Category: Uncategorized

This Monday morning, which was just a dreary and cold mid-Atlantic day, there wasn’t too much to cheer about.

Over the past three years, I’ve been drafted into the culture of football and now find myself, somewhat uncharacteristically, actually caring about games.

Culture. Football. Talk about oxymorons.

Just a few short years ago my only foray into football would have been to watch about a half’s worth of the Super Bowl and take the occasion to excuse the non-stop ingestion of deep fried anything.

I looked at the Super Bowl as being Saturated Fat Sunday.

Now, I even have four pro football games under my belt, although if given the opportunity to go to a game, the weather is still a factor in my decision process, as well as who’s going to be singing the National Anthem.

I’m still far from a fanatic. I even turned off the New York Giants game last night during overtime and never even bothered to go down to the basement and turn on the big screen TV to get a more real-life feel.

It’s not as if I had to be up early the next morning, it’s just that I was probably depressed because Simpsons episodes had been pre-empted in favor of the football game and I’d already seen that eposode of Chappelle about 300 times.

I did take the Baltimore Ravens loss harshly, though, particularly knowing that my kids are big Ravens fans. The manner in which they lost the opportunity to tie the game and force it into overtime was especially hard to accept, as an easy field goal was not as advertised.

The big news this morning was that loss and the resignation of the co-CEO’s of Research in Motion and the subsequent appointment of a new CEO.

The two items are not in any way related, but then did become so.

The question of the day on CNBCm tied it all together as they asked who likely got more sleep last night, Billy Cundiff, the Raven’s kicker or Thorsten Heins, the new RIMM CEO?

Ordinarily, being named new CEO is a pretty positive thing, unless you’re Leo Apotheker.

In this case the market didn’t react terribly kindly to the announcement of Heins’ ascension, especially since he was considered to be somewhat of an insider who may have also been asleep as the ship was sinking.

Oh, and the accent didn’t help either as the prevailing joke was that RIMM hired Leo Apotheker’s son.

I don’t know what kind of jokes are circulating today regarding Cundiff’s miss, but I doubt that there are many. People take their football more seriously thatn they do their stocks.

One was tragic, the other just business going about business.

Today would have been a good day for both of those guys to have stayed under the radar.

I’ve always liked that philosophy, although as I’m getting older, I tend to be moving toward the draw of the radar’s waves.

In fact, what a great opportunity to remind you that there’s still time to vote for me, repeatedly, in the “Finance” category of the “Shortie Awards.” Earlier today I was tied with Suze Orman, so I’m hoping that with your help I can pull ahead and parlay the victory into my own branded debit card.

One of my sons is reading Orwell’s “1984.” about 35 years after I read the book and truly felt the fear of that kind of future society. I don’t think that he senses the invasion as much as those of my generation who actually valued privacy and even anonymity.

Too much attention can never be a really good thing, despite the adage that “there’s no such hing as bad publicity.”

I certainly understand why there are times in life that you do want to elevate your profile, as you can’t win a popularity contest unless people know who you are.

Jon Huntsman?

Even Buddy Roemer didn’t know who Jon Huntsman was.

I suppose that it is possible to win a popularity contest if people just check the wrong box, but who’s to say that Patrick Buchanan and Ralph Nader weren’t wildly popular amongst elderly Jewish voters in Florida?

Maybe Mitt Romney will be hoping for that kind of Florida repeat in Florida. Maybe he should tell people that he’s Jon Huntsman and then offer to check the boxes on their ballot for them.

When it comes to stocks, I don’t particularly like it when the limelight is on a stock that I own.

Nothing good comes of it and if it does, it’s just a set up for a fall, so best to abandon ship. Good news is a good time to bail and take profits.

These days that easier to rationalize as we’ve learned that captains no longer need to feel bound to go down with the ship.

Although I don’t like the spotlight to be on my shares, I definitely don’t want the ones that dwell with the mushrooms in the basement. It’s hard to sell options on shares of companies that no one really knows about, so there has to be a balance.

Stick with boring household names.

Earnings season always represents a problem, even for these boring household names, in that you just know that the spotlight is coming and there are often irrational reactions to the news. After last week’s wild reaction to Google’s disappointing numbers, I took that as a good opportunity to pick up shares today, once attention was diverted elsewhere.

Like RIMM.

Of course, I did learn a lesson following the previous earnings season when in complete arrogance, which comes with being on the radar screen, I purchased shares of Amazon, Netflix and Green Mountain Coffee Roasters, all in advance of their earnings reports.

Although the losses on the underlying shares were really softened by the repeated options sales, I conveniently disregarded opportunity costs, when I could just as easily have foregone the excitement and invested in old favorites, like Microsoft or JP Morgan.

What I particularly don’t like is when an analyst gets on the air and spouts an opinion and then you see an immediate impact on the streaming ticker.

Once their on air, they don’t really care terribly much about the inherent worth of their recommendation. What they care about is the inherent worth of their appearance and how much additional value is added to their personal brand.

As an analyst, the more you’re on the radar screen, the less important is the content that you provide.

As a one time educator, I can tell you that as I got older and better known, my presentations were more about story telling and increasing brand value, than in adding worthwhile content and knowledge.

If you’re expecting to get some really timely news, It seems highly unlikely that an analyst, who’s being paid for his research and reasoned opinions is going to offer an opinion, but have his appearance preceded by a “Breaking News” banner.

Chances are pretty good that whatever that opinion is, whether it’s valid or not, it’s already well established on the radar screens of those that own the radar.

In keeping with the totally unrelated Heisenberg Principle, the attention paid to the shares creates a new reality. Sooner or later the real reality has to return, but for the individual investor the reality is often the opposite of the dream and the anticipation.

This an example of just how wrong the expression “why pay, when you can get the milk for free?” is, at least in regard to investment advice.

“The best things in life are free”?

Sure. In that case, I need to start an outrageously high subscription charge to read this blog.

Someday, probably someday soon, the heat and attention will be off Billy Cundiff. Like with the late Joe Paterno, it seems a sad trickle down of our very basic human nature that the most recent event occuring in someone’s life paints the majority of the picture.

We have probably heard the last of Billy Cundiff as a Baltimore Raven. For him, the radar scrutiny will soon be a thing of the past.

For Heins, it’s just beginning.

Looking at it from that perspective, I suppose that if we had to be on the radar screen it’s best to still have a long future of scrutiny ahead or at least to be able to choose at what point the rader will be turned off.

But for me? I’ll save you the trouble.

I’m right here, sitting on my La-Z-Boy and plan to be here for a long time to come.

 

 

 

Check out Recent PortfolioTransactions

 

Today’s Trades	Security	Type	Action	Type
January 23, 2012	GMCR	Option	STO	Weekly
January 23, 2012	ZSL	Option	STO	Monthly
January 23, 2012	ZSL	Stock	Added
January 23, 2012	GMCR	Stock	Bought
January 23, 2012	V	Option	STO	Weekly
January 23, 2012	V	Stock	Bought
January 23, 2012	HAL	Option	STO	Weekly
January 23, 2012	HAL	Stock	Bought
January 23, 2012	FMCN	Option	STO	Monthly
January 23, 2012	FMCN	Stock	Bought
January 23, 2012	AXP	Stock	Bought
January 23, 2012	MS	Option	STO*	Weekly
January 23, 2012	NFLX	Option	STOP	Weekly
January 23, 2012	CHK	Option	STO	Monthly
January 23, 2012	GOOG	Option	STO	Weekly
January 23, 2012	GOOG	Stock		Bought
January 23, 2012	RIO	Option	STO	onthly
January 23, 2012	AAPL	Option	STO	Weekly
January 23, 2012	MOS	Option	STO	Weekly
January 21, 2012	RIO	Option	Expired
January 21, 2012	VMW	Option	Assigned
January 21, 2012	SLM	Option	Assigned
January 21, 2012	RVBD	Option	Assigned
January 21, 2012	MSFT	Option	Assigned
January 21, 2012	MOS	Option	Assigned
January 21, 2012	AXP	Option	Assigned
January 21, 2012	BP	Option	Expired
January 21, 2012	AAPL	Option	Expired
January 21, 2012	CAT	Option	Assigned
January 21, 2012	DD	Option	Assigned
January 21, 2012	DOW	Option	Assigned
January 21, 2012	FMCN	Option	Assigned
January 21, 2012	GMCR	Option	Assigned
January 21, 2012	CHK	Option	Expired
January 21, 2012	HAL	Option	Assigned
January 21, 2012	ZSL	Option	Expired
January 21, 2012	S	Option	Expired
January 21, 2012	TXT	Option	Assigned
January 21. 2012	GS	Option	Assigned

  

 

 

 

Everyone knows that “history repeats itself.”

