Friday, February 29, 2008


These choppy markets are tiring.

Gold and silver are closing in on my long term price targets of $1,000/oz. and $20/oz., respectively. As posted here often, once those prices got within 10% of my targets, I started selling a bit every week. I'll continue to selling until the gold+silver allocation in my Krypto Fund gets back to 10%, provided the prices are at least 90% of my target prices. I have a lot left to sell.

I buy stocks with the money from the sales, but just also did buy some municipal bonds yielding 5% in Mrs. B's Sky Fund. I'm not excited about that purchase, but Mrs. B needs to learn about bonds, and the aftertax yields are quite acceptable. These were industrial development bonds guaranteed by an A rated corporation, so I don't yet bear the stigma of lending to the corrupt local governments. Ugh !

The bears attacked the financials yesterday again. Sigh ... not unexpected, but still tiring. Oils and miners did well. IF you are a trader, remember the second half of the saying, "buy dips, sell rips". Pick you selling points. This rip will end sometime. The beefers will rotate again and then you know you'll be hearing a spate* of punditry that the move is overdone, or they are overowned, or other silly, specious** babble.

If I seem a bit splenetic*** today, you are perceptive. I'm just tired of hearing the same, endless stream of garbage bagged as profundity and spewed out from Babblevision and other US press sources.

Today I get some silver out of the bank to sell - that stuff is heavy !

PS: I see the "US" says Kosovo should not be split to permit the Serb majority areas to stay part of Serbia. Why not ? The same principal that lets Kosovo split off applies, doesn't it ? And why is the US even involved ? Let the Europeans deal with that. Butt out !!!

PPS: Weak quarter at Dell. Uh .. could Mac inroads be hurting Dell at the margin ?

P^3S: Futures came down a lot on no news between 4AM and 7AM ET, but did hear about some yen related trades going on; yen is falling. Beefers really burn me up.

Words of the Day - no surprise, this is "S" day.

"Spate" - noun [$10]
"Spate" means 1. a sudden rush, flood, or outpouring
Sentence: see * above.

"Specious" - adjective [$10]
"Specious" means 1. having deceptive attraction or allure; 2. having a false look of truth or genuineness.
Sentence: see ** above.

"Splenetic" - adjective [$10] and noun
"Splenetic" (adj.) means 1. of or relating to the spleen; 2. affected or marked by ill humor or irritability; (noun) means a person regarded as irritable.

"Spoliation" - noun [$10]
"Spoliation" means 1. the act of plundering; 2. the act of injuring beyond reclaim.
Sentence: Will the beefers recurrent spoliation of the financial markets create a financial panic ?

Thursday, February 28, 2008

An F Day

Hehe, that got your attention, no ?

In honor of my laughing my guts out on that Sarah Silverman video on YouTube and the follow up one by Kimmel, I decided to use "F" words for my Words of the Day below. [See later comments for yesterday's blog for the links.] This also proves I am not a "blue-nose" if that needed proving.

Hmmm ... I started with a facetious* paragraph ;-)

Solid day yesterday - perhaps the markets are getting comfortable with Battleship Ben, who signaled more rate cuts are coming. Good - he needs to keep shelling the bears with those 16" big ones. IBD said many stock leaders (as they pick them) had solid days. RBS raised its dividend on good earnings and prospects. Vik Pandit at C beefed up its risk management staff. Large private capital $$$ will be going into Ambac ... providing evidence the doomsayers were wrong in screeching it is a black hole. After weeks of due diligence, I think one must conclude private capital knows better than big mouth pundits and reporters. The same applied to BAC's purchase of CFC.

Certainly the bears will try again. But recent bear raid attempts ran into real buyers lower.

I'll sell some silver Friday if I can get over $18/oz. Otherwise, I'm doing nothing but waiting and thinking. Btw, my Alpha Fund is very long, almost 200% long.

PS: the municipal variable rate note story in the WSJ is another example of how very profitable business is flowing to the big banks. The spreads on these backup lines is superb.

Words of the Day - "F" words
"Facetious" - adjective [old $10 - hmm my handwriting was a lot more readable 35 years ago]
"Facetious" means playfully jocular; humorous.
Sentence: see * above.

"Facile" - adjective [$10]
"Facile" means 1. specious, superficial; 2. mild or pleasing in manner or disposition.
Sentence: Is Obama just another facile politician or does he have real ideas ?

"Fatuity" - noun [$10]; and "Fatuous" - adjective [$10]
"Fatuity means 1. stupidty, folly; 2. a fatuous remark, act or sentiment.
"Fatuous" means complacently or stupidly foolish.
Sentence A: The colossal fatuity of LBJ's strategy for the Vietnam War cost the lives of 58,000 good American soldiers.
Sentence B: Georgy W. Bush and Rumsfeld imposed a fatuous postwar policy in Iraq that has led to wasted time and lives in fighting terrorism.

"Fecundity" - noun [$10] and "Fecund" - adjective [$10]
"Fecundity" means prolific, fertile.
"Fecund" means 1. fruitfuil in offspring or vegetation: profilic; 2. intellectually productive or inventive to a marked degree.
Sentence A: The blog of Bunkerman contains unusual fecundity of original thought. ;-)
Sentence B: The blog, "View from the Bunker", shows a profoundly fecund mind in its author. ;-))

Hmmm ... "Fecundate" is a transitive verb meaning to impregnate ;-)

Wednesday, February 27, 2008

Gold and Silver

In many posts, I've praised the investment style in David Swenson's book, "Unconventional Success: A Fundamental Approach to Personal Investment". I have used a version of that style for over 2o years in my pension, IRA/401K and other very long term investments that I call the Krypto Fund. See my blog post of February 10, 2007 for specifics. Hmmm re-reading my allocations then, I see my "adjustment" in August 2007 in selling my TIPs and buying stocks cost me money - waiting for the mechanical timing signals would have out-performed my brain. That's quite common. I really need to keep my discipline.

