “dead.”

I don’t really believe in coincidences, but all last week, one of my new favorite financial news shows, Bloomberg Rewind, hosted by Matt Miller had been featuring ex-Wall Street professionals who had left The Sreet behind, voluntarily or otherwise, in order to re-invent themselves.

The series was called “Life After Wall Street.”

One such story featured an individual that opened up a doggie day care center in Westchester County, New York. One of our best friends, who was also in healthcare did just that about 20 years ago, again coincidentally enough, in Westchester.

There must be something about high powered types living in Westchester, many of whom are probably employed on Wall Street, that engenders guilt about leaving the family pet at home while they and their 1% friends are at play or work.

That’s why I had to leave. And once we did, we got our first dog and left him at home all the time. Otherwise, the dog sitters would have been a total waste.

Our friend subsequently sold the business as it became incredibly busy and less joyful for her, albeit highly profitable.

The grass was green, as were the books but there had to be something else to life.

Time for yet another career change in her case she decided to pursue a lifelong dream of being a docent at the famed Bronx Zoo and giving guided tours to school aged children.

She reached that dream and has never been happier.

Maybe we should follow the routine outlined in that classic holiday movie “It’s a Wonderful Life” and just chime the bells each time a career is changed.

But the segment that really caught my interest happened to be on the same day as Altucher’s poignant blog.

Appearing were Rob Symington and Mike Howe, two of the three principals behindf “Escape the City.” Actually, it’s altogether possible that one of those two was actually Dom Jackman, but as a typical male, I really wasn’t paying that much attention, given that those resources are limited.

What attentive resources I do still retain were just enough for me to learn that Escape the City is an organization formed on the basis of a simple thought “Surely there is more to life than this.”

Where have I heard that before?

That can also be in the form of a question.

Somewhat maddingly, the site uses the same spelling rules as does my Smartphone’s auto-spell, yet I still was impressed with their organisation, although I still dislike being referred to as a Paediatric Dentist, even if in the past tense.

Anyway, “Escape the City” is designed with helping people rediscover their humanity. Re-inventing themselves or just doing something completely different with whatever tools and talents they have developed in the corporate world.

Their past lives.

What I especially liked was a Tweet that I received in response to one that I sent following their appearance on Bloomberg Rewind:

In response to “Sigh. If I only had skills, motivation and life expectancy I’d sign up. Great concept to restore man’s humanity, ”  I received  “he he. I’m handing out free slaps to anyone who says they’re too old to make a change.”

And then there was this poor 49 year old lawyer. He could have used one of those slaps.

About 15 years ago a very vibrant and successful guy, who was about 20 years older than me, but infinitely more alive, told me that you have to re-invent yourself every 10 years.

Chinese publicly traded companies do it all the time through reverse mergers. Why can’t we learn from them?

Hard to understand, but who knows if that life lesson could have helped an unhappy attorney who felt trapped and who wrongly believed that it was too late to change.

I re-invented myself about 9 years ago to a lesser extent and then again, this time fully, 3 years ago. Despite a successful career it wasn’t necessarily what I wanted to be doing for the rest of my productive life.

I’ve never looked back. I’m 57 now and eagerly looking forward to the next re-invention, even though I haven’t the slightest clue of where that road will begin or take me.

What I’ve come to realize (realise) is that you become empowered as coming to the correct observation that you’re a better steward of your destiny than your job, employer or career will ever be.

Now what kind of a financial blog would this be if I didn’t extend that lesson to stocks?

This segue is easy. It’s as easy as the difference between investing and trading.

It’s as easy as the difference between buy and hold and anything but buy and hold.

I never really thought about it, but my personal re-invention was done on the back of a philosophy that continually re-invented a stock portfolio. One that did away with any kind of emotional attachment to a stock or the thought that my activities had to be done a certain way, because that was the way it had always been done.