That must explain why we keep making the same mistakes. After all, since we all know that you can’t change history, why even bother?

Unless you’re Newt Gingrich. In that case revisionism seems to work, as long as he remains the victor and in charge of re-writing history.

For example, Newt’s current position, which seemed to make hostess candy Crowley’s eyebrows rise about 5 inches, is that his congressional reprimand for ethics violations occured only because he convinced Republican members to vote for the reprimand so that they could get back to the business of working on a balanced budget.

He credits himself with getting the Congress back to work and selflessly sacrificing his reputation.

After all, is there any politician that wouldn’t put nation before self?

History tells us that the victor writes history until the next victor comes along.

Once you call yourself an “historian,” you get a free pass and can alter immutable laws of time and place and make the details of the past fit nicely into the current version of the past. Again, being ascendant helps.

But we’re also said to be able to learn from history and especially to learn from our mistakes. In fact, “fool me once….” speaks to the expectation that we won’t make the same mistake a second time.

Sometimes, though, the past may lead us down the wrong path.

My guess is that it would be a grave mistake, perhaps literally, were Newt Gingrich to ask Callista to accept an “open marriage.” The fact that she reportedly supported the concept before their marriage probably has little predictive capability in 2012.

There’s no greater indicator of our pre-occupation with the concept of changing the past and our mistakes than the fact that the single most aired movie on broadcast television and cable is “Groundhog Day.”

I may have made that statistic up, but right now, I’m the one re-writing history.

Had we really been able to learn from the past there would have been Stephen Tobolowsky film festivals competing with Sundance and Cannes.

So clearly, we are all idiots, but at least Tobolowsky is front and center on Twitter and forms the basis for a more hopeful view of the future.

Not so long ago, only the spoken word was available to document our history and experiences. Life spans were short and there were people whose sole reason for existence was to maintain a culture’s hold onto its past and pass it on to the next generation.

During those days mistakes were often fatal. That’s a strong motivator to not repeat some dead guy’s mis-step.

With advancing life spans, the written word, film and video records and now digitized data available, one would think that we’d be pretty good at observing the past and using the data to accurately predict the future.

To get an idea of how that’s been working out, just go to your local doctor’s office and casually spend some time in the waiting room scanning through some aged issues of TIME magazine and see just how accurate the futurists turned out and how befuddled their tea leaves must have been. Who knew that you could smoke the stuff before reading it?

Interestingly, in the world of technology and start-ups, a past history of failure is far from fatal. There seems to be a real premium when recruiting to find those that have failed on someone else’s dime. The bigger the failure, the better, as it was assumed that the price paid for failure was borne by someone else and that the value of the lessons learned would accrue to the new entity.

Not that I’ve been a political watcher, but it would have been hard to predict for example, that the remaining Republican candidates for the nomination, each of whom tries to portray himself as the only true conservative, have blasted Mitt Romney for being a capitalist.

The attacks against Romney for his years at Bain Capital sounded as if Dennis Kucinich was ghost writing for even Newt Gingrich.

Now, reports that Romney may have been in the 15% tax bracket has the assaults coming anew.

Wolf in Sheep’s Clothing Syndrome? Because those couldn’t possibly be Republicans standing at those podia, at least not based on my experience. What really bothers me is that based on my past history of voting for losing candidates in Presidential elections, I’m likely to end up voting for one of those guys and there may be nothing that I can do about it.

Then, there’s also the famous quotation from George Santayana:

“Those who cannot remember the past are doomed to repeat it.”

That supports the concept that we can avoid making the same mistakes the next time around.

Probably the biggest mistake is to believe that history can, in fact, teach us anything.

The stock market is a perfect example of that.

All throughout the day, there will be a seemingly infinite number of charts shown and dissected on air. For each that makes it to whatever the digital equivalent of the air waves is, there must be an infinite number being studied elsewhere in cubicles, meeting rooms and in presentation halls.

So you would be excused for believing that all of the Ph.D’s would have this thing nailed with one algorithm or another.

And yet, how do you explain ignoring the axiom that warns of staying long in equities over a weekend when there’s uncertainbty on the horizon?

I’m sure that the actual saying is much more pithy, I just can’t recall what it is.

In fact, over the past 37 weeks, I like prime numbers, the Dow has gone up triple digits 8 times on a Friday, counter to the axiom.

And the reward for thinking that experinece was meaningless?

Two of those eight times were followed with up days on Monday.

Let’s see, I think that’s less than fifty – fifty.

Well, I for one, didn’t go long into the weekend, but I can’t give allegiance to an axiom for that. It’s that about 60% of my options contracts were exercised. For the first time in long memory, I won’t own any Goldman Sachs shares on Monday. Gone too are the recent JP Morgan Chase shares that were picked up in a rekindling of an old relationship.

Open relationship, I might add, as dalliances with old friend Microsoft came and went just as quickly.

In hindsight, I picked a bad two weeks to do what I’ve been doing for the past four years with religious fervor.

Besides, when has religious fervor lead us down the wrong path? You didn’t see the Israelites worship a Golden Calf a second time, did you?

They learned from their mistakes.

Common sense would tell me that I should learn from my recent mistake and turn on the “greed” compartment of my brain and forego the options premium income for the meteoric capital gains that history ordains.

Or I could look at the charts that I disdain and be reminded of the cyclic nature of everything that has true worth and inherent value.

Good companies exhibit cyclic share performance.

So which past is the one that will repeat itself?

I look at the band on my right wrist, “WWTD?”

“What would Tobolowsky Do?

The beauty of asking that question is that there are a couple of hundred roles from which you could derive the answer that best fits your working hypothesis.

Sort of like what politicians do on such a regular basis.

Now please, don’t interpret that as drawing a parallel between politicians, especially those that practice revisionism, to the more honorable practitioners of the thespian arts.

I don’t know Stephen Tobolowsky and certainly no Toblowsky’s were harmed in the creation of this blog entry, but his classic Groundhog Day character, Ned Ryerson, didn’t seem to learn from his past experiences.

Yet, despite Santayana’s unspoken thought that not doing so was the way down a dangerous pathway and despite the smugness of those who believe that we can control our future by mastering the past, Ned Ryerson knew better.

He kept right on smiling, despite obstacles he just kept plugging away and always maintained an optimistic air that made him Ned Ryerson. He was immutable.

What a great lesson. What a great character and performance.

Ned Ryerson showed that the past was meaningless, because there was always today to form the basis for a new past and to create a future not shackled by the past.

 

 

 

Check out Recent PortfolioTransactions

 

Today’s Trades	Security	Type	Action	Type
January 21, 2012	RIO	Option	Expired
January 21, 2012	VMW	Option	Assigned
January 21, 2012	SLM	Option	Assigned
January 21, 2012	RVBD	Option	Assigned
January 21, 2012	MSFT	Option	Assigned
January 21, 2012	MOS	Option	Assigned
January 21, 2012	AXP	Option	Assigned
January 21, 2012	BP	Option	Expired
January 21, 2012	AAPL	Option	Expired
January 21, 2012	CAT	Option	Assigned
January 21, 2012	DD	Option	Assigned
January 21, 2012	DOW	Option	Assigned
January 21, 2012	FMCN	Option	Assigned
January 21, 2012	GMCR	Option	Assigned
January 21, 2012	CHK	Option	Expired
January 21, 2012	HAL	Option	Assigned
January 21, 2012	ZSL	Option	Expired
January 21, 2012	S	Option	Expired
January 21, 2012	TXT	Option	Assigned
January 21. 2012	GS	Option	Assigned

  

 

 

 

 

The original Szelhamos Rules ran for precisely 1 year, from February 2007 – February 2008. This article originally appeared February 1, 2008 on the occasion of an earnings related Google share price plunge and the announcement of Microsoft’s bid for Yahoo!.

As a Google shareholder, I haven’t been very happy lately. In fact, I was upset about some of what I considered to be Google’s disregard for its shareholders even when it was approaching $750. Imagine the rants that are going through my mind now that Google is pointing another $40 points lower in the pre-open following yesterday’s earnings release.

