Why Do We Need Villains?





 


I rarely write about local events even though my world these days revolves around an area of about 50 square feet, maybe more, if you include the TV’s remote control range. If La-Z-Boy could design an in chamode model I could get that range even tighter.


Fortunately that tight range is by choice as the only tether I have is to the TV, but if I wanted or in a pinch, the only programming that mattered during the day could easily be streamed thanks to E*Trade and CNBC.


I did need to go out the other day to have a repair done on our car after a break-in attempt in the District of Columbia.


Funny thing was that they really didn’t need to smash the window, since I keep my full sized body bong secured to the roof rack for easy access.


In case Howard County police are reading this blog, I’m not being serious. The break-in occured in Laurel, but on the Prince George’s side.


In case PG County police are reading this, it was in the Ann Arundel County piece of Laurel.


And so on.


Without going into too much detail, I wasn’t terribly happy with what I thought was an inadvertent problem caused during the repair process. I tend to be fairly low maintenance and am not one prone to complaints, but I am wary of and will speak out against irresponsible behavior directed at me, as a consumer.


Villains aboundSometimes “speaking out” means raising the questions rather than a ruckus. I wasn’t trying to be a villain and I didn’t think that there were villains stacked up against me. Just people seeking to mutually protect their interests in the name of justice


Since I’m nearing one of those standard retirement ages and haven’t really perpetuated any scams (yet), I’m not really likely to start along that path in life at this point, especially with a local business in a small town.


Of course, there’s really no reason for the people at Win Kelly Chevrolet to know that, as I’m certain that they see their fair share of complainers, maybe even scammers, dealing in an industry that probably has a fair amount of consumer mistrust as the baseline.


Look at all of the people that tried to blame Toyota for what proved to be a non-existent electrical problem.


Long story short, they took every effort to make me, as a customer feel satisfied with the outcome. There were no threats, no yelling, just reasoned discourse from both perspectives. Had they decided to take a different approach or come to a different decision I would have been upset and would have just gone elsewhere for the required service.


And that would have been the end of it.


Instead, they chose to treat me, the customer, in a way that represented an investment in the future. They decided that there was no need for a villain on either side of the tale and were likely more forgiving and understanding than I would have been.


What they did was to create a future customer and a fair amount of good will. I mean, after all, here I am, impressed enough to be writing about them (Helen, Mark and Lyle)


Why doesn’t this happen in the markets?


Why is there always a need to find and identify a villain when things don’t go our way?


In the few years that I’ve been actively involved with managing my own portfolio there seems to be a villain each day the market goes down and an uber-villain when there is a downward trend. Granted, when the market does go up in a significant manner, it’s equally common to try and identify  the root cause, but human nature being what it is, the fervor in pursuit of that cause is much less


Most recently, the villain has been Highy Frequency Trading. Someday, I’ll probably write a blog about that along the same lines as “Why Insider Trading is a Victimless Crime.”


Market goes down? Blame it on leveraged ETF’s.


How about the uptick rule?


Short sellers. Don’t forget the short sellers. It’s amazing that Overstock.com is still around given the conspiracy led by short sellers to see it implode. Hedge funds, too.


Whatever happened to the Yen Carry Trade. I still don’t even know what that means, but that was a biggie about 4 years ago, or so. 400 point drop? Japanese Yen Carry trade. Up 175 the next day? Uh, something else.


Almost forgot about algorithms.


Now, probably the most unexpectedly designated villain is Alan Greenspan who obviously pulled the wool over everyone’s eyes for 19 years. As soon as he left the Federal Reserve it was decided that his policies were responsible for what ultimately became the housing bubble and banking crisis, maybe the Cambodian Killing Fields, as well.


That’s why you should never take vacation from work. Someone is bound to discover that you’re totally unnecessary. Remember Mel Brooks’ great line from Blazing Saddles? “We have to protect our phony baloney jobs, Gentlemen”.


What really amazes me is how any  of these could be identified as an endemic problem, yet suddenly become irrelevent the very next day.


Having a villain to point a finger at is very comforting. The United States is used to being blamed for all of the world’s woes. Every despot throughout the history of the world has known that an external villain must always be identified so that the poor “Schlubs” can be distracted from finding out the truth.


Whoever said “The truth shall set you free” probably knew what he was talking about.


Again, it’s the Mel Brooks concept at play. It really does have near universal application.


In that regard, it will truly be amazing to watch the evolution of the “Arab Spring”. After 60+ years of being fed a single line people may get to see that the enemy was actually within, unless of course the new governments sense a tenuous grip on power. In that case, it’s same old, same old.


As investors or traders, there’s no doubt that introspection is called for, rather than always seeking to place blame elsewhere when things don’t go as had been hoped.


Not having a unifying strategy or even worse, not following your strategies, is a good first place to begin the soul searching.


One of my favorite Tweeters is Eddy Elfenbein, who runs the Crossing Wall Sreet site. He is a buy and hold investor and has an exemplary record, one that is fully transparent. He’s also great with market and economic statistics and is funny, to boot. That’s not easy to do in the context of 140 spaces, even more difficult when 13 of those spaces are taken up by his name.


Yesterday he Tweeted “The sound investing rule that I most often break is that I get frustrated when a stock rallies right after I sell it. So hate that.”


Feelings and emotions are the bane of investing. The real villains are greed, fear and envy. Add frustration and regret to those.


In yesterday’s blog I wrote about some rules of my own that I sometimes consciously break because I have a hard time resisting the temptation that presents itself when there are idle funds in the account.


I was partially successful in breaking old habits on Monday but just couldn’t wait to burn through my cash today.


I continued with my energy theme and bought shares in British Petroleum, Transocean and Chesapeake Energy, as well as picking up additional shares of Riverbed Technology.


Boy, talk about villains. Take yesterday’s Halliburton and mix that with a little BP and Transocean and we’re talking some heavy evil, except for the fact that they’ve been very profitable for me in the past year.


With the exception of RVBD, I got them all at better prices than I would have yesterday, but I actually used the proceeds from call options sales to pick up the Riverbed shares and then used those proceeds to pick up more ProShares Ultrashort Silver ETF shares.


Of course, I still partially fell back into my bad habit of falling victim to my short term pessimism.


Once again, though, I’ll call it a partial victory, as I waited for the prices in today’s newly purchased issues to rebound before selling my calls.


I only blame myself for not waiting longer as the market did an almost 200 point turnaround that would have netted me even better premiums. As it was, before you knew it, the market finished up by only 20 points after a final hour drop of 70.


I was wondering who the talking heads would blame the last hour fade on but instead had to go and pick up my car.


After dropping off the loaner and driving off in my well cared for car I felt good about the dealership and the market’s close, despite the rocky paths taken.


As famed, but now long dead Pogo had said, “We have met the enemy and he is us”.


 


 


 


 





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Exercise Restraint to Prevent Premature Speculation





I’m getting better at exercising restraint.


In some areas, anyway.


Fried ChickenWhen I learned about a year ago that my cholesterol levels were high enough to supply my family and successive generations with lifetime supplies of Crisco, I radically changed my diet.


Much less red meat, very little fried food and almost no fast food.