Yes, I’ll take a capital loss on shares that I held for a week just becasue it gave me a great option premium for having sold calls to someone who may or may not hate what they’re doing, knowing that the odds of a successful call option purchasing strategy are small.

To quote my Tweeting friend from Escape the City. “he he.”

On Monday, we begin the first options cycle for 2012.

I will have lost a small portion of my ProShares UltraShort Silver ETF shares, half of my Dow Chemical and all of my Sallie Mae shares. Actually, as far as most months and weeks go, the re-invention will be somewhat lessened this Monday, but not by my choice.

It was an efficient market that now tells me what to do.

The shares that I’ll be losing were good to me and as with each cycle and facing assignment, I feel that I’ve learned something, gained more skills and am altogether happy with the experience.

But it’s time to move on.

Like the old saying “you got to leave the dance with the one what brung you there,” I’m certain that I’ll return to ownership of all of those someday, but with cash in my account and just a little more experience to boot, it’s time to restore just a bit more of the humanity and move on to something else.

I registered with Escape the CIty but then realized that I really don’t have any skills or talents that anyone else would want.

Then I also remembered that I enjoy not working, although Sugar Momma worries that the sloth, as it sets in, will never retreat.

It’s entirely possible that for me, re-invention has led me to a dead end, but at that dead end I may have found the “more” that there is to life.

The humanity. The freedom from a prescribed track.

Altucher and the crew at Escape the City have it right. There is more to life.

Re-invent yourself now. 49 is just right around the corner or maybe even a couple of blocks back.

 

Update: On this Good Friday, I’m repeating this blog entry originally posted on December 16, 2011, written the day after ranting a bit about Dennis Gartman and receiving more hits than for any previous blog. Fast forward 4 months and history repeated itself in terms of hits when I carried on about Rakesh Agrawal’s disclosure about having purchased puts on his raison d’etre, Groupon.

I need to grow up, but I do need to face up to the fact that my raison d’etre is getting those hits..

Probably from even before the time that ancient cave dwellers were able to make wall drawings people have been asking the question.

“Why does it seem that the evil among us thrive?”

The corollary, “Why do bad things happen to good people” is frequently asked and was the topic of a very popular book in the early 1980’s.

That particular book may in fact be the last one that I’ve read, but I’m not certain if there’s a connection.

Whatever version you take or don’t take your Ten Commandments, it’s clear that good behavior has to be spelled out as do the choices that should be made.

Don’t kill.

Oh. Don’t. Don’t kill. My bad.

I’m not a particularly deep or profound thinker although I took many more than my fair share of philosophy and theology classes in college. In all likelihood I owe my inability to recall any discussions of good versus evil due to an everpresent fog.

Watching episodes of COPS week in and out over the past quarter century it’s clear that the likelihood or high probability of reward is not what drives people to do evil things.

In those cases it’s probably stupidity mixed in equal parts with alcohol that’s responsible for the repeated journeys down the wrong path.

Sometimes it’s profit motive.

Somewhere along the line I’m certain that the expression “the meek shall inherit the earth” was highlighted as an answer to those wondering about the inequity in the world we happen to live in.

Presumably the meek are the 99%. Wherever the other 1% goes it certainly going to appear much more spacious in comparison.

Since human nature is increasingly defined in our fast food world of instant gratification by “I want it now.” the lure of getting a reward in some other as yet unproven world is getting increasingly elusive.

That makes it much easier to rationalize evil deeds. The reward, if any, is now. Let the meek wait in the wings.

When it comes to mentioning people by name, especially in this blog, I tend to do so only when I have something good to say. Something positive. Something laudatory.

The case of Dick Bove is an obvious example of me doing precisely the opposite.

The reality is that the people that I say positive things about don’t need my approval. It’s easy to recognize those that provide added value to the world.

Occasionally, I’ll use someone by name to illustrate what I think will be a funny stream of thought and in those cases it’s not typically in a positive light..

