Friday, October 30, 2009

Global Climate Models Crap Out

In the fine dice game of craps, that means to roll a 2, 3 or 12 giving an instant loss. Recent years global temperature date disprove the models' accuracy for the short term. Today's WSJ has an article with some facts and lots of excuses from the pro-human cause hive. You'll have to read the article for the excuses from the government paid "scientists", but here's the important parts.

WSJ: "Two years ago, a United Nations scientific panel won the Nobel Peace Prize after concluding that global warming is "unequivocal" and is "very likely" caused by man. Then came a development unforeseen by the U.N.'s Intergovernmental Panel on Climate Change, or IPCC: Data suggested that Earth's temperature was beginning to drop. ...

"Scientists who have long questioned man-made global warming cite the temperature drop that began in 2006 as more evidence the models are wrong. "They were predicting warming," says Richard Lindzen, a climate scientist at the Massachusetts Institute of Technology. Mr. Lindzen's work, regarded as leading the research challenging man-made warming, suggests that natural factors such as clouds generally inhibit, rather than intensify, greenhouse-gas warming. He wrote in a recent article that the study from the U.K. admits that the kind of climate model cited in the U.N.'s IPCC report "did not appropriately deal with natural internal variability, thus demolishing the basis for the IPCC's iconic attribution" linking greenhouse-gas emissions to climate change. He added that "even when all models agree, they can all be wrong." "

The earth IS cooler on average that in 2005 and no major computer models predicted that FACT. If they can't predict the short term, then how can they predict the long term, when every year is a sequential time evolution of the prior year ? Obviously the models omit major physical processes. Why are they a basis for any policy ?

Money, greed, fanaticism. The usual causes of major FUBARs.


Big rally - a reversal of the prior day. All those sold at the same time - as usual - realized that perhaps they were wrong and barged back in when the US GDP number came out better than expected at a solid 3.5% growth. If this market gets a good - or not so bad - jobs number next Friday, a big rally will ensue. Plenty of real buyers have picked up cheap stock from the beefers on these dips and the underinvested will panic.

Blabberg must read this blog. They were pointing out the analogies to the 1974 market this morning. That comparison was printed here months ago.


This AM I'll re-calculate positions in Krypto Fund to see if any re-allocations are necessary. Last evening, Fido Fund stock CLF reported good numbers, crushing estimates on both earnings and revenues. They are seeing increased demand from iron ore and metallurgical coal customers.

Word of the Day

"Threnody" - noun (also threnode) [$10]; plural threnodies / threnodes
Threnody means a lamentation, especially on a person's death; 2. a song of lamentation.
Sentence: In my lifetime I expect to hear threnodies on the death of the theory of human caused global warming. That false theory will die from an endless series of stakes of facts driven into its greedy heart as the earth reality bifurcates from the models' false trends.

Thursday, October 29, 2009

The Good, the Bad, and ...

The Ugly.

That's watching a few clips of Yankee batters whiffing last evening. The Universe is troubled, and in disharmony as the Yankees lost Game 1 of the World Series at home 6-1. Yankees fans must hope that this loss occurred from overconfidence and the Bronx Bombers now will reach deep into themselves for renewed energy and vitality to win the Series.

Here's an interesting headline from Le Monde on the heritage of the Yankees - "Base-ball: la gloira retrouvée des Yankees" meaning "Baseball: glory regained for the Yankees". The article will be my French study lesson for today. One thing that self-study of a foreign language requires is translation workouts that are interesting.

The Bad

As usual for the past few years, that's Wall Street and its seemingly immanent sleaze. Galleon paid millions to Wall Street firms for trading information, aka "color", that would not have been normally disclosed to most investors. I suppose it got value for its money. Now think. Who gave them that information ? Goldman Sachs, Morgan Stanley, etc. And who profits hugely from proprietary trading ? Goldman Sachs, Morgan Stanley (in the past), etc. So Goldman Sachs and the rest of the Street and big banks with proprietary trading desks - who ALSO represent themselves as honest brokers - make money from THE SAME information that Galleon is supposed to have illegally obtained.

There are honest brokers, and there are sleazy brokers. A sleazy broker, whether in stocks or real estate or cotton, trades and deals ahead of and in competition with its OWN customers. In some professions that is expressly illegal. It no doubt violates the duty an agent (the broker) owes to its client (the customer).

Financial reform should prohibit any broker from operating a proprietary trading desk. Period. If Goldman Sachs employees or even its stockholders want them to trade for their own account, let them split into two companies, viz. an honest broker and investment banks, and a hedge fund.

The Good

It's possible that cluster FUBAR climate treaty will collapse. Europe is bickering over the costs. China and the US disagree, too. Good.


The markets dropped yesterday when the beefers and traders, as usual, all tried to sell at the same time. Hardest hit were their technology and resource favorites.

I bought some more VVUS (a long term speculation on their promising diet drug), re-bought some RIMM at the gap support level to re-start a position, and a few more MT call options. MT earnings seemed good to me, but that stock was hammered.

I have plenty of cash on the sidelines and am looking for more speculations.

Word of the Day

"Cant" - noun and verb [$10]; this is one set of meanings.
Cant means (noun) 1. insincere pious or moral talk; 2. ephemeral or fashionable catchwords; 3. language peculiar to a class, profession, seat, etc.: jargon.
Sentence: Almost every public statement that I've heard from Wall Street figures is mere cant to delude the public to help preserve the vig they skim from the public and investors.

Wednesday, October 28, 2009

Another Whatnot Wednesday

It's uncanny. Today is Wednesday and, as usual, nothing is happening.

Well, not quite. GMAC asks for more taxpayer money. Why ? I don't know ... the WSJ article is hard to understand - lots of "facts" but not the ones that might help one understand why they need more taxpayer money. I guess it's unable to borrow money at sufficiently low rates to then finance car purchases at competitive rates for car buyers.

Obama looks like the new 21st century Alfred P. Sloan; he's putting together a car empire of multiple brands under US government control: GM, Chrysler and all their brands, plus their finance companies. What will he do with them ? No one knows; I suspect he has no idea either. He's improvising ... well, at least temporizing. He just wants to put that mess aside until he and his co-conspirators in Congress to pass climate change and health care cluster FUBARs. Once passed, even if the Democrats lose Congress, they'll be in a position to use Senate filibuster rules to prevent repeal. What a wonderful system ! ... NOT !

In case anyone missed it, the Case-Schiller home price index showed broad month-over-month improvement in a majority of major cities in the US. Data thus shows that the house price "bottom" is in, presuming that no further shocks occur.


I'll be looking at charts this morning, thinking. MT, one of the few remaining 1-2-3 Fund positions, reported earnings in Europe this AM. Blabberg says the stock is trading lower in Europe. I'll read the news on Briefing to see how the numbers compared to "expectations" and then read the press releases. Whether I take action or not will depend on what I see. My plan was to hold through January, but it's always subject to change, as any speculation is.

Word of the Day

"Dualism" - noun [$10]
Dualism means 1. being twofold; duality; 2. (Philosophy) the theory that in any domain of reality, there are two independent underlying principals, e. g. mind and matter, form and content (cf. idealism, monism, materialism); 2. (Theology) a. the theory that the forces of good and evil are equally balanced in the universe; b. the theory of the dual (human and divine) personality of Christ.
Sentences: (A) [from "Great Ideas of Philosophy", a Teaching Company CD course, part 5, Notes page 24] cf. monism: "For the ontological dualist, there are two: the dualist adds the mental to the physical."
(B) Dualism seems to be immanent in the "World" at many levels: elementary particles and their rules of interactions, good and evil, man and woman, and even ideologically in libertarianism and totalitarianism as extremes. In addition, for optimality actual states of existence seem to require both to manifest an optimal resultant "World State". As written yesterday, the World's naturally evolved state always seems to result in "some A and some B", and not "A or B".

Tuesday, October 27, 2009

The Way the World Works

This subject will be a recurring topic in the blog on and off for awhile, as I've been pondering aspects of it.