Although I must admit that watching the making of fried chicken in the recent period piece movie “The Help”, did make me want to rethink my re-thought ways.


I do miss the delicious ooze coming from my pores, as it was also eminently spreadable, but I tell myself that it is all worth it.


In some other areas, I’ve not been as disciplined.


For example, on Sunday, CNBC, instead of offering their infomercial programming had live coverage of Hurricane Irene.


I just couldn’t resist watching. I wish I had the restraint necessary to just turn the TV off, even though gluing myself to the screen was potentially jeapordous to my marriage.


I found myself hoping for the power outage that never came. That would have also given me another excuse for not using the treadmill for a 1,276th successive day.


Fortunately, at some point CNBC decided that Irene was for the most part, much ado about nothing, and regained its business senses and went back to its regular weekend schedule pimping itself to the highest bidder.


While it was doing live broadcasting, I thought that CNBC management missed a great opportunity to take advantage of obvious synergies. They really should have considered having on-air personality Brian Sullivan presenting while on a BowFlex or perhaps while whipping up a rotisserie chicken in no time at all.


Or both.


Over the weekend I had done my homework. Knowing that there would be cash in the accounts due to assignment of shares, I had made a list of stocks that I was ready to buy as soon as the market opened Monday morning.


Now, I like up markets as much as the next guy who isn’t short, but on days that I have cash, I’d rather see moderating prices. I really don’t like chasing stocks, even though that brings the best options premiums.


So I was disappointed to see that the overseas markets were posting 1% and higher gains on Sunday evening and that our futures markets were opening with an upward pop.


The real problem is that despite the fact that I know that what goes up must come down, I’m like a little kid as soon as I get some cash.


I just have to spend it. Now. I have to spend it now.


The funny thing is that only applies to stocks. Otherwise, I’m not much of a consumer, neither of goods or services. If the economy is waiting on me to change my spending habits it had better stop holding its breath.


But when it comes to stocks it’s a totally different story.


Take last month, for instance, when I received my first royalty payment for the Option to Profit book.


Normally, if I buy shares, I like to buy in large enough volume that selling call options on the shares will be worthwhile. Additionally, I typically like each position to represent somewhere between 5-10% of my total portfolio value. I’m also not a fan of perenially low priced shares.


But what did I do with my suddenly found cash position?


Sure, I invested it, but how?


Since it wasn’t enough to pick up my usual sized lot, instead I bought shares in Sprint.


Sprint!


Granted, that allowed me to get enough shares to sell enough call contracts, but Sprint?


That went counter to everything I stood for other than the need to clean my pockets of cash.


Even when prices are going up I’ve always had a really hard time resisting the urge to buy. Despite the fact that I have a long list of rules to follow when buying and selling, the need to resist the urge is something that I’ve never been able to do. Buying high and selling low is not on my list of trading guidelines.


Unfortunately, that also means that when opportunities do present themselves, such as after a nice downward move, I’m usually fully invested and am not in a position to take advantage of bargains.


Well, I did have my list of stocks all set and ready to go this morning.


Halliburton, Chesapeake Energy, Goldman Sachs, Transocean, British Petroleum and ProShares Ultrashort Silver ETF.


But everyone of them just followed the cue set by the pre-open futures.


Being the short term pessimist that I am, I fully expected the 100 point advance to retreat. Then I expected the same of the 150 and 200 point advances.


But somehow I resisted parting with the cash.


Well, not entirely.


I did pick up shares of Halliburton after it had fallen from having been up about $1 to just $0.40. I was able to do the same for shares of Freeport McMoRan and ProShares QQQ, which wasn’t on my original list.


Those opportunities didn’t last too long and my second series of urges hit, in that I just had to sell options right away.


That’s also the pessimist in me coming out. Since my expectation is that prices are going to drop, I want to make certain that I get the insurance premium before the opportunity is lost.


And so I did sell weekly options on those three newly purchased positions just in time to see another 100 points added to the Dow and lost additional capital gains opportunities in the underlying stocks.


As always, should have waited.


Just a case of “Premature Speculation”.


I’m not really embarrassed by it happening. I just get so excited. But I still wish it wouldn’t happen.


Especially as I’m getting older, I can’t click the submit button on cue as I used to be able to do in my prime, which probably occured in a different lifetime.


By the time the trading day ended, incredibly the market not only kept its gains, but closed at its highs. Always necessary to attribute the unattributanble to something, today the “Raison d’etre” was some nebulous news on the Greek banking scene and perhaps some relief over the relatively mild impact of Hurricane Irene.


Of course, had the market gone down, the reasons given would have been disappointment over the Greek banking merger and the hurricane related costs being discounted on Friday by the meteorologically enhanced trading algorithms of the High Frequency Traders.


Still, when it was all said and done, I felt great.


Despite battling with the ever-present “FOMO”, fear of missing out, I watched the market’s unabated move toward its 250 point gain and was still left with half of my cash still in hand. I was able to exercise some modicum of restraint, yet still felt like a trader.


I could hold my head up high, with an angle to the horizon of a young man.


Perhaps keeping things in hand is the solution to all things premature.


 


 






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Tough Times. Tough Decisions





 


Tough times do call for tough decisions.


We first heard that from Standard and Poors back in April.


No one listened, although the markets were spooked for a few hours on that day until the realization came that expecting a working and communicative political system to be at the root of any solution to our growing debt was probably just a joke.


It was certainly unrealistic, even though it wasn’t that funny.


Then, 4 months later, perhaps as much as 20 months ahead of schedule, they made the tough decision to downgrade U.S. debt instruments.


So this past Friday, the much awaited Bernanke speech at the annual Kansas City Federal Reserve meeting in Jackson Hole could probably be distilled down to its very essence.


Tough times call for tough decisions.


Bernanke Flips the BirdThe Chairman of the Federal Reserve re-iterated Standard and Poors’ “take home lesson”. A broken and dysfunctional political process would stand in the way of any solution to the economic issues that have been ailing us for these past few years. Not only would it stand in the way, but it has been.


In a nice Ivy League sort of way, the kindly gentleman from South Carolina, whose grandfather was described in the New York Times as having been a “Torah reader”, figuratively flipped Congress “the bird”.


Maybe literally, as well.


Either way, deservedly so.


With a somewhat surprising mid-afternoon market surge taking place well after Bernanke’s words, I found myself being assigned shares of Freeport McMoran, JP Morgan and Mosaic.


For the first time in 2 weeks I was being faced with the opportunity to pick up some new shares or add to existing positions at still “bargain” prices. Unless I missed a really explosive upside movement, as I did with Green Mountain Coffee Roasters, I never mind being assigned. There always seems to be plenty of new opportunities to pick up something and exploit the greed of those who would buy the call options I’m selling.


I like exploiting others.


At the moment, before the markets open, I have my sights set on shares of Halliburton, Lockheed, ProShares UltraShort Silver, Chesapeake Energy, Goldman Sachs and British Petroleum. Who knows, if JP Morgan or Freeport take an early hit, I might even buy those back.


But those will be easy decisions.


The tough decision facing me right now is what topic to focus on for this blog.


So many to choose from.