So that's why I'm writing about gold & silver. I had about 10% of my Krypto Fund in gold, silver and a gold mutual fund [at Vanguard]. That's quite a lot of money and the amounts of physical gold and silver is a lot - filing many large safe deposit boxes. But lo and behold, recently the gold & silver asset class grew to about 14% of the total value in the Krypto Fund as the prices of gold & silver rose while most stocks declined. I've posted here quite often in the past few weeks that I've been selling gold as its price got to within 10% of $1000, which was a long term initial target for me.

I could say that respect for the trading gods caused me to sell, but I can also say that the mechanical asset allocation formula in my Krypto Fund also mandated sales. And it still does. Gold & silver are still overweighted at about 12%. So now with silver within 10% of my initial long term target of $20/oz, I plan to sell some silver on Friday.

By the way, gold and silver are sold in troy ounces. 1 troy ounce is 31 grams, so an avoirdupois pound [that's the common pound] has about 14.6 troy ounces, vs. 16 normal ounces. Hence, a 200 pound man's weight is worth about $2.8 million in gold or $55,500 in silver, using $950/oz. for golds and $19/oz. in silver.

PS: I'm buying stocks with the money from the sales: US, Europe, Pacific, Emerging Markets index funds and REIT index funds - whichever asset classes are below target.

Words of the Day - some "W" words today.

"Wan" - adjective [$10] - pronounced "wawn" as in "won ton"
"Wan" means suggestive of poor health: sickly, pallid.
Sentence: Hillary's wan campaign might die the evening of May 4.

"Weal" - noun [$10]
"Weal means 1. (literary) welfare, prosperity; good fortune; 2. (common) a raised or reddened area of skin usually accompanied by itching.
Sentence: The public weal will suffer immensely if Hillary is elected President and institutes her corrupt and socialist governmental policies.

"Whither" - adjective and conjunction [$10]
"Whither" means [adj.] 1. to what place, position or state; 2. (preceeded by a place) to which (the house whither we were walking); [conjunction] 1. to the or any place to which (go whither you will); 2. and thither (we saw a house, whither we walked).
Sentence: Whither go the markets ? [meaning 1. under adjective]

Tuesday, February 26, 2008

A Surprise

Yesterday's reaffirmation of the AAA ratings of Ambac and MBIA was not really a surprise, but it removed one of the bears' tools for manufacturing fright. I suppose they will come up with a replacement soon. Rather than sit around waiting, I have been pondering how this correction might end. One possibility is just a grinding attrition of all the bearish arguments. But another would be a shocking, unexpected bullish surprise. Being a optimist about the world and humanity, I want to present a plausible surprise that would cause a 1000 pt. Dow rally that would simply impale the bears.

Defaults on home mortgages have been increasing considerably, mostly due to subprime and Alt-A defaults. Lenders say they are surprised by the number of speculators that lied on their loan applications about the house being a principal residence. I accept that as a fact. So contemplate the universe of "shaky loans". What types of loans would default early ? This is simple ... the liar loans and the speculator loans. Those people had no equity or willingness or ability to support or use the property at all. They don't even obtain its value as a place to live. So their default in the early phases of a slowdown must be accepted.

How does that affect the default curve, by which I mean the rate of defaults versus time into an economic slowdown ? Clearly, this effect would cause the curve to have a pronounced leading hump as early defaults as a portion of total defaults would be larger than for a normal slowdown. What is now observed ? Exactly that, the default rate is larger than expected in a normal slowdown and that is causing all sorts of pundits to predict doom and gloom, the "mother of all home price collapses".

I think they miss-interpret the data. They are not recognizing that the elevated default rates compared to a normal correction are elevated now due to the early defaults of the liar loans. Those will soon be exhausted. What happens after that ? Defaults will begin to drop. Now that will be a huge shock to the bears. And the ultra-cautious bulls. What will happen ?

A buying panic will occur as investors look to a return to normal business conditions in the fall and price stocks aginast those earnings. Heck, I think 1000 pts move up is conservative. Priced rationally off 2009 earnings, Dow 15,000 is easily in reach. And the big bank stocks would rally 50%, GOOG goes to 900, etc. :-))))))))

Some dreams come true.

[Hey, I admitted I'm an optimist in the first paragraph.]

Words of the Day - I thought some "O" words would be fun.

"Obstreperous" - adj [$10]
"Obstreperous" means 1. uncontrollably noisy: clamorous; 2. stubbornly defiant: unruly.
Sentence: Huckabee's obstreperous unwillingness to acknowledge his defeat by McCain is likely a selfish tactic to establish himself as the leader of the conservative wing of the party.

"Obtrude" - verb, both intransitive and transitive [$10]
"Obtrude" means 1. (intr) become obtrusive; 2. (trans) thrust forward importunely.

"Oleaginous" - adj. [$10]
"Oleaginous" means 1. of or relating to oil; 2. unctious; oil

Sentence using both: Huckabee obtrudes himself into the conservative movement with the manners of an oleaginous used car salesman.

Monday, February 25, 2008

Monday Morning Ramblings

Nikkei was up 3% purportedly on news the China soverrign wealth fund will invest $10 bilion in Japanese stocks.

Ambac bailout moving ahead.

European stocks are up solidly. Qatar rumored to ivest in RBS.

US Monetary Base is up only 1.4% year over year; that's way to small for an economy grwoing at over 2%. Even M1 down year over year. The Fed was way too tight last year and really needs to continue pushing money into the financial system.

Serbs are angry with US over Kosovo independence. Huh ? That's an EU initiative, why are they mad at the US ? Maybe since US is backing Europe on it. Why is the US involved at all ? Sheesh ... US State Department is meddling everywhere.

Why is the US still sticking its nose into the business and affairs of the world ? The Cold War is over - US won that in 1989-1990. There is no risk of Communist/Leninist/Stalinist/Soviet expansion anymore. So let's just let the world alone and mind our own business. Maybe the DC and NYC rich & powerful are using their influence in or control of the US government to further their world domination and their accumulation of power. That's the Davos clique. Certainly when their corporations have issues in other nations, they seem to be able to acquire US government support and aid. Hence the US meddles everywhere and then their people - the common man - in those places end up being annoyed with the US. All the while, the US common man knows nothing since the US press doesn't cover most world events or news. He just wants to eat his pork chop, kiss his wife & kids and give his dog a pat. And when the rich & powerful create a mess in the future, the common man will get taxed and / or a soldier volunteer from the hills in SE Ohio will get killed. Grrrr.