People seem inclined, whether genetically or by education, to see "things" as either A or B, not some A and some B. For example, when causes of the Panic of 2008 are discussed, most arguments degenerate into bipolar conflicts of (A) greedy Wall Street did it with overleverage, or (B) the government did it by mandating subprime housing finance by banks.

The World does not work as "A or B" in either its most microscopic level or the macroscopic level of humanity. People should stop trying to see the world as "A or B" - it's the wrong concept at the deepest philosophical level. In simple American language, the World is almost always "some A and some B". So stop thinking "A or B" - it just wastes time and leads to errors.

Another thing - the world is complex - literally. It involves complex numbers. Using complex numbers to explain phenomena forces one to bifurcate the phenomena into two dimensions - named the real part and imaginary part. Those are just names. But the math forces one to analyze the phenomena as "some A and some B", and not "A or B". That saves a huge amount of work and gets the answers right.

A famous physicist, Richard Feynman said once [paraphrasing from memory] that education should just teach what's right, and not to waste so much time on metaphors, analogies and simplistic models to try to "explain" the phenomena. I agree and would greatly expand that to all human endeavors, including political speech. All these endless metaphors and slogans are a waste of time and convince no one and lead to nothing.

The ancients knew this in some manner. Plato's theory of Forms involves the recognition that an object has two different dimensions, its matter and its form. A house is made of matter, the wood and nails, but is much more than a pile of wood and nails. The rules that combine the wood and nails - the architecture and construction plans - are the form.

The bifurcation of the World actually goes a lot deeper than even Plato knew. The matter itself is not one thing - "state", but is a combination of many - even an infinite number - of states. And even the form is not unitary. Matter does not follow the rules of a "wave" or a "particle", but is inherently at its deepest level both simultaneously. To be correct, one must abandon "A or B" thinking.

I'll write more about this subject soon.


I am doing nothing. Whether beefer selling or short selling, or a lack of real buyers higher, morning gains vaporized and the market ended lower by about 1%. Ms. Market stopped dancing and sat down yesterday; perhaps she needs a rest. Or needs some news to motivate her ? A good jobs number might induce her to dance the jitterbug again with some Bulls again.

Word of the Day

"Hylomorphism" - noun [$10]
Hylomorphism means the theory that physical objects are composed of matter and form. More extensively, hylomorphism is the theory that every physical object is composed of two principles, an unchanging prime matter and a form deprived of actuality with every substantial change of the object.
Sentence: [from "Great Ideas in Philosophy", part II notes, page 41] "On the question of human nature, [Aquinas] adopts the hylomorphic thesis: Man is a composite of body and soul."

Monday, October 26, 2009

East and South Asian Co-Prosperity Sphere

That prediction of your writer from a few years ago continues to develop before our eyes. Reading the news this mornings, I saw two examples of this evolution to a "Common Market" in East and South Asia.

FT: "China, Japan and other east Asian countries must have “serious” talks on currency co-operation to prevent a recurrence of violent fluctuations that have raised trade tensions in the region, said the president of the Asian Development Bank on Sunday. Haruhiko Kuroda said currency movements threatened the growth of trade between Asian countries, widely regarded as a key way of reducing the region’s reliance on exports to the US and Europe.

" “I think this is one area where east Asian countries are well advised to start a serious effort to co-operate,” Mr Kuroda said at the East Asia Summit between the 10-member Association of South East Asian Nations (Asean) and China, Japan, South Korea, India, Australia and New Zealand."

By the way, don't be deluded by the headlines about the dollar vs. the Euro. The real story is the dollar vs. all those currencies in Asia (except China). Those nations for decades undervalued their currencies to sell more goods to the US. That policy is now collapsing as it eventually had to do. This is also putting pressure on China to let its currency rise, as its competitors in SE Asian are beginning to be hurt relatively.

WSJ: "CHA-AM, Thailand -- Japan and China laid out competing visions of how to create a European Union-style trade bloc in Asia at a regional summit here Sunday, with China pushing for stronger ties with its trading partners in Southeast Asia while Japan held open the door for the U.S. to play a role in a proposed East Asia regional trade group."

I'll be a bit facetious now - here's another of my favorite quotes: The Emperor – Return of the Jedi - “Everything is proceeding as I have foreseen.” Hehehe.


I am doing nothing, but I'm thinking about where the next "screaming buy" (or sell) might be. My sales of various stocks and most of the call options to take sugar left me with lots of cash for new speculations. I'll just keep thinking ...

Book of the Week

"A Pragmatic Theory of Fallacy" by Douglas Walton [The University of Alabama Press: 1995] is a serious book crammed with excellent analysis and explanations of fallacies in rhetoric and argumentation. And it's very, very useful information for anyone who wants to truly understand all those types of dialogues that occur in our modern culture: critical discussions, quarrels, debates, negotiations, inquiries, and deliberations. People use techniques to advance their arguments that might be fair, or might be fallacies. Walton sorts though 25 "baptized" fallacies, explains and defines them and shows where they can be unfair or deceptive tactics, or might be legitimate.

If you've ever heard someone (or read it here) state that someone's adversary in an argument made the logical flaw or fallacy of "post hoc" [more completely, 'Post hoc ergo propter hoc'] or uses 'argumentum ad verecundium' without validity, and didn't know what he was talking (or writing) about, then this book is for you.

I just finished the book and enjoyed it immensely. I'm now sifting through it to prepare a synopsis of all the fallacies covered so I can be adept in recognizing them. I think this knowledge will help me understand public speeches and arguments on policy better. Of course, knowing the Latin names makes me 'appear' more erudite, too.

The book actually is perhaps best read after listening to a course from The Teaching Company [ ] titled "Argumentation: The Study of Effective Reasoning, 2nd Edition" by David Zarefsky, available now on sale for $49.95 on CDs.

Word of the Day

"Parapraxis" - noun [$100]; used in the comments last week by Sunboy.
Parapraxis means a slip of the tongue or pen, forgetfulness, misplacement of objects or other errors thought to reveal unconscious wishes or attitudes.
Sentence: When a politician says something not popular and later brushes it aside as an error or "slip of the tongue", the public would be well served by suspecting it was at least parapraxis, or at most a lie, and not mere inadvertent choice of words.

Friday, October 23, 2009


The market filled in Wednesday's closing crater yesterday. I suppose one could say that "real buyers" snapped up bargains. Or that "real buyers" saw good earnings on companies such as MMM and put more money to work. Or perhaps shorts put on Wednesday were covered. Or that Galleon liquidation selling pressure eased, allowing stocks to rise from light buying. Or underperforming beefers are trying frantically to catch up. Or perhaps all of these together.

My thinking on the cause of this long, grinding run is the combination of (A) the kindling - a slow recognition by more and more investors that the economy is recovering and will return to a reasonable level of activity in 2010, plus (B) the heavy fuel - insurance companies who sold variable annuities with floor guarantees distributed around S&P 1000 to 1300 are slowly being forced to re-buy stocks. I had written once not too long ago that the stunning selling panic of September and October 2008 was likely partly caused by the selling of such holdings as annuity floor guarantees were being hit. This is quite like the "portfolio insurance" debacle on the Crash of 1987. In 2008, the selling was spread over a much longer time than one day as the distribution of guaranteed minimums was broader in "price space". The reversal re-buying will necessarily be spread over more prices, too. Such is what we have seen in this long, grinding run.

From the monthly S&P chart and assuming a seven year maturity, the bulk the guarantees must have been written in the S&P 1100 to 1300 range, with somewhat less in the range of 1000 to 1100.

What does this mean for the future ?

This annuity re-buying pressure can continue but will peak around S&P 1200 - maybe 1150 to 1250 - a range in price space. After that, the economy must have recovered to normal conditions to provide not only earnings but also good prospects for earnings growth in 2011.

Also, it means that unless the economy DOES improve sufficiently to attract other buying support (beefers, mutual funds, etc), that a wave of selling could re-emerge if prices start going lower again.

For now, I'll ride the bull elephant to the next water hole.

As for new money, it's going into my cash account. I don't see any "screaming buys" now. And I don't have strong new ideas ... yet. I'm, beginning to noodle over where to look for that new water hole.