Of course, there’s always the opportunity to finely dissect Bernanke’s words, but they still haven’t fully understood his 2010 speech. I doubt that I’ll still be around pumping out this drivel a year from now. In fact, Bernanke himself may not be around in this capacity a year from now. Give or Take a few months.


There’s also lots of opportunity to exploit the weekend’s top story, Hurricane Irene.


Fortunately, other than a few ripped out trees in our neighborhood, we had no damage and kept our power throughout.


My Sugar Momma, who is a mental health specialist and is a volunteer member of the Red Cross Emergency Preparedness system spent some time at two different shelters that had been set up for the event, housing mostly Eastern European seasonal workers who were evacuated from Ocean City. Things were so well coordinated that she was able to come home to spend the night. Besides, for the evacuees, this was like vacation. There was no stress nor mental anguish for them. For once during their stay in America they weren’t being expolited. It was party time for them.


So, no Hurricane Irene storyline.


Finally, and I know that I spoke about Dick Cheney the other day in “It’s a Mad, Mad, Mad Cheney” blog entry, I just couldn’t resist one more go at it, especially after hearing his latest quote.


“Heads are going to explode in Washington”.


Based on his past hunting history, that comment may be literal, so I would stay away from open windows.


Reportedly, among the bombshells contained in his new memoir, “In My Time”, Cheney, the Vice-Preident who shot his hunting friend in the face and then exacted an apology from his pock faced friend, claims that General Colin Powell undermined the Presidency of George W. Bush.


Doing so wasn’t terribly difficult.


In fact, words, especially when uttered by George W. Bush, seemed to always undermine him somehow.


Now, I can’t be certain that General Powell never expressed his private opinions to others or expressed some concern with the quality of intelligence and the decisions made based on faulty intelligence. It is, though, hard to believe that a career soldier, a 4 star General, would do anything but follow the lead of his Commander-in-Chief.


Even so much as to be the fall guy for an Administration that had no credibility other than what resided in a well respected soldier.


On the other hand, Dick Cheney probably did more to undermine our Constitution than anyone since Jospeh McCarthy.


Although he is a hero to many and will take credit for the lack of domestic attacks sine 9/11, basing it on a trampling of civil rights, it’s very difficult to logically agree with Cheney since it is still an age old impossibility to disprove a negative.


No one will ever be able to prove that the lack of domestic attacks over the past 10 years has or hasn’t been related to enhanced interrogation, The Patriot Act or an impossibly large number of non-fatal heart attacks by a single individual.


I tired of the various comic routines focusing on Cheney a long, long time ago. At some point they just stopped being funny. Even though Joe Liberman has no shortage of detractors, what an incredible difference between two Vice-President wannabes. As a former Attorney General, I would have no doubt that Lieberman would have been an advocate for protecting human rights while protecting our borders.


Can’t prove that either, though.


But I will be thinking of Dick Cheney when the market opens in the morning.


I always do so when contemplating buying Halliburton shares, which incidentally, but not coincidentally,  goes ex-dividend on Tuesday. I love picking up shares right before their ex days and selling call options on them.


I remember all of the negative press going Halliburton’s way over the years, specifically due to Cheney’s tenure as CEO.


Years ago, I thought that I was going to go into business with a one-time mentor and friend, but the contract offered to me was really nothing to be excited about.


In fact, it was downright evil, unless you’re a big fan of indentured servitude.


Being the mentor that he was, he taught me one last thing.


Business is business and friendship is friendship. They’re two very different things.


We never did go into business, but we remained friends and he never shot me in the face.


And so it was with Dick Cheney, except for the shooting in the face part.


No, we’re not friends, but I didn’t let my dislike for his aura of evil get in the way of the business aspect of investing in Halliburton. I’ve always loved Halliburton and it’s treated me very well.


The lesson here is simply that “Profits are profits and disdain is disdain”.


We can agree that making money makes the tough decisions so much easier to make. Plus, you can use those profits to buy buckshot.


Now, one easy decision will come tomorrow. When it comes down to deciding whether to watch the Cheney interview or instead watch some Comedy Central re-run.


Any re-run.


When you get right down to it, Hurricane Irene, though it took lives, didn’t do anywhere near the damage that was expected. Bernanke, for however things work out for us in this economy, is above all, benevolent.


Cheney? Not so much on either account.


But in a spirit of compromise, I’ve positioned my La-Z-Boy directly under the leaking roof and will yell out all of my PIN passwords while enjoying “It’s Always Sunny in Philadelphia” episode for the 30th time.


 


 


 





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More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.


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Of Patriots and Plagues





 


Earthquake? Check


Hurricane? Check


100 Year Flood? Check, check.


Drought? check


What’s next? Locusts?


LocustsWell, we don’t have locusts where I am, but we do have stink bugs. A few years ago, ciccadas were substituted for locusts and were very successful in disgusting all of us.


So far, this years’ stink bug invasion is much milder than their first appearance last year, but they’re back. Despite the general agreement that there are no good consumer approaches to the management of these pests, that didn’t impede the sale of stink bug remedies at my local Costco. One such very nicely packaged product was prominently displayed at the entrance and despite an ungodly price, moved off those shelves with amazing speed.


Thursday evening we watched our dachshund, Laszlo, start fretting and barking at nothing in particular. He’s certainly more high strung than our past Golden Retriever Murray ever was, but this was even excessive by his own standards. After having gone through the absurdity of an earthquake in the mid-Atlantic, we wondered if he was sending the early warning signal of yet another rumble in the making.


Maybe completely coincidental, but Laszlo was very restless during the very early hours on Tuesday morning, Unless that were some imperceptible tremors, its not likely that he could have given us 12 hours advance notice. More likely, Laszlo was howling in response to some deer, who in turn may have been spooked by those same humanly imperceptible tremors in response to the frenzied forest rodents, and so on and so on.


Although my people tend to think of plagues as coming in a batch of ten at a time and ending with widespread death, I don’t think that there are that many more natural disasters to come this summer.


These days, it’s more the man made disasters that I worry about and it’s possible that those have Laszlo’s attention, as well.


Like many of us, Laszlo may be expressing his concern over Ben Bernanke’s upcoming comments from Jackson Hole.


Maybe he’s expressing some indignation over the sweetheart deals Warren Buffett is able to get from distressed banks and investment houses.


Maybe Laszlo was bemoaning that fact that the likes of Steve Jobs will not be seen again in his lifetime.


All of those concerns are valid and are the side benefits of using The New York Times as a potty training tool.


As an aside, Laszlo’s take on the “Arab Spring” is that it’s much ado about nothing. More of the same to come he believes. However, I’m not aware of his expertise in the international arena, despite the fact that he is a domestic news savant.


People being people, we either look for lessons from the past where none really exist, or we ignore the true lessons of the past. At the moment there’s lots of speculation over just what Bernanke will say.


Amazingly, although he is widely considered to be the most transparent of the Federal Reserve Chairman, there is still disagreement over what he said or meant at last years’ Jackson Hole Economic Policy Symposium, hosted by the Kansas City Federal Reserve


Yes, the same Kansas City Federal Reserve chaired by Herman Cain in the 90’s.


Did Bernanke actually  announce Federal Reserve policy regarding quantitative easing or did he merely allude to that option?


A year later and the experts are still arguing.