Live & let live. Freedom is a two way street. Let's stop medding everywhere.

Words of the Day - some R's today ;-)
"Redound" - verb, intransitive [$10]
"Redound" means 1. to have an effect; 2. to return, recoil; 3. to contribute, accrue. An older [1970s] definition on my word card is "to lead to a usually unplanned end as if by an inevitable flow of consequenses'.
Sentence - Persistent US meddling in the internal affairs of other nations and regions redounds to increased resentment and even hostility to American values of freedom and human rights by providing potential dictators a foreign opponent for their demagogery.

"Recondite" - adj [$10]
"Recondite" means 1. hidden from sight, concealed; 2. incomprehensible to one of ordinary understanding or knowledge; deep; 3. of relating to, or dealing with something little known or obscure.
Sentence: Recondite US State Department meddlling in other nations' affair on behalf of powerful US corporations might be hurting US leadership for increasing human freedom.

"Redolent" - adj $10]
"Redolent" means exuding fragrance, aromatic.
Sentence: Hillary's campaign is redolent with rotten stench as it grasps for anything to survive a little longer.

Friday, February 22, 2008

Washington's Birthday

Today is the canonical birthday of George Washington, that remarkable man who did so much to create the United States of America. Reading a biography of his gives one much insight on how this nation was created out of wilderness to become the world's leading bastion of freedom for over 300 years. And it was wilderness. The accounts of a 21 year old Washington traveling from Williamburg, Virginia on instructions from the Governor to parlay with the French near Lake Eire shows great hardship and efforts.

The Crown in London had ordered the Governor to stop French expansion into the Ohio country. Accounts of Virginia's assembly questioning and even limiting the British appointed governor's requests for funds and authorization for militia shows how the Crown's commands were quite foreign to pioneers who had effective independence for nearly 100 years. [See my blog post of July 4, 2007 for further thoughts on theory.] The correlation of forces leading to American independence was increasing even in the early 1750s. The seeds of freedom and independence had germinated and grown much on America's fecund lands.

So I recommend reading one of the many fine biographies of George Washington in remembrance of him on this day. John Marshall's is a good start as that author knew Washington personally. I am currently reading "All Cloudless Glory", a two volume set that seems very thorough.

More yo-yo action as the bears were imbued with energy by the not unexpectedly poor Philly Fed index. That index's poor reading set off a bad wave of selling one month ago and the bears used it Thursady to try the darkside again. They are searching for sellers lower and trying to create more panic so they can cover shorts lower. Time will tell. Recent caution gave clues that there are real buyers lower, however. Be patient. Buy dips in good groups as they are pummeled in bear raids.

I am still slowly selling gold, using the funds to buy index ETFs in my Krypto Fund. If silver can put in a few days over $18, I'll start selling it, too. I still need to sell a lot to get my gold & silver asset allocation down to 10% in my Krypto Fund.

I also sold 1/2 of PCU yesterday for a 125% LT gain. That stock's LT gains date was hit in January, but the stock was depressed by a bear raid then. I just had too much exposure to copper. I still think PCU gets taken over at $150, and that copper will go to $5. But I try to practice risk management, too, and take partial sugar on rips.

Words of the Day
"Truculent" - adj [$10] - the first syllable is pronounced like "truck"
"Truculent" means 1. feeling or displaying ferocity; 2. deadly, destructive; 3. scathingly harsh; 4. aggressively self-assertive.
Sentence: Will Hillary resort to the usual Clintonian truculent campaign style to close ground with Obama ?

"Tergiversate" - verb, intransitive [$10]
"Tergiversate" means 1. be apostate; change one's party or principals; 2. equivocate; make conflicting or evasive statements; 3. turn one's back on something.
Sentence: As more and more Democratic superdelegates tergiversate on their prior support for Hillary, the likelihood of Obama becoming the party's nominee increases.

Thursday, February 21, 2008

Some News, Some Not

Yesterday was an interesting day for the markets. Much bad news and an early bear raid hit the markets to knock the S&P futures down 20 pts, but buyers stepped up and the market closed up 11 pts on higher volume. The Nazz performed similarly. A higher volume reversal up on bad news is significant. So I wonder if this is a sign of a change in psychology ? That up day on the recent AIG bad news showed the same. Are real buyers stepping up, or are there no more real sellers lower, to cause short raiders to cover ? The former seems more probable based on the positive close.

Energy and miners were strong again. Dip buying proves itself again.

The Star Wars anti-missile program proves itself against a real target. Scores of liberal physicists of the 1980s were proven wrong in their pronouncements of impossibility; Ronald Reagan proven correct.

A WSJ op-ed brought up the "pushing on a string' fear. This occurence was predicted here weeks ago.

The stagflation fear is now rampant. Uh ... what happened to the recession ? Does no one realize that "stagnation" does not equal recession ?

Hillary wildly attacking Obama as "inexperienced". Objectively, he has more experience that her. But what's new about a Clinton lying ?

The left smears McCain with an old rumor about an affair. Hmmm .... I thought that didn't matter anymore ? Nothing new about leftist double standards or smearing.

Gold is at a new record; silver approaches $18; copper is at $3.76; oil is over $100. Uh ... does anyone not see that this world economic strength is incompatible with recession ?

The recent smashing and now ripping up of energy and miners proves that patient dip buying of good groups works. If you did that and are an investor, pat yourself on the back and enjoy and wait for the LT gains. If you're a trader, remember part two - "sell rips".

Phooey ! The Vista computer just crashed again - this post is from the autosaved draft. I hate this computer. Crashing with a mostly bare bones systems stinks. Total BS. I'm thinking of just junking it and buying a new Mac for my main computer. And now I have to call Dell support today - that should be fun.

Word of the Day
"Exanimate" - adj [$10]
Exanimate means 1. lacking animation; 2. lifeless or appearing lifeless.
Sentence: Until yesterday, exanimate stock markets made Bunkerman wonder why he spends time daily watching them.

