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Shout Out November 30, 2007 (posted 11 AM, updated 3:15 and 3:50 PM)
I’m not a very outwardly displaying emotional kind of guy, but as I watch this morning’s futures, which are pointing to a 100+ point gain, I was trying to contain my glee. I know how these things can change quickly.
Considering that there’s no one around me, I’m not sure why the glee needs to be contained. After all, I thought nothing of dancing with my laptop. So clearly, it’s not an issue of embarrassment. It must be my Victorian upbringing.
But there’s no doubt that today’s early numbers are due to Bernanke’s speech last night. Based on the September experience, if rate cuts become a reality after the December 11th Fed meeting, there may be another rally waiting to bust out.
I do like watching other people let their glee out. But now, I can’t do it within 150 yards. At least not for another 2 years.
So, I suppose in the vernacular of some segment of society, “here’s a shout out to Ben. Ben Bernanke of Washington D.C., this one’s for you”.
A couple of month’s ago, Bernanke was overshadowed by George Bush’s implausible pronouncements about the role of the federal government in assuring the sanctity of people’s home ownership. But today, he’s the man.
So far, at least.
I’m not really sure what segment of society uses or used to use that expression, but I do know that I’m not part of that demographic. The closer I look at myself, the more I realize that I’ve become part of a demographic that I used to hold in disdain.
And you know, it’s not that bad. If Che only knew.
My guess is that if JFK had not been assassinated, Che would not have been overly involved in exporting communism, as a determined United States would have forcefully stood up to any ingression in the southern hemisphere.
With no other place to turn, Che would have eventually become an unrequited capitalist after his escape to the United States during another of Castro’s purges. The reality being that with Che on the Cuban mainland, he would have been too much of a cult challenge to Fidel’s supremacy. He had to go.
Che probably would have negotiated a great equity position in the tee shirt industry that perpetuates his image and would have gone on to lobby for lower corporate tax rates.
That’s what happens to your ideals.
Before the day is over, there’ll be some more economic data released that may send that glee packing, but so far, so good, as the first bit of news just came out.
Personal economic spending was up a bit, but less than expected. There was a very small drop in the Dow futures, but a big pop in MasterCard’s pre-open. It’s not cash that people are using, as even I have taken to swiping my card at McDonald’s. Yesterday, in fact, on my way home, my wife called me to pick up some sandwich buns. Rack up another credit card sale.
The only downside to this is that our annual tradition of emptying the big change jar will probably result in some disappointment in the distributions are made this summer. I’m just not bringing home as much change as in the old days.
It’s amazing how quickly things have turned around. All of a sudden, with 3 weeks to go until options expiration, I’m looking again at the happy possibility of those options being exercised. Best of all, all of the strike prices that I had selected are at their highest levels. Of course, based on past history, I’ll probably wind up moaning about the prospects of losing these stocks as we near the expirations date.
So predictable.
At the open, the futures did successfully predict a great upward climb. Within the first minute of trading the Dow was up by more than 90 points. On a negative note, it took a full 2 minutes to break the 100 point gain barrier.
At this rate, with 388 more minutes of trading remaining, there should be about another 19,400 points of gain left to go. So look for a closing Dow of about 33,000.
If I have time, I may recheck my math and logic. But right now, I’m too busy trying to keep track of all of the green arrows to really care about math and logic.
Mostly what I should keep track of is my fleeting sense of reality, because as we entered the final hour of trading our 150 point gain completely disappeared. Now that really should have been entirely predictable.
Speaking of which, yesterday was another terribly disappointing day as regards the devolution of my mind and mental acuity. This is where it’s all heading.
When I arrived home yesterday evening, my 11th grader said he needed some help with his math, in preparation for an exam today.
No problem. I’m great at math. Love numbers, love number theory. It’s all good.
I’ll always remember Chapter 4, or at least in previous years I would have always remembered Chapter 4. Because you never forget your personal Waterloo.
I’d like to blame it on being tired, but I just couldn’t grasp the concept of matrices operations I was of no help, at all. I think the drawbridge between my remaining synapse was in the up position. Oh well, at least something works.
First, this summer, it was the inability to grasp MySQL and PHP programming and now matrices. Where is this heading? That’s not a rhetorical question. It’s not going anywhere good.
It no longer remains to be seen whether the market will be heading anywhere good as the day progresses. Just 30 minutes into the day, we were drifting off of the highs, but were still up 120 points. At the time, who knew how much that would be destined to change? I had been looking for a good trading opportunities, but hadn’t found anything yet in the early going.
What I was thinking of doing was buying December $25 puts on Corning. It usually starts going down as we start getting some early holiday shopping numbers. Best of all, it’s gone up nicely the last few days, so it will be due for a fall.
After re-reading the last paragraph, I convinced myself and went through with the put purchase.
I run a few different portfolios. That Corning put was for my kids’ account, which is the most aggressive portfolio. It, luckily for them, has had the best return of all of my portfolios, despite some clunkers like Citigroup and Blackstone.
And then, just as suddenly, or rashly, I decided to set myself up to take tax losses on the Blackstone. I sold December $22.50 call options on the majority of my shares. With a cost basis of $28, the loss will be offset by about $1.70 a share from previous call options premiums. But this one will be a strategic loss. One for the team, as it were.
But even with Blackstone in the dumpster, whereas the NASDAQ is up about 11% YTD, the kids portfolio is up nearly 40%, not including today’s results, which will end up being disappointing as the market drifts further and further into the red in the final hour.
I suppose that I should give a shout out to me, but that would be unseemly. Poor Ben, his influence barely lasted 5 hours.
With the mindset of a cynic, I decided that I was done trading for the day and took our dog for a walk in the woods. We went deeply enough that I actually found the “clubhouse” that my son and his friends built. It was quite impressive, but I’ll have to head out there one more time, this time with a camera, to do it justice.
When we arrived back, winded and sweaty, the market reversed its course once again and was up 25 points, although with a bias toward a downward drift. With minutes to go, it’s still not clear whether we will make it 4 gaining days in a row.
But at least there was ne last hurrah for the Bernanke Bounce before we headed into the weekend. Because, wouldn’t you just know it. Confounding the cynics, as myself, the Dow ended up pulling out a 60 point gain.
Now that it’s all laid to rest, at first, I thought that the weekend would be reserved for pondering the imponderables of some of Google’s latest non-core initiatives, that seem to be undercutting short term price performance. Are the Google twins losing their minds, as well? Alright, I’ll grant them that space exploration is a natural extension of on-line search, but the other ideas?
No, I decided there will be no pondering. Instead, I’ll just dance with my computer to the melody of a nice Victorian tune.
Just another day of pleasant surprises.
Pleasant Surprises November 29, 2007 (posted 8 PM)
I was a little hesitant about today and how things would work out.
I know that you’re probably thinking that my concern was for the direction of today’s market, especially following nearly 600 points of gains over 2 days.
Far from it, though. There’s more to me than that. Not much more, but at least there’s a scant semblance of a third dimension. My wife won’t allow me to retire until I get much more multi-dimensional.
Clown school doesn’t count.
Today was the day that I was supposed to play host to a recent college graduate, who was interested in shadowing me for a day to see whether or not she was interested in pursuing a career similar to mine.
Superficially, the answer would have to be “why not”. After all, I only work 3 days a week and can take off as much time as I’d like. On top of that, I’m surrounded by great people and I get at least one hug each week and am subjected to all of the sexual harassment that I can take. That makes it pretty easy to enjoy things and certainly that’s a great selling point, if you’re lucky enough to stumble into the same kind of environment.
The stumble took me 20 years.
But this was a little bit different. Even though I had spent nearly 20 years in advanced education and had many “interns” and others over the years, this one came unusually recommended.