Now, with 500 point dailiy swings the norm, precious metals soaring, the European Union at a crossroads and American unemployment still at unprecedented levels the experts are expanding their arguments to include the impact of Bernanke’s as of yet unspoken words.


No doubt, but the Federal Reserve Chairman can still shake our world. With interest rates still at historic lows and talk that his quiver is empty, Bernanke seems to know how to make meaningful policy out of nothing at all.


In the absence of any obviously precipitating factors it safe to assume that yesterday’s sell-off, which did follow the previously established script of recent weeks, was just a defensive posture in anticipation of some unwelcome words from Jackson Hole.


Based on demonstrated ability to interpret Bernanke’s words, I suggest that traders wait a year or so before passing judgement and taking action. And when they are finally tready, they should scratch their heads and ask just one more time what he really meant.


Neither was there earth shaking news from Europe nor depressing newly released economic metrics for today’s downdraft.


In fact, there was good news.


Despite Wednesday evening’s 5% after hours drop in Apple after Jobs’ resignation announcement, it actually outperformed today’s market, as cooler investing heads prevailed. Tim Cook, his successor, is not exactly an unknown entity. Apple, even in the absence of its heart and soul will continue to create great wealth by virtue of creating great products. Think of how much Steve Jobs has helped circulate money through our economy. Music, movies, computers, communications all premium priced, all contributing to Apple’s profits and stock gains.


Whatever our deficit is at this very second, imagine where it would be without having had the benefit of Apple related tax revenues and capital gains.


On a personal level, think of the capital gains that got redistributed into our economy through increased shopping, investment and charitable giving.


Steve Jobs? A patriot.


More good news came from Warren Buffett’s $5 billion vote of confidence in Bank of America and in the US, in general.


Our history books talk of great American patriots. Future editions should include the name Warren Buffett. For so many people, their money is their life. Buffett may be roundly criticized for getting great terms on his investments in Goldman Sachs and Bank of America, but I shudder to think of how much deeper the abyss would have been without his willingness to sacrifice his wealth for the common good.


I rarely revise these blog postings, but the following is from an observation made by  Marek Fuchs, TheStreet.com media critic, who in a nice video clip parsed Bank of America/Buffett coverage.


His spot on observation was that Buffett was being analyzed through an inappropriate lens. The Wall Street Journal headline was that Buffett had made a cool $700 million in 30 minutes on his Bank of America investment, casting a predator light on Buffett, as if he was ready to cash in on his “paper profit”.


Maybe that’s what an under-taxed “hedgie” would have done, but Buffett is in it for the long run. Can you imagine what kind of harm would have befallen the market if Buffett took his “day trade” profits?


So, repeat. The man’s a patriot.


Only history will tell us how we should consider Ben Bernanke, whether we should utter his name in the same breath as Steve Jobs and Warren Buffett.


The once prisitine reputation of his predecessor, Alan Greenspan, has been a bit soiled, as he’s received at least some of the blame for our housing crisis and financial meltdown.


I think Bernanke will withstand that test better than Greenspan, but he certainly won’t have the opportunity to match Greenspan in years of service. EIther by choice or otherwise, he will find happier pastures.


In the meantime, I reserve patriot status for anyone that gets me a stink bug solution that will leave my family alive.


—————————————-


This blog entry was written a bit more than a month prior to Steve Jobs’ passing. See “Why I Owe Steve Jobs a Debt” for the indirect, but very tangible benefit that I derived from Steve Jobs and his Apple legacy


 


 





Hop SIng and Paw Blaze a New PathAmerican Tower ChartMake you Portfolio Work for You!


Invest like TheAcsMan


Option to Profit is available as either an eBook or 300+ paperback. Take a humorous look at a serious topic and learn how to make your portfolio finally go to work for you in bull and bear market environments.


See a sneak preview of Chapter 1.  hoco blogs


More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.


Find  OTP Book at Amazon, B&N or now you can also Order direct  from publisher. Use 10% Discount Code P4S2ZD8H


 


  








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It’s a Mad, Mad, Mad Cheney





 


When I left home Wednesday morning, for an unprecedented third consecutive day of honest work, I was resigned to once again being completely in the dark. Since I feel that I don’t have that much time left, I find myself having to get used to things much faster, so I am getting somewhat accustomed to being cut off from streaming news in record time.


Following that earthquake induced rally that was clearly a result of everyone forgetting to follow-up on the morning’s market rise with a spirit deflating plunge, as per the script,  I was happy to see the futures pointing to only a mild giveback. I combed my memory banks and really couldn’t find a recent example of how the market reacted to a mildly negative open. Lately its been a series of exaggerated up or down pre-market futures.


Granted, I didn’t look or think very hard. I’m sute there’s some kind of precedent.


By the time the work day ended the market had closed and that early morning drop gave way to a nice triple digit rally. That combination definitely hasn’t happened for a while, but complaints are definitely not in order. Those kind of surprises are pretty easy to deal with.


A quick glance through the New York Times online edition gave me no great insights into what moved the markets. I’m not certain why I even checked since in the absence of any concretely path altering news, the reasons given are always conjecture dressed up to be fact.


I did know that something was up with the precious metals. In fact what was up was that they were decidedly down. Since I own shares in the ProShares Silver Ultrashort ETF, I also follow Silver and Gold ETF’s just to have an idea of metal’s direction. What I didn’t realize was that the drop was over $100.


Maybe somebody actually considered James Altucher’s comment last week that gold was just a rock and realized that it is just a rock.


Someday, people will add where were you on the day of the great east coast earthquake andwhere were you when gold droped $100 to the classic OJ and JFK questions


Normally, with the kind of move that the UltraShort Silver shares showed today I would have sold calls into the strength of a 10% upward move, but I think that there’s still quite a bit more downside for the metals, especially Silver. Unfortunately, by not selling those calls I’m violating one of my cardinal rules by giving into greed.


Alright, so we’ve established that I can be greedy, but let’s just rationalize it by thinking that the decline in silver prices, when leveraged by the short ETF can help to nicely offset the paper losses from last month. Sometimes it has to be about the capital gains and not just the options income.


As it turned out, there really was no news. The Steve Jobs resignation had occured after the market close and wouldn’t be a potential factor until today’s open. The after hours drop in Apple paralleled the 5% drop in gold and who knows, may be the basis for tomorrow’s blog.


Add where were you when Jobs resigned for the second time to the list.


Dick CheneyThe only news that caught my interest was that regarding Dick Cheney, except that this time it wasn’t related to a new cardiac incident. That’s what made it news.


As soon as I heard the revelation contained in Dick Cheney’s upcoming book, “In My Time”, that he had drafted a resignation letter in the event that he suffered an incapacitating illness, I had visions.


Normally, my visions are limited to stock options I’d written expiring worthless as the stocks hovered just beneath their strike price. Vions, fantasies and dreams are all the same for me.


That’s a strange kind of dream. It’s not the kind of dream draped in deep imagery that could be used to rally people to greatness. I doubt that they’d be dedicating space on the National Mall to commemorate the life of a man behind that kind of dream. It certaily doesn’t reach for the unreachable. It just reaches for a consistently unlikely, yet possible, sequence of events. More like a  “I have a scheme” concept.


