Monday, December 31, 2007

Gold Bars

Many years ago I took a Chinese cooking class from Joyce Chen, who appeared on TV in the 1970s and ran a restaurant in the Boston area - there's a Chinese food company in her name now.

She said that making or having spring rolls / egg rolls on New Year's Eve is good luck since they resemble gold bars and will bring prosperity. In normal years I would make a batch myself and have them for New Year's Eve ... with my martinis, of course.

But this year I'll have to settle for some from the China Wok restaurant. Mom's kitchen is in the disaster area ... sigh ... what a mess !

I figure the bears will window dress today and knock stocks down to protect their paydays. On Wednesday I should be back in my office and will calculate the year's results. With the XLE near all time highs I expect it will be a good one for the Alpha Fund. But it's return will have been dragged down by my big cap fins positions. Obviously I was too early there.

Gold will help the Krypto Fund a lot as I had over 10% in it there.

Enjoy a "World's Finest Martini" tonight and look forward to a good 2008.

Just learn what you can from the past, then forget it and look forward. Big gains loom, in my humble opinion, and I am positioned to grab onto them.

Sunday, December 30, 2007

Whither Inflation ?

Gone to the lands of sun and surf, it seems. Or to the various sin cities.

Uh ... the former means Florida and California, the latter means Las Vegas, DC and NYC.

In the heartland in SE Ohio, whole milk is $3.99 per gallon, six hot wings at KFC costs $2.99, and a 14" pizza at the best place in town (now) with four or more toppings costs $10.95. The dinner buffet at the China Wok is $5.99 all you can eat. Actually, milk is 8 cents per gallon if you spend $30 at the local regional supermarket.

That's the price of good weather year round and action and nightlife and lots of people - well off people in the case of NYC and DC. And power. That's not real inflation in those places - just supply and demand and a shortage of "nice places" to live compared to an excess demand by too many geezers and too many rich and powerful people bidding the price of common items up.

Here in the heartland where land is plentiful and the weather is nothing special, homes are available at low prices as are most other items other than gasoline.

This nonscientific survey suggests the cost of good weather year round is about 30%; ditto for living in a power center.

So Ben should just keep rates low as core inflation is contained and low.

Let's not grind down the common man with common desires due to excesses in weather and power centers.

Friday, December 28, 2007

Whither Gold ?

I see gold is around to old all-time high. The actual all-time high is hard to determine as gold was ultra-volatile back then and intraday swings were huge. I guess the Bhutto news in Pakistan caused this rip. But gold was basing around $800 anyway and physical demand is strong this time of year. I wonder if we see Gold $1000 helmets before Dow 15,000. Both are within 10-15% so a solid bull move will do it.

I'm very long gold and silver as you know - both over 10% in the Krypto Fund. I'm doing nothing now, just sitting.

Still dealing with the water disaster at Mom's house. This will take weeks :-((

Thursday, December 27, 2007


A water pipe in my Mother's house broke and caused a huge water mess. So I'm dealing with cleanup crews, contractors, insurance adjusters, etc. Argghhh ! And I had to rent some rooms at a local motel that accepts dogs as Mrs. B and I had the whole team here. Obviously my prevention plan has some flaws ... grrrrrr. Any plan relying on human attention / duty is risky.

I needed mechanical backups. Darn.. That was a plan that failed.

I see Ms. Market is playing ping-pong. Sigh. And I turned Bubblevision on this AM was thought they were so depressing ... woe is us !!!! ... core inflation is 2% so we must worry about stagflation. Sheesh ! Phooey !

This is really nuts. Time will cure it as soon the reality will beat them over the head with a 2x4.

I suggest searching this blog's posts of January 2007 for the "World's Finest Martini" recipe ... enjoy yourself !

Friday, December 21, 2007

More Evidence Memories Don't Exist

The WSJ has a story about massive mortgage frauds likely causing a large portion of foreclosures. Bear, Stearns and other aggressive mortgage underwriters got scammed. Why ? They really didn't check anything. I guess they "forgot" about the equipment leasing frauds of the 1980s, etc. or the Equity Funding fraud of the 1970s; Or the "salad oil" fraud of the 1960s.