The message that I received from a lifelong friend, and as close to a relative as you can get, was the hope that this individual would marry his son, if only he was smart enough to ask her. Academically speaking, there’s no doubting his intelligence, but as I have learned all too well, that part of the brain doesn’t always serve you properly.
I value that person so much, that I even wrote a letter of recommendation to graduate school on this person’s behalf, sight unseen, following only an extended telephone conversation, which best could be described as a “tell me about your life, interests and dreams” kind of interview.
Well, today was the day. She had traveled more than 200 miles to spend just a few short hours, which I thought would be sufficient, particularly if the shadowing process was unusually onerous.
But the first pleasant surprise today was that my shadow was delightful. Nice, personable, interactive and bright. If anything, I may have understated her attributes in my recommendation letter, glowing as it was.
In fact, she asked if she could come on a monthly basis, and I found myself not shuddering at the prospect.
And oh yes, I hope that he is smart enough to propose.
In fact, in a bow to the obligation that I had, I asked her if she had any nice friends for one of my sons, whose recent picture I happened to have with me.
Based on some unintentional findings when doing a Google search, it doesn’t really look as if he really needs any help in that regard. I’m not sure that any self-respecting drugstore would have developed those pictures.
Bless the digital world.
Anyway, she didn’t seem to anxious to answer my question. But when you think about it, I wrote a sight unseen letter of recommendation, the least she could have done was set up a sight unseen blind date.
Was that asking too much? I’ll try again next month.
In hindsight, though, I think that I may have inadvertently asked her if she knew of any nice Jewish boys for my son. That may explain the silence.
To set the record straight, I should have asked for nice Jewish girls.
Alright, so that was now out of the way, thereby leaving time for the real concern of the day. Where were we going from here?
After 2 up days, I was prepared for a return to the norm.
But that would be alright, since those rapid upward climbs are always followed by equally rapid descents. There’s nothing better than a slow, steady advance.
As great a day as yesterday was, I would much rather see 250 trading days of mundane 0.1% gains, rather than these singular pops of 2.5%, surrounded by occasional 200 point losses and punctuated by roller coaster patterns of movement. Who needs excitement of cherries jubilee, when there are bran muffins? There’s a lot to be said for the wonders of regularity, as last night’s South Park episode will attest.
And you thought you knew the real Bono.
Besides, tonight, everyone was waiting for Bernanke’s speech, which hopefully would affirm Donald Kohn’s soothing words from yesterday.
But another pleasant surprise played itself out by the end of the trading day. Despite another mildly volatile session, the market figured out a way to make it 3 days in a row.
No small feat. Small gain today, but still, no small feat.
For me, the pre-open began with what looked like would be really great news and action in E*Trade. In fact, on heavy pre-open volume, E*Trade was up by more than 20% on news that it’s CEO, Mitch Caplan, the architect of the now failed banking and lending strategy was being unceremoniously dumped. That’s what Citadel got in return for pumping $2.5 billion into E*Trade and picking up some loan portfolios at $0.40 on the dollar.
As recently as Monday, Caplan was still aggressively shilling on E*trade’s behalf, although you could tell that a sale of assets was not off the table. He wasn’t at ease as much as he usually was, but these haven’t been ease provoking times. Maybe had he not had a penchant for wearing tight plaid sport jacket patterns on television, he’d still have a job.
But that bit of pleasant news this morning didn’t last, as E*Trade ended the day down nearly 10%.
The new speculation is whether this takes E*Trade off the buyout block, but the consensus is that it doesn’t. Which of course makes it even less understandable why the stock fell today. It’s now thought that Schwab is out of the picture and that Ameritrade is going to be much more interested in E*Trade now that some bad paper is off of its books. Of course, now there’s Citadel to deal with.
I really don’t care, just as long as E*Trade keeps going up in price and Ameritrade does, as well.
Although I had been thinking of selling Blackstone, it rose another 3% today. Maybe the thought is that at these prices, there may be some good buys waiting out there for Blackstone, as long as it can get some financing.
Good luck with that.
I suppose that Schwartzmann’s first public statements in quite a while also have helped. So I’ll continue looking for a short term capital loss opportunity.
I’m happy to say, that despite the relatively lackluster year, as a result of the recent setbacks, I don’t have very many choices for short term losses. I guess that’s good, but I would like to minimize next year’s taxes, although, once again, there’s no reason to complain. The more you pay, can only mean good things.
For the first time in about a month, we can look to tomorrow as perhaps capping off an up week. It’s been a while, but that’s what makes it even more savory than bran muffins.
I’m ready for the surprise that brings us to 14,500 by years’ end.
So for starters, here’s hoping that Uncle Ben doesn’t disappoint tonight.
I’m not ready for any unpleasant surprises.
Oh, before I forget, not that I ever would.
Happy Birthday, Judy
Sesame Street November 28, 2007 (posted 9:30 PM)
My oldest son is now 21 years old. With time, it gets harder and harder to remember the early years. One thing that I do remember, though, is etched deeply within my memory banks.
Like so many well intentioned parents, we subjected our child to a mind numbing form of behavior management. Long before there were DVD’s, we had the VCR.
Remember those days?
One of those VCR tapes that our son watched incessantly was one in the Sesame Street series. The one song that remains burned in my mind goes like this:
“One of these things is not like the other things
One of these things doesn’t belong
Can you guess which thing is not like the other thing
Before I finish my song?”
That song has its applications to today. Can you guess, boys and girls?
Here’s a hint. The song ends at 4 PM.
Based on the pre-open futures, maybe today will be the day that we string 2 gains in a row, together. That’s definitely not like anything else we’ve seen in a month.
Another show that we had taped for him and that he loved to watch, was “Double Dare”. Remember that show? It seems that has applicability to today, as well. Maybe instead of ringing the opening and closing bells, they should just empty a cauldron of green slime onto the traders below. Now that’s symbolic, especially when we get those 200 day losses.
Today’s first glimpse into the confusion that consistently marks the markets came as the Durable Goods Report was released. The numbers showed a 0.4% decline in orders. It was actually down 0.9% if you took out defense industry expenditures.
The immediate read by the analysts was that this number was worst than expected and they envisioned a drop in the futures, which at that point were up 80. How could anyone disagree with that analysis?
But guess what, the futures just added on another 25 points. Obviously, the “futures” can’t be very smart.
Quick move over to a trader at the Chicago Mercantile Exchange and he explains that the decreased Durable Goods numbers were expected, since a big part of those numbers is predicated on a weak housing market.
Granted, that was in hindsight, but that’s exactly the way the game is played. No one is really wrong, no one is really accountable. My guess is that whoever invented the sub-prime loan will ultimately be awarded a Medal of Freedom form the President at an elaborate outgoing ceremony.
That’s just the way it works. Rarely do high profile people that are incredibly on the wrong side of the market disappear into the ether. In the worst case scenario they become weather forecasters in some low demographic market. Just one more example of where performance really doesn’t count for much.
Monday, for example, the smartest guys in the universe, the ones at Goldman Sachs issued sector downgrades that included just about everything imaginable. Once you got finished going through the list of sector downgrades, there was really no way to have any kind of optimism about the direction of the market, because there was nothing left off of that list.
So in homage to the Goldman list, the market decides to go on an absolute tear.
Now there are some who attribute today’s strong opening to the Fed’s Vice Chairman Donald Kohn’s remarks that suggest there will be further Fed rate cuts to come from their December 11th meeting. But really, do you care who gets the credit, as long as the market moves up? I don’t see anyone crediting me for noting the strong bull signal from Tuesday afternoon’s last hour rebound.
But it still remains to be seen how long that 100 point gain in the first 5 minutes will last. Remember, yesterday had a really good closing rally after it started looking as if we were about to enter the abyss one more time.