Wednesday, February 20, 2008

Mud Wrestling

That's another name for my metaphor of market action as a herd of elephants stomping in the mud, looking for a trend to head out to a new waterhole. The world is awash in metaphors and similes nowadays, and the typical babblevision pundit sounds like a modern day "Sancho Panza" spewing out mountains of metaphors instead of Sancho's proverbs which infuriated Don Quixote but delighted noble listeners.

Here is the legend for my metaphor of today:
Elephants = Beefers = Big, Evil Funds.
Mud = trendless, choppy market action
Stomping = trading
Waterhole = profits

I like animal metaphors. They capture the actions and psychology behind some individual and collective human activities. As well they should, since humans are a mentally advanced animal. Humans still have much primitive animal brain components and human behavior is not so different from animals. I guess paleo-antropologists say humans are about ten million years in evolutionary time from gorillas and spent most of the last two million years as hunter-gatherers in the wilderness. So we differ little from animals in our deepest mental functions.

Short term, perception rules the markets.
Long term, reality rules.

For months, the rich have been panicked as they think another 2001-2003 market collapse is imminent. You see, that's the "lesson" they learned and now they think preservation of capital is the most important goal now. In old days, that meant bonds. But they don't just buy some bonds now. The trendy thing to do which they have "learned" at the country or city club is to use hedge funds - an alternative "investment" to provide "stable" returns. Now they "invest" in hedge funds which are just trading pools. Notice the false precedent: how do you "invest" in a "trading" fund ? You are just hiring a manager to trade on your behalf, not investing. So as all marginal funds are just piled into trading funds, how can a new trend develop ?

Why the chop/yo-yo/ping-pong/mud stomping ? A trend in some groups starts, but after a bit a group of "smart" traders "decide" to short it, and the group stops going up, possibly generating selling from some longs and then the group declines as the stocks go down under that pressure as more longs liquidate. So it's back to the beginning and the cycle conintues. No net gains, just yo-yo/ping-pong/mud stomping action.

If all the world's a trade, how can a trend develop ?

Over time, reality will rule. the steady pressure of corporate profits, stock buybacks, and real buyers on the dips eventually will drive up prices, creating a series of higher lows. These higher lows over time will permit the herd of trading beefers to see a new water hole in the distance, and a good bullish trend will start.

Until then, all we can do is wait, watch the real data and corporate earnings and economic news and wait. But there is evidence this process is happening. Long term, big money investors like Warren Buffet are making huge purchases of good stocks they like.

Take advantage of the inane dips caused buy beefer liquidation to buy good stocks at low prices. For example, oils and miners were knocked way down a few weks ago. And in the great wisdom of the beefers, recently they have roared back. A patient dip buyer got good stocks at low prices and now has a fine gain.

Keep doing asset allocations as needed. I have more gold to sell to get asset group under 10% in the Krypto Fund. If silver goes over $18, I will sell some of it, too.

Reality will eventually rule.

HP reported good earnings up 38% and revenues up 13% and raised its outlook for the year.

GM building in NYC to sell for a record price over $3 billion.

ING reports good earnings, small writedown.

PS: The Street is sure eating their rich customers ... like piranhas ;-) The latest is the auction rate preferred stocks sold to the rich as a liquid, higher yield short term investment [lolol]. I guess the rich learn that there's no such thing as a free lunch. I hope the rich start seeing their hedge fund investments as similar garbage "investments".

Words of the Day:
"Execration" - noun [$10]; also "Execrable" - adj. and "Execrate" - verb, transitive
"Execration" means 1. act of cursing; 2. a curse; 3. something that is cursed or loathed.
"Execrable" means 1. deserving of execration; 2. extremely inferior, very bad.
"Execrate" means 1. to declare to be hateful or abhorent; to denounce; 2. to feel loating for; abhor; 3. to invoke a curse upon.
Sentences: Bunkerman execrates beefers, as they perform little useful function but collect high fees from the stupid rich. Their execrable activities cause needless pain for the common man trying to invest his savings. Today's blog post tried to explain why beefer activities deserve execration from all thinking people.

Tuesday, February 19, 2008

Fact Tuesday

Hehe, good pun, no ?

So after yesterday's erudite post of scholarly thoughts [ ;-) ], today reverts to the markets. Since Babblevision and so much of the financial press provides an incessant stream of unsupported opinion [ aka fearmongering, etc. ], I want to give you a diegesis* of facts from the news of this weekend and today.

1. Copper breaks up out of a consolidation pattern to $3.67
2. Three major steel makers agree to 65% price increases for iron ore.
3. Oil back to $97.

So do those facts evince** recession for the economy? No.

Soon, the reality of the growing world economy will provide sepulture*** to all the fearmongering and recession-mongering those beefer bears.

Be patient. Buy good stocks on dips.

PS: Europe was up bigtime on Monday; Asia was up last night. US futures are up.

PPS: The problems in the aution rate municiple market means big refinancing business for the muni bond underwriters, viz, many big banks.

Words of the Day
*Diegesis - noun [$1000]; also "diegetic" adj.
"Diegesis" means 1. narration, narrative; in a speech, the statement of the case; 2. a narrative; a statement of the case.
Sentence: see * above.

**Evince - verb, transitive [$10]
"Evince" means 1. indicate, to make evident; 2. show that one has (a quality)
Sentence: see ** above; or "Hillary's campaign evinces collapse." This fine word permits one to succinctly make that statement, versus an the Gen Y version: "Hillary;'s campaign looks like it's going to collapse." One word, "evince" replaces "looks like its going to".

***Sepulture - noun [$10] (literary) [rhymes with "sepulcher" - accent on 1st syllable]
"Sepulture" means the act or an instance of burying or putting in the grave.
Sentence: see *** above; or "Will the voters of Ohio and Texas give sepulture to Hillary's campaign."

Monday, February 18, 2008


I finished two books over the weekend that both showed how crucial government policies can be influenced by delusions of the makers that have no factual basis. The books were "Lincoln and the Northern Response to Secession" and "Armed Truce: The Beginnings of the Cold War 1945-1946".