But this time I had a different series of images.


Imagine if the world had known that sitting in some secret vault was a resignation letter, that if released, would have resulted in Dick Cheney relinquishing his Vice Presidency.


Obviously, Dick Cheney changed the nature of that office and he had many supporters. But they’re not the ones in my vision. Instead, I see all of the 2004 and even 2008 hapless Presidential hopefuls running around in comedic fashion trying to find the location of that secret vault so that they could save the nation  by putting through the resignation of the individual so many so as evil personified.


Yes he was mad, and not in a good way.


Imagine a devious Dennis Kucinich trying to outmaneuver a roller derby-like Hillary Clinton for the next clue. I suppose that there would have been a few Republicans in that mix as well since the Vice-President was just a heartbeat away from the real thing. In my vision, Mitt Romney is breaking a sweat and there are some mis-placed hairs.


People always think about the impossible. Among those dreams are time travel. Some dream of going forward while other dream of going back. I suppose that either one would only be complete if you could book the round-trip.


Cheney, in his book, is reported to paint a sometimes unflattering picture of his less experienced boss, George W. Bush. I don’t know if he reads many books, but I’m guessing that Bush would probably like to climb into that time travel unit right now and release that resignation letter before Cheney ever gets the chance to steer him into what would turn out to be a series of misguided paths.


While there, I may ask him to place a few trades for me.


That’s more in keeping with the kind of visions and dreams dancing in my head.


 





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What Earthquake





Farrah FawcettYou have to feel badly for Farrah Fawcett.


Not only did the one time sex goddess die of a very unsexy disease, anal cancer, but she had the misfortune to be overshadowed by the death of Michael Jackson on the very same day that her life came to an end.


Maybe because we had tired of the drawn out and highly public nature of her past few weeks or maybe because the King of Pop’s death was so unexpected, but Farrah barely even received a nod on the day of her passing.


Sometimes going under the radar is a good strategy, but given the well orchestrated and documented events during the final phases of her life, it would have been reasonable to believe that Farrah and her family wanted the very spotlight that should have been her birth right.


The news that surrounds your news can have significant impact on your news. Announcing great earnings does your shareholders no good if the day happens to be one of bad macro-economic news. Nothing like the impending collapse of a large European economy to put the damper on the earnings reports of companies that have nothing to do with the retirement age in Greece.


Similarly bad earnings can sometimes get fortuitouly overlooked on days that already have a significant downtrend in the overall market. There’s nothing like letting your bad news just get mixed in with everyone else’s bad news.


Think about how many politicians in the throes of some ethical crisis have had the pressure taken off because some other story has popped up.


Remember Gary Condit, the one time Colorado congressman, who had been implicated in the disappearance of his intern, Chandra Levy?


On August 23, 2011 following an interview with Connie Chung and revelations that Condit had an extramarital affair with a flight attendant, as well as with Chandra Levy, suspicions deepened and the noose seemed to be tightening around the Congressman’s neck. The very same congressman who was one of Bill Clinton’s biggest detractors during the Lewinsky period.


Well, wouldn’t you know it, but by September 12, 2001 no one was really interested in talking about Gary Condit. Of our 535 Congressman and Senators, there’s at least one that owed thanks to terrorist attackers.


Let’s look at today’s headlines.


Libyan rebels storm Gaddafi compound, Dow Jones finishes up 322 points and 5.8 earthquake hits east coast of the United States.


That’s a big news day. So big, in fact, the poor Colorado, which suffered its largest earthquake in over a century, in at a 5.3 magnitude, went totally unnoticed.


The Condit Phenomenon.


I happened to be one of many along the east coast that felt the tremors and at first shrugging it off as vibrations from construction, soon realized that it was anything but normal as the tabletop upon which I was working, despite being attached on one end to the wall, started bouncing wildly.


With the Dow up about 190 points at that time and having finally pulled off a few trades was loathe to leave the computer screen. But at some point common sense kicjked in and the screen of green was left behind with open trades awaiting to be executed.


Hated to leave them behind, but ……..


For me, Tuesday was an even more rare event than Monday, in that it marked the second day in a row that I was working. But as opposed to Monday, I was able to pull off a few trades. I purchased more shares of Freeport McMoran and also sold weekly calls in JP Morgan and Freeport McMoran in addition to Deere monthly calls, all into strength.


There really wasn’t much reason to believe that the market would do anything differently than to follow the script of the past few weeks. Those scripts came in two varieties. The market either opened strongly to the downside and stayed there or opened strongly to the upside and quickly gave it back.


Over those weeks I missed more opportunities than I’d like to admit to sell call options into strength and then close out the positions as prices fell.


So Tuesday seemed to be just another of those days that optimism would quickly give way to pessimism.


But the script got sidetracked.


Sometimes earthquakes in major metroplitan areas of the US will do that sort of thing. With everyone talking about the Quake of Eleven, someone forgot to tell the market that it was scheduled to reverse course before the closing bell. Maybe some of the remaining generations of floor traders wanted to make one last  stab at a major bull session before the big one hit.


No matter what the reason, it was nice to see all eyes off the markets and focused on something else. Fortunately, there were no reported casualties and only minor damage, so instead of grief we all just got to talk about the experience of havcing just experienced an earthquake.


So left unchecked, like some at an all you can eat buffett, the market just kept piling it on.


By the time I finally got back into the building and to the monitor, the trades were made.


Depite the market continuing it’s climb, I was happy to finally get some trades made.


I don’t know if I can draw any parallels for Farrah Fawcett. I’m not sure what she and her publicists could have done to prevent her script from being rewritten.


From where I sit today, I was very happy to see the script get thrown out, just like I tossed that Frarrah poster 35 years ago.


Time to Moon Walk on.


 


 






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Predicting is Tough Business





 


One thing that I don’t like about my internist is that he brings patients back to the examination rooms on time.


Normally, that would be the kind of criterion used when handing out high grades for healthcare providers, but I like sitting in the waiting room. So much so, that when I have appointments with him, I just show up extra early so that I can spend quality time in the waiting room.


No, it doesn’t have anything to do with a nurse or receptionist wearing unusually clingy or low cut blouses, it all has to do with the waiting room reading material.


I just love reading old issues of TIME magazine. Even though we have a subscription and I have the telephone app, there’s nothing like a badly dated issue to get my interest. Sometimes, if I  feel a need to have the issues on the end table all to myself, I’ll feign a real dry hacking cough so that others will keep their distance.


Nothing of a literary nature gets me as enthused as reading the bold predictions made by the world’s experts. Whether politics, the economy, social trends or technology, I just love seeing how often and consistently they’re wrong.


NostradamusReading the predictions of modern day futurists gives you a real respect and appreciation for Nostradamus.


It’s been more than 500 years since his death, yet nothing can come close to the gold standard, especially for the ability to choose just the right kick-ass hat for any occasion.


After all, predicting, whether the great financial wizards of our time really want to admit it, is what it’s all about. For all of their great insights and interpretations of propietary data, they’re just predicting and then hoping that our attention is diverted elsewhere when they end up missing the mark.


Take that gold standard, for instance.