Many people take out balloon loans. Of course if anything bad happens to them when the balloon comes due, they won't be able to refinance it. Uh ... this lesson was learned in the 1930s.

MS, BS, etc. lose huge sums on "one desk" - uh ... anyone remember how Kidder, Peabody and Barings went bust ? Or how a rogue trader cost ML hundreds of millions ?

The Street pays these guys huge sums for years as they "make millions" for the firm ... then the firm loses billions when they blow up. Street management is just stupid, frankly. They are lazy and stupid and greedy. They should pay these people ultra-well ... in stock and tied up cash based on a moving average of profits. So if the guys blow up, the bonus gets yanked back.

Then the hotshots might actually think a bit ... playing with their own money at risk might actually induce some thinking.

And now I read Cerberus is in trouble. Maybe Apollo, too. No surprise. LBO and hedge funds play with others' money and blow ups from greed are quite probable there, too.

Futures are up early on this triple witching day. Europe is up as was Asia.

PS: It appears some major gaps on the S&P and Nazz were filled on this pullback. I'd be interested in comments from the "gapmeisters" if this is true.

Thursday, December 20, 2007


I'm starting slow this morning as I recevied a furniture delivery at 5AM.

ORCL had good numbers ... uh .... where is the recession ? Where are the cap ex. cutbacks ?

Friday is a triple witching day, so will likely be wild being a slow, pre-holiday trading day, too.

Hmmm ... this blog appears to be quite influential as Guiliani has fallen and Romney is now tied for the lead. McCain is now 3rd. So my preliminary endorsement really moved the polls ;-)

Obama runs better against some R's than Hillary. Makes sense ... why vote for a known liar and thief ?

The Fed does another TAFfy today ... results Friday.

Barron's Online is pumping NE: it's a 1/2 deep water driller, 1/2 shallow water that is trading in 8x 2008 eps. I own it in the Alpha Fund.

Wednesday, December 19, 2007

Do Memories Exist ?

I wonder about that ... does 21st Century man have a memory ? If he's a few years over 50 and a homeowner, he should remember one or two major declines in the value of his home. And those were paper declines from peak values. My home peaked in value 1987, then dropped about 30% in a couple of years. Did I care ? No. the trough value was still 50% over my basis and way over my mortgage and home equity loan balance. I still had a home and still had to live in it. So that paper value meant zero - an unrealizable number. Did I change any habits ? No.

Ten years past before my home reached that peak value again. Now it's about 50% over that past peak. Why hyperventilate about peak to trough numbers for an asset one has no interest or capability to live without ?

And most baby boomers are like me, unless they were and are spendthrifts. They live in a home they bought years ago and have a huge equity balance.

There was a recession in 1990 ... completely unrelated to the home value drop.

So why all this hyperventilating ? Has 21st century man become stupid ? I think not. I think most of America has no concern over this home value drop - they still have a home to live in and still need it. So nothing has changed for the bulk of people.

Speculators & spendthrifts are in trouble. So what ? Since when do they drive the US economy ? What other industry is in trouble ? None.

No recession ... buy good stocks on dips ... be patient ... It's always darkest [and coldest] before the dawn.

PS: The ECB is making the Fed look like amateurs ... ivory-tower pinheads. Financial leadership is being shifted to Europe :-((

PPS: The results of this "Term Auction Facility" of the Fed will be interesting. I don't really have an opinion, but will think about the results a lot.

Tuesday, December 18, 2007

Slogging towards 2008

The beefers and big fund managers must get their big window dressing, tax loss selling, liquidations and manipulations done this week as Friday is a big triple witching day and after Friday volume will collapse for the holidays. So wild swings are likely this week, as that wise commentor on this blog, frosty, pointed out last week. Yesterday was one of them, a "ping" and this morning is starting out at the "pong".