Civil War Delusion
The first book clearly shows the leaders of the North in both parties - Lincoln, Seward, Douglas, etc. - believed that there was a "silent majority" of the people of the south (more in the border states and less in the Deep South) who believed in the Union. So for the five month period from Lincoln's election in early November 1860 to early April, 1861, all these people strove to find a formula for appease the South, temporize and calm the seccession movement, which they thought would/might defuse the rebellion and over time restore the Union. But the book also shows that the leaders in the North really had an amazing ignorance of the opinions of the southern people. There was no "silent majority" for Union - that was a self-rationalized delusion. Finally in late March 1861, Lincoln sent trusted private emissaries to visit the South - they returned to tell him that not a shred of Unionist sentiment existed there. And he personally met with border state representatives who flatly told him that nothing less than total Northern acquiescence to every aspect of secession would "prevent" the further secession of the lower tier of the border states, viz. North Carolina, Virginia, etc. So Lincoln finally made a decision, stopped all appeasement and announced the mere resupply of Fort Sumter's food. South Carolina immediately attacked the fort as the initial violent event of the rebellion and ensuing Civil War.

Cold War Delusion
The book "Armed Truce" shows the leaders of the US government had an astonishing - colossal - ignorance of Stalin's Soviet Union. On February 9, 1946, Stalin made a speech to 4,000 top Communist party, military and government officials announcing a return to prewar collectivism and continued hostility to the west. The context was an "election" campaign for the Supreme Soviet. Here is a comment by a high British official echoed by Truman: "certain allowances must be made for election speeches, even in Russia." In France, Le Monde referred to the Stalin's speech as a "great electoral" one. Other western leaders thought that "the Russians do in fact intend cooperation with the West". In response to Churchill's famous "Iron Curtain" speech on March 5, 1946, Trygie Lie, the first UN Secretary General said that he "played into the hands of 'anti-Western elements' in Moscow".

I could give innumerable examples of the delusions of US and other western leaders and opinion makers about the nature of government and goals in Stalin's Soviet Union. The aforementioned book is chock full of precise, cited quotations.

The west was quite confused for years in many crucial decisions in dealing with the Soviet Union since many of its deeds mismatched and contradicted the delusion and its words. Not until the famous "Long Telegram" of George Kennan and Churchhill's "Iron Curtain" speech did the delusional fog finally begin to clear. Events aiding this were the capture of Soviet spies in Canada that showed aggressive Soviet spying and theft of secrets from its WW II allies.

Here is the crucial quote from the "Long Telegram" of late February 1946 -
"Belief that Soviet 'suspicions' are of such a character, that they can be altered or assuaged by personal contacts, rational arguments or official assurances, reflect a serious misunderstanding about Soviet realities and constitutes ... the most insideous and dangerous single error which Americans can make in their thinking about this country"

After the "Long Telegram" and Churchill's speech and innumerable examples of Soviet agression - the latest being its sending Russian troops and tanks into Persia in spite of a treaty to remove all troops by March 2, 1946, the US government finally had its own delusional fog removed and the policy of containment began that over the ensusing 45 years led to the downfall of the Soviet Leninist state.

Obviously the current era has examples of delusions of governmental leaders. We now know that the current Iraq war was begun based on a form of delusion and illusion - about and created by Saddam Hussein. I'll write about that later.

Word of the Day
"Insideous" - adj. [$10]
"Insideous" means 1. working or spread harmfully in a stealthy or subtle manner; 2. designed to entrap: treacherous; 3. beguiling but harmful: seductive.
Sentence: see above quotation from the "Long Telegram"

Thursday, February 14, 2008


That word originally meant, "good news". And that is what I will give today.

GDP in Japan grew at 3.7% (annual rate), compared to 1.4% forecast by economists. So where did that growth come from ? The US - nahhh. China - probably, and the rest of Asia, too. I've wrtten here before about my long term thinking that a "Greater East Asia Co-Prosperity Sphere" that will develop and become a major force in world economic growth. So this rise in GDP of Japan despite US weakness in the same time period suggests this is now happening.

The Japanese stock market was up over 4% and the other major markets in Asia - India, Hong Kong, China, Taiwan - were up strongly, too.

What else does this "fact" tell us ? World economic momentum is not slowing. The US no longer is the elephant driving all the world's economies.

Battleship Ben tesitfies today with his annual Humphrey Hawkins testimony. I expect him to stress relieving economic risk, and toss a well-gnawed bone to inflation hawks.

Words of the Day

#1a - "sentient" - noun and adj. [$10]
"Sentient" means responsive to or conscious of sense impressions.
Sentence: Success in independent long term investing require one to be sentient by paying attention to, and thinking about economic and corporate facts and events in time.

#1b - "insentient" - adj. [$10]
"Insentient" means without consciousness or sensation: inanimate
[for sentence, see below]

#2 - "theurgy" - noun [$10]
"Theurgy" means 1a. supernatural or divine agency esp. in human affairs; 1b. the art of securing this; 2. a system of white magic performed by Neoplatonists.
Sentence: Many hucksters offer stock traders an insentient theurgy of charts and lines to divine the future prices, at a charge, of course.

#3 - "deliquesce" - verb - intransitive [$10]
"Deliquesce" means to become liquid, melt.
Sentence - Will this rally deliquesce under a new wave of beefer fearmongering, or will rationality prevail and help it gain momentum ?

PS: Hmmm ... hehe ... I said "huckster" ... does that remind anyone of "Huckabee" ?

PPS: Eurozone GDP Q4 growth better than expected, too.

Wednesday, February 13, 2008

Whither Wednesday ?

Nice alliteration, no ?

Ms. Market had to dance some odd tunes for some drunken beefers yesterday, as they decided in their infinite wisdom [ not! ] to hit the Nazz in the afternoon with a bear raid. Their antics are really getting old. For months all we've seen is drunken beefers pounding each other, sometimes rushing the bar to buy groups of stocks, sometimes rushing out of the saloon in panic. Meanwhile, the US economy, ex Wall Street induced panic in some debt markets, is perking along as proven by non-financial earnings for Q4. At some point this will resolve itself as so much stock is slowly ending in the hands of real buyers on these endless dips caused by the beefer brawling.