Of those predicting that gold would go to $2000 per ounce see if you can come up with a single one that hasn’t been predicting that since 1980. No one in the last 30 years has developed any kind of following by predicting that gold would drop in price.


But who’s going to rain on the party. Right now, no one really wants to hear about all of the missed predictons, because we’re all in such awe of how they could have gotten it so right.


This time.


As any marketing genius will tell you, it’s not about the quality of your content, it’s all about making that content memorable. You’ll be much more likely to remember Reverend Camping for his recent prediction of the coming end to the world that you would be to remember the guy who predicted that it will be 74 and sunny in San Diego for the next eternity.


Obviously, being right is irrelevant in the long term, as long as you’re right, right now.


When I was younger, there was an obscure television show on Saturday evenings that would glue us to our sets. The clairvoyant was Maurice Woodruff and his show was entitled “Maurice Woodruff Predicts. Maybe it was his British accent, maybe it was the public acknowledgment of his homosexuality, long before it was fashionable, but everyone loved an entertaining predictor. This was also the era when Saturday evenings were filled with the likes of Vidal Sassoon and Alan Burke, so the pickings were pretty paltry.


But Woodruff was a good one, in that he would predict really outlandish things and often far ahead into the future that there was never going to be a likelihood of his predictions being remembered, much less proven wrong.


Somneone was bound to die before judgement day.


So just to be on the safe side and to protect himself from all of those who spitefully waited years to prove him wrong, Woodruff died, a relatively young man, from the heart attack he should have predicted, just a few short years after the demise of his US show.


I on the other hand, now older than Woodruff at the time of his demise, am ready to go on record and make a prediction about this Friday’s much anticipated speech by Ben Barnanke at the Kansas City Fed’s meeting in Jackson Hole.


A a reminder, last year, at the same venue, the market had just recently suffered a 16% drop, as we have just endured. It was at that time that Bernanke laid the framework for what came to be known as QE, or qualitative easing. Maybe it was quantiative easing. Does it matter? That set the market back on the right track.


Quantitative easing was much maligned, as was QE2 as the second round came to be called, but you could have predicted that one, as the cat calls came from the usual gang of reflex slingers.


Now everyone is waiting to see whether Bernanke will set the seeds for QE3.


Now the naysayers are saying that QE3 won’t be enough. In the past that didn’t want he fed buying American debt, now apparantly they want it, but more of it.


Who would have predicted?


Well what will it be?


So wait no more, because my bold prediction for that day is that Chairman Bernanke will stand by the podium dressed in a blue blazer, sporting a button down Oxford shirt and will be tieless. I am also getting a strong image that instead of a podium, the Chairman may deliver his message from the conference table.


I stake my predicting career on this one.


And I plan to put my money wehre my mouth is by stringing myself up with his unworn tie if something doesn’t give soon.


Too bad it didn’t occur to me to use my predictive talents for good during recent market sessins.


On this past Friday in the early trading I commented on Twitter that I had learned from Physics lab that even concrete bounced. That was an obtuse way of saying the market climb of the morning, as substantial as it was, wasn’t very meaningful.


But did I do anything about it? Did I sell into the strength in anticipation  of buying shares back at cheaper prices later in the session.


Of course not.


How about today. Same deal. 200 points up and then ending the day up just 37.


You could probably predict that the answer to that one is “No”.


And you’d be right, but granted, I had one of those rare days that I had to work, so I couldn’t avail myself of the trading screen without interruption. This time the call came early this morning. Since the person that I covered for reads this blog on occasion, I’ll not refer to him as a friend, but he suffered an unexpected back injury and I had to leave my perch for the day and tend the family business, since by comparison, I was able bodied.


By the way, I predicted that injury approximately 4 years ago.


As it turned out, the only trade I made all day was to sell August 26, ’11 calls on Mosaic into the early strength. I had planned on doing the same with others that had weekly options, but never got the chance, because by the time the ability to sit and trade arrived, the market had given it all away.


I could have predicted that would happen, but I couldn’t predict that it would happen so quickly, yet again.


But physics being what it is, hight predictable, each successive bounce of a piece of concrete should get smaller and smaller.


Who needs predictions when you have science?


For today, I’m searching our basement for just the right headgear to give me a leg up on this predictably unpredictable market.  Anything to bring me more into line with and perhaps channel my mentor Nostradamus.


I further predict that by tomorrow I’ll have absolutely no recollection of predicting anything for today and will just keep right on going in total ignoance of all of my past mis-steps.


Just like the experts.


 





Hop SIng and Paw Blaze a New PathAmerican Tower ChartMake you Portfolio Work for You!


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Option to Profit is available as either an eBook or 300+ paperback. Take a humorous look at a serious topic and learn how to make your portfolio finally go to work for you in bull and bear market environments.


See a sneak preview of Chapter 1.  hoco blogs


More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.


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Rebirth





 


It’s hard to say whether my short term memory lapses are taking center stage or whether I truly had never heard of the story of the “West Memphis Three”.


The latter seems strange to me because I am a news junkie. I don’t particularly care for history, but eventually current events change their nature and become parts of the annals of our collective existence.


At that point I no longer care.


Either I completely overlooked their 18 year old story or have completely forgotten the story. Either way, I need to be questioning something.


I’m not even remotely going to try and pass judgment on the three men convicted of murderering three young boys. They were just released from prison in some obtuse kind of plea bargain and appeared before the press. I didn’t bother reading about the events surrounding the case because now it is in the realm of history.


I don’t do history.


But I did watch the press conference the other day with a totally clean slate. Here were three young men who had spent half of their lives in prison and now they were sitting in front of cameras and reporters, clean cut and well spoken.


ReincarnationThey were just beginning the process of being born again, except that they still have the burden of a lifetime of memories and possibly guilt and regrets.


It’s hard to run away from your mind even if you have some really deep seated pathology.


On the other hand, half a world away you can be reborn as often as you like for a mere $6. Buddhist priests in Thailand perform very popular rebirth ceremonies whereby an individual can shed their date of birth and start all over.


Why is that important? Because culturally the date of birth is tied to beliefs regarding luck and fortune. Don’t like your luck? Don’t like the way your life had been going, just pay your six bucks and lay down in a coffin . While you’re clutching some flowers and listening to priestly prayers a white silken cloth is draped and undraped over your uncovered casket. WIth each pass, a bit of the stench of your life is being removed.


Don’t care for you new date of birth? Hey, what’s another six?


Depending on your ability to sustain a sense of denial you may be able to run away from your past and memories.


I had my own sense of re-birth this past Friday, but it was unlike either of the two previous rebirths described. Instead, it was almost more like a Hindu vision of going back to a previous life. The kind of retrograde rebirth in recognition of a life poorly lived.


It all started as I became resigned to the fact that I would likely have no trading opportunities this past Friday. My Sugar Momma and I decided to take advantage of the opportunity and went out for a rare weekday afternoon movie.


We went to see “The Help”. Of course, I didn’t read the book and SM did.


Regardless of knowing the outcome or not, we both loved the movie, not just for the message and story of hope and determination, but also because we both enjoy period movies.


Here’s the problem. While the movie took place during 1963, one of the maids in the film was clearly using an Electrolux vacuum canister model that wasn’t available in the early sixtes.