Early in the morning, I took advantage of some early strength in both Ameritrade and E*Trade and sold some December call contracts on a small portion of my positions. I sold some $20 Ameritrade and $7 E*trade. Based on their premiums, there seems to be an expectation that something will happen within the next few weeks for those companies. I kept more than 70% of my shares unoptioned, so as to be in a position to get greater profit, if prices surge beyond the December strike prices.
That is called “wishful thinking”.
As the CME trader pointed out, the housing market was weak, and that was further confirmed as the New Home Sales report came out a 10 AM.
And the market did just as expected. And by that I mean that you should read “heavy sarcasm” into that statement.
It went up even more immediately after the news, despite the fact that there is now a nearly 11 month inventory of new homes.
Quick idea for a new Fox reality series. “When Bad News Goes Good”.
I would give up some of my Google advertising budget to place ads on that show, although now that I know that Google plans to get into the “renewable energy space” as a means of social responsibility to offset its massive hardware’s impact on the environment.
Huh? I need help on that one. Why exactly is Google planning to pump hundreds of millions of dollars into alternative energy sources? The Google guys have lots of grand ideas, but so far, the reality is the the only thing that makes money is search. And it makes lots and lots of money. So much so, that no one will ever miss a few hundred million.
As happens 3 days each week, my official source of earnings ultimately took precedence today and I wasn’t able to fully revel in what would go on to be the second largest gain of the year. And best of all, the second consecutive day of gains. If you really like factoids, the past couple of days marked the best 2 day gain in 5 years.
The good news was signaled yesterday, as the market recovered from it’s last hour losses and closed at its highs.
For me the really good news, not to gloat, is that even though the Dow is still down almost 7% from its October high, the Szelhamos Portfolios are 3% above those October highs. That’s just a small consolation, however, as the professionally managed portfolios are tracking the overall market.
A few days ago, I thought that all of the options that I had written would just expire worthless, which is always the goal. But all of a sudden, once again, I’m looking at the possibility of going up against the wall again, as prices on some of my favorites are beginning to climb. The good thing about that is that I’ll have plenty to write and moan about.
Although I still have nice cushions between the current prices of Google, Goldman Sachs and Apple, MasterCard rose another $11 today and is once again knocking on the strike price’s door.
It’s nice having these kind of problems. Those kind of problems are so much easier to deal with than figuring out the new color for our carpets as the office is remodeled.
Best of all, I’m still sitting on a number of positions that I haven’t optioned yet, as I’ve been waiting for prices to climb before selling the call options. Each of those represent good revenue streams.
As I get older I get a greater appreciation for a good stream of anything.
There is a good chance that as the tax year comes to an end, I will write call options on some positions that I am willing to sell for losses, such as Blackstone and Citigroup. Since Blackstone, especially, is deep in the hole, I may get lots more benefit by taking the short term loss rather than keeping the money tied up in a position that has no near term prospects of becoming profitable.
Like Citigroup, however, its nice price activity the last couple of days, will result in a higher call option premium. I may want to take the losses, but I still want those losses to be lessened. So since the options expire before the end of the year, that strategy may end up being the best of all worlds. If tomorrow has any continuing upward momentum at all, I will probably make those options sales.
As I think back to the friendly neighborhood of Sesame Street, I realize that Oscar was probably the character who really didn’t belong with the rest. There weren’t too many cranky characters in that neighborhood. On days like yesterday and today, I feel a lot like Elmo, effusively gushing about what a great few days its’ been. But then I realize how quickly you can transform from Elmo to Oscar, so I’m not really sure if they’re different at all.
I’ll have to go to our VCR archives, since I’m sure we still have that old Sesame Street video and try to watch it with the wisdom that I’ve accrued over the past 20 years. If Elmo and Oscar don’t appear in the same scene, then I’ll know that my theory is correct.
That may turn out to be the unifying theory of the universe that I’ve been looking for. Maybe nothing is different from anything else. It’s all the same, just separated by time and space.
Tomorrow, I hope I get to keep my Elmo face on, but if you notice anything different, you’ll know why.
Yes Virginia, There is a Cyber Monday November 27, 2007 (posted 8 PM)
Listening to the varied analysts yesterday, there was considerable doubt whether Cyber Monday actually existed.
Just ask Yahoo!
The cynics said that Cyber Monday was just an invention. A marketing ploy and no more. Others said that what we call Cyber Monday was, in fact, not the busiest on-line buying day of the year, at all. Interestingly, they all disagreed on what day actually was the busiest. I guess that sometimes numbers can be very subjective.
But, if you can’t get through to Yahoo!, you can just ask me about the validity of Cyber Monday.
As I looked at the data coming in to the Szelhamos empire of on-line shopping, there was no doubt that yesterday was the busiest traffic and busiest buying day that we’ve seen in the few short months that we’ve been trying to get money out of your pockets and into ours. If that’s not our marketing slogan, it should be.
And unlike the fine folks at Yahoo!, we handled every transaction flawlessly.
Most interesting of all, in unadvertised, under construction sites were receiving hits and buying action. The internet still astounds me. How anyone could have been directed to these sites is beyond me, but it’s less expensive than having to advertise their existence. So who am I to complain?
Someone, for example, did a search for “alan lerner rubber doll” and was directed to one of my sites that specializes in gifts. An Alan Lerner rubber doll is not my idea of a great holiday gift, but what do I know? I certainly don’t know who Alan Lerner is, but I do know of Alan Jay Lerner, the Broadway lyricist. But I can’t imagine that there’s someone looking for a rubber doll of a long ago deceased lyricist as a gift.
But once again, it bears repeating. What do I know?
In a demonstration of utter arrogance, I direct you to “Monetize Me” to see the various links that will take you to the “known” websites. Your on your own if you want to try to discover some of the others. But yet, Google searches led people to some of those sites. More amazingly, is that some people got there without any help from a search engine, at all.
Szelhamos Rules is like that. The vast majority of its hits are direct, rather than being referred or as a result of an advertisement. My friend who manages the website for the major hotel management chain asked me where my readers are coming from and I had no idea. I mean I did know the breakdown of sources, but I had no idea how the people coming to the site directly ever found us. I doubt that they searched Google by the keyword “Szelhamos”, although we are the #1 searched Szelhamos site on the internet.
Something to be proud of.
Since yesterday threatened to be one of those rare days that would have witnessed two up days in a row, something had to be done. And something was done, and with a vengeance.
No one was really quite sure what the impetus was for yet another 200 point decline. Was it the Yahoo! Online payment troubles, or was it Senator Charles Schumer’s infamous letter. The funny thing is that I can’t remember the content of that letter that bought out the furor from the days’ analysts. And it seems to be a non-event in the news. I can’t find reference to it anywhere. But they were all hot under the collar yesterday.
Interestingly, in America’s newspaper, USA Today, there is only a very fleeting reference to Yahoo’s little problem. And believe it or not, no reference to the Szelhamos empire. Certainly no reference to Schumer.
What I do know is that Google, which had been up about $16, ended up losing $10 yesterday, maybe dragged down by a comination of Yahoo! And Schumer.
Today, it was all over the place. In the pre-open it was up and maintained a small gain in the early trading. Then despite the 150 point early gain, it proceeded to lose $10, before finally finishing up by almost $8.
Once again, who am I to complain? Up is up.
Maybe today’s market turnaround all started with Citigroup’s behavior late in Monday’s session. It had been down by another $2, before recovering to make it only a $1 loss. It was unusual to see it trimming its loss while everything around it was just plummeting in yesterday’s final hour.
Hmmm.
Today, some substantive Citigroup news came out that wasn’t a death knell.
That was a nice change.