PS: I mentioned something to Mrs. B yesterday about her stocks in Sky Fund. Many of the big companies whose shares she owns are within easy striking distance of all time highs. One example is MMM. To me, many indices are deceptively negative, as their heavy weights to financials misses strength in big industrial and consumer products names.

PPS: I suppose you can guess that I think such guaranteed floors on stock investments should be prohibited, whether in variable annuities or in any other derivative contract, except via true stock options.

Word of the Day

"Ethotic" - adjective [$10]
Ethotic means of, relating to of characterized by ethos (from Greek - nature, disposition). An ethotic argument is one that attacks the character of the opponent. It's a specific form of argumentum ad hominem.
Sentence: Why does so much American political speech descend instantly to ethotic arguments ? Perhaps there is little ability in the ruling classes to generate true solutions. Or few of the noble virtues in them . Or both.

Thursday, October 22, 2009

More Beefer Antics

Yesterday the market cratered around 100 pts. in 45 minutes at the close. To whom can we ascribe such inane selling ? Beefers*, of course. [*Beefer = "big, evil fund defined as a hedge fund or mutual fund that trades very actively and has over $100 million in assets.] My guess is that the selloff was from liquidation of Galleon. The owner / leader of that group of hedge funds was arrested a couple days ago for insider trading. Hence, its investors all wanted to redeem their money. I suppose sell lists were sent out to the Street. The Street's principal traders probably shorted the stocks to front run the sales. And all that had to be done by the close. Wonderful.

These antics just cause the public to be a bit more disheartened by the market. Too much of this volatility occurred last year. The average Joe wanting to make an adjustment in his mutual fund gets flung hither and thither. Some days he's lucky, others unlucky. All for nothing. Beefer antics add zero value to the markets. All that vaunted talk of liquidity is sheer nonsense. The Street's proprietary traders suck that out in milliseconds and the beefers themselves cause bids to disappear and shorting raiders to emerge from the hiding places.

As for Galleon, there was some discussion a few days ago whether the government was proper in using wiretaps. Today's news reports make it clear that several informants gave the government plenty of probable cause for getting wiretap warrants. End of controversy.

The FT shows another example of the dumb rich in the "There's a sucker born every minute" Club. "John Meriwether, the hedge fund manager and arbitrageur behind Long-Term Capital Management, is in the process of setting up a new hedge fund – his third. The move comes barely three months after Mr Meriwether decided to close his second fund manager, JWM Partners, which was wound down after clients saw the value of their investments fall by more than 44 per cent over the course of the financial crisis. JWM Partners was set up soon after the collapse in 1998 of Mr Meriwether’s first – and most infamous – fund, LTCM, which triggered a wave of panic across the world’s markets ..."

Who in their right mind would invest money in that nonsense ? Two funds blown up and now a third try ? Sheesh ...

And think a bit ... every proprietary trading desk on the Street does the same thing with billions. And are they better than Meriwether ? Nope. All this is simply a scam - hucksterism at its worst. Get other people's money; speculate, get fees and bonuses and then blow up. The Street is littered with the carcasses of those for that past three decades.

But now the the web of swaps and derivatives, the big firms are linked. So blow ups will necessarily bring in the taxpayer again. Ban all this nonsense or require 100% cash or physical collateral for any net short positions in derivatives.


My Tuesday sales to take "sugar" on some call options were timely. Earnings are good, but this market needs some news to move higher, such as a big drop in unemployment claims or some better job numbers. I still think that will occur by year end (as I said a few months ago). If it does, S&P 1200 should be hit. I'll wait for now, but might re-buy some calls if prices get cheap on some interesting names.

Word of the Day

"Onomastic" - adjective [$10] a Mencken word;
"Onomastics" - noun, plural (treated as singular) [$10]
Onomastic means relating to names or nomenclature.
Onomastics means the study of the origin and formation of (especially personal) proper names.
Sentence (from Mencken, The American Language, page 553 bot. referring to the origin of "Podunk" as a colorful synonym for a very small town.
"Here Dr. ____ seems to have been in error, for an onomastic explorer, _______, reported in the Boston Herald for February 8, 1933, that he had discovered a veritable Podunk in Massachusetts, not far from Worcester."

Wednesday, October 21, 2009

A Solution to the Health Care Dilemma

Last week I wrote briefly about the current legislation snaking its way through Congress. Both the House and the Senate bills are 1,000 page cluster FUBARs. Both are likely unconstitutional as they impose specific burdens on some individuals and but not others. Neither solves the health care dilemma completely.

That dilemma is the conflict between our desire for freedom to live our lives as we choose and the de facto acceptance by all that we don’t want to see or let people die in the streets or suffer from untreated illnesses or injuries from poor choices or unlucky events in their personal health and finances. One can characterize that modern emotion as a combination of empathy and fraternity. Libertarians might rant against it, but it’s inarguably there.

The current system is a mess with multiple prices for the same treatment depending on who pays, huge administrative costs, and incredible complexity. Pre-existing condition restrictions on coverage cause massive employment immobility. Random costs are borne unfairly by those simply unlucky. Employers impose proto-fascist, “brave new world” style behavior restrictions. The US health care system is both inefficient and immoral.

What to do ?

Establish a simple (relatively) National Shared Health Benefit that would cover everyone in the United States. Concurrently, it will replace Medicare, Medicaid and all other Federal health plans (except service related Veterans benefits, which would remain separate).

Expressly covered would be: preventative care (physical exams, cancer screenings, etc.); all child bearing costs (pre- and post delivery for the mother’s health and well-being), vaccinations, illnesses, wounds, injuries and defined mental illnesses; all prescription drugs; cancer screening for early detection and the treatments; hospitalization, etc. Coverage will be determined by starting with Medicare coverage and adding those treatments and procedures and services necessary for all persons less than 65 years of age. A Medical Senate composed of one medical professional and one public member (non-medical) from every State shall determine coverage and payments for new treatments by majority vote under the National Shared Benefit Plan.

A per-visit co-pay of $20 will be required as well as similar, reasonable co-payment for drug prescriptions. This is very necessary to deter hypochondriacs, etc. This would be waived for the truly indigent.

Competitive Structure

National Shared Health Benefit would be priced and administered by competitive private enterprise. The Federal government would conduct Dutch auctions for the program. Insurance companies, doctor & hospital groups, corporations, non-profits, coops or even States would submit one or more bids to provide the Specified Coverage for any person in their designated region at a fixed price for each year up to a specific number of persons. The Dutch auction would act similar to the auction of US Treasury issues. The cut-off price necessary to insure all persons in that region would be awarded to all the winning bidders who submitted prices at or below the cutoff price. Out of territory claims (due to travel, etc.) would be handled by simple cross-remittances.

Last, every winning bidder – and only winning bidders - would be authorized to offer “gap” policies and premium care policies at any price in any package. That fine business opportunity would encourage quality operations to participate in the National Shared Benefit Program.

Person in the region would choose coverage from the winners; if not choice is made, the coverage is assigned randomly. If a winning bidder has too many persons selecting that program, the prior persons covered by the bidder get priority with random selection thereafter.

Fairness & Free Enterprise

This plan disallows both the cherry picking of low risk persons and refusal to cover pre-existing conditions. ALL persons are covered, pooling ALL the risks; ALL share these costs in the spirit of national fraternity. Anti-freedom corporate lifestyle restrictions would be prohibited. Genetic screening would be prohibited as a determinant of coverage, but importantly, not for treatment or preventative care. This plan brings clear benefits to the working man and woman; it promotes families and children. This system would bring the spirit of competition and initiative to the medical system that is not in the existing program.

Price discrimination would be prohibited from any service provider participating in the program. This means the existing system of charging one person covered by plan X a different price than a different person covered by plan Y would be ended. Prices for all services would be required to be posted publicly on the Internet. Persons willing to pay for some extra tests, examinations, home visits or screenings would thus be offered fair price for such services.

How to Pay ?

