Hope to Survive the Change

 


Although it’s highly likely that my post sedation delerium would turn out a daily entry far more coherent than usual, I turned to the kindness of guest bloggers to preclude the chance of typing out some long held family secret.


Today’s guest blogger, Tony Vahl, may be known to many as the co-founder of the popular DailySkew.com, no stranger to an irreverent look at events pretending to be serious. An accountant by day, he finds the time to put numbers aside and focuses on letters and punctuation marks to the delight of his readership. Follow Tony on Twitter and help support a life giving cause


 













I am not an Options Trader.  Never traded options in my life.  I hope some personal eyewitness testimony will suffice.

I come at this as someone who saw the Housing Bubble bursting back in 2006, and felt like a lone wolf crying in the wilderness.  Smiling real estate salesman kept telling me at the time, “Don’t worry.  The market will hold firm.  After
all, this is Florida.”


Don’t worry. Be happy. What could go wrong?

Yeah, right.

Catch a Falling KnifeTwo years later, I was told, “Buying a home now is like trying to catch a falling knife.” This time they were right.  Even a broken clock is right twice a day.  A $120k home I purchased four years ago is now worth half that. Unexpected medical bills have put an employed individual in a stable career and his family on the brink of foreclosure. 

Anyway, since I’m not a trader, I figured I’d share with you what I’m seeing on the ground.  What I see is change.  Not just loose change. 

I’m seeing stores going out business.  Take Payless Shoe Stores (TIcker PSS), for example.  They just can’t compete with Zappos, now wholly owned by Amazon. 

Isn’t it funny that Zappos has an issue with the security of the credit cards of their customers after Payless announces store closings?  It’s too late.  It’s like that scene in Star Trek II, when Khan started the Genesis Wave.  He hit the “Commit” button, and then there was no stopping it.  You couldn’t even switch stations, the force was that powerful.


Once you’re in danger of losing your credit card number you had on Zappos, you’re stuck.  There’s no turning back. All you can do is wait for the fallout and wonder where it will land. Just like the falling space debris that seems to becoming a regular occurence. There’s not much you can do besides hoping that it doesn’t land on your head.

Here’s the thing about change. We humans resist it.  We do not like change.  We want things to stay the same, but that’s just not happening.


If you’re among those resistant to change you can probably take some solace in knowing that the fact that it’s not happening won’t change.

I look at President Obama’s Hope and Change campaign from 2008 as an incomplete sentence.  I think what he really meant to say was, “Let’s hope we can deal with all the change that’s coming.”  Or, “I hope the pace of change slows down.”

That’s real hope, to deal with all the change.

Over the past year, I’ve noticed the aisles have become bigger at Wal-Mart.  While this may be ascetically pleasing (I know, Wal-Mart and ascetics is an oxymoron), I see the wider aisles and think, “Less products.”


There are shortages on occasion.  They are minor.  You can shrug your shoulders and move on, but sometimes you just can’t find a specific product.  You’ll run to Target, Publix, Walgreens, Dollar Tree, and you still can’t find it.  It’s
like there’s been a run on Borax or your favorite sliced ham.

It’s like just-in-time delivery has become we’ll-get-it-to-you-when-we-have-time.

I was reading a blog post by Jeff Jarvis written at Davos, where he was attending the World Economic Forum’s “1% camp.”  He concluded that with technology, you’ll see greater efficiency but fewer jobs.  So, the question becomes what are people going to be doing for a living?  I feel like this argument has been going on for awhile, but the pace of change has quickened.

Fewer jobs, jobless recovery, better economy, but the average Joe is not necessarily feel it.

Of course, I would argue there are plenty of new opportunities.  For example, in the publishing industry, authors are skipping the traditional route and going straight to Kindle with their missives.  If the masses like it, the author is
rewarded.  No middle man.

It’s a brave new world.  If you can build an audience, you can bypass the system.

Traditional jobs might be disappearing, but opportunities abound.