What was considered good news today was that Citigroup has essentially sold an potion to the government of Abu Dhabi to end up being a 5% owner of Citigroup. How that’s good for the rest of us, I’m not really certain, except that Abu Dhabi seems to be as capitalist as you can get and is willing to put other issues aside, when it comes to making a buck. In the meantime, if that’s so good, why is Citi’s stock up less than the overall market, having been in negative territory for most of the day?
You certainly saw the same kind of homage paid when Prince Al-Waleed welcomed Sandy Weill to Saudi Arabia. Amazingly, with the special mid-east meeting taking place in Annapolis today, there is even word that the Tel Aviv stock exchange has ongoing business with the Abu Dhabi stock exchange.
There’s a song called “Love Changes Everything”. It’s a really beautiful song by Sarah Brightman. More appropriately, though, it should be entitled “Money Changes Everything”, but that title was already taken by Cyndi Lauper.
Anyway, a couple of jointly owned falafel franchises and mid-east peace may become a reality. I’ve always wanted the convenience of being able to get a falafel at my local ATM.
In the meantime, the vote of confidence by the Abu Dhabi sovereign funds, a phrase never heard until a couple of days ago, may have meant more for the overall market than for Citigroup.
In fact, Chuck Schumer was back in the news today, but this time in a positive way. He gave his blessing to the Abu Dhabi – Citigroup alliance. The lesson is that they can buy our banks, but not our ports of entry. I guess that there’s no way to effect sabotage through financial institutions.
If not through financial institutions, maybe they can wreak havoc with our insatiable lust for electronics, as word has now come out that Abu Dhabi has picked up a stake in Sony.
Sony and Citigroup. It just goes to show you thyat miserable companies love miserable companies.
Anyway, what Schumer took away yesterday, he gave back today. Almost point for point.
But it didn’t quite work out that way for my portfolios. Even though today’s 215 point gain almost made up Monday’s 233 point loss, my portfolios recovered only half of what they lost the other day. Interestingly, as I was looking for the reason, I found that there really wasn’t an obvious answer. Every single one of my portfolios exhibited the same kind of behavior, recovering only half of Monday’s loss.
I called Senator Schumer’s office to see if I could get restitution for the remainder.
They’ll get back to me. Although I’m also still waiting to hear about the 40 acres. I’m not very hopeful on either count.
Lately, the real message at the end of the day has been that on those rare up days, it was dangerous to get optimistic. Bottom fishers found out that they were nowhere near the bottom in lots of different sectors. Take financials for example. I know I did.
So what made today so different?
In the mid-afternoon it really seemed as if today was just going to be like the rest of the recent days. Even those days that didn’t jump out of the chute and just plunge, but instead rose, those gains would just disappear in the last hour. And those gains would disappear incredibly fast. Yesterday was the perfect example.
But today, it seemed as if the script was going to be adhered to, once again. The market had been up by about 200 points, but as we entered that final hour, the gain fell by 100 points. Just as suddenly, the price drop just stopped. The script was ignored and ad lib buying took hold and took the market right back over its earlier 200 point gain.
Does anyone remember the last time we had that kind of against the grain turnaround?
I’m sure that the answer to that question is something like “a couple of weeks ago”, but who remembers these kinds of things?
What I do know is that a year from now Yahoo will remember that there is, in fact, a Cyber Monday, and they will never doubt it’s existence again.
Now if the Szelhamos empire can have 365 Cyber Mondays each year, I could afford to hire a ghost writer.
Isn’t that what you would really call a win – win situation.
Help me out and I’ll even hire a ghost reader for your efforts.
Putting it into Perspective November 26, 2007 (posted 10:30 AM)
I was feeling pretty good about last month.
Obviously that feeling had nothing to do with the performance of my portfolios, although I did have some comfort in knowing that they didn't lose as much as did the averages. Perspective matters.
You need to find comfort wherever you can get it.
I learned that from a now discredited marriage counselor.
Perspective matters.
What I was feeling good about was the increasing number of hits at the Szelhamos Rules blog, as well as to the various web sites that help to support this site and it’s efforts to raise some money for charity. The fact that those increased hits will help me afford to get a new pair of shoes is just a bonus.
That good feeling, however, disappeared the other night. But I’m not bitter. My feet don’t like unnecessary changes. And besides, those shoes have become such an integral part of my feet, that the TSA agents that I see each week don’t even notice that I have shoes on.
Precisely, the moment of inflection was right before we sat down to Thanksgiving dinner.
These days, I tend to be fairly singular in my topics of conversation, so naturally I had to bring up the various web sites with everyone and anyone who would even bother to feign attention. The lawn gnome seemed most interested, but I grew tired of having to re-explain advertising strategies to a politically incorrect figurine.
In my mind, it was going pretty well, at least I was impressed. That is until I made the mistake of cornering our next door neighbor. Not in an awkward office Christmas party kind of way, but in a “I need to make every conversation revolve round me” kind of way and now it’s your turn to listen.
As it happens, she is the website programmer and database manager for a major hotel management company. That company is traded on the NYSE and is instantly recognizable, even in Mozambique.
When I told her that the past 30 days had pulled in over 2000 hits, she looked at me and said “that’s about as many as we get every 10 minutes”.
Perspective matters.
That buzz kill sent me back to the pumpkin beer. Thank goodness that seasonal things come but once a year.
The Friday after Thanksgiving also comes just once a year. Based on this past Friday, that’s the sort of seasonal event that I wouldn’t mind seeing on a regular basis. This Monday morning every analyst is also doing their best to kill Friday’s buzz.
Since there wasn’t any exciting nor unsettling news this weekend, there’s not too much reason for a big move this morning, but that really has nothing to do with anything. We’ve had plenty of mornings that the market is just in a bad mood, even absent a mitigating factor.
And sure enough, the pre-open futures are pretty flat.
One stock that had me interested was bought to my attention by a reader who e-mailed me from Japan. On2 Technologies makes video compression software. It is up 13% in the pre-open, but that brings it to only $1.11.
I don’t usually intentionally buy stocks at that price range. I have had stocks go down to that price, but it definitely wasn’t my intention to see those downward moves and I definitely don’t have the nerve to short stocks.
On2 Technologies has only 37 employees and annual revenues of about $10 million, so I’d be a little reluctant to get into this position, but you can’t argue with today’s results. I hope for this reader that his position keeps appreciating. There’s nothing nicer than being able to take profits out of your stocks and apply them toward personal pampering.
I’d like to do that, but I’m setting myself up to make a cardinal mistake in investing. We’re getting tantalizingly close to the end of the year and I would love to defer some sales until next year, so that the taxes could be deferred as well.
That’s risky business. You really shouldn’t let tax considerations make decisions for you, but sometimes it’s hard to resist the lure of decreased or deferred capital gains. By the same token, sometimes, no matter how distasteful it is to take a loss, you may as well get maximum tax benefits from that loss.
It will be interesting to see how the conventional wisdom plays out. Typically, the wisdom is that the end of the year sees selling to take advantage of losses. But we’ve already seen lots of selling, so maybe that negative driving force has been dissipated. By the same token, the “Dogs of the Dow Theory” proponents seem to act earlier and earlier each year and can serve as an upward moving force. Of course, there’s always that end of the quarter mutual fund driven “window dressing” buying that purportedly occurs.
If the early results from “Black Friday” portends well for the rest of the holiday season, which is certainly not assured, there’s a powerful combination of factors to drive the market up in the next 5 weeks.
So, I’ll focus in on that scenario, rather than on a tax driven strategy. See, you can rationalize any self-fulfilling action you want.
Citigroup is a good example of that. The other shoe fell today, as they didn’t exactly deny the news that upwards of 45,000 jobs will be cut. Just for kicks, go to the March 27, 2007 blog which was written the last time Citigroup cut jobs. Just like the last time, on the kind of an announcement that usually sends a stock’s price higher, Citigroup is underperforming. Well, at least the new guy won’t also be the bad guy.