The existing Medicare tax will be broaden to be a simple one rate tax on Gross Total Income, defined as the sum of (a) the current “Total Income” [line 22 in the 2008 Form 1040] plus municipal bond interest income [line 8a of Form 1040], plus any untaxed Social Security benefit [i. e., amounts not included in line 20b]. The existing Medicare tax and Medicare payments by current beneficiaries will be eliminated. Any other income now not reported shall also be taxed. This principle here is that this is a shared benefit for all and absolutely no free riders will be permitted.

One tax rate is set based on the plan’s “average cost” to raise the necessary amount. The rate will be adjusted automatically for cover the “average cost” computed on a five year moving average basis taking into account the trends of prices. The revenues from this tax pays for the insurance coverage for ALL priced by the competitive Dutch Auction bid process.

Employees will receive a credit against this tax based on the per person cost of the “net benefit” of any plan of their employer up to the cost of the National Benefit. This credit amount will be reported in the W-2 form. The Health Care Tax will be withheld from employee pay in the event the employer does not provide any health care plan. No double taxation.

That’s it. Simple and Fair.

Secondary Benefit: This is a model for true tax reform. Combine the existing income tax (personal and corporate), Social Security tax and Medicare tax into a single tax structured like the Alternative Minimum Tax.

Market Actions

I took profits early yesterday in the 1-2-3 Fund on the calls on PG, UTX and ITW. Profits were around 80% on each. Remaining call options are on MMM, BA and MT. Why did I sell ? Easy. UTX and ITW reported good earnings yesterday. The strategy behind the option plan was to capture gains from good earnings due, in my thinking to their overseas operations. Once the numbers were in, why keep holding ? Both stocks had ramped up be fore earnings and were up a bit on the news. For PG, it was ramping up, too, in anticipation of good earnings. Hence I sold all three.

I'm not a hog ... Je ne suis pas un goinfre.

Word of the Day

"Maieutic" - adjective [$10]
Maieutic means (I) of or relating to the dialectical method used by Socrates in order to elicit or clarify the views of others; (II) (of the Socratic mode of enquiry) serving to bring a person's latent ideas into clear consciousness.
Example from "The Pragmatic Theory of Fallacies", page 221, by Walton:
Use of a Straw Man fallacy can "prevent proper maieutic insight into one's own point of view from developing."
Application: The debate on that national health care plans suffers from the lack of maieutic insight that critical discussion using proper and fair argumentation techniques could bring out; thus a national consensus is not fostered.

Tuesday, October 20, 2009

An Apple A Day ...

keeps poverty away ?

I won't go that far, but no doubt the star performing company in these "crisis" times is Apple (AAPL). AAPL sells expensive consumer products. The perma-bears and pundits of gloom have been saying that "the consumer is dead" and "a new normal is here" and, as usual, "it's different this time. What does the data point - a real factual result - of AAPL say ? People want high quality, well designed products that work well. They will pay good prices for them. Period.

WSJ: "Apple Inc. continued to power through the recession as it posted a 47% quarterly profit jump as consumers continued to snap up its iPhones and Macintosh computers. The company also sounded an upbeat note for the holiday season, despite new competition in the smart-phone and PC markets. Shares of Apple surged more than 6% after the results were released, eclipsing $200. ... Apple also sold 3.1 million Macintosh computers in the quarter, up 17% from a year earlier, as it continued to gain ground on Windows-based machines. In the quarter, Apple released Snow Leopard, a major upgrade to its Mac operating system, and it said initial sales have been double that of the previous upgrade two years ago.

"Apple's strong results appear to indicate that overall consumer spending is recovering. Other technology companies have also recently posted positive earnings, including Intel Corp. and Google Inc. "This quarter really signals that we're coming out of the trough," said Gene Munster, an analyst for Piper Jaffray. "You don't see too many blow-out quarters like that, especially when you're the size of Apple." "

All those computers with Windows XP are targets for conversion to AAPL machines when they need replacement. Windows sucks so much, I've vowed to never buy another machine using Windows. I have written before that I think AAPL eventually gets 25% market share in PCs. That means plenty of growth for years.

The Sky Fund holds AAPL as one of its larger positions.

The Real

FT: "Brazil has imposed a 2 per cent tax effective from Tuesday on money entering the country to invest in equities and fixed income instruments. Direct investment in the productive economy will not be affected. The move, announced shortly before local markets closed on Monday evening, is designed to slow the appreciation of Brazil’s currency, the real, which has gained 36 per cent against the US dollar this year."

That is going to really hurt ETFs investing in emerging markets which are trading vehicles of speculators. That 2% vig on flows is a killer for frequent position adjustments. Beefers will also be hurt badly. I suppose that derivatives might permit some avoidance of it, but the firm selling the derivative might have trouble hedging the other side of the trade without paying.

I really don't like that coming from Brazil. Countries that talk big about free trade, but then impose a ham-handed tax on investors seem rather unstable. I wonder? Brazil's leaders did some stupid things on that Honduras mess, too. Perhaps those oil discoveries are causing a bit of hubris there.


I continue to check Krypto Fund after any large market moves. Soon perhaps I'll have to do some re-allocation and pay Krypto her management fee ... a dog biscuit. Sure beats paying a hedge fund manager.

I'm also monitoring positions in both 1-2-3 Fund and Fido Fund. As the prices get close to my mental targets, I'll take the sugar and move on. I don't wait for the music to stop before sitting down when I'm happy with the results. I'm not a hog. Hmm ... I wonder how that is said in French ?

French for "hog" is "le cochon" but they don't use that metaphor for greed. (btw, it's used for filth, dirt, smutty, etc.). Instead French uses "goinfre", an adjective or masculine noun. So from the unabridged dictionary, "He's a greedy pig" is "Il est un goinfre." or "C'est un vrai goinfre".

I'm not a hog -> Je ne suis pas un goinfre.

For fun: to say insultingly "you're a greedy pig" - "tu es un goinfre". BUT for "you're a dirty pig", use "le cochon" - > "tu es un cochon."

A real-time, multilingual blog !!!

Word of the Day

"Sophism" - noun [$10]
Sophism means 1. (normal usage) a false argument, especially one intended to deceive; 2. (argumentation theory) an eristic or contentious syllogism, distinguished from paralogism by intent to deceive.
Sentence: Most of the arguments raised in the debate on ObamaCare are sophisms designed for the network news or faxed "talking points".

Compare to paralogism: (Logic) 1. a fallacy; 2. illogical reasoning (especially of which the reasoner is unconscious). Paralogy is (a) the characteristic of having paralogisms inherent, or (b) a collection or grouping of paralogisms. Paralogy is a Mencken word - here's a fine quote referring to speeches given in the 1924 Republican convention: "the imbecile paralogy of the speeches." Hmm ... that could be written about convention speeches since around 1992.

Monday, October 19, 2009


Reading books is one of only two ways to learn anything serious or important about the past or present world and human cultures. The other way is intensive travel. Travel plus reading books is optimal. I'll write about travel later, but I'm going to start a new "Book of the Week" feature for the blog today. Each book will be one that I've actually read or listened to on CD in its unabridged entirety.

Today I feature a fun and useful book: "The Secret Life of France" by Lucy Wadham. This book was just published. Here is the "Publisher's Description" from - "In this candid and funny account of her escape from English boys and her love affair with a Frenchman, Lucy Wadham describes the mutual bafflement and fascination that characterised both their subsequent marriage and her unfolding relationship with France. Using her own personal experiences over 25 years, Lucy offers a rare, insider's view of a nation that may be deeply incompatible with ours but is also, she thinks, chronically misunderstood. In "The Secret Life of France", Lucy leads us on a journey through the French moral maze, and examines French attitudes to a range of subjects from marriage and adultery to work and race relations. By taking apart the cliches she helps us gain a better understanding of this nearest and most alien of neighbours, and suggests that on some matters we have much to learn from them. "

I concur. And two reviews in Financial Times concur as well - that's where I discovered it. The book was a very enjoyable read. I learned a lot about France and French culture. The author's perspective is British, but the American perspective is rather easy to extract as she makes British cultural comparisons explicit. France and the US have a mutual love-hate relationship going back 350 years to colonial times. Modern cliches really do France and the French a disservice. Reading this book helps one understand both much better.