Why exactly were we spending money on space shots?

Focus guys. Focus.

I understand why Richard Branson does it, but Google? Is there something to search for on the moon? Maybe they can use the lunar surface to house their servers in an ecologically friendly fashion.

So the word comes out today that Yahoo received a so-called “unsolicited” bid from Microsoft for $31, a hefty premium to yesterday’s close. It will probably take all of 10 minutes for Yahoo’s board to meet and accept this “unsolicited” offer. But just a few short months ago, Yahoo was at $31, without any takeover rumors propping it up.

And with Microsoft offering Yahoo shareholders a choice of cash or stock, I decided to pick up some shares of Yahoo at $28.50 and immediately sold some February $30 call options on those shares.

I’ll never be mistaken for an arbitrageur, but this seemed like free money.

Considering that Microsoft usually gets a free pass when it comes to anti-trust issues, and Microsoft said that the deal is not contingent on financing, this is a done deal.

As far as the European Union goes, who really cares? Microsoft never really even cared about the operating system and browser bundling debacle a few years ago. They’re smart guys with really deep pockets, who could easily figure out runarounds, while paying any imposed fines.

Those are just the cost of doing business. In the old days, it just would have been in the form of kickbacks and bribes.

Jerry Yang is now off the hook. He won’t be among the legions of ill-fated returning hero CEO’s who weren’t able to resurrect their moribund companies.

The question becomes how will two substandard search engines going to do against Google and will Google reflexively buy the 90% of AOL that it doesn’t already own and doesn’t need.

Google shouldn’t and won’t. But the very thought has breathed a little life into the lifeless shares of Time-Warner.

With all the talk about synergy, the ultimate synergy would be Yahoo paying Google to send Terry Semel into orbit. Maybe the architect of Yahoo’s fall into weighless orbit can help establish Google’s first extra-terrestrial colony.

Years from now, when the history of internet search is discussed, it will be Google that everyone will remember, with a few oldtimers recalling something else being around. What was that other one? Ya Who?

Microsoft’s offer for Yahoo is valued at about $45 billion. Based on what Google paid for its 10% share of AOL a couple of years ago, the remaining piece would be worth about $45 billion, as well.

Last week, I thought that Google might go down after Micosoft announced its earnings and I was prepared to pick up some more shares.

It didn’t happen that way, but at these levels, I’m ready to pick up some more Google shares once I give the market 30 minutes or so to get over some of the initial emotional trades.

In the meantime, the pre-open market rally that was being fueled by Microsoft was then killed by the official jobs numbers. Even though the unemployment rate went down to 4.9% from 5%, the revisions were killers and 100 points just evaporated in a couple of blinks.

A decline in payrolls was not exactly welcome news, but the tends to validate the Fed’s decision to drop rates and may also be validating S&P’s call that the recession started 3 months ago.

In the meantime, a few months ago I had written about Rio Tinto, which is one of my longest holdings. I’ve had shares for more than 10 years. Back then, I wrote that the Chinese weren’t very happy about the prospects of a Rio Tinto takeover and a potential stranglehold on the materials that China needs to keep its engine going and growing.

And today China acted.

They’re picking up a piece of Rio Tinto, together with Alcoa, which had also been rumored as a potential suitor of Rio Tinto. Since I also own shares in Freeport-McMoran, BHP Billiton and Lundin Mining, the trickle down effect is welcome new, especially since this sector has really been beaten up over the last month. How nice that at 10 AM Rio Tinto is up $41, while Google is now down $41.

Yin and Yang.

No pun intended.

The only problem is that I have twice as much Yang as Yin.

Isn’t that always the case?

In the new world, the one that will be a post Google-Yahoo union, Microsoft will surge to an Avis like position in the world of search. They will be a strong, but still distant #2.

$45 billion is a lot to pay to be a runner-up. But sometimes, being the runner-up can put you within a heartbeat of being #1.

No doubt tha’s what America’s mayor has on his mind. Being #2 to the oldest President in history may have its advantages. There’s nothing wrong with the back door, if that’s what you’re interested in, although I don’t think that Giuliani or McCain will consider legalizing it.

With all of this talk about the Bush proposal for an economic stimulus package, my guess is that McCain and Giuliani are all for stimulating your package in the privacy of your own home, but aren’t totally ready to embrace an entirely new world.

The wonders of internet search back this line of thinking.

A Google search for “stimulus package” doesn’t seem to use an algorithm that identifies many economics related sites. Whereas there is still some debate over the nature of the economic stimulus package that should be created, the online community seems to be in near universal agreement that the stimulus package requires batteries.

Maybe Microsoft and Yahoo will be able to get it right.

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If you’re a purist, you know that “reconnaissance” is a term that is applied to the gathering of information regarding an enemy. Although typically done covertly, it isn’t considered espionage since it’s carried out by combatants or agents of combatants.

Today started a period of reconnaissance for me, but I really wasn’t trying to gather information on enemies. The great thing about being anti-social is that you usually are short on the enemies side of the ledger as you are on the friends side.

Reconnaissance today started with evaluating the prospective daughter-in-law population.

As the first half of an 11 hour roundtrip today, I drove to New York City very early this morning to meet my son’s 6 AM flight returning from Israel. He had spent the last 10 days there as part of a great program called “Birthright,” which allows college and recent college graduates to make that trip at no cost along with others.

No strings attached.

When I initially dropped him off to begin the trip, I immediately noticed that within his group there seemed to be a very favorable female to male ratio.

Did I mention that all of the girls were Jewish? Did I mention that “favorable” meant many more females.

The group pictures that were posted online once they arrived confirmed that ratio and the one picture taken after romping through the Dead Sea gave me an opportunity to evaluate birthing stock.

Our evolutionary ancestors reportedly did that instinctively to ensure survival of the species.

Look, I figure if that was an important enough characteristic for our evolutionary ancestors to regard as being important, who was I to try and recreate the wheel?

So excuse me for staring.

Anyway, while the moon was still high in the sky, I had the opportunity to observe other parents waiting for their children also returning from their trip.

All prospective in-laws.

Years ago, probably before the age of 10, I can still recall asking Szelhamos how you could tell if she was Jewish, since the tell tale, albeit hidden physical characteristic that was a sign of the covenant was reserved for the male members of the tribe.

His response was simple, yet took me years to understand.

“Nezd meg a segget“

He was exhorting me to do reconnaissance of assets.

Clearly, I had no use for the ones that kept the bluetooth firmly attached to their heads and were chattering away for the additional hour’s wait, due to a flight delay.

That was a pretty ungodly hour to be blathering and I still find something unsettling about people that seem to be talking to themselves.

The fact that one of them may have had a cappuccino and had some residual foam around her mouth did nothing to ease my sense of unease.

As a pretty anti-social person, it does take a lot for me to respond to even the most enticing opportunities from polite people. It certainly takes much more for me to initiate any kind of interaction.

Scanning the terrain and eavesdropping on various casual conversations between people that had at least one thing in common, I actually inserted myself into a conversation and then commandeered it as I sensed good stock.

The subject was waiting for her daughter who, after quite a bit of comparing family histories, seemed to be a perfect daughter-in-law candidate.

It was amazing as two perfect strangers casually exchanged so much information, yet what was most encouraging was that the subject fully understood my reason for asking about her bra size.

But before her daughter appeared, my son made his exit from customs first, and as it turned out, my future daughter-in-law Hannah, wasn’t in his group. But no sooner did that news deflate my hopes, than a traveling companion came over and hugged and kissed my son.

She was then met by both of her parents.

I didn’t have the opportunity to do the same level of recon on them as I had on the nameless woman to my left, but they were definitely not on my enemy list and based on the most superficial of mating rituals that I’d observed, warranted consideration.

Mission accomplished.

Following yet another long drive, this time home, I had little energy remaining to pay attention to the markets.

I did take note of the fact that by the end of the day my year to date performance fell slightly behind that of the market.

That’s what sometimes happens when you think of covered calls as your friends and I certainly spent a lot of time with them lately.

In an up market, as we’ve had for the past 3 weeks, they can turn out to be your enemy.

And so, reconnaissance is now in order.

Although perhaps tomorrow will be the hoped for day of a nice drop in the averages, despite Google’s after hours 6% drop, the better than expected earnings from Microsoft, Intel and IBM are likely to offset any weakness on the final day of the options cycle.