Interestingly, on that day, I also wrote about my trading out of United Healthcare and picking up some Altria. The Altria has done very well, with a 16.5% profit so far, even more when you factor in the dividends and options premiums, which have added on another 4.5% so far.
But what I’ve missed is the recent stealth rally in UNH. One reason that I think that I missed it is that UNH is at the alphabetic bottom of my watch list. I need to get a larger screen or delete some other stocks from my list.
For now, I opted to delete. I got rid of Dell, Intel, GameStop, Boeing and ExxonMobil. So now I can see UNH on my screen, but I think it’s too late.
There’s clearly a lesson to be learned from this.
Perspective matters.
So does size.
Blackout Wednesday November 23, 2007 (posted 10:30 AM, updated 11 AM, 1:10 PM)
Almost everyone in the western world knows that the day after Thanksgiving is now called “Black Friday”. No one is really sure how that name came about, but Black Friday seems to be starting earlier and earlier in the morning. Amazingly, Black Friday sales account for nearly 10% of all holiday sales and Black Friday accounts for nearly 96% of today’s news stories.
Of course, there’s also the phenomenon of “Cyber Monday” when there is an incredible surge of on-line buying. Cyber Monday hasn’t yet caught on in the same way as a celebrated national phenomenon, but it’s no slouch. From the news reports that I’ve heard, people have been lining up in front of their computers as early as this morning, despite the cold northern blasts.
But the other day I learned about another holiday related phenomenon. This one has not received much press, but apparently is well known within the underground world of a certain segment of our society.
This one, “Blackout Wednesday” is mostly celebrated among college students, who are not likely to pass a celebration up. Given what the future looks like for them, I don’t think that I would pass too many of those opportunities up either.
Blackout Wednesday is not really about the shopping aspect of the season. If they go shopping at all, it’s for alcohol. Occasionally, there may be pizza or wings. But I think the day, or more appropriately the night, is more devoted to the consumption of alcohol, rather than the purchase.
Among college students, the day after Blackout Wednesday is now referred to as “Delirious Tremors Thursday”. Some of the old timers will remember it as “Thanksgiving”.
This year, the lines forming at those bars that are known to be lax in checking ID’s, began late Tuesday evening. Strictly speaking, the activities related to Blackout Wednesday are not reflected in the holiday sales numbers. But just as Black Friday is creeping ever so closely to Thanksgiving Day, so too may Black Friday some time in the future, begin with a celebratory Wednesday tradition.
As has been the case of the past few years, I’m sure that initial reports will show that Black Friday was hugely successful. As a result the early retail holiday numbers will look quite good. But then, as the script is written, and it’s almost as sacred as “Miracle on 34th Street”, the numbers that come in closer and closer to Christmas are going to end up as a disappointment.
And some will be surprised and others will say that it was completely expected. As far as the stock market looking forward by six months, half of those futurists always have it wrong.
Sure enough, by 7:30 AM, the first reports were already coming in regarding the initial successes of the holiday shopping season. Interestingly, if you listened closely to a report coming from a Best Buy, initially they were forecasting 25,000 customers at the store at the King of Prussia Mall. Thirty minutes later, at an update, they were projecting 20,000.
Basing the outcome of that season on the activities of a few frenzied shoppers is sort of like basing the presidential election outcome on the basis of the first votes in from Dixville Notch, New Hampshire,
Actually, I’m just being told by one of my research associate interns that is not a very good analogy, since Dixville Notch has correctly picked the last presidents 10 out of the last 12 elections. Additionally, I’m being informed that the origin of the name Black Friday has to do with the fact that for many national retailers, they don’t reach profits until the Friday after Thanksgiving.
If not for the pursuit of trivia, what exactly would distinguish us from animals?
But for the sake of making a point, I will rarely let facts get in the way. Luckily, the research interns don’t stay with me long enough to ever outgrow their blind idolatry.
From early reports that are trickling in, it also seems that Black Wednesday was quite successful, although none of the participants can seem to remember the details.
My memory, however, is still pretty intact, at least as far as the recent market’s activity has been going. Just about every day for the past 2 weeks has been Black something or other. So it’s no surprise that I’m not terribly excited about the pre-open futures 80 point gain. On a positive note, there’s not much news that will be coming out today to swing it one way or another, but it will be an abbreviated trading session and there will be light volume. So anything goes.
The really good news about today is that there is no 3 PM trading hour. That last hour has been a kiss of death the past couple of weeks. With trading ending at 1 PM today, there really is no final hour of trading.
Once again, I’m being informed that not only am I factually incorrect, but my logic is being called into question as well.
Speaking of reports coming in, Thanksgiving Day marked the first annual meeting of our family corporation, to divide the first quarter’s profits from the various internet based enterprises.
To be a member of the corporation, individuals had to prove at least 1/37th Native American heritage. Who would have guessed that all of the research interns met this qualifying criterion?
I was proud when my children discussed their 2 options for the distributions. They were torn between plowing their money back into the operations or taking it all and going to the race track.
Szelhamos used to love the race track, although he rarely would bet on a horse. If however, he noticed a horse evacuating its bowels during the warm ups, that was going to be the certain winner.
It rarely ever was, but when it was, it was cause for celebration.
He also liked horses with good teeth.
I’m certain that if he was ever able to spot a horse spontaneously relieving itself and flossing, he would have taken out a second mortgage and let it all ride.
As it would turn out, the stake holders chose cash.
Cash is always good, but I’m not yet ready to move into cash positions, myself. Even though the Dow is now down nearly 10% from its October high point, the Szelhamos portfolios are down only 3%. Despite all of the anxiety over those call options hedges, they really do help provide a cushion. Unfortunately, the managed portfolios are down about 9%.
Still, it could be worse.
This morning, the market did open with an upward bias. Although the 100 point gain of the first 15 minutes soon dissipated, I still am hopeful.
But then again, one of those pesky research interns has just reminded me that there is no place for hope in the world of investing.
I didn’t realize that these guys were not being paid to think. I thought they were just not being paid to dig up facts and data. And crushing my hopes and dreams? Priceless.
Either way, it is money not spent well.
Probably the best news of the morning is that the Fed chairman Emeritus believes that we are not headed toward a recession and that the US economy is flexible enough to withstand any housing or energy related problems.
I hope he’s right. Today, in fact, the home builders are strong.
With today’s upward movement, I thought it would be a good opportunity to sell more call options., And so I sold December call options for Goldman $250, Coach $40, Apple $200 and MasterCard $200. I suppose in my own way, I got into a shopping frenzy, as well But, with each subsequent cycle of selling and buying back these call options, the strike prices are consistently creeping up. It is truly the best of all worlds.
In the best of all worlds, the news would always be good. Based on the early reports from the likes of Best Buy and other electronics stores, those big ticket items are flying off the shelves. More big screen TV’s being sold that may not end up having living rooms to house them. You take the good with the bad.
This is also the time of the year that analysts always pump up Corning, the maker of lots of those flat screens. And each year, despite record flat screen sales, Corning’s price performance disappoints. Ironic that on the one hand LCD screen sales are off the wall, whereas their share of the home insulation market is going nowhere. Today Corning was up big. Next year, I’ll try to remember to pick some shares up right before Black Friday, unless my memory is shot from Black Wednesday.
I haven’t owned Corning in about a year, but I did trade in and out of it repeatedly for a couple of years, always between 5 and 10% profits, for very short term holding periods.
I’ll be watching Corning and expect it to fall to a $18-19 level by the end of the holiday season. At that point, I think I would be interested in picking up shares. I know that history doesn’t necessarily repeat itself, but analysts do. It’s almost like the rat that keeps making the same mistake in the maze, despite always getting shocked.