By the way, since I read only about one book per 2-3 weeks as I spend lots of time learning languages and listening to lectures, many of my books covered here will be past reads. I have a 700 square foot library full of books, many that I've read.


I checked Krypto Fund over the weekend; it's doing very well. Some asset classes are probing re-allocation checkpoints, but not quite there. I'll wait.

Otherwise: Je ne fais rien ... Ich machte nichts ... Nic nie robię ... Estoy haciendo nada ... Non faccio nulla ... Nihil facio ... I am doing nothing.

Word of the Day

"Epigone" - noun [$10]; also "Epigonous" - adjective [$10] and "Epigonic" - adjective [$10]
Epigone means an imitiative follower especially an inferior imitation of a creative thinker or artist.
Sentence: For serious learning, the Internet is a mere epigone to books and travel. In a more complete sense, it's analogous to a visual, searchable card catalog that can help one find where to obtain reliable knowledge, but not actually obtain it directly.

Friday, October 16, 2009


A long, cold rainy weekend is expected here at the Bunker. Sky has some sheep herding lessons - he doesn't mind pushing the sheep around in the rain. He loves it. The drive to the field is about 66 miles and takes me about an hour and 15 minutes each way, barring traffic SNAFUs. How do I spend the time ?

Listening to mindless babble on the commercial radio ? Nope ... Nein ... Nie ... Non ... No.

Listening to satellite radio in "Gold Mist" - sometimes. I like the channel 4 - the music of the 1940s.

But I prefer to listen to audio courses on CDs produced by the "Teaching Company". See

I've bought dozens of their courses, listened to them and can say that I've enjoyed almost all. I just finished "Books That Have Made History: Books That Can Change Your Life" and am now listening to "Great Pharaohs of Ancient Egypt". The courses go on sale a few times a year and the paper catalog they send has fine descriptions so it's easy to pick new titles to buy. Most are offered on sale in the range of $20 to $80 for CDs, depending on how many lectures are in a course. DVDs cost a bit more. Most titles go on sale a couple times a year. I stick to CDs except for art courses for which I always buy DVDs.

For categories, I've tried history, literature, religion, art, music and philosophy. All are good - they really do get college professors to give the lectures who have outstanding teaching ability.

Since I have a background in science, I have not tried any of the titles offered in science and mathematics.

If you have long drives anytime, I recommend these courses as a way to enjoy the time and get something positive out of that time behind the wheel. I've been a bit surprised how much I can listen just driving around town. Those short drives of 10-15 minutes to and from town for errands can give me one lecture (30 minutes) a day.

This is a good way to learn about a field or book that you might never have the time to read. Or find a bit about a book to decide to read it. I've done both. Also, the art courses helped me hugely enjoy my vacation in London last Spring, as I could appreciate the paintings in the National Gallery in London so much more having a bit of knowledge.

Broaden your mind ! Discite ! [That is the Latin imperative command, "Learn ! "]


Ms. Market continues to party. The Perfect 7s chant seems to be working. Thanks to all who said it - "well done" - great vibes !!! I will reiterate a bit of voodoo this weekend by making another batch of spring rolls.

I continue to monitor the call options book in 1-2-3 Fund and will take profits if and as they hit mental ranges of value. Options are extremely risky, so I don't wait for the last dance to sit down.

Word of the Day

"Malediction" - noun [$10]
Malediction means 1. a curse; 2. the utterance of a curse.
Sentence: Perhaps it's an overstatement that I proffer regular maledictions upon beefers [= big, evil funds], but just marginally.

Thursday, October 15, 2009

Seems Like Wednesday

Not much is going on ... the semi-holiday on Monday had made today a slow news day.

Corruption continues: WSJ - "America's largest public-pension fund, Calpers, revealed that a former board member had reaped more than $50 million in fees for arranging investments that could saddle state taxpayers with hundreds of millions of dollars in losses. The disclosure deepens concerns that alleged conflicts of interest are undermining state retirement funds."

New Ways Still Fail: WSJ - "Fewer than four of 10 fourth- and eighth-graders are proficient in mathematics, according to a highly regarded federal test given in early 2009, adding to recent evidence that the U.S. drive to become more economically competitive by overhauling public education may be falling short."

I suppose spending half their young lives playing video and other electronic games is part of the problem.

Perky Overseas Business: FT - "A Hong Kong property developer has sold a duplex apartment for a world record price, less than three months after the territory technically emerged from recession."

Don't be Americo-centric, listening only to US doomsayers. FT - "The recovery in China’s economy gained new impetus on Wednesday with figures showing a sharp improvement in the country’s exports and imports in September. The trade surplus also fell last month, providing evidence of some rebalancing of the economy at a time of persistent trade tensions over cheap goods from China, which is likely to become the world’s biggest exporter this year. "


I took some "sugar" yesterday as the strategy and tactics of the call option book paid off, for the correct reasons, no less. Specifically, good earnings at companies with significant overseas revenues were reported and continue to be anticipated. I sold the CAT calls for a 100% profit. A few days ago I had sold the GOOG calls for 100%+ profit, too. I plan to hold the rest for their earnings reports, but if they ramp up prior thereto, I'll take the sugar.

Dow 10,000 means nothing. A recovery of S&P 1200 does mean something, as that is the pre-panic, pre-beefer-Viking raid level.

Word of the Day

"Malefactor" - noun [$10]
Malefactor means a criminal, an evildoer.
Sentence: More and more malefactors are exposed in the world of finance. A crisis removes the easy money, so covering up their wicked schemes becomes impossible.

Wednesday, October 14, 2009

Good Earnings News

Intel reported surprisingly good earnings and revenues last evening. From

"Reports Q3 (Sep) earnings of $0.33 per share, $0.05 better than the First Call consensus of $0.28; revenues fell 8.0% year/year to $9.4 bln vs the $9.04 bln consensus. Intel reports Q3 gross margin 57.6% vs 55.5% consensus and prior guidance to upper half of 51-55% range. Co issues upside guidance for Q4, sees Q4 revs of $9.7-10.5 bln vs. $9.51 bln consensus. Intel guides Q4 gross margin 59-65% vs 56.7% consensus ... "

"China had a particularly strong qtr. US continued to ride strong consumer sales with the back-to-school cycle exceeding co's expectations... Channel sales out have shown healthy sequential growth for three quarters in a row. Inventory in the channel remains slightly below normal levels ... "

From memory, a majority of Intel's revenues come from overseas sales. This is my thesis for the call option purchases with expiration dates well beyond earnings reports. In hindsight, I suppose I should have included Intel in the stock selections. Oh well ...


Doing nothing but sitting and awaiting earnings reports from the companies in my call option book. As mentioned before, if the stocks ramp strongly into earnings, I'll likely take some profits pre-earnings. Also, hitting S&P 1100 will likely induce me to take partial profits as that was part of my initial plan. I don't usually change a plan if and as it works out. Doing that without new good cause seems to very bad luck - perhaps it shows hubris and angers the trading gods.

Word of the Day

"Recondite" - adjective [$10] an old word from the card file
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: After listening to Sen. Olympia Snow's reasons for voting for the committee version of ObamaCare, her true reasons remain recondite. All she really said was the "something" needed to be done. Wow, such erudition ! Not ! Fool or knave ? I suspect "fool" in this case. A knave would surely have had a better reason.

Tuesday, October 13, 2009

Details Matter

An article in an issue of the WSJ (paper edition) last week illustrated why the debate over "health care" is so shallow. ObamaCare touts that the uninsured will get covered under his plan and that your existing plan won't change. And he says the costs are low and fair. All this bloviation by him is a fallacy of lying by vagueness in the debate over this policy. Massachusetts has a law mandating persons to buy "coverage" or pay a fine. That word in quotes, "coverage" and its definition matters.

The WSJ article was written by a Masachusetts couple who are retired now from IBM. They pay for the IBM health care from their own money and bought a catastrophic policy as well. But now they will have to pay the fine in Massachusetts. Why ? Because the State requires "more" coverage, in essence a lower annual cap on their own outlays. Isn't how much one can afford by their personal means (self-insurance) a matter of individual freedom? They surely can "choose" between a prepayment via insurance for that potential cost or paying as they go. The difference is only $500 [$2,000 state limit vs. $2,500 for IBM.] However, the couple will have to pay the fine of $1,000 per year, because getting a policy other than the IBM one would cost a lot more.