Right now, good earnings are my enemy. Funny had that changes, but look at how quickly some shares, such as JP Morgan and Goldman Sachs turned it around this week after earnings were released.

So my reconnaissace will be to scope out the area of available stocks that also happen to be well priced.

Did I mention that they didn’t have to be Israeli companies or even Jewish?

Each of the past 2 weeks I’ve had to replace about 25% of my holdings, but it appears as if now I’m looking at replacing more than 50%.

Collateral damage is expected when selling covered calls, but this month is turning out to deliver unexpected and last minute casualties. Options expiration is like calling a truce. Casualties are always hard to accept, but even more so if they occur right before the truce.

And so, new recruits are going to be need for my buying surge on Monday.

Good luck trying to find “bargains” right now as if just about everything has been running up as of late, so it may be difficult to find shares that have good birthing characteristics and could yield healthy profits in the short term.

Back when I was first getting started with the covered call strategy, I often found myself buying back contracts before expiration and then waking up Monday morning to see that the shares had fallen to levels below where they would have been assigned.

I don’t really look at stocks as enemies, but those acted as if they were just that.

If anything, though, stocks are your friends. You just have to show them a little respect and treat them properly and neither expect too much, nor too little of them.

Part of the “Birthright” program is for the group to spend a couple of days paired up with members of the Israeli Defense Forces, as guides. Military service is obligatory for that small nation and most everyone serves. Obviously, that’s very different from the United States.

It’s likely that very few of the IDF members have ever come across an American participant in the Birthright program who was also in the military, as is my son, who is in the National Guard, while going through college.

That created an additional level of bonding and comraderie for my son.

As it turns out, he referred to one of the young soldiers as his future wife.

Maybe my reconnaissance was unnecessary. Maybe all I really need to do is let nature work its magic.

I’m going to keep that in my mind as we enter the next week or two. Maybe it’s time to embrace a short term bull market and not search for just the right opportunity that reflects price stability and favorable options premiums.

Nah. I’ll just go with Szelhamos’ advice and look for the assets wherever they may be.

 

 

 

Check out Recent PortfolioTransactions

 

Today’s Trades	Security	Type	Action	Type
January 19, 2012	RIG	Option	Assigned	Monthly

  

 

 

 

It doesn’t take many cycles of watching the nightly news to realize that there will never be a shortage of unspeakable tragedies. As soon as you hear about some horrible personal or global event that sends chills down your spine, along comes another, giving you barely a moment to catch your breath.

Unbelievably, each successive wave of bad news just gets worse and worse, yet as we become hardened to the bad news experienced by others, we just channel surf to escape the burden of our emotions.

It’s hard to deal with an unending flow of examples of how unfair the world can be, but the world became an infinitely better place for all that could afford a television with remote control.

For the ones who couldn’t, it’s just like a final nail in the coffin and further proof of just how unfair the world can be when you can’t even shield yourself from news of the realities gong on around you.

By virtue of your birth place, by virtue of your DNA and by virtue of where you may be standing at the moment, you may never have had a chance in life.

I mentioned Woody Allen yesterday and his eminently quotable line from Annie Hall, a movie that had more than it’s fair share of quotable quotes.

“I feel that life is divided into the horrible and the miserable. That’s the two categories. The horrible are like, I don’t know, terminal cases, you know, and blind people, crippled. I don’t know how they get through life. It’s amazing to me. And the miserable is everyone else. So you should be thankful that you’re miserable, because that’s very lucky, to be miserable.”

“Fair share?”

Actually, “fairness” had nothing to do with the surfeit of great lines from that movie. There was nothing coincidental about their occurence and nothing was there to pre-ordain their success or failure.

They were all earned.

In that case, life was fair, because there was an appropriate form and quantity of recompense for the uniquely inspired screenplay and movie.

If anything, though, you may argue that the quantity of recompense wasn’t at all fair, because so many more worthwhile actions receive far less financial reward or adulation from the public, like executing a key block that lets a game winning touchdown occur.

No one remembers the guy that sacrificed his well being for the greater glory of someone else who was already standing on a much higher rung of the ladder.

In truth, life isn’t fair in either direction.

Horrible things happen to truly innocents and wonderful things happen to those that may be far from innocent.

We all know the story of Jed Clampett.

By all accounts he was a good, hard working and God fearing man who was an abysmal failure in life. Not very fair, but he was then fortunate enough to blow an oil line while hunting for squirrel or perhaps some after dinner raccoon.

And then you have the likes of Qusay Hussein, son of Saddam, whose only redeeming quality was that he reportedly rarely raped the disabled.

His final moments may have been considered to have been the ultimate in fairness, whereas others would believe that it was unfair that he had escaped the judicial system.

Years ago there was a very popular book, When Bad Things Happen to Good People that sought to explain how that could possibly be the case, in an effort to reaffirm faith among those sensing its impending loss or even questioning the possibility of its very existence.

That book made such a big impact on me that I always cite it, despite the fact that I can’t remember a single argument in the book for maintaining faith when faced with an onslaught of terribly unfair events.

But the title says it all and that’s enough for me.

This afterrnoon I was sitting and staring at my spreadsheet that tracks trades and more specifically option premiums for the current cycle that expires in just 2 days.

If you haven’t downloaded the spreadsheets, you’re missing out on the ability to stare aimlessly at numbers.

I’ve mentioned before that I tend to think of money in terms of a “1964 Color TV” metric. That always puts it into perspective for me. I know that others may prefer the metric that looks at how long would someone have to work in order to buy a loaf of bread, but I’ve always been a 1964 Zenith 25 inch color TV, high radiation emitting, kind of guy.

What really struck me this day was after making some final trades for this cycle, was that the near final tally for the first month of the year was greater than my entire salary for my first real job as a dentist after completing my residency training.

I’m not certain, but it’s very likely that based on 1983 statistics, I may have been in the 1% right out of the gate, although that concept probably didn’t exist back then and certainly wouldn’t have been a position that merited disdain.

Since dentists tend to be “fairly” well paid, even at entry level positions, I think it may be patently unfair that a years’ worth of salary could now be made so quickly by just clicking on a few buttons. over the course of 20 trading days in a month.

For me, everytime I click on the “Submit” button to send a trade order, in my mind, I always see the Google “I’m Feeling Lucky” button.

On the flip side, as I listened to news come out suggesting that Amazon’s new Kindle Fire may prove to be more successful than previously thought, and have watched Amazon’s share price rise by about $12 from where my shares were assigned last Friday, I can’t help but think about the “unfairness” of that situation.

Based on our past experiences we each have a different take on what constutes fairness and unfairness.

Since I feel entitled to make trading profits, it can only be unfair it it works out otherwise.

I used to often think about “unfairness” as it came to earnings, particularly since I never worked a mere fraction as hard as did Szelhamos, not to mention all of the other things that he had to survive throughout his lifetime.

I once had a good friend whose father sold roadside popcorn at college football games. We used to talk about how bizarre life was when obscene amounts of money could be made with relatively little effort. particularly given our backgrounds

At that time I didn’t realize just how little effort you could actually get away with.

As easy as it may be to rationalize the dis-equilobrium in “fairness’ by thinking that it just as easily could have been me getting hit by a drunk driver, the reality is that many are spared the exposure to life’s unfair moments.

We don’t live in a dangerous environment where a stranger may unfairly choose to attack, nor are we without healthcare insrance such that a readily treatable infection would kill us.

Those are examples of unfairness that shouldn’t exist.

You don’t need a lofty philosophical or theologically based treatise to bring home that point.

Sometimes you just know that luck is such a big part of creating an environment that ends up treating you fairly.

I don’t know how a nearly 80 year old Woody Allen would now feel about the two categories of people, now that nearly half of his life has passed since “Annie Hall” bought his words regarding misery to the world.

Laughter can dampen the misery.

“Annie Hall” is said to be a play on “anhedonia” which is a pychaitric disorder that makes the individual unable to experience joy or pleasure. That is possibly the most unfair malady that anyone could ever strike anyone.

As unfair as life may be, even at it’s lowest depths, people can still find the incongruities in life that create humor, even in despair.

So, I will recover from Amazon, that as I began typing away has gone up another few dollars.

What I do know is that at some point, somone holding those shares will be thinking how unfair it was that the opportunity to sell those shares wasn’t taken before the next predictable drop.

Then I will buy them back and life will be fair again.