I’m usually wrong about that, as I don’t read people very well, but I least I think the contexts are funny.

Interestingly, on the topic of the Ten Commandments  I did have an opportunity to chat with Newt Gingrich the other day and wanted to get his take on some of the more timely commandments.

His take on adultery was interesting, as he believed that adulterers were essentially a “made up people,” exisiting only as a result of marriage.

His reasoning made a lot of sense, but then you also have to take into consideration the existence of that hot babe in the cave next door.

But see, I used Gingrich, as an example and used his name.

I don’t typically do that, other than in a joking way.

Evil? I don’t think so. I think it’s a good natured way to point out the ridiculousness of things. In this case, all things Gingrich.

Up until the other day my single most popular blog posting, based on the number of hits in a day, was about Herb Greenberg. In that piece I tied my contrarian perspective to measuring how his increasing Twitter popularity was likely related to an upcomiong bullish trend in the markets.

That was an easy piece to write as I greatly respect Herb Greenberg and the role that he plays in ferreting out what many may consider to be “evils” in the marketplace. I think that I’m able to segregate the part of me that may recoil at the mention of a stock that I own from the part of me that respects the objective and probing analyses.

But yesterday I took a decidedly different approach, reminiscent of the “Angry Man in the Street” character of the old, the very old, Steve Allen Show.

You can read it for yourself. Not only did I right a rant, even though I benefitted from what I perceived to be unethical behavior, but I Tweeted incessantly about Dennis Gartman’s decision to publicly disclose that he had liquidated his gold positions, while his clients could not do so.

I may be very wrong in this regard, but it seems as if his clients would be potentially hurt by Gartman’s very public comments and actions.

Had I not known better, but on the basis of the number of Tweets that I had written, I’d have thought that I’d become some single issue lunatic living with 80 feral cats in the basement of my parent’s home.

Well, wouldn’t you know it, in terms of hits onto the blog, bad outswamped good.

Sorry Herb, but flinging arrows seems to be the way to fame.

Now, being one who lives entirely off of the stroke of an ego that comes from a mouse click, that has to get my attention.

It’s the proverbial battle of good versus evil.

Since I’m into corollaries and asking unanswerable questions, that further raises the concept of “is it acceptable to fight evil with evil?”

Sadly, there’s an incredible amount of positive feedback that comes along with successfully getting away with evil acts.

To some degree I wonder if selling call options is an evil act in and of itself.

Not that I’m likely to change my ways, at least not as long as it keeps being rewarding, but doing so exploits others.

Those others are the ones purchasing the call contracts.

You know who they are. They’re the ones that want to generate greatly leveraged returns to satisfy their avarice for riches, although I’ll just conveniently ignore those doing so to protect their portfolios.

Should I feel badly about capitalizing on someone else’s greed? After all, look at all of the evil conferred on society by leverage gone wild.

Boy, now we’re getting into the realm of the “Seven Deadly Sins.”

I suppose that I can take some solace if I sit and realize that there’s a good chance that someone will be purchasing some of my ProShares UltrsShort Silver ETF shares for $12, as it currently sits at about $15.

Now that’s really mean.

But it does pay. And in this case for some unknown call options purchaser, very handsomely at that.

By the same token however, I’m not being hurt too much. After all, I bought that batch of shares for $12.01 about 9 days ago and received $0.64/share premium. Even after expenses that will work out to a 5% ROI.

Hmmm.

So here’s to a world where we can take turns at being evil.

I’m good now, so I guess it’s your turn next, Dennis

 

 

 

 

 

 

Today was one of those days that if you were an investor in gold you might be able to remember where you were on this day even 20 years from now. When I say that, just to be clear, I mean 20 years in yen terms.

In fact, I remember where I was 30 years ago when the bottom fell out from under gold and silver. I actually was invested in futures at the time. Not quite as much as the Hunt Brothers, but for me, I was invested much more than I should have been by any measure of sanity.