The Kremlin and the Russian Orthodox Church are become entwined ... Putin to become Prime Minister ... hmmmm perhaps a redux of czarism is evolving ?

A Bear Stearn's hedge fund manager under criminal investigation .. no surprise here as I stated a few months ago ... I can't give the reasons, but "a tiger doesn't change its stripes" or "once a thief, always a thief" is "enough said.

I intend to write a long blog about Thucydides and the relation of those events 2500 years ago to now. I have been amazed how much I see of modern national state situations and relations as existing in those small city states of 2500 years ago. Even military events - tactics and strategies - are quite fascinating. I wish I had read this book many years ago. Sigh ...

Futures are up significantly at 6AM EST. I am still considering buying more C.

Later this morning I need to drive to Hartford to meet my partner for our yearly strategy session with our main accountant. So I'll be away from about 10AM to 4PM EST.

The S&P cash is back to its level of early 2007, but corporate earnings are much higher. So one can get a free year of earnings in many stocks.

No recession ... buy dips in good stocks to the long term ... many good entries exist.

PS: Here is an example of how despicable and corrupt Congress is. The Earned Income Credit is a libertarian originated program that actually gives working poor families money efficiently without armies of bureaucrats. In 2004 this program supplied about $36 billion to the poor, being the largest anti-poverty program of many. I just heard the Congress - controlled by supposed Democrats "caring" for the poor - is spending $17 billion on earmark pork payoffs/bribes just now. So they rip off the taxpayer for almost 50% of the amount they supply for the poor in the EIC. Now you see why they - D's and R's are such knaves. We need more populist libertarians !!! Bunkerman for President !!!

Monday, December 17, 2007

Monday Morning Rambles

The snow blower was repaired - the plug was fouled. Sheesh ... if they made those plugs accessible with some directions, I could have fixed that with a wire brush. So I cleared off the driveway fairly well. The new plow person did a nice job, putting down some sand, too. The driveway is 1250 feet long with many twists, turns, rises & dips - good for defense but bad for Mrs. B's car when there is ice. The old plow person is now doing it, too. So I have to resolve that conflict today. More complexity in life ... sigh.

Wheat is over $10. This has nothing to do with inflation, but due to repeated crop problems in the US, Europe and Australia: droughts, ice, etc.

IR to buy Trane. Sigh ... takeovers continue.

Holiday sales are OK ... employment is OK ... no recession.

Let's see if the Fed's new borrowing facility works today. This will be interesting.
Asia markets are down big overnight - I see no real news.

I read quite a bit about C's new boss and I like him. The fact he refused a big, fancy office in his last job as embarrassing was quite heartening. So I am considering adding to C today again.

The US presidential race is heating up as voters ... real voters ... are now paying attention. I have decided to support whomever I perceive as the most honest candidate [who is intelligent], regardless of party. As the US government has so many checks and balances, I think this way something good can happen if we finally have an intelligent, honest person in office.

So far, that means Romney, then McCain. I really don't know much about Obama and he is quite inexperienced. But I do have an open mind.

Friday, December 14, 2007

Back in the Saddle

Ahhhh Las Vegas ... the dice were friendly as were the cards. I stepped up my game a bit & really had a fine time at the tables & ... the dining tables :-)

Amazingly I actually made a bit of money :-)

Mrs. B crushed them at the penny slots.

Hmm ... I see Mrs. Market has been a bit fickle ... traders must be enjoying this.

And I see Ben has not obeyed my directions fully. He seems to be trying to be a bit clever with this auction of money to the European, but at least he did cut rates and the door is open for more. Grade -> C+

The beefers who bought the banks on the dip have bailed ... ugh.

I plan to buy a bit more C this morning and some more GE, too. The reason I'm buying more C is that I noticed upon reviewing my account I had a bit of room for more of it. And the price is right.

No recession ... buy dips ... Don't Fight the Fed ... be patient. Disregarding all the hyperventilating, the Fed did cut rates again.