 

 

 

Check out Recent PortfolioTransactions

 

Today’s Trades	Security	Type	Action	Type
January 18, 2012	CHK	Option	STO	Monthly
January 18, 2012	HAL	Option	STO	Weekly
January 18, 2012	ZSL	Option	STO	Monthly
January 18, 2012	ZSL	Stock	Added
January 18, 2012	BP	Option	STO	Weekly
January 18. 2012	GS	Option	STO	Weekly

  

 

 

 

 

Most successful business leaders and individuals would agree that your business has to keep constantly moving forward and even re-inventing itself, if necessary.

In hindsight, some less than successful corporate shepherds will agree that moving forward is a better idea than just “seeing what develops” and then finally reacting.

As the case of Kodak has shown, nothing really develops anymore and no one really wants to buy cheap printers from among a plethora of cheap printers available from established market leaders

Treading water isn’t a very good option, because sooner or later, you end up sinking or being eaten by a shark. As so poignantly stated in “Annie Hall,” a shark….. has to be constantly moving forward or it dies.

Sears anyone?

But just look at IBM.

How much does the 2012 iteration resemble that of 1985? The change at IBM was more than just a move away from the obligation to wear white button downs.These days, if you seen an IBM logo on a laptop, you can be certain that it’s not going to be anew ultra portable.

Been there, done that and moved forward.

Whether through acquisition or playing to the strengths of your key players, successful companies manage to be ahead of the curve and anticipate the movement of the marketplace.

They don’t ask you for your zip code when you buy a pack of off-brand batteries

This past Friday was a big day for Standard and Poors and specifically for their Sovereign Ratings Committee, headed by John Chambers, the one not of Cisco fame (or infamy, depending on your perspective.)

Chambers had caught some significant missives hurled his way after his committee downgraded US debt just a few short months ago.

I was among those a little upset with the call and even had the audacity to question Chambers’ credentials, since after all, he was neither an economist, an MBA or anything remotely related to  such weighty  fiscal analysis.

He held a Masters in English Literature from Grinnell College. A fine institution, I’m sure, as they do not currently offer programs that allow the entire curricula to be accessed while in pajamas only.

In the meantime, he’s been a busy guy, in charge of a committee that is becoming a household word.

This time attention was all on the European Union and the downgrade of France’s national debt, in addition to its downgrades of Italy, Spain, Cyprus, Portugal, Slovakia, Slovenia and Malta.

Or as most people would refer to the final three: “Who?”

On top of that, with the creation of the European Union, Standard and Poors was able to also downgrade the derivative creation, the European Financial Stability Facility, as its rating is based upon the ratings of its component nations 

Let’s face it. The invention of the European Union has been great business for the rating agencies. A mere 20 years ago, what kind of sovereign debt was really there to even bother assigning a rating to? Even China wasn’t on the map a generation ago, much less Slovakia, Estonia and some lesser known countries.

European Financial Stability Facility?

That’s like a bonus for the rating agency. It’s not even a country. Who would have imagined that there would ever be such a thing that would even need to be rated?

But you have to recognize when you’ve hit your peak.

Bruce SPringsteen sang “Glory Days” as sad testament to those who don’t realize that the peak has come and gone and are caught in that downward spiral.

Standard and Poors’ glory days are now and it needs to realize that.

Or die alongside the shark

First there were the “BRIC” nations, Brazil, Russia, India and China, which at the time were a reflection of the booming economies in the nations that were driving world growth. Those were heady times.

Then we all remember the “PIIG” nations, the ones that reflected the frightening downside of the faltering banking systems of the likes of Portugal, Italy, Ireland and Greece. 

Once S&P gets though the next ratings assessment on the CRAP nations (Czech Republic, Romania, Austria and Poland) it will need new markets.

But that’s where the real genius of John Chambers comes to play. He knows that in a changing world you do play to your strengths, so Standard and Poors will soon be expanding its reach.

With Google’s recent purchase of Zagat and its famed restaurant ratings guide, it’s clear that this is the next big market.

But Chambers has his sights set on so much more.

Beginning soon, insiders tell me, Standard and Poors will take the restaurant and movie review world by storm, distinguishing itself from the universe of review services on the basis of its fluency with the wriotten word and literary stylistics.

Taking a page from Ted Turner, who decades ago decided to colorize the world’s great cinematic efforts, Standard and Poors will start by issue reviews of classic movies and restaurants.

Early word has it that there will actually be downgrades of “It’s a Wonderful Life” and “Citizen Kane,” while “Hardee’s” restaurants will be getting a strong vote of confidence.

Clearly, the impact on related businesses is for the investor to consider.

As advertising rates go down for showings of “It’s a Wonderful Life,” consideration must be given to lightening up on media holdings, particularly those sensitive to seasonal revenues.

Would you not want to get in on the deluge of new customers to Hardee’s?

The beautiful thing is that the potential for S&P is unlimited and the nimble investor shares in those opportunities.

But why stop there? Who wouldn’t want independent ratings of everything?

I for one would like to have Chambers ply his new vision and review the value and worth of “Consumer Reports.” Maybe if that option had been around earlier, I wouldn’t have been walking around with this anger over my purchase of a 1980 Pontiac Phoenix.

Maybe had that been done in 2000, Gore would have easily won Florida’s electoral votes.

Obviously, a natural area for issuing uprades and downgrades would be on our individual actions or thoughts. I don’t have the patience to wait for 1984, when I can have it all now.

For one, I wouldn’t have minded a downgrade of my poorly conceived idea of this past Friday to sell call options on the Amazon $175 call options expiring that same day.

When I scan the grocery store aisles for toilet paper, a rating from the Sovereign Debt Committee would go a long way toward allowing me to choose with confidence and to use the product without fear of future chafing due to inadequate support structure of the underlying plies.

Real synergy arises when you realize that the Sovereign Debt Committee could actually print its latest report on the CRAP nations on toilet paper itself. Or, if truly forward looking, could market nation specific toilet paper, made entirely of their debt instruments.

Now we’re really talking out of the box thinking.

And revenues.

The kind of revenues that could make the Sovereign Debt Committee an attractive spin off to help an therwise faltering McGraw-Hill.

Obviously, the real payday for Chambers would be the purchase of the spun off Soverign Debt Committee to Google, which could then assign Chambers to use his educationally derived skills and write copy for their Daily Deals division to go head to head with Groupon and LivingSocial, until Google does what it i ordained to do, which is to let it die an ignoble death.

Maybe in this case, even movement isn’t enough for this shark.

 

 

Check out Recent PortfolioTransactions

 

Today’s Trades	Security	Type	Action	Type
January 17. 2012	GMCR	Option	STO	Weekly
January 17. 2012	CAT	Option	STO *	Weekly
January 17. 2012	CAT	STock	Buy
January 17. 2012	MOS	Option	TO	Weekly
January 17. 2012	MOS	Stock	Added
January 17. 2012	JPM	Option	STO	Weekly
January 17. 2012	JPM	Stock	Buy
January 17. 2012	VMW	Option	STO	Monthly
January 17. 2012	VMW	Stock	Buy
January 17. 2012	AXP	Option	STO	Weekly
January 17. 2012	AXP	Stock	Buy
January 17. 2012	AAPLL	Option	STO	Weekly
January 17. 2012	CHK	Option	STO	Monthly
January 17. 2012	CHK	STock	Added
January 14, 2012	AMZN	Option	Asigned	Crumbs
January 14, 2012	AAPL	Option	Expired	Weekly
January 14, 2012	AXP	Option	Assigned	Weekly
January 14, 2012	GMCR	Option	Assigned	Weekly
January 14, 2012	GMCR	Option	Expired	Weekly
January 14, 2012	GS	Option	Expired	Weekly
January 14, 2012	HAL	Option	Expired	Weekly
January 14, 2012	MOS	Option	Assigned	Weekly
January 13, 2012	AMZN	Option	STO	Crumbs

  

 

 

 

A lot has been said about the recent Jockey underwear survey regarding who people would rather see in their upcoming ad campaign. Hurriedly arranged, the alternative new campaign had to be launched when news came that Chaz Bono would not be ready in time for the spring collection, due to some unfinished business left dangling.

Reportedly, the nation was evenly split in their opinion, but voting continues.

What a surprise. Although in our very recent past, evenly split is an apt description of just about everything with regard to our positions on political, social and economic policies..