Fast forward and imagine gold driving away in a white Bronco on the LA freeway. Maybe good advertising for Ford, but not so good for retaining the adjective “precious” in front of your metals holdings.  

If you’re Mr. T your personal net worth plummeted today, but even if you could jump off the ship you would likely sink wih whatever holdings remained, unlike your Captain, who had the foresight to jump ship earlier, with the lone flotation device aboard, without alerting the crew and those that trusted him to guide them on their journey.

 Metaphor? Not really.

 Captain Gartman. Good move driving that Bronco and jumping that ship.

 Did I mention that he took the map that also gave the location of all the sharks in the water?

I don’t own gold in any investment form, unless you count the potential value of my body if all of its component elements are sold upon my demise. I didn’t get those dental crowns as an investment. I got them because of bad habits.

Too bad there’s no market for cholesterol.

A few months ago while on CNBC, James Altucher raised some eyebrows, as he usually does anyway, when he pointed out the obvious.

“It’s a rock.”

Alright, in deference to my geologian readers, that’s not totally accurate, but even you you have to admit that you understand exactly what he was saying.

Yes, it’s precious, but how many times have you heard comments like “you can’t eat it, it won’t keep ypu warm, etc..’?

Usually, those kind of comments come from the likes of people that either can’t afford gold at its current price or by choice haven’t invested in any because they think it’s overpriced.

Those same people often discover that it can be eaten or keep you warm if it’s at the right price.

Forget the axiom that value is determined by whatever someone is willing to pay for the asset.

That’s only true when supply is well in excess of demand.

When it’s the other way around there’s no rational basis for price. Factor in fear, greed and the all too popular, FOMO.

The other day, Dennis Gartman, a noted investor, newsletter writer, talking head and whatever else he does announced that he had gotten out of gold.

Good for him.

It was actually indirectly good for me as well, as I own many shares of the ProShares UltraShort Silver ETF which goes up as the price of silver, another of those precious metals, goes down.

But what I really don’t understand is what Gartman was thinking.

In fact, he only sold gold from his personal account and very publicly proclaimed that fact. Reportedly, the managed accounts that he has for his clients preclude him from making such changes until the end of the month.

So it really was good for him.

His clients? Eh, not so much.

Now, if I was a Gartman client and a portion of my funds was tied up in gold, I don’t think that I’d be very happy to hear the steward of my account proclaiming to the world that he’s liquidated his personal gold holdings and I’m left with the bag.

Hey. What? He did what?

From my perspective and perhaps limited advantage, he sought to protect his reputation at the expense of his clients’ pockets.

Imagine, as an investor, there you are in a perfect position to watch the value of your portfolio plummet because the captain of the ship not only jumped, but let the world know that the ship was sinking before he let his crew know.

Captain Gartman.

With captains like that you don’t need Somali pirates. Especially when the captain alerts the pirates to your exact coordinates, what assets you’re carrying and what meager defenses you maintain.

My guess is that Captain Gartman would sell immediate salvage rights on his way out.

As a captain, Gartman may defend himself and say he doesn’t know the meaning of the word “fear” and didn’t act out of such emotion.

I might add that he doesn’t know the meaning of the word “fiduciary” either and certainly didn’t act in that manner.

But back to those ProShares UltraShort Silver ETF shares..

I’ve droned on about them for a while. Even though my average cost is $13 and with yesterday and today’s big drop in silver prices, it is up to about $15, my profit is predominantly from its sweet options premiums, even though the ETF capital gains are looking good, too..

Slowly and against my better judgment, those shares have become about 15% of my portfolio, making them well out of proportion to any other single holding.

But the premiums have been so precious.

Happily, I’ll be losing about 20% of those shares at $13. I would be happier if they were going to be assigned at $15, but those shares were purchased at about $12 and have gotten more than their fair share of premiums.

In the meantime, if the shares do close above $15 by Friday’s bell, I lose all of my shares.