Insanity. This is how the ruling classes led by Obama are lying by vagueness about this health care debate. They simply make up sound bits and propaganda with no basis in reality of human lives to sell their "plan".

It's a national disgrace and will probably lead to a huge disaster, cluster FUBAR if this 1,000 page monstrosity is passed.

What is being missed are all the mandated "coverage" details. Every lobby group is going to DC to get their favorite illnesses covered by mandates. Simple, affordable plans get chucked aside as this one size fits all policy is getting crammed though DC under a tidal wave of propaganda.

By the way, is it not obvious that employment will be severely hurt if more employer mandates are imposed ?

The Solution: A national "shared benefit" health plan that would provide a fair, moderate health coverage for all. This would be a provided to all persons in the form of an electronic voucher. The plans would be let out to bid by the government (or States) and all insurance firms could offer qualified plans for bid via the Dutch Auction method used for selling government bonds. Existing plans would get a credit for the value of the Shared minimum. Complete freedom for buying additional, "topping off" policies would be preserved.

How to pay: (A) Broaden the Medicare tax to a single tax on ALL income following the structure of the Alternative Minimum Tax, corporations included. All income would be taxed equally (including municipal bond interest). No more separate pools. Simply set the rate to raise the necessary amount.

Secondary Benefit: This is a model for true tax reform. Combine the existing income tax (personal and corporate), Social Security tax and Medicare tax into a single tax structured like the Alternative Minimum Tax.


I sold FCX yesterday from Fido Fund. I am concerned about an article in FT about problems with the Congo government regarding FCX's huge investment in a copper mine there. I also wonder why the company has not reinstated its dividend, as copper prices have been well in the upper $2 area for months. Total profit there was about 60 points in various positions, or about a nearly a quadruple.

Also, I sold the GOOG calls that I had, for over a 100% profit, in 1-2-3 Fund. I'm keeping the stock in Fido Fund long term. I figure I won't make much more on the calls even if earnings are good near term as the stock has rallied strongly into earnings with several upgrades..

PS: I need to translate "lying by vagueness" into Latin so it will sound more erudite.

PPS: A principle concept of this blog, viz. distrust of the ruling classes - all of them - is gaining more adherents. WSJ online today: "Americans have historically swung between anger at big business and anger at Washington. This year their rage has targeted business and government with equal fury. ... Episodes of populism in U.S. history are marked by "people being fearful of and opposing concentrated power of any kind," said Michael Kazin, a Georgetown University historian and author of "The Populist Persuasion." "Big corporations and big government can be seen as parts of the same problem," Mr. Kazin said. That was particularly true during the Gilded Age at the end of the 19th century. Theodore Roosevelt tapped into that resentment by promising to end what he portrayed as a corrupt and cozy system where powerful companies and politicians rewarded each other." Populist Libertarianism is the way !

Word of the Day

"Objurgation" - noun [$10]; from "Objurgate" - verb, transitive [$10] literary; a Mencken word
Objurgate means to chide or scold.
Sentence: Many posts of this blog are reasoned objurgations of the antics of the ruling classes. Why does the press objurgates them so little ? Because the modern press is part of the ruling class.

Monday, October 12, 2009

Celebrating Columbus Day

Today is a holiday for celebrating the discovery of the New World by the Old World. Modern revisionists who make a hobby of denigrating the civilization created and still led by European white people like to say that New World wasn't discovered, it was there all along as a home for the "native" Americans. Why do they use that term ? Because they want to be under the panoply of implied "good" things created by America, yet differentiate themselves from the European white people. After all in their view, everything bad in the world is caused by them.

Turn back the clock to 1491. What was in the undiscovered New World ?

Aztecs dominated the center of the hemisphere with a culture focused on ritual murders of captive peoples. Writing and science of the Maya civilisation had been lost, probably due to conquest.

No metalworking skills - not even copper axes. Steel tomahawks came from Europe as trade goods. There were no horses or even oxen, hence no wheel for transportation. Ships ? Nope, just canoes.

Almost no people lived on the Great Plains - hunting buffalo was very difficult without horses. Native peoples used spears and arrows tipped with crafted flint arrowheads. The skills were about the same as existed in the Old World 10,000 years earlier. "Armor" was made from folded hides worn over the upper body.

The northern hemisphere was a mass of tribes in constant warfare. I've read histories that focus on the very earliest contacts of the European with the New World in North America - both in the Southwest and south with the Spanish and in the north with the French, English and Dutch. accounts. The cultures are rather reminiscent of Germanic tribes depicted in Caesar's commentaries. Tribes fought and massacred each other to get as much land as possible for hunting, leaving a huge swath of vacant land around them.

The European gets blamed for the plagues that surely killed large numbers of New World peoples after "first contact". One area that I do know much about, viz., the Ohio area, was NOT depopulated by the plagues. The Iroquois did it, via simple genocide. A combination of the two destruction forces probably happened in most areas. A tribe was weakened with loss of half its people from plague, then the stronger neighbors could move in and wipe them out. [Reference: "The Battle for North America" by Francis Parkham who uses original French accounts of the earliest explorers.]

Plagues existed in the Old World, too. The Black Death is well known, but one can read a history book titled, "Plagues and Peoples" by William H. McNeill to see that many, many plagues swept through the Old World for thousands of years. Those arose from east and south Asia and Africa, mainly. Do we condemn those cultures for destruction of human life. Nope. They aren't the dreaded "white European".

Heck, AIDS came from black Africa. Do pundits and revisionists write about that plague as being from black Africa ? Nope. They concoct phony ways to blame it on the white man and the CIA.

The New World in 1491 was an early neolithic society with culture levels around the level of perhaps at most 4500 BC in the Old World - about 6000 years behind technologically and culturally. The discovery of the New World by the Old World lead to huge advances in human civilization, including the most important one to date, namely the creation of the United States of America, the first democratic republic of free people with no aristocracy.

Where would the world be without that discovery ? Germany would have won World war I, Bolshevism would rule north central Asia, and east Asia would be ruled by either a Japanese military empire or a Maoist theocracy or both. No forces of freedom would exist anywhere: just endless genocides and massacres. And then one of those "wonderful" nations would "discover" the New World and spread the same plagues and even more deadly technology to a primitive people.

Obviously, the world is hugely better off from the discovery of Columbus. Let's celebrate his drive to look over the horizon and find out what's out there; it was a great achievement for humanity that led to many great and wonderful events.


Nothing planned. I will go over my positions today and evaluate them for risks and reward potential.

Word of the Day

"Adventitious" - adjective [$10]
Adventitious means 1. a. acquired by accident, not inherent; b. accidental, casual; 2. added from outside; 3. Biological appearing in an unusual place or in an irregular manner; 4. Law (of property) coming from a stranger or by collateral succession rather that directly.
Sentence: The adventitious position of the western hemisphere permitted to its unexpected discovery by Columbus in 1492. Had it been 1000 miles further west, discovery may have been delayed for a century or more as all attention would have focused on the route around southern Africa to the East and its profitable trade.

Friday, October 9, 2009


The Nobel committee continues to show its political and ideological biases. This morning I truly did, "laugh out loud" when I heard it awarded the Peace Prize to Obama. I thought, "for what ?" Then I heard the committee head speak on Blabberg and he said, in essence, for talking, for saying "words" that all want to hear. Europe loves Obama's smooching them and saying they he respects them now ... and will in the morning.

The Nobel committee is just being ridiculous and looks foolish; giving a purportedly prestigious prize for talking, not doing; ignoring people actually working and doing something for peace; and giving prizes for worthless talk. Lol - laughing out loud - yup, that's me.

Oh well, maybe they felt they had to make up for the Olympic committee's decision to brush aside Obama's lobbying for the Games in 2016. By the way, the track record of that prize committee is pretty bad as a predictor of future performance; it's really contrarian. I suppose that's bad news for true peace.