Doing nothing now, except I will try to sell some more gold today if I can get close to $900/oz.

And Hillary's campaign machine is running out of oil as she suffers from lack of that crucial element, viz., votes. Obama crushed her in DC, MD and VA. The MD and VA margins were quite shocking, as he won by over 20 pts. So she might last a few more weeks, but without some miracle, she will lose.

And that brings us to the words of the day :-))

Word of the Day #1 - "veracity" - noun [$10] - this card in my word file dates from my high school days over 35 years ago.
Veracity means 1. truthfullness, honesty; 2. accuracy
Sentence: The fundamental problem that Hillary has in seeking voter support is that her inherent lack of veracity is now widely recognized and accepted.

Word of the Day #2 - "hermeneutic" - adj. [$10]
Hermeneutic means interpretive, explanatory.
Sentence: #1 - This blog seeks to provide hermeneutic reasons for the stock markets' seeming random motion. #2 - The sentence I used to show the meaning of veracity is also a hermeneutic example of why Hillary is losing this contest. ;-)

Gosh, what will I use for material for my sentences when Hillary is out of the Presidential contest ? ;-)

Tuesday, February 12, 2008

Lincoln's Birthday

Today is the 199th anniversary of the birth of Abraham Lincoln. The Department of Massachusetts of the Sons of Union Veterans of the Civil War ("SUVCW") held a commemorative brunch on Sunday which I attended, being a member of that fine organization. The speaker was Russell McClintock, Ph. D. whose fine book, "Lincoln and the Decision for War: the Northern Response to Succession", analyses the events between the initial succession of the deep South states and the attack on Ft. Sumter. I bought a copy of the book from Dr. McClintock, which he kindly autographed with his signature and "Fraternity, Charity, Loyalty" the motto of the SUVCW. The book was just recently published by The University of North Carolina Press.

Dr. McClintock's talk was quite good and informative. He focussed on the actual facts and timing of the actions of northern leaders and Lincoln, in particular the compromise negotiations and the decision to re-supply Ft. Sumter by Lincoln. Covering crucial events leading to the war, his talk really helped one see the decisions made by the persons, not the legends. I've skimmed his book and think it will be a fine read, which I intend to begin today.

Since we've all lived through many wars, and in particular the current war in Iraq, seeing how historical persons made decisions leading to these is very helpful. I can already envision analogs of Lincoln's decisions to Roosevelt's leading up to US entry into World War II. The book may or may not bear those out, but that's part of learning. Reading good histories loaded with facts is crucial in understanding world events.

Celebrating Lincoln's birthday, and Washinton's birthday on February 22 is so much a better way to learn and understand America than this amorphous and silly "President's Day" - which is now just a shopping day - that the stupidity and selfishness of modern culture gives us.

Word of the Day #1 - "verdure" - n. [$10]
"Verdure" means 1. green vegetation; 2. the greenness of this; 3. (poetic) freshness.
Sentence: Living in what seems like the frozen ice planet of Hoth, I'm dreaming of the verdure of the forest in spring.

Word of the Day #2 - "veneficial" - adj. (Obs.) [$1000].
"Veneficial" means practising, associated with, malignant sorcery or witchcraft. The word is derived from "venefice" [$1000] meaning the practise of employing poison or magical potions; the exercise of sorcery by such means.
Sentence: Can Hillary save her dying campaign through political venefice, or will she resort to the usual Clintonist smear tactics ? hehe ;-)

Monday, February 11, 2008

Monday Morning Ramblings

Very little real news occured this weekend. Hillary's campaign lost four more state contests to Obama, as her campaign strategy has crumbled and she is now replacing her campaign manager.

Beefers planted more bearish stories about debt markets, but each was noticeably missing truly negative data. The WSJ article even specifically mentioned that defaults just aren't happening and declines in market values of loans are due to liquidations, not defaults. Apparantly many hedge funds bought loans on leverage - sheesh, what a silly strategy !

Gold and silver are up; copper is firm.

Battleship Ben testifies later this week.

I'll be buying more stocks today to tweak my Krypto Fund percentages to perfection. And selling more gold this week, too.

I chose words beginning with "R" for today's words of the day.
Word #1 - "regnant" adj. [$10]
Regnant means 1. reigning as in the Queen regnant; 2. (of things, qualities, etc.) predominant, prevalent.
Sentence: The Obama revolution has deposed Hillary as regnant Democratic front runner for the presidential nomination.

Word #2 - "reify" verb, transitive [$10]
"Reify" means to mentally convert into a thing; materialize.
Sentence: Can the beefers reify recession from their rampant fearmongering and panic ?

Friday, February 8, 2008


That's the Word of the Day - a $100 word meaning "patient endurance of hardship, injuries or offense; forebearance" in reference to animate beings. So who shows longanimity ? That's easy - the long term investor !

We have been enduring endless bear raids, fearmongers, recession mongers, loud mouth pundits, record short sales, pointless Babblevision opinion-itis and all sorts on silly excessive pessimism. Our stocks on average are at prices of early 2006, almost two years ago. The panic of the rich has driven prices of high quality stocks to PE levels almost ludicrous as a time when the 10 year Treasury is near a multigenerational low yield. Risk premiums on moderate grade corporate debt is excessive at a time when defaults are low and earnings for all but the financial sector is growing at solid single and double digit rates.

Fear reigns on Wall Street and the beefers are doing their best to create financial panic.

Patience, grasshopper !

Battleship Ben Bernanke is shelling them heavily and they will either capitulate soon or be reduced to poverty and underperformance via attrition. We just have to survive and wait - hence, longanimity is our code word.

What to do meanwhile ?

Rebalance ! Sell some gold, buy stocks ! Sell some bonds, buy stocks ! Buy stocks with some of that money market fund ! I bought a large amount of Vanguard ETFs yesterday: VPL, VGK, VWO, VTI, and a bit of VNO. I still need to sell a lot of gold, but my stock allocations have beeen topped off. Get those asset allocations to the target levels, now ! Prices are at great long term buy levels.

Hehe, imagine me as Gunny Sgt. R. Lee Ermey of that great show, Mail Call: Shut your pie hole, drop & give me 20 and go rebalance those assets !!!