Normally, I’d be somewhat saddened at losing such a money maker, but I’m beginning to salivate at what appear to be some bargain prices right now for lots of my other favorites.

The situation happens with regularity, but what makes this different is that I may have lots of cash available to pick up those bargains on Monday.

Caterpillar, Halliburton and Freeport McMoRan are yelling to me. They may not be precious right now, but they will be once again.

And if it should happen that I lose my ProShares UltraShort Silver ETF shares, guess what?

Yeah, Silver will go back up again and the price of the inverse and leveraged ETF will go back down.

Been there and done that.

Although the value of assets can rise and fall, if there’s inherent value, they will rise again.

Just look at Gold and silver.

Sure, it may have taken nearly 30 years, but their precious status returned.

Reputation? That precious attribute that you can work a lifetime to attain? That’s not so easy to resurrect.

I’ve never had the “privilege” of being a Dennis Gartman client, but his reputation and credibility have lost whatever luster they had, at least in my eyes.

Not so precious, anymore. 

 

 

 

 

As a relatively “unsocial” kind of guy, I’ve been very slow to adopt to social media. In fact, it was only at the advice, suggestion and arm twisting by my kids to use social media as a tool to sell books and get people to read this blog, did I reluctantly agree that they may be right.

Ego is an amazing thing.

Over the past 25 years, the only other things that I was slow to adopt was the one time ubiquitous “PDA” and the “mullet.”

Palm, Treo, Handspring. Whatever the names and models were, it’s all a blur, I never went that way although I may someday go for the retro look as nostalgia is due for its next generational comeback.

I’ll think about that after tonight’s Hall and Oates concert.

Today was just another one of those laughable days in the rumor mills. Good thing, because it was an otherwise utterly boring day with no news coming out of the EU and with Herman Cain out of sight.

As trades go, I sold Caterpillar calls, bought some more ProShares UltraSilver ETF and subsequently sold calls and that was all.

Boring.

As much as I took delight in my accurate prediction about retail sales, when it was reported that they were disappointing (in advance of the revised results after Christmas which will indicate that they were better than expected), it was still a tiresome day.

The best rumor and the one that got the most attention was about Netflix.

I own Netflix and have for about a month or so. In that time I’ve sold lots of weekly calls. Sometimes I’ve had the shares assigned and other times not.

Sometimes I’ve bought the shares back and sometimes I haven’t.

This week started with a reduced holding due to an assignment of a portion of my shares, but as luck would have it, the rumor mill started early.

And often.

Monday started with the rumor of a Verizon buyout of Netflix. WIth the market spending most of the day down 2%, Netflix was up about 7% in reaction.

Although I did my obligatory sale of calls, as has been my recent habit, I was a premature speculator and sold the calls a bit too early.

This morning, in the pre-market, the rumors started anew and Netflix surged.

Now if they were as good at streaming speed as the quick fashion in which the stock price gave up the ghost in the pre-open following a suggestion that Verizon was denying any interest in a buyout, they’d have a pretty great product,

The rumors and their rationalizations were fascinating.

Sometime in the past 24 hours the speculation was that Verizon was fueling the rumors to drive up Netflix’s stock price to make it a less attractive take over candidate for anyone else.

This is the kind of rumor that may be referred to as a “conspiracy.”

Interestingly in my area, Verizon FIOS ads still tout the ill conceived and subsequently aborted Netflix pricing plan as a reason to make the switch over to FIOS. It’s not really accurate, but that really doesn’t matter, because it was accurate at one time. For a couple of days, for that matter.

That seems like a better strategy to make it less appealing to anyone else.

Attack their business through that good old American concept of competition. Sure, unfounded rumors are good, too, if you want to cause your opponent to stumble a bit.

But driving up their price?

Then it was a return to the plain vanilla rumor that started it all.

Verizon was planning to buy Netflix.