PS: it's been a cluster FUBAR here with the snowstorm. Luckily our flight from Las Vegas wasn't canceled - it was about 2 hours late. Then the car to pick us up at the airport was late ... then when we got to our house, the last 500 ft of the driveway wasn't plowed so we had to walk in 8" of snow :-((

PPS: So this morning Mrs. B had to take a car for abig service appt. ... and got stuck in the driveway ... so I got out to shovel & push as did a neighbor ... after about an hour we got her out & on her way. Today we will hire a new plow person & fire the old one.

P^3S: More cluster FUBAR ... my snow blower won't start :-((

Sunday, December 9, 2007

Las Vegas

Mrs. B and I will be in Las Vegas for 3.5 glorious days commencing Monday AM, returning Thursday evening.  I plan to hit the blackjack tables with my trusty pocket card to minimize my losses as I enjoy the action.  And I'll hit the craps tables in a big way with my "reduced variance mathematically minimal losses" tactics ... lol !;-).

Mrs. B will hammer those penny slots !:-)

Be patient, buy dips of good stocks.  The beefers seem to be moving to a new waterhole in anticipation of Ben coming through.  If so, a new intermediate trend should start.  

Friday, December 7, 2007

The Past, the Present and the Future

Today is December 7. That date in 1941 was a Day of Infamy, as the military empire of Japan executed a surprise attack on the US Pacific Fleet at Pearl Harbor in Hawaii. That evil, expansionist empire was crushed and destroyed. That was a win.

The US ended the war inarguably the most powerful nation on earth with sole possession of decisive atomic weapons and an industrial & scientific base undamaged - even revitalized - by the war. What did it do ? Help create peace and prosperity for others.

The US proceeded to work to create international institutions to help the world develop peacefully and helped the world recover [Bretton Woods monetary agreement, the World Bank and the IMF ]. After few years the US devoted huge resources to preventing another evil, expansionist ideological power - Soviet and World Communism - from seizing power worldwide. In 1991 Soviet Communism, the heir of Bolshevism, collapsed. That's a win.

Today I read the IMF has become ... redundant. So many developing nations have strong economies and bulging reserves that its advice and loans are not needed. And I hear on Worldwide Exchange this AM early from a ... Frenchman ... that the US economy is much less a factor worldwide now. That's significant since it's not from a US bull trying to rationalize his posture, but from a disinterested money manager focusing on the entire world. So the postwar effort has worked. That's a win.

I foresee Asia developing into self-supporting consumer driven economies and Europe living peacefully without internal wars and conflict and becoming a peaceful United States of Europe overtime.

There are major risks and minor conflict points, but overall it's a win. The belated W strategy in Iraq is winning ... finally he did what was obvious four years ago. If he had listened to Bunkerman [and not McNamara ...oops, Rumsfeld], that war would have been over in 2004. Perhaps he will apply this strategy to Afghanistan and finally win that one, too.

So perhaps the US should soon declare victory and go home to live in peace. Let's not make the mistake of the Athenians and keep sticking our nose into others' business. The big problems are solved. Live & let live, I say. Europe and other peaceful nations seem to want to be a more positive international force now. Perhaps the US should step back and let them.

The world is on a positive, morally good trajectory with improving freedom and economic conditions for the people of the earth. Let's just let it stay on that path.

Uh ... yes, I am very optimistic ;-)

PS: I'm not saying disarm. A powerful military is a guaranty of peace. There will always be evil people & groups. Speak softly and carry a big stick.

PPS: I'd like to see the jobs number come in between 50K and 100K. I am very long & strong.

Thursday, December 6, 2007

Still Waiting ...

The S&P cash index closed over its 200 DMA yesterday and that's over the neckline of a tilted inverse H&S bottom pattern that measures to the all time high of about 1575. If a second close over that line occurs today, the pattern is confirmed.

The Russell is still weak, but the Dow & Nazz shows bullish patterns, too.