Je ne fais rien ... ich machte nichts ... nic nie robię ... estoy haciendo nada ... non faccio nulla ... nihil facio ... I am doing nothing.

Oddly enough, while reading the news I felt the tone of the news was changing this morning from that endless crisis blather to a more normal, general tone.

Word of the Day

"Proscenium" - noun [$10]; a Mencken word
Proscenium means the part of the stage in front of the drop or curtain, usually with the enclosing arch.
Sentence: Obama can step onto the world's proscenium today to receive for more accolades for his "performance" from his enthralled European groupies.

Thursday, October 8, 2009

Ils Montent - They Go Up

Up is up.

I'm no fan of management at Alcoa (AA). They are serial blunderers. And I don't own any stocks in aluminum companies since aluminum is not a scare metal; it's very, very abundant. But this fact caught my attention in press reports of their quarterly results.

WSJ: "Alcoa said it sold more aluminum in the past three months, compared with a year earlier, due to rising shipments and declining inventories"

The company also made money: "The world's largest integrated aluminum producer posted a profit of $77 million, or 8 cents a share, in the quarter. " Analysts had expected a loss.

The world economies are increasing. Ils montent.

Last Friday I had a bit of fun. Following the style of 1960s and 1960s psychobabble, I posted a chant to harness the metal 'vibes' of readers. I was motivated by two movie scenes. First was the scene in the great movie, Moby Dick, with Gregory Peck as Capt. Ahab. At one point the great white whale, Moby Dick, rises from the deep and Capt. Ahab roars, "He Breaches" (from memory). Second was the scene in Kelly's Heroes" when the tank commander nut, Oddball, played by Donald Sutherland, notices the optimism of everyone and says, "Crazy... I mean like, so many positive waves... maybe we can't lose, you're on! "

The chant was structured using an idea of a Platonic form from numbers to have seven verses chanted seven times in seven languages. Here it is again.

"augunt ... Sie steigen ... Ils montent ... aumentano ... aumentan ... wzrastają ... they go up."

I've improved the original idea. If seven people chant this seven times seven times a day for seven days with a seven second "ommmmmmmmmm" in between each chant, this will be a perfect 7x7x7x7x7x7x7 chant - imagine that power of it - the vibes !!!

Haha, this is a joke, but it's fun.


I suppose it sounds boring, but I am doing nothing. Je ne fais rien. I'm just sitting on my positions, letting them play out. A few more movie/TV quotes come to mind.

The Emperor – Return of the Jedi: “Everything is proceeding as I have foreseen.”

Hannibal Hayes – The A Team - “I just love it when a plan comes together”

Word of the Day

"Eristic" - adjective & noun [$10]
Eristic means (adjective) 1. of or characterized by disputation; 2. (of an argument or arguer) aiming at winning rather than reaching the truth; (noun) 3. the practice of disputation; 4. an exponent of disputation.
Sentence: (A) Congress seems more interested in eristics that in doings anything for the people. (B) a more erudite Rodney King might say, "Let's all stop being so eristic".

Wednesday, October 7, 2009

The European Union Survives, Stronger.

The large majority vote in Ireland a few days ago to ratify the Lisbon treaty, after narrowly defeating it last year, showed how much public opinion can change in a crisis. A crisis causes people to re-think their values and question assumptions. Decisions that could not be made in normal times can be made in or just after a crisis. A few years ago I questioned whether the EU could survive a crisis. Would its members focus on narrow, selfish interests ? Or pull together ?

At that time, I thought that it would crack up and fall apart. The events show I was wrong. Europeans seem to have learned how to live together peacefully and not resort to excess nationalism and hate-mongering of their neighbors. The big countries did not put undue pressure on the small ones. Perhaps that's because they had huge economic pressure on themselves.

The small countries realized they were far too vulnerable on their own. The vote in Ireland proved that.

I now expect all the small countries of Europe to join the Euro-zone as quickly as possible, as they know their economies and currencies are too at risk to raiders and unscrupulous or foolish financial practices. The lessons of Iceland and Hungary make this very obvious.

This is good news, a big gain for world stability. This removes a huge risk to world economic growth.


Je ne fais rien. Ich machte nichts. Nic nie robię. Estoy haciendo nada. Non faccio nulla. Nihil facio. I am doing nothing.

More precisely, I'm riding this bull elephant comfortably loaded with plenty high powered ammo in the form of a call options on stocks that I think will outperform due to overseas growth.

Word of the Day

"Mereology" - noun [$1000]; a word from logic.
Mereology means the general theory of the concept of 'part of': a 'part' is understood a section of a given object, and such a section is not identical with the object itself. The formal mathematical theory was developed by S. Lesniewśki; it is an extended system of Boolean algebra.
Sentence: Thinking about parts and wholes and how different (or alike) a part can be from the whole, that is, mereology, is quite essential to analyzing the fallacy called "composition and division". Mereology helps to critically assess many analogies and metaphors that might be false, or quite valid.

Tuesday, October 6, 2009

Where is Everybody ?

That question is a bit metaphorical and facetious, but also arises from a few observations.

First , many stories have appeared in the past few months about vacant, foreclosed houses in many weak real estate markets. The sun & surf locations are worst hit: CA, FL, AZ and NV. Someone once lived in those homes or they were second homes, or perhaps, bought by speculators relying on the "greater fool theory" for a profit.

Did people in those homes move elsewhere or are they renting or something else ?

Second, today's WSJ has this story: "Apartment vacancies hit their highest point since 1986, surging in cities from Raleigh, N.C., to Tacoma, Wash., as rising unemployment continued to chip away at demand during the traditionally strong summer rental months. The U.S. vacancy rate reached 7.8%, a 23-year high, according to Reis Inc., a New York real-estate research firm that tracks vacancies and rents in the top 79 U.S. markets. The rate is expected to climb further in the fall and winter, when rental demand is weaker, pushing vacancies to the highest levels since Reis began its count in 1980."

That rules out the people moving to rental apartments.

So where are they ? Or did they never exist ? Were they virtual people ? Has the US population fallen ? Did lots of young people move back to their parents homes ?

To me, analyzing the home real estate bubble requires one to explain these facts and relationships.

We know the US population has not gone down. The growth rate may have fallen a lot, though, as illegal immigration is reported to be much lower due to to the weak employment market. There are also reports of illegal immigrants going home - even after many years here. That's no problem for me - but it would be interesting if some of the US real estate bubble was fueled by them - or not. I suspect they had little direct impact on home demand; indirect, knock-on demand is possible, though. Prices are determined on the margin. I don't know if it's a coincidence that the housing market boomed when the US was being overrun by illegal immigrants and cooled off and collapsed as fences were being built and tighter job rules were being imposed.

The panic of 2008 also caused serious retirement fund losses, so many retirees and near retirees probably ceased to desire a second home in the sun & surf area, or dropped plans to move there. And overextended retirees perhaps sold. That eliminates many "virtual people".

Speculators also are mostly crushed now, too. That eliminates more "virtual people".

What does this mean ? House prices won't recover to the prior highs for many years. This is the real estate cycle, which happened around 1981 and 1988-1990 periods. I remember in the last cycle, it took about ten years for my home to reach its prior high valuation (based on true neighborhood sale prices).

The market needs real people to replace all those virtual people. I say, a bit facetiously, what this nation needs is a new baby boom - a new cycle of increased household formation !

Young men - get married ! Young women - get married !

To quote that great song performed by Eddie Cantor in 1931, "Now's the Time to Fall in Love":

"Potatoes are cheaper, tomatoes are cheaper
Now's the time to fall in love
Why, the butcher, the baker, the old candlestick maker
Gave their price a downward shove
Grab yourself someone to fry your eggs and bacon
She can live just like a queen on what you're makin'
You'll find in some kind o' trouble
You're better off double
Now's the time to fall in love"

Word of the Day

"Ephemeral" - adjective [$10] an old one from the card file *
Ephemeral means lasting only a very short time.
Sentence: Will Obama's popularity be ephemeral ? Perhaps, since it seems based on emotions and hopes of people, not on any real actions or substance. Talk is cheap and eventually homo boobus will realize that. Obama needs to do, not talk. Acta non verba. [actions, not words]

To forestall flack, a $10 word is one that that I once had to look up in a dictionary, not knowing its meaning or just being unable to articulate that meaning clearly at that time. This word card is written in my handwriting of probably 40 years ago. That I now know its meaning does not reduce the value of the word.