Although a Verizon spokesperson later said that there were no such talk, many in the investing world believed that the issue was not whether there would be a buyout, but whether anyone would figure out that the holdup was due to both parties being caught up in a Verizon telephone menu loop. All that’s needed is for someone to realize that all they have to do is press “O” to be connected to a buyout specialist.

In the meantime, Netflix was then played to the vest. No one really knowing which way to go.

As a seller of options I like movement because volatility drives up premiums. But once I get those premums, I love stagnation. That may also explain why I haven’t matured one bit after 27 years of marriage.

So while the Netflix story plays out, and my time horizon is only a week at a time, attention was turned to Zynga.

Zynga is one of those social media phenomena that I haven’t adopted.

Best known for its Facebook resident games, especially Farmville, it’s due to come public at the end of this week.

As opposed to most other recent tech and social media IPO’s, Zynga is different in a number of ways.

One is that it is reportedly and surprisingly not a fun place to work. Brain drain is especially expensive when brains are your leading commodity. An unhappy mind is not a creative mind.

What was especially interesting is that in advance of the IPO, one analyst has already come out with a “sell” recommendation based on an “underperform” prediction.

Now I know knothing about Zynga or its products, but I do know that investors are willing to pay for growth opportunity.

Zynga is so heavily tied to Facebook, there’s obviously a liability asociated if Facebook heads in a different direction. Ask any Apple suppliers that have seen the Golden Goose seek better priced vendors.

But really, how much more is Facebook itself going to grow?

How many more new games that set the social media world on fire, especially without cannibalizing its exisiting game base, will Zynga put forward?

Besides, once they’ve seen the next big fad, how are you going to keep them down on the Farmville?

Seems to me that buying Zynga shares is akin to buying out a floppy disk maker about a decade ago.

What Zynga needs is something that will capture the interest of the 1%, like me, who don’t want to get their virtual hands dirty by playing Farmville.

Maybe “Rumorville” is the next logical step. Trade in the green of the farm for the green of the portfolio.

Buy and sell analytical tools, inside information, algorithms and television appearances.

Want to be a talking head? No problem. All you need is the right currency. “Want to be a rainmaker?”

Immunity from prosecution? You can buy it, just like in real life.

I suppose that if you’re on the short end of a rumor it’s not very funny, but that’s the chance you take, especially with all of these momentum stocks bouncing around.

For now, as long as Netflix stays above $65 and trades in a predictable range, I can be a very happy guy.

Maybe even enough so to be a sociable kind of guy, as well.

Nah.

 

Follow me on Facebook and Twitter. Clearly my overt display of anti-social behavior is a cry out to be liked.

 

 

 

 

 

 

“I asked her name, she said blah…blah…blah…she wore 9/10 pants and a very big bra…”

O.K. I’m back…..

My “Any Of You”  thread includes a stock ticker. MGIC Investment Corp, whose ticker is MTG. It is probably my favorite stock of the past two months.

It has formed a chart pattern called a cup and handle.

The “Cup and Handle” was first described by William O’Neill in his 1988 book “How to Make Money with Stocks. It is also the same William O’Neill whose name shows up on my caller ID when someone using his good name is pitching a free no obligation trial leading to a subscription to Investors’ Business Daily.

I need IBD like I need IBS. Just talk of Taco Bell makes that bowel irritable. Yet, yo quiero Taco Bell.

Maybe a nice soothing tea instead.

Anyway, the Cup and Handle represents a bullish continuation pattern.

After the handle is formed and hurries to the resistance line which is predicated by the tops of the shoulders as well as the head….ah “head” one of my favorite words…say it again “head” I will be back in a minute….O.K I’m back…the thrill for all chart watchers occurs “THE BREAKOUT”

Not the OXY 5 breakout where you have to cleanse properly like Jessica Simpson., this is the cash money breakout. Not cashmoney as in the rapper crew….this is DOLLARS AND CENTS….blue skies….no resistance type of breakout. This is what we wait for as we have nurtured the formation of the cup ourselves from early August till early December.