I saw the flashback to my time as a door to door Electrolux salesman and immediately recognized the disticnctive blue color, but more importantly, the rectangular shape. If anything, a well healed southern family in 1963 would have their domestic help using a gray Model S. You know, the cylindrical canister.


Then I remembered. I didn’t really like that life. I didn’t want to be reborn as a vacuum cleaner salesman.


Imagine being a 50 year old career vacuum man and starting off each morning in a team meeting where you could always count on someone saying “Our vacuums really suck”. Even more sadly, laughing at those words day in and day out.


West Memphis Three judicial rebirth? Good.


Buddhist rebirth with profit motive? Doubly good.


Hindu rebirth, especially if leading to a lower form of life? Not so good.


Which now brings us to the Monday following the third Friday of every month.


From a purely option premiums perspective last month was one of the very best I’d ever had. I would love to live and relive that month over. That would be a great rebirth. To top it off, to have the memories remain intact would truly be something very special.


But those great premiums came at a price. I wasn’t assigned any shares, so I won’t have any funds in the portfolio to pick up any meaningful new shares at what I think are bargain prices.


That’s the part that I’d like to forget. The fact that all of my holdings closed under their strike prices.


Well under.


The nice thing about selling options, whether the monthly or weekly variety, is that at least they offer the chance for a new beginning. Granted, it costs more than $6 to exercise that right, especially since each stock has its own life, but I can certainly agree with the Thai believers in that the latter part of July and the first three weeks of August 2011 were very bad times to begin an investment’s life.


I have no clue what the future will hold, but I don’t think it’s as bad as a morning vacuum pep talk or even as bad as last month’s market.


I’m not likely to forget last month anytime soon, but it will become ancient history, just like 2008.


No matter what this new cycle will bring, it too will be over, maybe as early as this Friday for some holdings and no more than 4 weeks from now for the rest. That’s the kind of life cycle I can deal with. Maybe that’s why the last cycle was so insufferable. It was one of those damn 5 week options periods.


In the meantime with this month and rebirth to look forward to, I just need to make some room in my brain to deal with all of the new information.


Time for my monthly spring cleaning between the ears.


I think I’ll be tossing vacuums, justly or unjustly freed prisoners and last month aside. I’ll also be tossing every episode of every evening show on Comedy Central aside so I can just watch them again and find them funny all over again.


No memories and no regrets.


 




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You Can Never Go Back Home (Archives)





 


The original Szelhamos Rules ran for precisely 1 year, from February 2007 – February 2008. This article originally appeared March 29, 2007. For Michael Dell update, read “How Much Bad News Can we Handle? (August 19, 2011)





Recent data seems to refute this old adage. After spending 5 or 6 years in college, many newly minted, diploma holding graduates are returning home. “Failure to Launch” was a reflection of a growing phenomenon around the country. For me however, the sight of Terry Bradshaw’s butt, has made that both a memorable and disturbing film. But the reality is that you can go back home. It’s cozy, it’s safe and it’s cheap. And everyone is doing it.


But in the world of business it’s not quite so clear that you can go back home. Steve Jobs and Charles Schwab did, and their company’s shareholders were elated to welcome them back. Apple Computer may just have well been named Jobs Computer, because there was only a rotten Apple during his absence. Even the threat of his departure, whether due to personal health or options related scandal, had depressed the stock price, and his returns to grace and health saw upward moves in Apple’s price.


In Charles Schwab’s case, the company was already called Charles Schwab. No need for renaming. But when he left, it lost focus. When he came back, Schwab, the company came back, better than ever. Among the discounters it is still able to command a premium for its services.


So they could go home. And everyone lived happily after after, that is, until they leave again. And someday Steve Jobs and Charles Schwab will pack up and go. Planned succession? Who could fill their shoes? John Scully?


But it’s not always that way. Remember Gateway Computer? It’s still around. It’s a $2 stock that every now and then gets speculative play because people think that it will return to its former glory. And why not? A couple of years ago it’s iconoclastic founder, the pony-tailed Ted Waites returned, to help rescue the company, that littered the landscape with its ubiquitous cow boxes in the mid-90’s. Gateway once had cachet, now it has some shelf space at Best Buy.


Well, you know what happened. I already told you it was a $2 stock. Buying out low quality maker eMachines didn’t do much for Gateway. Bringing the cow boxes out of pasture didn’t help much either. And so Ted Waites left again. He couldn’t go home. He never did learn to avoid the pastures while in sandals. That was his real downfall.


Why bring this up? Who really cares about Gateway? Although I still have my first PC, a Gateway P70, with a kicking 1 Gig hard drive, I really don’t think about Gateway. In fact, the only reason I still have the unit is that it is too heavy to take to the dump. There is nothing compelling about their machines, other than to bring back memories of the early post-IBM days when Gateway and Dell slugged it out for the hearts of the computer newbies.


No DellBut I do care about Dell. A few days ago I wrote that I was planning to make a sale of my Dell stock if it reached 25, which I was expecting, since the bad news was certainly behind us.


In my own mind, I may think that I’m pretty important, but I’m pretty sure that my disclosing my intentions didn’t send panic waves through the market for Dell stock. O, as it turned out, it was more bad news.


A couple of months ago, the famous founder, Michael Dell himself, stepped back up to the plate. Out was his hand picked CEO successor, whom he had wholeheartedly endorsed just weeks before. That’s always the kiss of death. The stock rallied on that news. The prodigal father was returning to rescue his child. Dell would go up, would go down, would show some brief upside trends on news. But Michael was back. He came back.


Now it’s never good news when you start the morning with an announcement that trading in Dell stock is halted. That was this morning’s news. It followed yesterday’s announcement that there may be a need to restate prior year’s’ earnings. Irregularities. How I hate that word, at least if it refers to a stock that I own. At my age, it’s very important to be regular.


Dell is a good example of how not to buy a stock. A while ago, after quarter after quarter of great earnings and guidance, Dell announced a disappointing quarter. The stock fell about 10% on that news. I though that was a great opportunity to buy into a great company, at a great price. Not !


Who knew that the house of cards was beginning to crumble. Those disappointing results may have been the first indication that you can’t hide irregularities forever. Manipulate as much as you want, but sooner or later the truth comes out. And so for the past 18 months or so, its been one delayed filing after another. That’s never good news. Yet Michael Dell stood by his man. After all, they did share an office.


In hindsight, with the continued delays, and the continued support of Michael Dell, there should have been alarms going off for me. But I kept confident. Secure in the fact that even while no longer running the company, Michael Dell would get this thing back on track.


He didn’t and he hasn’t. It’s hard too imagine that he didn’t know the depths of the problems at Dell. They still make a great product, albeit not price competitive, but a great product. In a household full of computers and laptops, our Dell is our top dog. But as a company, it’s broken, and Michael Dell should never have gone back home. Only time will tell what whether there was criminal activity or securities violations and now Michael Dell is back. If he knew the depths of the problems, his arrogance is mind boggling. The market wants results, not camouflage and not a soft shoe shuffle.


Maybe more disturbing is that if he didn’t know what was going on, what is he doing coming back? Stay away. How could he have been so removed? That’s very different from the departure of Jobs from Apple. If he was so removed and distanced from operations at Dell, how in the world could he be prepared to rescue them from this morass?