As it would turn out at the end of Saturday evening, in the playoff faceoff between the two undergarment models, the “Brady Bulge” easily beat the “Tebow Twinkie.”

By “beat,” I meant was victorious over, as this is a family friendly site.

As someone who has long supported the cause of third party cadidates, I’m going to cast my vote for either Ed Asner or Danny DeVito, if the survey ever gets past my Caller ID defense mechanisms.

I’m really having difficulty trying to get the image of Tebow in his tighty whities doing his genuflection and then being greeted by the inadvertant escape of his He-bow. You know, the thing he uses when he needs to Wee-bow.

As I think back to my voting record I’ve voted for the following third party candidates: George McGovern, John Anderson and H. Ross Perot,  while ignoring the likes of Ralph Nader or Pat Buchanan.

I know that strictly speaking George McGovern doesn’t qualify as a third party candidate, but I think his performance that year was on par with the likes of Strom Thurmond, George Wallace and Robert LaFollette.

To a very large degree anyone running as a third party candidate has to have large doses of narcissism and denial running through their veins. So much so that they’re willing to see the side that they’re more closely aligned with lose, due to the siphoning of votes.

Neither Asner nor DeVito would ever do anything like that. They could just as easily lead or be a team player. Having appeared in an underwear shot in “It’s Always Sunny in Philadelphia,” DeVito has already proven that he has the literal and figurative goods. He is also willing to supply a wide angle lens for appreciating the full effect.

John Anderson may not fit into the narcissistic category either, but the other recent candidates certainly have changed election outcomes. Although I’m not really certain who Ed Asner would take votes away from, unless the mainstream dichotomous choice was between Tim Tebow or Danny DeVito.

In that case, Tebow slips in, but not before matrimony.

At this point who knows where Ron Paul is heading, but theres no doubt that he would receive lots of support in making that decision from those on the left side of the aisle. From purely a conceptual bais, probably no one would be more in favor of dropping the unwritten rule that ours is a two party political system than Ron Paul.

Why? Because it’s a rule, of sorts. That’s reason enough. If the good Lord had only wanted two parties he would have only made two human genders.

Well, that’s where he lost the evangelical vote. That and the legalization of heroin thing.

“Beats me” how he can get them back. And by “beats me” I mean in a self-pleasuring fashion.

Alright, maybe trying to meld evangelical views with libertarianism isn’t a great idea.

I was watching David Letterman’s interview with guest Senator John McCain the other night. It was really a good segment. I’m still struck by the comment that John Stewart had made a few years ago that he would have voted for the John McCain of 2000 if he had run against Al Gore in the Presidential election.

Politics does strange things to people.

Even good people. Don’t even think about what it does to people that are already inclined toward narcisism and entitlement.

Do you know what would be just punishment for that kind of person?

Change their name to “Newt,” or if you’re really feeling feisty and hot under the collar, just call them a “Newtchebag.”

One of the things that Letterman was hammering at, and McCain obviously agreed by body language, facial expression and non-spirited defense, was that perhaps the two party system was broken and both sides were to blame, but that it was probably still better than the alternatives.

Alright, maybe we don’t want the typical Parliamentary system where bizarre coalitia are formed and the smallest fringe party can hold everyone else hostage.

Just look at the European Union. Remember the curveballs thrown by Finland and Slovakia?

But is three really too much of a crowd?

The thought that only dichotomous choices are appropriate has long been the paradigm of life.

You either have one spouse or you don’t. Pity the Romney’s of centuries past that had to fee to “Old Mexico” in order to rid themselves of societal dichotomy.

But the thought that only dichotomous choices are appropriate has also long been the paradigm of personal investing.

You either buy or you hold.

That used to be the same with sell side analysts. Only in the past few years has anyone ever been so bold as to offer a sell recommendation. Doing so was probably as unsettling as the first time someone wore something other than a white button down shirt at IBM.

Black and white is great if you want people to act out of their visceral senses. Offer total opposites and make it easy for people to choose without the need to get bogged down in thought processes. The lack of regard for the ability of people to actually think is widespread. It explains why there are severe restrictions on the number of insurance companies that can offer health insurance in a given state.

Too confusing for the populace.

Without a doubt there are those that are paralyzed over the very prospect of having to make a choice or decision. You know the type. Maybe you were one of those kids that would take an hour to choose their socks each morning, even if they were going to be completely enveloped in snow boots.

But choice is the very essence of a free people.

Szelhamos used to tell me that under the Communists in Hungary, if you wanted shoes, the choice was brown or none. If you asked about black shoes the answer was “re-education,” perhaps on the Siberian campus, for good measure.

I’m glad we have choices and by choices, I mean options.

Not to overly “beat” it to death, but the ability to use a third mechanism to protect yourself from the unpredictable nature of the markets, as they are subjected to “eurosis,” greed and rumors is priceless. As difficult as your past may have been when selecting your socks or your stocks, the use of hedging mechanisms are simple and are likely to protect you from languishing in portfolio equivalent of Siberia.

In this case, “priceless” can be quantitatively analyzed for its influence on your portfolio.

Even though I do post my transactions, I’ve always resisted ever placing any performance data. Besides the fact that its information only between myself and my IRS agent, there really aren’t any restrictions on me from making whatever claims I like.

I wish it had been like that when I was the Chancellor of Germany.

Regardless of what my personal performance statistics are at any moment in time, sometimes, some things are best left hidden and out of the public view.

In the case of underwear, that’s one of the unwritten requirements.

Kneeling to honor your personal Savior can be tricky.

As I continue to ponder the survey choices I’m glad that I live in a world where Ed Asner and Danny DeVito can have a greater and longer lasting influence on society by virtue of their art and other activities than guys who can throw a ball and fill out a highly fitted piece of expandable material.

And by “expandable material,” I mean the underwear.

I’m also glad that I live in a world where we can honor Dr. Martin Luther King and celebrate his life and ideals, although I still don’t know why the markets need to be closed, especially since that means I have the burden of thinking for an additional day of how to remake the portfolio after about 30% of its value was assigned, as I say goodbye to Amazon, Green Mountain Coffee Roasters, American Express and Mosaic.

Someday, we will say”goodbye” to Tim Tebow and Tom Brady, future footnotes to society’s history, yet neither their ephemeral star nor coming in third of fourth to Asner or DeVito should carry shame

Foot notes are important, too, but will always take a second seat to TrollFoot Notes.

 

Postscript:  Join Ed Asner and “Asner’s Avengers in their fund-raising effort to support Autism programs and research.

 

Check out Recent PortfolioTransactions

 

 

Today’s Trades	Security	Type	Action	Type
January 14, 2012	AMZN	Option	Asigned	Crumbs
January 14, 2012	AAPL	Option	Expired	Weekly
January 14, 2012	AXP	Option	Assigned	Weekly
January 14, 2012	GMCR	Option	Assigned	Weekly
January 14, 2012	GMCR	Option	Expired	Weekly
January 14, 2012	GS	Option	Expired	Weekly
January 14, 2012	HAL	Option	Expired	Weekly
January 14, 2012	MOS	Option	Assigned	Weekly
January 13, 2012	AMZN	Option	STO	Crumbs

  

 

 

 

I have no business giving advice to anyone or making predictions. My track record is pretty abysmal.

I’m also a sinner.

Years ago, when running for the Presidency, Jimmy Carter, the Governor of Georgia, a gentleman peanut farmer, Naval Academy graduate and nuclear engineer (there’s a combination you don’t hear often) showed the good judgment to submit to a Playboy interview.

Probably the most memorable part of the article, beside the full frontal view of the future president in a man thong, was his admission that he had  lusted in his heart and “commited adultery in my heart many times.”

If you’re unaware, the adultery thing is big. Big enough to have made it into the Top Ten Sins list.

Just imagine that if coveting your neighbor’s wife made the list, just how badly adultery must trump coveting.

To this day, no other Presidential wannabe has submitted to a Playboy interview, not even Bill Clinton, of “boxers versus briefs” fame and other things..

The point of this is that in 10 presidential election cycles, I’ve only correctly picked the ultimate winner just 3 times. So you really don’t want to follow my path.

I’m completely agnostic as to political party when it comes to national elections and have always voted along a “who has the best chance of losing?” platform.

I’ve even been known to vote for a third party candidate if it meant preserving my voting record.

Jimmy Carter, for whom I did not vote, was essentially saying what we all knew, in that he was a despicable human being, at least in heart and mind.