You are in a relationship with the cup.

You watch it go up and down. You tell it where to go.

You get mad at it when it goes down and you give it an “ATTABOY”  when it goes back up.

As you get confirmation of the formation of the handle you realize you have fathered the cup to finality. You have led it down the preconceived path that was destined for your precious cup

Ah, what a proud PAPPA.

As MTG prepares to leave its nest and head for blue skies you realize the hard work it took to get to this point. How many ups and downs did it take to reach the end point? But you needed all the ups to realize the downs and all the downs to realize the ups. Without all this there would be no cup and the handle would have nothing to attach itself to, thus voiding the breakout.

No ups, no downs?

That means no handle and no breakout. All the ups and downs are IMPORTANT….they are VITAL…to complete one’s journey….one cannot be accomplished without the other….

It all boils down to that classic “WHAT GOES UP MUST COME DOWN” unless it has lasted for 4 hours then quickly call a doctor or in my case screw the doctor I am calling 1-800-…or maybe I should just screw the doctor if I am going there any way.

I think I am on to something here.

“You ….you got what I need but you say he’s just a friend…..yeah you say he’s just a friend…oh you…you got”

O.K. I’m back….

Life as a stock is no different than our lives when it comes to ups and downs. Both need the ups and the downs to form the end point. You just do not realize the relevance of the parts at the time of formation but it becomes crystal clear in the end.

As for MTG, I give you a personal thank you for the opportunity to watch you grow from a little $2.16 kid to a $3.78 teenager and looking forward to your $5.26 tenure as an adult.

PAPPA is proud but after $5.26 you are on your own as I need to nuture my other kids.

“The cats in the cradle and the silver spoon…..”

 