You would think that at some point there would be a learning moment.
Speaking from my own experience, eventually that moment does come. Even if you’re a celebrant of Blackout Wednesday, there comes a point that it’s just not that exciting.
What is a little exciting is some early upward movement in 2 of my recent speculative picks, E*Trade and Lundin Mining. I need some good movement to close the year out with a smile. Either that, or the sudden death of a hereto unknown wealthy relative with no other immediate heirs.
Otherwise, December 31st will just be another excuse for Blackout Wednesday redux.
I’ve Done the Math November 22, 2007 (posted 9:00 AM)
For me, it’s always been about the numbers. But this one, even a numerophobic sociopath could have and should have calculated.
Or maybe only a numeropathic sociophobe. I forget.
It’s like atheist and agnostic. I know they’re different, but what was that difference again? Effect? Affect?
On a positive note, I’ve looked at some actuarial tables, and I still have enough time left to be all of those. That is, if you believe in the statistics.
Damn numbers. Damn Theists.
See. I’m halfway there, already. Now all I have to do is figure out how to best insult all of our Thanksgiving Day guests today. Maybe I’ll bathe the kosher turkey in a melange of milk and shrimp juice, since I couldn’t stretch the bacon enough to wrap the turkey in it.
Oh, and the scallop and lobster stuffing mix that we left out overnight, will be to die for.
Anyway, the much dreaded “correction”, by most everyone’s definition is almost here. From our October highs to yesterday’s close, we are now down over 9.6%. At this point, all we need is another drop of 50 points and we are officially in correction territory.
For the analyst who called for a “crescendo wave of selling”, you got that right.
Yesterday was one of those very annoying kind of days. In hindsight, I’m really glad that I got to spend several hours in the License and Permit office, going from station to station. It was almost like a Bar Mitzvah party, except no roast beef carving station. At least those few hours spared me a little bit of yesterday’s angst.
I did arrive home by about 2:30 PM and what I found wasn’t very pretty. And I’m referring to more than the boxer clad back from school visitors. But just when it looked as if we were sinking into lower and lower depths, the Dow reversed a 190 point loss and was down by only 45 points with an hour to go. Maybe all that was necessary was my presence in front of the screen. I always knew that Maria Bartiromo could see me.
After all, isn’t that the reason we don’t have televisions in our bathrooms?
What she would see is that I’m no Joey Ramone. By that, I mean, I still have the safety pin deeply buried in my cheek. It’s never coming out. It’s what keeps me going.
Joey never took my advice. Especially about Navistar. Otherwise, he’d still be alive and wealthy beyond his wildest dreams.
If you’re wondering about the Joey Ramone reference, just click on his name and turn your speakers on.
But let’s get back to Maria. Why she’s said nothing, still mystifies me. I think that I may need to add some other descriptors onto “numeropathic sociophobe”. I’ll speak to my wife about that, she well versed in the diagnostic terminology.
When I saw the upward movement of the markets, my first lucid thought was why anyone with reasonable intelligence and lots of discretionary cash, would be buying stocks heading into a holiday and a very volume challenged trading day to come on Friday.
But that was the rational side of me. The other side just breathed a sigh of relief and thought that the program buyers were coming in just prior to that 10% level, so as not to enter the market too late and miss the fire sale.
Lately, the wishful thinking side of me has been on the wrong side, because you know what happened. The market was like a greased pole in that last hour. Yet another 200 point loss.
Usually, I’m somewhat forlorn when the market is closed in observance of a national holiday. Today, I’m going back and forth, from ecstatic to relieved. We really do need a day off.
Maybe two.
Because tomorrow may be Black Friday in more ways than one.
I hope that the ritual pre-dawn shopping and buying frenzy on Main Street and U.S. 1, isn’t offset by a selling frenzy on Wall Street. The old axiom has always been that on light volume days you tend to see dramatic moves in the averages. But these days we see dramatic moves everyday.
It’s not very comforting when you hear the news that with 5 weeks of trading to go, the S&P 500 is in negative territory.
From my perspective, all that means is add another year on, until retirement. But I can’t complain about that. How many people get to work with their best friend?
By the way, congratulations to Doreen and Kevin, Susan and Rob.
Alright, so I’m not a consistent sociopath.
I probably would be a lot more dour this morning, were it not for Google and Deere. My universe of stocks consists of about 125 positions, not including options positions. Some small, some not so small. But yesterday, only 25 were up. And that’s the way it’s been the past 2 weeks, with a couple of exceptions. Man, was that 319 point up day sweet or what?
But if you sit down and think about all we really need is 4 more of those days in a row. That’s not asking too much? Is it?
I’ve done the math. It would work.
Now all I need to do is contact the deities.
It’s in their hands, or in some cases, their multiple sets of hands, right now.
They know where to find me.
Right in front of that TV.
Joey, this one’s for you.
Oh, and Happy Thanksgiving to the more than 1,300 readers this month, including all of you investor class expatriates.
Szelhamos would thank you and all those that watched his personal story.
It’s Ugly November 21, 2007 (posted 10:00 AM)
Very pithy.
That was one of the most memorable quotes of the morning.
I think the very first time I heard those words it was from the obstetrician, although it was obviously said in Hungarian. But what did he know? In all likelihood, not only would he not have been an obstetrician, but there was a pretty good chance that he wasn’t even a physician.
Pig farmer comes to mind.
I think that it would have been more reassuring if the word “he” had been substituted for “it”. But such are the nuances of Hungarian pronouns. At least I wasn’t referred to as “hamhock”.
So far, this morning’s pre-open just adds to the ugliness. The prevailing mood is that the next level of support is at 12,000 on the Dow, which will be achieved in a “crescendo of selling”. Another nice quote. I can’t begin to tell you how many times the phrase “Dow Theory” has been used so far, early in the morning. So far, though, not a single “Elliot Wave” has been uttered.
The release of the Jobless Claims Report, along with its revisions, which indicate more claims filed, did nothing to move the futures, however.
Depending on your perspective, those numbers should have moved the futures in the direction of your choice. Reduced inflation fears or weakening economy? It’s your pick. You would have thought that given the overall market sentiment, any news is bad news.
Maybe the guys who move the futures markets just placed their sell position orders last night and are already in The Hamptons, getting a head start on the Thanksgiving holiday. Good strategy, since they can beat the gas price increases that are likely to hit after today’s oil inventory numbers come out. Just a week ago, the experts were saying after a dip in crude oil prices, that we’re out of the woods with regard to $100 oil.
They said the same thing about $80 and $90. But every time we have tested those floors with falling prices, they just snapped right back up.
Today may be the day, although an hour before the release of the numbers, the crude oil traders are playing it coy.
But I don’t see much celebration. Not even from the oil companies, drillers and refiners. Their stock prices aren’t doing any better than the rest of the market. But I suppose someone is raking it in. Maybe that’s why Prince Al-Waleed could afford to sit by his Citicorp stake as he lost billions.
You do have to feel sorry for those Wall Street guys, though. With the long traffic delays on the way to the Hamptons house, they’ll have plenty of extra time to think about how to afford to heat those houses and afford to fill up their gas tanks for the long ride, if their end of the year bonuses don’t materialize.
When sub-prime meets The Hamptons becomes reality, New York will join the rest of the country in realizing that there’s a problem.
Right about now, unless your working for Goldman, it doesn’t look like an unusually jolly season. Maybe the Goldman analyst that follows Freddie Mac won’t be doing quite as well as the rest of his fellow analysts. He downgraded Freddie Mac’s price target from $73 to $28. The first $40 drop must have convinced him. I think that analyst’s name was Rumsfeld.
Luckily, I’ll have plenty of diversions today that will keep me from melting down as I watch the losses keep piling on. Even though there has been an improvement in the futures as we near the morning’s open, recent rends don’t point to anything good coming out of today’s session.