I hate selling on bad news. That’s why I didn’t panic last month. The difference is that ultimately, with a broad enough time frame, the market always recovers. Remember 1929?


You can’t say the same for companies. Remember Enron? Maybe Dell makes up a few cents, but it’s hard to see a return to its glory days. There’s lots of competition. Computers are commodities and are priced as such. Dell products are no bargains and you have to wait a few days to get yours. Americans want instant gratification, not a visit from the UPS guy.


Oh, and the SEC problems don’t help, either.


I have two solutions. Think private equity, if you can’t comply with the SEC.


So, Michael. Come. Visit. Have a nosh. But seriously, what were you thinking?


And my other solution?


It’s time to go before you end up on Best Buy’s shelves, next to your old friend, Ted.


 


NOTE:  The graphic appearing in this blog article did not appear in the original version


 


 


Hop SIng and Paw Blaze a New PathAmerican Tower ChartMake you Portfolio Work for You!


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Option to Profit is available as either an eBook or 300+ paperback. Take a humorous look at a serious topic and learn how to make your portfolio finally go to work for you in bull and bear market environments.


See a sneak preview of Chapter 1.  hoco blogs


More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.


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How Much Bad News can we Handle?





 


 


Today started off with terrible news, so it should have come as now surprise that the markets would react negatively, drastically and with unbridled violence.


Jackie ChanThe news that the beloved screen actor and martial arts expert, Jackie Chan, had died of a heart attack swept numerous social media sites, spreading across the globe, saddening fans and traders alike.


On the heels of Thursday’s U.S. market close, Friday should witness a bloodbath in the Asian markets once those markets open, as Chan was held to near diety status. Very fortuitously, the Arab markets are closed on Fridays, in respect of their Sabbath day. Chan is so revered there, in recognition of his early role in a little known Saudi backed film where he decapitated a young Moses, thereby causing the Exodus to never occur.


He is, in fact, held to such high regard within that demographic, that his image is not allowed to be shown in his movies.


Today’s report came several months after the most recent unsubstantiated rumor of Chan’s death, but the market, in its wisdom is never backward looking and ignored the news that the silver screen star was very much alive.


It’s not about accuracy. It’s about the moment. Revisions are routine and routinely ignored.


You could tell that there was obvious tension in the air as CNBC security was called in to separate Jim Cramer and Simon Hobbs from one another. It appeared as if Hobbs was trying to establish mutual consent on the adoption of Queensbury Rules, but the kid from Philadelphia was having none of that.


Although calmer heads eventually prevailed, it wasn’t so for the markets. They needed to vent.


Following the early sell-off came more bad news from Europe. Finland, a economic powerhouse of a country best known for having been usurped by the Soviet Union, joining Hungary as one of only two members of a dead language family and the home of the ubiquitous Nokia telephone, threw a wrench into the Greek bailout.


I would have also mentioned walrus blubber, but the previous sentence was already well past run-on status.


Just as they were getting ready to cross their T’s and dot their umlauts, Finland decided that they wanted collateral on the loans to Greece. On the surface, that wasn’t a problem. but then the FInnish Finance Minister was concerned that the Feta Greece was putting up had a expiration date that was unacceptable to the olfactory enhanced and sensitive Finns.


So our markets reacted accordingly as there was fear that the stink would spread across the European continent.


Oh yeah, and then there was that abysmal report from the Philadelphia Fed. The report showed contraction of factory activity to its lowest level since 2009. Anyone who has waited in line for a Philly Cheesesteak can attest to how long it now takes to shred the Cheese Whiz


But wait, isn’t that when we hit our last stock market bottom?


How great of a sign is that? Good enough to take the Dow from down 200 to down 500.


That good.


For those that remember The Haines Bottom, RIck Santelli reportedly called the bottom today. Somehow I missed that, but I did hear him call for $2200 gold, albeit, he warned of a precipitous correction. That would be bad news to come, but probably good news for others.


Today, all of the talk was about “risk-off” and the shift of money into gold. Given gold’s meteoric rise these past few hundred dollars, I still have a hard time seeing how that qualifies as a “risk-off” investment. I still can’t get James Altucher’s remark out of my mind. “It’s only a rock. It’s a rock”.


Real value resided in tulip bulbs. We all know that.


Those may be the most sane words I’ve ever heard uttered. The former. Not the latter.


Later in the day, with about an hour to go until the closing bell, trading was halted in Hewlett Packard.


More bad news.


HP had been another rumor source all day, as word leaked out that it was looking to spin off its PC business and then acquire an Enterprise company named “Autonomy”


Seriously, Autonomy is going to be acquired. Anything incongruous about that?


Well, HP pre-announced its earnings and the stock nose-dived. The fact that they pre-announced should not have come as a surprise to anyone, as HP has a habit of doing that regardless of the CEO du Jour.


What struck me as funny was a comment by Michael Dell.


Yes, that Michael Dell, who suggested that the name of the new HP PC spin-off might be “Compaq”.


Yeah, pretty funny, but Michael Dell is probably not in much of a position to fling stones. In fact, during the first iteration of Szelhamos Rules, he was the subject of “You Can Never Go Back Home“. Read it, especially in light of the warning in the very last line of that blog article.


Of course, if you owned Dell shares yesterday, you weren’t very happy, as Dell just reinvents their own personal bear market. Although after 16 quarters of earnings’ disappointments since Dell’s return, they must surely be approaching  Michael Dell’s objectives.


Truth be told, cutting off the “Dude, you’re getting a Dell” guy was like cutting Samson’s hair.


As I watch more erosion of my portfolio at least I was able to come up with a new strategy to make my funds last me through retirement.


Out of necessity comes invention. So I’ve decided to stop taking my hypertension medication. Not only does it soilve the primary problem, but it’s also a very cost-effective way to solve it.


The last bit of bad news still has me puzzled.


For some reason, much ado was made today about the President taking vacation. In fact Yesterday Donald Trump said that he “was told” that President Obama has now taken more vacation than any other President.


How convenient that he could spread that “news” but not take the blame, when its proven to be false. My guess is that he was probably the one who started the Jackie Chan rumor as a way of taking heat off of himself for publicly announcing his beautifully timed purchases of Citibank and Bank America.


Forget that President Obama has taken one third of the vacation time that his predecessor did during the same time period.


It was no accident that Will Ferrel, in a Saturday Night Live spoof, had George W. Bush referring to himself as “your President, 24/7. That’s 24 weeks a year. 7 hours a day.” Where’s there’s smoke, there’s fire.


But, you would think that the President’s opponents would greet his vacation as good news.


After all, if he is to be blamed for the economy and the rapid degradation of Feta cheese, it should be of great benefit to have him take his hands off that steering wheel.


As a fitting end to the trading day and as a unintentional salute to the new norm,  Maria Bartiromo said “The Dow Jones Index is off by over 500 points. Its worst loss in a week”.


In a week. Not 2 years, or whatever the previous standard was for time between disasters. Now 5 days seems like an eternity.


Using that new norm, my retirement funds should last at least another 2 weeks.


Now, finally, some good news.





 




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