Alright, maybe I read a bit too much into that single quote.

At the time, people were stunned both by the fact that he agreed to the interview and that he admitted that even a pious God fearing public servant was a sinner.

Back then, in the hierarchy of sins related to fantasies, you were more likely to be excused of wishing you could murder your boss than for lusting after his spouse.

In the world of stock investing there are sinners, and most everyone will agree as to who they are.

The short sellers.

They’re the people that are betting that stock prices will head downward. They sin not just in their hearts and minds, but in body and soul. They spread fear and gloom and wish and hope for bad things to occur. They find themselves naturally cheering when natural disasters.strike.

How un-American is that?

Very, but it gets even worse. The short sellers actually have even more evil Overlords, those that find joy in using leveraged short ETF trading vehicles.

Just as for millenia people have been blaming the Jewish population in the midst for all of their problems,. short sellers are the Jews of the market.

They get blamed for just about everything.

Sure, occasionally new enemies arise, such as algorithms, high frequency trading, insider trading and other egregious violations of “business ethics,” but when you get down to private and casual conversation, the truth comes out.

The short sellers have replaced the horns on their heads with crisply tailored Armani suits, ultra-rapid speech patterns and lots of coffee.

In a page taken from the playbook of every despot through history, when things start going badly, always look for an internal enemy. If none is available, then go external.

Short sellers are the root of all of our problems.

Certainly, you have to remember the regulatory response at the height of the financial and banking crisis.

No short sales on the financials. They even sought to enforce existing regulations regarding naked short sales. How desperate of a move is it when you start enforcing regulations?

And who could forget the always entertaining Patrick Byrne of Overstock.com, now trying to rebrand as O.co

In a near and somewhat sad, yet comical, paranoid fixation on short sellers, Byrne has created a place for himself in some sort of Hall of Fame, yet despite years of non-performance and floundering of his company, he remains CEO.

The rants are pretty amusing and do seem to follow in some lessons learned from generations of anti-semites.

It is somewhat ironic though that Byrne chose shortening the name as his approach to rebranding. He’ll probably blame the resultant consumer confusion on the shorts.

So here we are, at the precipice of JP Morgan announcing its most recently quarterly earnings.

And here I am with no shares of JP Morgan, not having held shares for 6 weeks.

Over the past two years, JP Morgan has almost continually been in my portfolios. It was one of the first stocks upon which I sold weekly call options.

Week after week after week.

During that time period I’d occasionally lose shares to assignment but would always buy them back as the price retraced, just in time for the next ride up.

But not this time.

I missed the entire $32 to $36 move.

So here I am lusting in my heart.

But it’s not the mild kind of coveting lust, wishing that I had owned shares.

No, it’s more the adulterous kind of lust, just wanting to go down on that stock.

Sorry for being so crude, but that’s the best allusion I could come up with.

Just like a short seller, I’m hoping for JP Morgan share price to make a marked move downward after it announces earnings on Friday.

Jamie Dimon has been in the news of late. It seems to me as if he’s actually trying too hard to put a good face on things, making me think that there’ll be a disappointing earnings report forthcoming.

But still, even though I have no vested interest, I find myself thinking evil thoughts, joining the class of investing sinners.

Is it a sin to lust for a downward move yet take no actions to support that lust?

Yes, Jimmy Carter proved that in a different ecosystem that is surely transportable to the current situation.

And so, I find myself a sinner.

Every trade has a winner and a loser.

Zero sum kinetics is the lay of the land.

Unlike real life situations when the victim may be know to you, when investing, the victim is unknown, unless you’re that victim.

But I do find solace when I realize that by selling call options, I’m doing my best to do battle with one of the Seven Deadly Sins.

You remember those, don’t you, sinner?

Sloth, gluttony, wrath, pride, lust, envy and GREED.

What could be worse of a sin than buying call options? Using leverage of MF Global proportions, the buyer is hoping to strike it big with a minimal outlay of money.

So yes, I’m a sinner, but I am trying, until I realize that I also dewell among the Overlords.

I’ve found great joy and reward from ownership of the ProShares UltraShort Silver ETF, while lovers of silver have found sadness.

I don’t know quite how to reconcile all of these conflicting feelings. except to hope that there will be room for all of us sinners in the Kingdom of Security in Retirement

 

 

 

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Today’s Trades	Security	Type	Action	Type
No Trades Today

  

 

 

 

This is precisely why I need to get out of the house more often. Either that or do something to diminish my ability to understand, comprehend and discern the babbled word.

Or maybe just learn how to work the “Mute Button,” but I’ve never been very good with technology.

Oh, and add recall to that list. Sometimes being able to remember details is a bad thing.

The past few days Microsoft has been on a roll, above and beyond the market.

You remember Microsoft. You know, the company that was everyone’s whipping boy. Although, to be fair, it is enirely possible that I’ve misinterpreted the expression “dead money” and the snarky tones and sneers may have always been completely unrelated to the stock.

Back when I was younger, it was incredible how popular you could suddenly become if you had a Spalding rubber ball, when one was desperately needed for a stickball game.

If you dont know what stickball is (or was), think basketball instead.

Suddenly, Microsoft is everyone’s favorite stock and no one is owning up to their past.

Instead of “dead money” it’s “undervalued.” All of a sudden Talking Heads are taking note of its dividend, the very same dividend that has long been decried as insufficient and not enough to make purchase of shares appealing.

The jokes.

Zune, Bing, WIndows cell phone, Vista, Clippy, Ballmer, Skype. It just goes on.

No one wants to admit that the own, want or need a Microsoft product. You never hear anyone sing “Oh baby you, you got what I need'” when it comes to Microsoft. People are ashamed and embarrassed.

It’s like admitting you crave veal or sauteed infants.

I’ve lost track of how many “experts” and “analysts” have called for Steve Ballmer’s resignation, firing or execution.

When you think about it, what better testament to the depth and strength of a company when it could have such a long list of failures and abandoned projects.

Have you ever heard of Google? Ever looked at their long list of litter along the technology highway?

The difference is that when Google abandons a project they do so because of their collective attention deficit disorder. They just can’t behave otherwise. Even force fed doses of Googlin and Googlall are virtually useless.

In the case of Microsoft, my guess is that nothing that we’ve ever heard of is a total and abject failure. Probably every project and product has something worthwhile that will add value to something that may just be a glimmer in a dreamer’s mind at the moment, but a necessary cog to make the dream come true.

And make billions of dollars.

Suddenly the Windows phone business looks promising, ultrabooks and Windows 8 are arriving and the world has reversed its axis of spin.

I’ve blogged about Microsoft a number of times and also included extensive discussion of the stock in the Option to Profit book.

To be totally honest, I haven’t owned Microsoft since July 2011, despite the fact that it has long been my favorite covered call and douple dip dividend play.

Sometimes you stray.

Although I looked elsewhere, there’s not much argument against the fact that as long as Microsoft traded in a tight range, essentilly reacting only to macroeconomic events, it was a slam dunk when it came to selling call options and collecting quarterly dividends.

To my great delight, my oldest son, who penned a guest blog for me, independently decided to write about his reason for buying Microsoft shares, as his first equity purchase, and somehow was able to tie it in with the rationale for the mistreatment of local Occupy Wall Street crowds in the DIstric of Columbia.

That’s my boy. What better way to express your true oppositional and contrarian self than to buy shares of Microsoft?

At least I’ve changed my errant path and own shares again.

As is my habit when I enter into a new position or re-establish an old one, I sell weekly in the money or near the money calls. In this case, I sold near the money monthly calls, compromising my ethos a bit, perhaps out of remorse and guilt.

Despite the fact that Microsoft fell about 1% in the after hours market on Tuesday when it announced that fourth quarter personal computer shipments were going to be even less than the previous disappointing numbers, it quickly recovered by mid-day trading on Wednesday.

And then some.

In Eric Jackson’s recent article in Forbes magaine, “Crowd Sourcing the Top 2012 Twitter Stock and Market Picks,” I chose Intel as my top short pick for 2012, although I will not likley be playing that conviction, because I neither know how to short, nor have the conviction to put myself at such risk.

Bearish on Intel, yet not on Microsoft?

Notice, I didn’t say “Bullish on Microsoft.”

For me, Microsoft works best when it’s dead money to everyone else. Besides, the sneers are amusing. The non-verbal communication is so much better than the verbal kind when it comes to many of the typical faces seen spouting their “opinion du jour.”