Word of the Day #2 - "meretricious" adj. [$10]
Golly, this index card from my card file is so old, the handwriting must come from my high school days when I started this file to improve my vocabulary.
"meretricious" means 1) of or relating to a prostitute; 2a) tawdrily or falsely attractive, and 2b) based on pretense or insincerity.
Here's a sentence using definition 2b: Hillary's meretricious campaign continues to hold on as her core base of support in women has not yet realized it is being fooled.

Thursday, February 7, 2008

Emergent Strangeness

Strangeness is a property of quarks, a fundamental particle, which combine to make up protons, neutrons and mesons which in turn combine to build the nuclei of atoms.

Strangeness also seems to be an emerging property of today's "rational" and "efficient" markets, through the reaction of stocks to news. CSCO says that next quarter's sales will grow 10%, gross margins will stay around 65%, and 60% of its business is now outside the US. Not bad, an "OK" report. Before earnings, CSCO stock price was down to 23 from a high of about 34 in October. So that's a drop of 32% that the "efficient" market has built into its "rational" expectations of future earnings. Since 10% revenue growth for the next quarter would be an odd "recession" - more like a mild slowdown - one would think the stock would pop up. Nahhhh ! The beefers hit it and the stock traded down 7% to the 21 area.

So the quantum property "strangeness" has emerged in stocks and their behavior to events and news. Fascinating ... mirabile dictu ! New phenomena appearing before our eyes ! What a wondrous time to be living !

Ok, that's enough sardonic commentary. Ms. Market is still in a bad mood, seeing every bit of news as somehow bad. It's no time to be a hero. Just be patient and buy high quality stocks on inevitable dips. And do not buy a stock before its earnings report.

PS: this morning's unemployment claims reports will be important. As will the Bank of England and ECB interest rate decisions.

PPS: I see gold is over $900 ... good, as I will sell another slug of my gold and use the money to buy stocks. This is a reallocation trade in my Krypto Fund, where gold is still very overweight.

Word of the Day - "sardonic" -adj. [$10]
"Sardonic" means "scornfully derisive" or "disdainfully or skeptically humorous: derisively mocking". This word is somewhat difficult to distinguish from sarcastic, which is an adjective derived from the noun, sarcasm, meaning "the use of bitter or wounding, eps. ironic, remarks". Some dictionaries give "sarcastic" as a synonym for "sardonic".

Wednesday, February 6, 2008

Another $10,000 word

Yesterday I gave you "demoktesis", which is an extreme form of a democracy where every person and all the rights of every person is owned by a corporation - a governmental body - and each person holds one share of stock entitled to one vote and one share of distributed profits. So that governmental body is a democratic tyranny where a majority can do anything to anyone at anytime. Ancient Athens was close to this.

Now suppose that some people in the territory of the demoktesis don't want to be part of it - for whatever reason ? Perhaps some Gen X-ers don't like its rules and procedures and want to withdrawal ? Can they form their own corporation and live on their own, perhaps in a community where Grateful Dead music is played all day long as the members toil on their jobs, growing weed ? "Can the [super] corporation ... allow another corporation to spring up in its midst. Can it tolerate the dangers of isolated nonstockheld individuals; in a word, ancorpy? ' "

"Ancorpy" is a $10,000 word not in the Oxford English Dictionary. If you google that word, you will simply find the source where I read it and where this quote was found, viz., the book, "Anarchy, State and Utopia" by Robert Nozick, page 290 top. From the context and likely entymology, it means "existence not of the body"

The aforementioned book is quite sophisticated and is a difficult read, but quite enlightening and valuable. Nozick shows how a minimal state can arise from anarchy using first principles and how utopiae can arise. I read this book and also read "Heavens on Earth", mentioned yesterday, which is a valuable book on actual uptopian experiments in 19th century America. Both really helped me understand how some aspects of socialism really can help increase the happiness of real people if applied with restaint and the freedom to withdraw or move away. They are not marxist theoretical propaganda.

By the way, the relationship of the American Indians to the government of the United States was, and still is, is an ancorpy to a great extent although some merging has occured, but other distinctions are still being created and explored.

Word of the Day #2 - "dwam" - [$1000 - a Scottish word absorbed into English]
"dwam" is a noun and verb, also being spelled dwalm, dwaam, and dwaum.
As a noun, it means a swoon or fainting fit.
As a verb it means to swoon or faint; to become unconscious; also to sicken or fail in health.
Sentence: Will diehard Hillary supporters dwam as Obama overtakes her delegate count ?
... or ... Will Hillary dwam before the next major primary to create sympathy as her crying spells lose effectiveness ?

Tuesday, February 5, 2008

The $10,000 word

Other than a few exceptions, I've noticed that the level of intellectual rigor of my posts has fallen a bit lately. I haven't posted new words or concepts as often as I would like to do that. I have been reading quite a lot of classic and modern writings, but haven't run acroos too many new words - at least new to me. So on this "Super Tuesday" I'll use some words on my index cards that I've been saving for an appropriate time.

By the way, I really dislike that press term, "Super Tuesday" as it demeans a crucial aspect of democracy by associating it with a football game. Montesquieu wrote that a republic depends on the cultivation of virtue. Unfortunately, the US leaders don't seem to have had much virtue for about two decades, and the press certainly does little to cultivate it when they treat a primary election like a football contest.

At least the voters today seem ready to choose candidates based on their perceived exemplary character.

I've created a new class of words - the $10,000 word. These words are so rare or sophisticated or intellectually stratosperic that they are not even in the unabridged Oxford English Dictionary. I came across two $10,000 words in reading a fine book titled, "Anarchy, State and Utopia" by the famous philosopher, Robert Nozick. I suppose to be able to understand or use such a word, one must take a high level college or graduate school class in an appropriate subject. That would cost about $10,000 at today's prices, hence the $10,000 word class.