The chips showed some power yesterday - I don't own any as I don't like them long term, BUT if you are a trader, those might get beefer backing as they move to the new waterhole. The SOX shows a higher high and a higher low.

I plan to buy some more CSCO today to round out my position. This is a long term hold for me, not a trade. I like Internet related tech for the long term.

Be patient. Buy dips in good stocks.

PS: It's so obvious all Congress is interested in doing are creating the earmarks payoffs for their bribe payors. Despicable.

Wednesday, December 5, 2007

Slow Start

I've been a bit sick lately so am starting slow this morning.

I see Brent is back over WTI oil ... interesting.

Futures are up for now.

ADP jobs number is this morning ... that's been more accurate lately.

Wall Street is being investigated over subprime issuance ... good ! How could anyone really think those 2/28 loans made any sense ?

Sen. Chris Dodd says Goldman should be investigated ... :-)

More later ...

PS: ADP employment number was very strong - +189K and revised October up. That's good. That last thing we need is for a weak economy picking up momentum.

PPS: The recession mongers should be twisting in the wind .. dying. They are losing a two front war badly. On one front, the Fed is attacking them with strong thrusts to prevent a future downturn. On the other front, good employment numbers are wearing them down with steady attrition show no current downturn. When will they capitulate ? There are so many of them - underinvested or short. And soon to be out of a high-paying job ... shucks.

Tuesday, December 4, 2007

Waiting ...

Ms. Market will probably take a break and go Christmas shopping this week ... at least until Friday AM and the jobs report. Will she buy a green sweater & scarf, or a red overcoat ? Time will tell, but I think she's getting a bit tired of hairy bears and will soon move to the muscular bulls, perhaps for a stampede up.

WSJ says beefers had worst month since 2000 in November - most lost money. Shucks.

Baosteel is reported to be preparing a bid for RTP. Its chairman is quoted indicating such.

Old Man Winter has arrived here - 4+ inches of snow and 20F temperatures. Heating oil prices are quite high - I just paid $700 to fill my heating oil tank. That doesn't bother me, but Joe Common Man might get a shock. The average income for a two income family is around $55,000, so that one tankful is over 1% of income.

Be patient. Some of my recent adds are "granny stocks" that I like for very long term investments. I expect they might pull my Alpha Fund return down, but I want to slowly create a portfolio with very long term stocks I can hold for 20 years or more. Over a one year horizon, I think I can get about 20-30% or more in them but obviously over longer time frames that won't stick.

If I can get a good entry and 20-30% in one year, then holding them for 20 years becomes easy. Many of Mrs. B stocks in her Sky Fund are like that: PG, PEP, MCD, etc.

I'm just explaining my strategy and tactics.

Monday, December 3, 2007

Long Term Investing

Here is an example of long term investing. About one year ago in another forum, I was criticized by a "master" for mentioning PG as an interesting stock in the disinflation environment that I foresaw as coming. I had remembered that in the 1980s, stocks like PG, MCD, KO, etc really performed very well in such a disinflation, moderate growth environment.

Of course a crucial aspect of long term investing is that one holds the stock long enough to something good to happen and/or one's views to become more widely recognized and accepted - if one is correct, but just early.

So PG one year ago was around 65. Today it's 74. So that's a 14% gain plus a 2% dividend, thus one obtained 16% under favorable tax treatment. A short term trader would need to be correct several times and realize a bit over 20% to have the same aftertax return.

Well, Mrs. B did a bit better in her Sky Fund, buying PG in March at lower prices, plus PEP and MCD. Those companies have good products, good margins, and good overseas exposure. In a disinflation environment with a declining dollar, they can outperform. And they are good long term holds for a "retired" couple having steady dividend growth.

We'll probably hold these stocks for a long time now, having gotten good entries.

To build a good long term investment portfolio really takes at least a year. Good entries don't occur every day and one needs to select stocks that will perform well in the anticipated environment.

There are good entries now under the economic trajectory that I believe is unfolding: a mid-cycle slowdown amid disinflation and solid growth in emerging market nations.