I wish that I was wordly enough to say “opinion of the moment” in French, but “du jour” will just have to do.

I don’t know what will happen with my Microsoft shares come next Friday, but I’ve vowed not to go this long without Microsoft shares in my portfolio, ever again. 

I guess that in a way Microsoft is really no different from any other stock that’s being discussed by the universe of Talking Heads. What I’ve come to realize is that taking advice from these guys is about as satisfying as watching a bootleg DVD when the video and audio are out of sync by a scene or more.

Although you may be tuned into their every word, all bets are off when the transmission has ended.

Circumstances change, news pours in and today’s hotter than hot buy is now “a neutral position.”

I’m not really certain what that means. I’ve never understood if that meant that there was just no opinion regarding the direction of price movement or if that was just a nicer way of saying “dead money.”

Suddenly, the fact that the Talking Head is spewing advice that happens to be free is utterly meaningless and certainly reflective of value.

That’s not to say that all things that are free have no value, maybe just the spoken word. You want value for free? Get Eddy Elfenbein’s Newsletter and read his blog, Crossing Wall Street..

Although Microsoft is a keeper an should be a portfolio mainstay, I’m still not a believer in buy and hold. That disbelief essentially stems from my own inabilities.

“It’s me. It’s not you.”

I’ve never been good at discerning a good stock from a bad one, although I do recognize pure crap.

But I’m also fairly terrible at assessing a timely purchase based on an appropriate price. Compound that with the inability to know when to pull the trigger and sell and you have the makings of someone who should never talk to anyone about stocks.

Or write about them.

In summary, I’m no Eddy Elfenbein.

That’s why I rarely stray from my list of “Old Reliables” and the comfort zone that they provide.

I like consistency and that appears to be just about the last thing you get from the Talking Heads.

Now, if Microsoft happens to crash and burn tomorrow, I’ll just believe that yesterday never happened.

How convenient.

 

 

 

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Today’s Trades	Security	Type	Action	Type
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January 11, 2012	MSFT	Stock	Buy
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As I get older, I often find myself questioning very basic beliefs more and more.

I do, however, understand concepts such as why humans must have a mechanism to register pain.

For example, while it seems meaningless to have a kidney stone associated with pain, perhaps the utility of the pain is to send a message that you have to change some lifestyle choices.

That assumes, however, that human beings have the desire to practice preventive medicine or that they even have the ability to learn from past experiences.

Our judgment is often flawed, even in the presence of compelling data. I know and am constantly being told by Sugar Momma that I need to drink more, yet I continue a camel’s existence, coffee notwithstanding.

That kidney stone example may be stretching it a bit, just as it needlessly stretches that ureter, but more concretely, it’s probably a good idea to sense pain if you put your hand inadvertently on a hot stove burner. You really want to have some feedback mechanism that would give you the incentive to remove your hand before it became completely roasted.

Delicious, yet destroyed.

Forget about the more controversial beliefs, such as that of an expanding universe. Those more etheral thoughts are really getting harder to accept or even comprehend.

Human judgment is a strange thing. There’s no question that collectively we do learn from the past and as a species we are able to read the data and respond to reality as it evolves, so that as a species our ability to interact with the world constantly advances.

It’s on the individual level that I have my doubts.

Although an expanding universe seems to fly against the idea of neither creating or destroying matter, the ability to advance a species requires a positive sum game. The net balance after considering good outcomes from judgments has to exceed the bad outcomes.

You can argue that cows will not change their society because they neither create nor destroy outcomes based on their judgment. They will forever go on in the same way munching on whatever they can and marching into whatever abattoir to which they’re led.

Of course, if you sat around arguing about cows’ ability to advance their society, culture or species you’ve already made the bad judgment of spending time on that philosphical pursuit.

For anyone who has ever watched “COPS” it’s also obvious that human judgment can be impaired. Granted, on that show it’s hard to control for those felons that are purely acting on the basis of impaired judgment, as many who have such an obstacle to overcome are also faced with the obstacle of flawed judgment.

To do so, you’d have to assess the actions of someone who was normally in reasonable balance with the world and who has appropriate interactions with society, while successfully navigating through life.

Those can be fairly powerful filters and are useful in determining who to keep out of your life and away from your family members.

Impaired judgment was a topic touched upon a few days ago when writing about the Percocet prescription that I had been given and how it might effect both clarity of mind and purpose.

Obviously, there are many times that you really don’t know whether your decisions were appropriate until many years later. The perfect example of that is how an American President’s legacy is really only fully understood by future generations as the consequences of decsions play themselves out.

In that regard, your children are the same. It takes a while to know, although you certainly get some clues along the way. I’m reasonably certain that Bernie Madoff’s mother probably would have had some reason not to be completely surprised by the eventual path that he took.

Otherwise, most decisions that we make tend to have fairly quick consequences. Everything else being equal, quick feedback from decisions should be more efficient in effecting change in our ability to learn from experiences.

Although I repeatedly say that I never have regrets regarding stock market related decisions, that’s not to say that I don’t question my judgment.

Most recently, I’ve had reason to question my judgment regarding sale of yet another series of contracts on the stock that I’ve beaten to death over the past few days.

Netflix.

I also have already expressed my doubts regarding proper judgment when I actually purchased the shares on the same fateful day as I most recently picked up shares in Green Mountain Coffee Roasters and Amazon

Flawed judgment? Impaired? I don’t know, but I do know that the net balance of those decisions has been negative.

The question becomes whether or not I’m capable of learning from the decisions.

Probably not.

Most of life is predictable. You live, you die and then fairly mundane stuff there’s stuff in-between.

The unpredictable events are memorable only becasue therre are so few and their outcomes are magnified as the mind begins to believe that “the exception proves the rule.”

That kind of philosophy probably arose from someone trying to justify a lifetime of bad decisions when faced with obvious facts.

I very vividly remember my first kidney stone attack about 7 years ago. Not only do I remember the pain, I also remember the words of advice. It’s just that I decided to fall back on relying on flawed judgment to disregard the advice.

I wasn’t impaired. At that point the pain was gone. My flawed judgment might have been averted if the impairment had continued.

The stock market, despite so many people living and dying on the basis of charts and algorithms, has never really proven itself to be predictable.

What I wonder about Netflix is how so many “smart people,” and presumably the very recent price rise had to be driven by deep pockets, which usually are found on people that are self-diagnosed as “smart” could have occured?

What kind of judgment was necessary to believe a rumor that on every level really didn’t make sense? Then compound that with the judgment that it was an investment worth pursuing.

It’s not terribly likely that it was the universe of individual investors that acted irrationally. The total sum of discretionary funds available for investment by that universe is dwarfed by funds that are professionally managed.

Today, an analyst was exceptionally blunt about Netflix.

Michael Pachter, of Web Bush Securities, may have taken his cues from the recent GOP debate tactics and didn’t even bother nuancing his words when calling out Reed Hastings, Netflix CEO, when he said “he’s crazy. He has lost his mind.”

It wasn’t much better for Whitney Tilson, who had previously been very wrong on the short side with Netflix and subsequently took on long positions in Netflix.

Here was a case when the filter wasn’t on. Was that good judgment or bad judgment being so blunt about fellow ‘smart people?”

From my perspective, Pachter was “pain,” but in a good and necessary sense.

When you do make a bad judgment regarding an investment, the pain may not be physical other than for the physical amount of money that you have left at the end of the day. The pain is emotional and obviously stress can effect physical well being, as well.

Pachter was sending that warning signal, although in this case, it was probably the individual investor that drove prices down an additional $2 after his pointed comments, as they scurried to get out.

My guess is that Hastings and Tilson also believe that Pachter is a pain, but not in the good sense.

Now couple that with the report that since December 19th, 2011, the only down trading hour of the day was from 2 to 3 PM. which happens to be when Street Signs is on the air.

Coincidence? Maybe, but among the reasons that I enjoy Street Signs is that the hosts, Mandy Drury, Brian Sullivan and Herb Greenberg don’t serve as cheerleaders. Instead, they serve out caveats and often give great reasons to be circumspect about “the facts.”

You have to like people that preach prevention and want to help spare you some unnecessary pain.

Oh, and they may also have been the ultimate judges in selecting this years’ “Word of the Year.”

In that regard, great judgment.

 

 

 

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