Monday, October 5, 2009

A Day Off

I'm helping Mrs. B drive to a sheep herding event in upper New Hampshire today. We're leaving early, so I can't post today. Sorry.

Word of the Day

"Harbinger" - noun [$10] an old one from the files
Harbinger means 1. one that pioneers in or initiates a major change; 2. something that presages or foreshadows what is to come.
Sentence: One wonders if the Olympic committee thumbing its nose at Obama is a harbinger to the decline and fall of the Bloviator aka La Grande Bouche.

Friday, October 2, 2009

The Nose of the Camel

The ham hands of government are grabbing more and more power of the the health care sector, and Obama's "plan" shows signs of moving much further into that area. Once the government starts paying for something, the political forces create much pressure to control it and all its details more and more. Here are two examples.

WSJ: "Democrats on the Senate Finance Committee voted Thursday to encourage limits on the compensation of insurance executives, responding to charges that expanding health insurance coverage would enrich insurance companies. ... Sen. Blanche Lincoln (D., Ark.) said the limit is needed because insurance companies are going to reap a windfall of new customers under the legislation. "This is the right thing, and the right message to the American people,"

I don't really care about insurance executives, and I've written many times that top corporate executives are overpaid, but this level of nitpicking is ridiculous.

WSJ: "More than 660,000 seniors next year will lose the private Medicare plans they now have because some insurers are dropping coverage in response to tougher federal requirements.
Most of those beneficiaries are enrolled in a type of Medicare Advantage plan called Private Fee for Service, where enrollment has surged from about 820,000 three years ago to more than 2.44 million today. PFFS enrollees, unlike those under other Medicare Advantage plans, can see any doctor they like as long as he or she accepts payments through their plan. ... Congress, alarmed by the high cost of PFFS plans, voted in 2008 to require the plans to establish networks of providers beginning in 2011. Companies such as Humana Inc., which has established networks that can cover at least 80% of PFFS enrollees, are doing just that. But Medicare officials acknowledged Thursday that others are pulling out. Plans with a total enrollment of 667,000 people are scheduled to be canceled next year, they said."

In other words, contrary to claims of Congressmen, choice of doctors will NOT be maintained under Obama-care. Once it pays directly, Government imposes more and more requirements and coverage that eventually dictates every aspect of a health care plan.

All this should be simplified. Why is Medicare a separate system ? Why is Medicaid a separate system ? All that create huge billing complexity and more and more administration Eventually the costs of administration outweigh any claimed savings.

I recognize that people are not going to let people die in the streets from lack of care in this modern, relatively prosperous world. We should simply recognize that a level of basic health care is to be a shared benefit of society. In reality, it already is, as persons without coverage now go to the emergency rooms with illnesses and broken limbs, etc.

Provide everyone with a simple voucher (electronically) to choose their own basic care plan. If a person doesn't choose, his plan can be randomly assigned to existing, qualified plans. Health care providers would compete for our business. And people would be free to decide to spend more money to buy additional care plans, that might provide for more convenience and care, extra tests, private rooms, etc.

This is more like some European plans like Germany and France, as I understand them. The marketplace would keep costs down as plans would have to compete for our business.

How to pay ? That's for another blog.


Big drop yesterday as all the long beefers sold trading positions as the same time, as usual. And I suppose the bears piled on. These moves should be no surprise to anyone, and we should all expect them from time to time.

I have a good bit of cash from prior sales in Fido Fund to buy stocks for longer term positions, and will start looking around. I might make some 1-2-3 Fund stock buys, too, for shorter term trades.

Word of the Day

"Anfractuosity" - noun [$10] and "Anfractuous" - adjective [$100] A Big Al word !!!
Anfractuosity means 1. circuitousness; 2. intricacy.
Anfractuous means characterized by windings and turnings; sinuous; circuitous [1615-1625 back formation from anfractuosity]
Sentence: Streets in the very old sections of East coast cities and towns can be so anfractuous that one needs a compass to keep one's direction. ... or ... The anfractuosity of creating ObamaCare has become so pronounced that only a cluster FUBAR can result.

Language Bonus

Here is a chant that we can all do to create positive vibes and concentrate mental energy to increase stock prices. It says "they increase" in seven languages.

augunt ... Sie steigen ... Ils montent ... aumentano ... aumentan ... wzrastają ... they increase.

Chant this seven times with a seven second "ommmmmmmmmm" in between each chant.

This will be a perfect 7x7x7 chant - imagine that power of it !

[FYI, this is a joke, but it's fun.]

Thursday, October 1, 2009

Change and No Change

No Change

Today is the 60th anniversary of the creation of Red China by the third member of the mass killer's elite club of the 20th century, Mao. That infamous triumvirate includes Hitler and Stalin. Of the three, the megalomaniac Mao is still the face of the government of Red China. How does that nation celebrate the anniversary ? By showing its true form.

FT: [my emphases] "The People’s Republic of China celebrated its 60th birthday on Thursday with a spectacular military and civilian parade through the centre of the deserted capital Beijing.
All of China’s top leaders, including Jiang Zemin, former president, watched from the rostrum above Tiananmen – the Gate of Heavenly Peace – as the cream of China’s armed forces and military equipment paraded through Tiananmen Square.

"Away from the parade, central Beijing was completely deserted after unprecedented security measures kept the public away and ensured no unexpected incidents ruined the parade. Ordinary citizens were told to watch the show on television and blocked from getting anywhere near the festivities.

"The display of military power and unabashed patriotism included goose-stepping troops, tanks, artillery, a regiment of intercontinental nuclear-capable ballistic missiles and flyovers by about 150 military aircraft. "

That's about all one needs to know: The People - no role. Goose-stepping troops on parade. Red China is a military dictatorship run by a small group, the "Central Military Commission" via a "nomenklatura" of favored bureaucrats - in effect, an aristocracy.


BBC Online: "Judges who will form the highest court in the United Kingdom are to be sworn in later, marking a major milestone in British legal history. The Justices of the Supreme Court are replacing the Law Lords as the final court of appeal for almost all cases in the United Kingdom.
The court is independent of Parliament and will hear the most important cases. "

Well, well, well ... the British decide to follow the lead of their American cousins. This is quite interesting.

When will Europe decide that the US Constitution and structure of its government is the model for a United States of Europe ? I suppose it will take another fifty years to create the psychological foundations for recognizing that reality and get comfortable with accepting that the American government structure the best compromise for disparate states to form a union.

Other Matters

Ken the Cad "retires", surprising the board of directors of BofA. Sheesh, what a worthless board.

Saturn to close as its sale to Penske collapses. That's a shame. A brand and sales style the customer actually likes gets dumped. How rational is that ?

WSJ: "NEW DELHI -- India is poised for a big increase in its civilian nuclear capabilities. Prime Minister Manmohan Singh on Wednesday stressed the importance of nuclear energy in bridging the country's yawning energy gap, as Indian and international companies line up to enter a market opened by last year's U.S.-India nuclear deal."

So India joins the nations that are rational about energy growth, viz., going nuclear. When will the US move back to the only true solution to its energy problem ? Probably not until something breaks the grip of the Green Bishops on policy in the US.


I am doing nothing.
Je ne fais rien.
Ich machte nichts.
Nic nie robię.
Estoy haciendo nada.
Nihil facio.

[I still need this in Italian - coming soon.]

Word of the Day

"Hebetude" - noun [$10] literary; another Big Al word (and used on Gilligan's Island, too)!
Hebetude means dullness.
Sentence: After a couple years of market ping-pong games by the beefers, all these intraday moves on no significant news generates nothing but a heavy hebetude in the weary. Why do I even look intraday any more ?

Słowo Tygodnia

"Wiedzieć" - verb, imperfective, fourth conjugation
Wiedzieć means to know, in a general sense of something, everything, nothing.
Zdanie: Nic nie wiem.
Sentence: I know nothing.