I have a very cloudy crystal ball.
The cloudiness is internal and is just reflective of my own degrading and poorly capable neural mechanisms. It just doesn’t know how to deal with data and apply appropriate weightings to streaming information. It also seems to be incapable of consistently recognizing when patterns are likely to reverse.
My crystal ball is also in need of dusting as lots of extraneous factors get in the way of rationally approaching the prediction business. Some of those external factors may be personal baggage, while others just represent the irrational world as it attempts to interpret facts and rumors.
Anyway, my crystal ball is in constant need of dusting.
So I don’t begin to believe that I know what’s going to happen by even the next keystroke. I’m envious of all of those that regularly appear on TV and are able to forecast the future.
I’m especially envious of those that don’t care about the eventual outcome of predictions and who don’t believe in the concept of “report cards.” You can either look at predictions as being purely of entertainment value or as a guide for how to live your life.
I don’t see them in either of those ways.
In a perfectly ordered world simple mathematical principles should help to explain all events; past, present and future.
Maybe that’s the way it is on our newly discovered twin planet, Kepler 22b, the one that they’re calling “super earth,” but it sure isn’t that way here.
Yet mathemeticians, statisticians and physicists are widely sought after by financial firms who clearly believe that the market continues to be a rational place that can be dissected into a collection of equations that cascade with great predictability.
Given that the little guy doesn’t move the needle very much, I can only believe that in a zero sum game the big winners of the day are very similar to the big losers of that same day, in that both place great reliance on high priced objective tools that are used to predict the behavior of a rational market.
I can also surmise that those that win on one day are every bit as likely to lose on the next, as is the opposite true.
Otherwise, we would see the extinction of those that are in the habit of losing and then it would no longer be a zero sum game.
It would be a Charlie Sheen like universe with only winners prowling the markets.
As result, the only logical explanation can be that the crystal ball used by the big boys is every bit as cloudy, but is more capable of moving the needle.
Presumably, trading algorithms can only suffer from cloudiness of design, rather than being subject to dustty conditions, so they have me at an advantage.
The one thing my crystal ball has been good at has been to realize that computer storage media will evolve, leaving older prehistoric forms worthless as the hardware necessary to read the media of yesterday all become extinct.
So before the inevitable would happen I always transferred my files to the latest generation of storage. My old 5 1/4′ floppies gave way to 3 1/2″ less floppy disks, which in turn gave way to CD, then to DVD and then to various USB ported external devices. To my credit, I also foresaw the need to skip the Blu-Ray option.
The other day, while cleaning out a closet in preparation for Phase 2 of our re-carpet process, I discovered a long ago forgotten PC in a closet. It was a tremendously heavy first generation Pentium processor with a 1 gigabyte hard drive and no USB ports.
I remember thinking just how “kick ass” that sweet gig of storage was going to be.
And it was until the world invented music and photos.
In the time before there was art of any sort that computer was all that anyone could have ever needed.
I didn’t dust off that computer, but I did dust off an old statistical analysis program that I used to use back in the days when I actually did “research” and back when my existence may have offered “added value.”
I thought that perhaps a methodoligical approach to data could help my crystal ball see just a bit more clearly.
Luckily, I’d saved the installation disks, which had come on those 3 1/2” floppies onto a CD, in anticipation of the death of the floppy. I even knew where to find that CD, although I hadn’t used the program in about 10 years.
What prompted the need to dust that statistics package off was the desire to see whether there was any correlation between Friday and Monday market closes over the past 6 months.
My semi-casual observation indicated that there was some kind of an association, but I needed more confirmation.
Obviously, the very thought that I would uncover some previously undiscoverd correlation was delusional, as if all of the highly compensated people designing prediction models hadn’t already looked at every single possible relationship imagineable. I mean if someone has looked at variables such as Original conference of Super Bowl winner in a leap year, then days of the week had to be a given.
It’s just that no one ever told me.
Increasingly, it had empirically seemed to me that we were seeing large moves on Fridays which especially puzzled me if those large moves were to the positive side.
WIth all of the uncertainty these days, whatever happened the the adage of not wanting to be long stocks over the weekend?
Take this past Friday, for example. The market ended up just shy of 200 points.
Again.
In fact, we’ve seen 13 triple digit moves on Fridays over the past 31 weeks. 7 of those have been upward moves. Since George Bush declared that he had won a mandate in 2000 with less than 50% of the popular vote, I suppose that you could be justified in saying that 7 out of 13 represented a mandate of some sort.
But as it turned out, no matter how I sliced, diced and transformed the data, the chances of having a big move on Friday is not likely to predicate anything for the coming Monday. What is not likely to happen, though, is seeing a triple digit upward move on Friday followed by an equal move on Monday.
In fact, of the 16 triple digit moves on Monday, only 5 had been preceded by a triple digit Friday.
Too bad.
As the final week of the December options cycle comes to an end, I only need toi replace shares of Green Mountain Coffee Roasters and Netflix, due to assignment.
That means that everything else could benefit from a nice rise on Monday.
What I can predict is that on weeks that I suffer lots of assignments I love seeing Mondays open in a decidedly negative direction so that I could use the newly available cash to pick up bargains.
I can also predict that on those weeks that I don’t have much cash to reinvest I love seeing a strong jump out of the box so that I can sell optins into the strength.
I suppose that represents an algorithm of some sort. I may have to give myself a nice Christmas bonus for that one.
After dusting off the statistics program and evaluating the past 31 weeks of Friday and Monday closing data, creating subsets of triple digit moves on either of those days and then looking at absolute values, as well, I came to the conclusion that nothing really mattered.
“The trend is your friend” has given way to “MoMo” stocks that could just as easily become your worst enemy as your friend.
With all of the talk last week of a stock market melt up, coming fresh off the heels of the same people who the previous week had characterized the market’s move as reflecting a “dead cat bounce,” my inartful analyis says that there’s very little reason to believe that any melt up will happen on Monday.
If I’m wrong, I can always go back to my old profession and at least put that duster to the use for which it was intended.