The first $10,000 word is "demoktesis", which means a system of ownership of the people, by the people and for the people. This would be a political system where all rights on all persons are held by a corporation in which each person holds one share. Think this through. The corporation in demoktesis actually owns each person shareholder and owns all his/her rights in complete. The adjectives, "all" must be taken literally. The "shareholders" can vote to revoke any or all aspects on the rights or property of any person or group, or confer anything on a favored person or group. So this system is literally a tyrannny of the majority. I found this concept on page 290 of the aforementioned book.

Thinking about aspects deomcracy in this level of detail help one see how it must be modifed in practice, as the Founding Fathers of the US did. Protection of individual and minority rights though supermajority voting rules is crucial.

I have one more $10,000 word which I will write about tomorrow ... leaving you in suspense.

Word of the Day #2: "aperient" - adj. and n., meaning laxative. [$10]
[from "Heaven on Earth", a book about small utopian experimental communities of the 19th century in the US, page 199], "Beneath a sugar coating of fiction that is transparently thin lies like the same old communist aperient ..." I think substituting "Clintonist" for "communist works well, too, in describing Hillary's patent medicine she offers voters.

Word of the Day #3: "traduce" - v. trans., meaning to speak ill of, misrepresent. [$10]
[from Annotated Uncle Tom's Cabin, introduction page xli], "... [ a contemporary Southerner writing to object to the book ] "Stowe traduced the slaveholding society of the UNited States ... ]. In modern times, some political leaders [Hillary & Bill ?] seem to traduce their opposition in any manner that can fool voters.

Monday, February 4, 2008

Monday Morning Ramblings

Gmen sack Pats ... I guess Brady was spending took much time with Giselle and not enough on the playbook. Great game .. but I went to bed at 8PM and missed the second half. That's the price of getting up at 4AM to read the news.

Asia markets are up strongly with miners leading. Miners are up strongly in Europe early. This is more reaction to the Chinese stake in RTP. I have thought for a long time that Chinese direct acquisition of miners made sense and was inevitable. The price rises in iron ore, copper, coal and other minerals must seem relentless to China and since they can see no end as China has so far to grow to catch up to the West, buying the resources makes a lot of sense. I own BHP, RTP, RIO, PCU, FCX and CCJ in the Alpha Fund for the long term.

WSJ says Hillary's poll leads have vaporized and that with proportional representation rules for the allocation of delegates, Obama is likely to get as many delegates as Hillary whether he wins or not. Obama has a big bank account and can spend a lot on later states.

McCain seems ready to lock up the nomination. Polls in California show McCain tied with Hillary, losing to Obama. This means the Presidential race is now wide open as it's so early.

A book I'm reading is "The Trouble with Physics" by Lee Smolin. It's very good, covering the major problems in physics and astrophysics that need to be solved, attempts at them via string theory, its failures and also covers other imaginative efforts from other directions. The book also describes sociological problems in the physics community and groupthink of the string theory researchers that close off other avenues of progress even though string theory seems to be a dead end. I recommend it.

PS: From Briefing, a possible bidding war for RTP might occur. "Rio Tinto: China Investment Corp has put up $120 billion at Chinalco's disposal should it decide to make a full bid for RTP - Times of London"

Sunday, February 3, 2008

The End of Good Music II

Last evening, I was reminded of my post of July 3, 2007 in which I proved that no significant amount of good music is currently produced, or has been produced for decades. That proof has so far not been refuted. [See that post for details.]

I watched the fine movie, "Alexander's Ragtime Band" staring Tyrone Power, Alice Faye, Don Ameche and Ethel Merman. The movie was made in 1938 - long ago, naturally, see my proof. The songs were written by the incomparable genius of Irving Berlin and peformed with great beauty and emotion by Alice Faye and Ethel Merman. The combination of great talents in individual skills produced the superb totality of the performed song. Very little made in modern times reaches that level of total quality.

I think we can go further. The irrational insistence that a performer must write and perform his/her own music to be "great" is simply nonsense and has led to cultlike atmosphere where great singers alone cannot get favorable employment. Since the retirement of Julie Andrews, there is simple not a single female vocalist that can compare to anyone of the great singers of the pre-1960 era.

Barbara Streisand is not in the same level of quality as Julie Andrwews or Judy Garland, Alice Faye, Ethel Merman, or the other great female vocalists of the past. No current male singer can be compared with Vaughn Monroe, Howard Keel, Frank Sinatra, or other pre-1955 male singers. I think this is caused by the cult of the performer-writer. Too bad, lots of great talent is not being developed.

Friday, February 1, 2008

Rally Time

Yesterday was the IBD confirmation day we were waiting for - S&P +1.7% on higher volume, and considering the reversal from the day's lows, the gain was even larger. IBD doesn't say so, complaining that stocks aren't in proper bases with favorable buy points. True, but selection rule are rules. Now one should be in dip buying mode. A confirmed rally does not mean the market will go straight up, but it does greatly increase the odds. Over the next few weeks/months, good stocks will base and create favorable breakout buys, so watch those charts.

I'm now a fundamental long term buyer, so I like to buy the V-type dips and average in. My buying tactics differ from IBD sometimes, but I do still use their cup & handle breakouts from a good base when I see it on a stock I like for other reasons.

I sold more gold yesterday and bought more Vanguard Pacific and Europe ETFs [tickers are VPL and VGK] in my Krypto Fund. This is simple asset allocation at work. It's quite a good example of how this group asset allocation pays off. Gold is way up and with its profits I can buy stocks in groups now depressed. The TIPs & Bond allocation was also way up and I already reallocated a large amount of it.

GOOG was hammered in afterhours trading. I bought some at 515 and put a bid in lower for more. I will try to buy that last slug this morning either in the premarket or on a dip. This great growth stock is cheap as it's been pressured by beefer selling in January. Around 500 you are getting an entire year of earnings growth for free. Year over year earnings growth for the quarter was 39% and its PE is now about 20x on 2009 estimates. Golly, I need to buy a lot more of that stock ! I think it's worth $1000/share.

PS: Year to date as of January 31, Krypto Fund is down 3.05% and Alpha Fund is down 6.8%. Not good start, but I think both are well positioned for the big move up I expect. I still have quite a bit of gold to sell and reallocate to stocks.

PPS: MSFT for YHOO at $31 cash or stock at holder's option ... "bear hug " hostile offer ! Wow !