Internet related tech, energy, miners, big cap financials, select transports are my favored groups. I'd like to find one or two hot small cap growth stocks, too.

PS: A UN global warming summit in Bali ... gee .. I wonder how much fuel was burned getting all those coneheads to that far away place ? And I wonder who is paying ?

PPS: Ben Stein says GS report on credit crunch was designed to create fear so they could make money on shorts. Golly, he must read this blog, too.

P^3S: IBD says the market is in a confirmed rally. I don't see a confirm day in days 4-7; maybe they are invoking the exception that if days 2-4 are very strong overall, that can be confirmation. Perplexing ???

P^4S: There are some inarguably "smart money" groups buying distressed assets, viz. Buffet (TXU bonds) and MS (Lennar land), among others. It's starting to smell like the bottom is in or close thereto.

Sunday, December 2, 2007

Causes of War

As a long term investor, one has to be aware of major risks. War is a huge risk. I have been reading the fine book - Europe: A History by Norman Davies - and just finished the part on World War I. The New York Stock Exchange was closed for months after that war began. Prices at first collapsed, but soon a great bull market began in US stocks.

So I started thinking about the principal war risks the world is subject to now. I came up with three, but a friend pointed out that I missed a major one. First I need to review the common causes of major wars.

I. "Man makes war not out of hate and aggression but out of devotion to irreconcilable values" - so said Herodotus in general terms [source: Great Ideas of Philosophy, Part 1 notes page 22, a course on CD]

II. Revolutionary totalitarianism in one state leads to wars of expansion in furtherance of the ideology. I've written much about this here.

III. The powerful state strives to subject or feed on the weaker state for simple power or economic gain. This can lead to a small war or a big war if the weaker state has a big, powerful ally.

How does this work in practice ?

American Revolution - that's type I as I've written in the past.
War of 1812 - type III that didn't work for Great Britain.
American Civil War - ditto, type I.
Mexican & Spanish American Wars - type III
World War I - type III per Austria-Serbia, but Serbia had a big friend, Russia; and Belgium had big friend, Britain.
World War II - Type II in Europe, and type III in the Pacific [US was pressuring Japan re China war leading to Pearl Harbor]
Cold War - type II
Korea and Vietnam - Vietnam War - combination of type II and type III with South Korea and South Vietnam having the big friend, the US.
First Gulf War - type III with perhaps a bit of type II
Second Gulf War - this appears to not fit the typology, being a preemptive war to avoid a wider much conflict that might have occurred if Saddam had obtained nuclear or poison gas weapons and attacked or threatened Israel leading to nuclear retaliation or preemption. So it has characteristics of all three types of causes.

So these three types of wars work pretty well, in my humble opinion, in explaining most conflicts of the past 250 years in which the US has been involved.

Future War Risks (these are my ideas):
A. China might become more militaristic and nationalistic, invade Taiwan with big friend, the US, leading to a major type III war.
B. Russia might become more nationalistic and militaristic, and attempt to pressure states on its periphery, which now have a big friend, the US and perhaps the EU, leading to a type III war.
C. Muslim fanaticism in Iran might precipitate a major type I war, with nuclear war with Israel leading to a much wider conflagration. Or a new Muslim caliphate as envisioned by bin Laden is somehow created leading to major type II wars as it seeks to expand.

Here's the one I missed: the great power of the US might be misused by its leaders in trying to "butt in" and impose its views [economic or political or other] on numerous other states, leading to a coalition war against the US. This would be analogous to the Peloponnesian War. The powerful Athenian democracy intervened in many minor conflicts that culminated in a number of city states led by Sparta banding together to defeat Athens before it became too dominant. This is a composite type I and type III war.

I hope future US leaders show a bit more restraint in being the world's policeman. Live & let live might be a good motto for first principles in world affairs.
PS: The Serbia+Bosnia+Kosovo war was obviously a Type I war.
PPS: Poverty is not a cause of war, but it does help create victims for Type III aggression wars.