I’ll use the same line of reasoning to avoid participation in our neighborhood’s 5K run tomorrow and touch football game on Sunday.
Both are somewhat awkward to annoy, as our home is on the finish line and is host to half of the football field. It’s amazing how tightly those spandex curtains can be drawn, although the window frame does buckle a bit.
For today, though, there’s still one more parent – teacher conference to go. It’s hard to believe, but next year will mark the end of those annual traditions for us. I’m trying to comb through my archives, but I think that I see a relationship between the Dow and the scheduling of parent – teacher conferences. The end to this tradition can’t come soon enough.
After the conference, I have to make a mad dash to our county’s Permit and Building Office. Today is walk-in day. It starts right after my conference ends. I was there yesterday and told that if I dropped off the application it would take a week for review, as opposed to an immediate review and response on walk-in day.
Who knew that you needed a permit to build a gallows?
Go figure. So I’ll be back.
In the meantime, I had the misfortune of being at the screen when the opening bell finally rang. It only took about 2 minutes for the Dow to drop 100 points.
The fact that 45 of the past 50 immediate pre and post Thanksgiving trading days were in the black doesn’t seem to be swaying the traders. So far, today, they’re being especially brutal on the retailers, even though no new news has been released. As I predicted, yesterday’s double thumbs up to Coach is a devastating body blow, as Coach is down 3%, compared to 1% for the rest of the retailers.
I think that I’ll have to check through my comic book archives to see if there was a stock market in the Bizarro World. If there was, it probably functioned in a rational and completely understandable fashion.
Oh, to be in the Bizarro World.
I rarely venture into the world of metaphysics, but is it possible that we are already inhabitants of the Bizarro World? As I venture out of the house today, I’ll look for other meaningful clues.
At least in the Bizarro World, ugly is good.
Home at last. Home at last.
Disappearing Acts November 20, 2007 (posted 7:30 PM)
There are a number of things that I knew with great certainty today.
Usually, “great certainty” is the sign of a feeble mind. Today, on the first day of my vacation, my mind felt invigorated, so I had an unusual sense of confidence in my sense of certainty.
One thing that I knew for certain actually stemmed from yesterday evening. It was my first opportunity to watch “Dancing with the Stars”.
I’ve done the Cha Cha. That was no Cha Cha that they were dancing last night. And what a disgrace those judges were. They didn’t even know enough not to award straight 10’s to those make believe Cha Cha artists.
This morning there were other things that I knew with great certainty. What I do know is that I will be writing an angry letter to the head of the network. How do you spell “Eisner”? How could he condone such non-discriminating judges?
Although now that my wife has explained to me that the judges use the same scoring system as is used in golf, I understand that those 10’s were an expression of disapproval.
So I suppose that leaves only one other thing that I know for certain.
The one thing that I really knew would be a certainty is that I would leave my parent – teacher conference this afternoon thinking that the teacher was about 12 years old. I wouldn’t have felt that way 20 years ago.
Ever since Michael Eisner left Disney everyone seems so young. Even Scrooge McDuck.
In hindsight, she was young. I think that I would have thought that even 20 years ago.
When I went back for round 2 of the parent - teacher conferences in the evening, suddenly everyone seemed older. Not me, though. I was invigorated by the days’ turn of events.
By 7:30 A.M, I already knew that today would be a day of disappearing acts. I knew this with great certainty, as you may have gathered by now. As it would turn out, not all disappearing acts are bad.
I knew that today would be the day that the last of the cherry cobbler would disappear. Sometimes you just know. It was bound to happen. There was no sense in trying to further delay the inevitable.
Goodbye old friend. Your disappearance I classify in the “bad” category.
I was reminded of that Simpsons’s episode when Homer finally succumbed and ate their pet lobster, “Pinchy”. It was a bittersweet moment.
“More drawn butter, please” is a phrase that haunts me to this day.
Goodbye old friend.
As I watched the pre-open numbers, I knew that there was more of the inevitable ahead. At that point, the Dow futures were up by over 100 points, on the heels of good numbers from Hewlitt-Packard. It was all looking sweet, with no real inkling of the bitter tears that lay ahead.
But then word came out that Freddie Mac had its own mortgage problems. Freddie Mac? Aren’t they the one’s that wanted caps lifted so that they could make more loans?
More bad loans, I guess. Their reasoning probably went along the lines of, “we don’t lose much money on each transaction, but we make it up in volume”. And can you believe that their regulator didn’t buy that argument?
Worst of all, was the rumor that it was considering cutting its next dividend by 50% and its reserves have fallen below the level set by regulators. It’s probably a good thing that so many people are losing their homes. At least they’ll never know the pain of heating a home when oil is hitting new record highs, as oil was up nearly $4.
Goodbye old friend. 100 point rise, we hardly knew ye.
It was inevitable, but the market did what it does. It did a 240 point swing. It’s gotten hard to keep track.
What had started out as such a deligtful day, filled with lots and lots of green areas, fairly quickly eroded into just another one of those November trading sessions.
But what ended up occurring, I would never have predicted. Granted, volume was light, but the Dow pulled out a 50 point gain in the last 30 minutes. It’s almost as if there was an understudy that hadn’t bothered to read the script. It’s so hard to find good help right before the holidays.
But every now and then, you discover a star.
Admittedly, like everyone else, I wanted a rally, but not the “relief rally” that the cynics were talking about. I tried to get the best of all worlds. In my heart I knew that the great upward movements that were being seen in my old stalwarts, like Google, Apple, Goldman and MasterCard wouldn’t last, so I wanted to capitalize on price spikes by selling some of those December call contracts.
As much as I knew that those gains wouldn’t last, I got a little too greedy, trying to get higher options premiums than the market was willing to pay. I was able to sell some December $750 Google contracts, following a new price target of $900. But I wasn’t able to get any other contracts sold, as the market did the turnaround much quicker than I had expected. Had I settled for a lower option’s premium, I could have bought back those options later in the day, as the market headed south
In fact, later in the afternoon, I tried to buy back my Google contract at a profit, but just then the market turned again. This time, it turned back up and, amazingly, stayed there.
As much as I’d like to think that there’s something good coming our way before the New Year, it’s hard to see it happening. One of my recent purchases, Coach, had been hit hard the last week, but was up yesterday and again today. Unfortunately, a couple of analysts gave Coach the “two thumbs” up kind of support that usually dooms a stock.
So where did it all end? It doesn’t matter, really, because it starts all over again in just a few hours. As it stands, we’re still below 13,000, a full 8% below our highs. The unrequited bulls are still sticking with their end of the year 14,500 prediction.
What makes me think that there’s an outside chance that it may just work out that way is that there are more and more climbing onto the “recession” bandwagon.
Just like the contrarian thinking with Lundin Mining. No one wanted to buy a December call contract yesterday. I looked at that as a bullish sign, and Lundin ws up nicely today. Luckily for me, it offset the carnage at E*Trade.
Just another example of greed. In hindsight, I should have been happy with a 70% gain in 2 days. But no.
E*Trade got hammered yesterday and today. A sale rigt now would still leave me with enough left over to pay the commission on some other poorly conceived trade, but I will continue to have faith.
After all, it’s only money pulling a disappearing act.
Choose Your Friends Carefully November 19, 2007 (posted 10:00 AM, updated 3 PM)
I’m not bitter. Even though today’s blog title might suggest otherwise.
In fact, this morning I’m actually quite happy, despite the pre-open numbers.
But it’s the big picture that counts and the big picture looks good, at least if we don’t project for more than a week.
I have this week off, the house is empty, the coffee is hot and sitting right in front of me is a gift that my wife bought home yesterday. A wonderfully happy making kind of gift.
Not to diminish that value of this gift, it wasn’t my first choice, but my wife is more astute than I give her credit for. She quickly realized that my request for a Swedish nanny had no basis in necessity. Although I suppose that you could define “necessity” to suit your needs. So that request got a big “NO”.
But as far as it goes, today’s gift is right up there.
My wife didn’t buy this gift, she just delivered it. Strictly speaking, therefore, since we are entering into the holiday gift giving season, she can’t really take credit for the giving aspect. I’ll probably try the nanny thing at least one more time, although none of my credit card rewards programs offers gift certificates for international nannies.
I’m far too sophisticated to settle for a domestic.
But the gift that she delivered will hold me through the nerve wracking waiting period, when I’ll sit around wondering whether there were enough holes punched in the shipping box for the nanny to survive the Atlantic crossing.
Never give up hope.
So, Cherry Cobbler is a nice thing early in the morning. Homemade cherry cobbler is even better. I just wonder whether we have to return the baking dish, or whether we can add it to our collection. We firmly believe in the concept of “eminent domain”. Especially when it comes to Pyrex.
A few weeks ago I wrote about re-discovering some old friends. Man are there dividends to be reaped by being a social being. Now if I only had a friend with vanilla ice cream.
As you get along in life, you realize that the number of friends shrinks, for one reason or another. Death, federal prison, witness relocation and leprosy are all excuses that have been used to sever ties with me. Most of those excuses were from a single person and they were in that precise order.
The others?
What others?
This morning, as always, I started by checking the New York Times Obituary pages. There’s always something interesting there, but I didn’t spend too much time browsing the notices.
What I did read was the article on how “Goldman Sachs Rakes in Profit in Credit Crisis”.
A week or two ago, I wrote how Goldman’s CFO, David Viniar sold 20,000 shares, just at their near term peak. I never did the math, much too depressing.
I also mentioned that David Viniar was a high school classmate.
As it turns out, David Viniar was also the savior at Goldman, at least with regards to setting off the warning signals about their mortgage related risk. He noticed that the Goldman portfolio was overweighted in mortgage based securities and he recommended hedging those investments. His timing, as it turns out was truly impeccable.
The cynical me, just a mere week ago, thought otherwise.
One can only wonder that if Lloyd Blankfein gets the $75 million bonus, how much David Viniar is worth to the company and its stockholders.
But alas, the lesson to be learned here is not that you should hedge your investments. The lesson is that, even at a young age, you should really choose your friends very carefully. Your mother was invariably right, because you never know who they are going to turn out to be.
I don’t really remember much about David Viniar, other than his early 1970’s hairstyle and, if memory serves me right, an ever present backpack and work boots. Of course, since it was the 1970’s, those were historically appropriate fashion statements, but I’m not entirely certain that my mother would have approved of his company.
I can only imagine that the hairstyle is much more Goldman appropriate. And the back pack is now probably lined with vicuna. The work boots? He probably gave those up, at least for the workplace. He probably still has them around for the weekend hikes in The Hamptons.
The article in the Times had lots of names of Goldman alumni, all hperlinked. The likes of Robert Rubin, John Thain and many others. David Viniar was not hyperlinked, nor was it his picture that adorned the article.
I am fairly certain, however, that my mother would now approve of his company.
Goldman Sachs.
One wonders whether he can bake a Cherry Cobbler?
I suppose everyone is entitled to their own fantasies.
For me, right now, the fantasy is that over the next 6 weeks the market will do what it is unlikely to do.
This morning’s futures don’t seem to indicate a start in that direction. And the New York Times article? It’s really old news. It didn’t give Goldman a bump, at all. I guess that not many people are going to be swayed by an article regarding a $220 stock. If Goldman was a $10 stock, the article would have driven all sorts of people into stock positions.
With time on my hands this week, even with the extensive “Honey Do” list that is at my side, I was looking to make trades, but the direction that we appear to be heading toward, is not very inviting.
So I’ll probably make a little bit of a dent in the list. In fact, I have to, because the cleaning people are coming today, and we really don’t want them to know how we really live.
With the opening bell, this morning, I’m beginning to develop a Pavlovian response. These days, that sound of that bell just heralds a sell-off. So far, this morning is no different, and so I sit here uncontrollably shaking and cringing in the corner. The 100 point loss within the first 15 minutes helped to reinforce the whimpering.
Of course, being down 200 points didn’t help. I did take advantage of the drop in mining stocks to purchase some shares of Lundin Mining at $9.75. I thought it was a good sign that no one was bidding to buy December $12.50 call options, even though the stock was about $14 just 2 weeks ago. Not a single bid. How much more contrarian can you get?
Ideally, I love seeing a nice up day at the very beginning of the options month. When the market spikes upward, those options premiums are especially good and there is a full month’s worth of time value, as well. There’s nothing like taking advantage of someone else’s unbridled enthusiasm.
As often is the case, Goldman started a small rally in the Dow. As Goldman turned from a small loss to a gain, the Dow followed about 10 minutes later by cutting its loss by 20 points. Not to take away anything from JP Morgan Chase, which is a component of the Dow 30, it’s really Goldman that should be in the Dow.
If it goes up a few more dollars, I’ll look at the possibility of selling either December $240 or $250 contracts. The $250 contract, which is 10% out of the money, actually offers more than 1.6% premium. By my standards, that’s worthwhile.
But this morning, I’m feeling greedy. I’ll wait, since I have a long way to go to catch up with David Viniar.
When it is all said and done, though, the Cherry Cobbler is much better than a couple of weekends in The Hamptons.
The Goldilocks Economy November 16, 2007 (posted 9:00 AM, updated 11:30 AM, 1:00 and 4:15 PM)
Every now and then I like to remind myself that I’m a pretty smart guy. A couple of Harvard degrees didn’t go completely wasted, although an analogy to the level of pureness of Ivory Soap may be appropriately drawn.
No one would argue with that analogy. But at least I’ll always be able to point to that 0.56% that is being put to good use. So far, none of that 0.56% has been expended this morning.
Usually, I find myself trying to get into a reassurance mode when I don’t understand something.
A few months ago, I was at a rare place. I just couldn’t understand the basic coding necessary to write a data base collection and analysis program. That was a very disturbing moment. PHP, MySQL and all of that stuff just went over my head. It was as sure a sign of deteriorating mental capacity as I've ever experienced. All of that Sudoku didn’t seem to be helping to maintain that all important mental edge. If you can’t count on some newly discovered 4,000 year old Japanese puzzle to maintain mental acuity, what can you count on? Ginko?
More recently, instead of something going over my head, this time it was under my feet. I just couldn’t get the dance lesson thing. Rumba, Cha Cha, it was all the same gibberish. It was really a bizarre language. Listen, I can’t even understand the basic steps of a Hora.
It’s all much more confusing than PHP and certainly more physically bruising. Mental anguish is easy to conceal. The welts? Not so much.
Now, after months of feigning understanding, I have to admit, I have no clue what is meant by “The Goldilocks Economy”, an expression that is used over and over again by one of my favorite talk show hosts, Larry Kudlow. Without being fawning, Kudlow is the most gracious television host that you can imagine, even when faced ith guests that are at times, at tad unruly.
I find myself rarely agreeing with Kudlow’s positions, but his talk show truly is the model for “fair and balanced” and covers most of the issues that Szelhamos taught me should never be discussed with strangers.
Of course, on a regular basis, Szelhamos would violate that basic rule, as he used to love to push that envelope.
Szelhamos and I used to be regular viewers of “Kudlow and Cramer”. Of the 4 topics that Szelhamos believed shouldn’t be discussed in public by anyone other than himself, only “sex” was excluded from the show. Politics, money and even religion were fair game.
A couple of years ago, the buzz word du jour was &# | 