What does this mean for the Options trader?  No clue, directly.  Indirectly, I suppose this is like taking the temperature of a patient and using that data as a guide for how to proceed.  The good doctors now how to read the thermometer,
and the good trader knows how to read the change.


 


TheAcsMan Comments while strung out on something:


I can’t begin to wonder how Borax and ham ended up in the same thought process, but it will bother me until my dying day. No explanation will ever suffice, that is until I bothered to look up the association. It’s almost enough to make me sign up for “Kosher Camp.”


The wider aisles at Wal-Mart line of thought got me wondering whether you “Ascetics” or “esthetics.”  was actually the intent. Knowing the author’s sense of  “skew,” I could make a case for both being oxymorons in the Wal-Mart universe.


Personally, I think the wider aisles are there to accommodate fatter shoppers, but to mask paucity of supply with the appearance of plenty may be a plausible explanation.


The argument about technolgy and jobs has been going around for at least 50 years. The initial position was that technology, robotics, automation etc.. would never threaten jobs.


Ha.


People being people, they repsond to external events. Family sizes will get even smaller if economics dictates that be a prudent thing to do. Eventually the work force contracts, as does the unemployment rate. Supply and demand is one of the very few inviolate things in the universe. You just have to live long enough to ride out the cycle.


What does this all mean for options traders? The first clue comes from the interpretation of the 2008 Presidential campaign theme of “Hope and change.” 


“I hope the pace of change slows down,” is an expression of the inherent calculus behind options pricing. A rate of change is a derivative, as are options. There is no tangible product. Just as hope is etheral, so too is an options contract.


I always think of the AIr Supply song from a generation ago when trading options.


“Making Money out of Nothing at All.”


The point is that change, just as pointed out, is always coming. In the world of stocks and options, you can count on change, you just can’t count on its direction at any moment in time. But, you can count on its bi-directional nature.


So you really don’t have to know how to read the thermometer to proceed. You just have to know that there’s change and its coming at you. Be prepared for it and the fat shopper plowing down the aisle for that last package of sale priced sliced ham.


A good lesson for life in general.









 

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Recent Trades Security Type Action Type
January 30, 2012 XLF Option STO Weekly
January 30, 2012 XLF Stock Buy
January 30, 2012 MS Option STO Weekly
January 30, 2012 FMCN Option STO Monthly
January 30, 2012 FMCN Stock Added
January 30, 2012 GS Option STO Weekly
January 30, 2012 GS Stock Buy
January 30, 2012 HAL Option STO Weekly
January 30, 2012 HAL Stock Buy
January 20, 2012 MOS Stock Buy
January 30, 2012 V Option STO Weekly
January 30, 2012 V Stock Buy
January 30, 2012 RVBD Option STO Monthly
January 30, 2012 RVBD Stock Added
January 28, 2012 HAL Option Assigned Weekly
January 28, 2012 GMCR Option Assigned Weekly
January 28, 2012 AAPL Option Asigned Weekly
January 28, 2012 MS Option Assigned Weekly
January 28, 2012 MOS Option Assigned Weekly
January 28, 2012 V Option Assigned Weekly
January 28, 2012 BP Option Expired Weekly
January 28, 2012 AXP Option Expired Weekly
January 28, 2012 GOOG Option STO Weekly
January 28, 2012 DE Option Expired Weekly
January 28, 2012 NFLX Option Expired Weekly
January 27, 2012 RVBD Option STO Monthly
January 27, 2012 RVBD Stock Bought
January 26, 2012 FMCN Option STO Monthly
January 26, 2012 FMCN Stock Added
January 26, 2012 MS Option STO* Weekly
January 26, 2012 MS Stock Added
January 25, 2012 ZSL Option STO Monthly
January 25, 2012 AXP Option STO Weekly
January 25, 2012 ZSL Stock Added
         
         

  

 

 




































 

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Copyright 2012 TheAcsMan

Empty Nest






I love the “empty nest.”


I don’t get all the people who bemoan the fact that their children have made lives for themselves. These days that isn’t terribly easy to do, so instead of being saddened, it seems that pride is called for when looking at the empty bedrooms.


And the cleaner house. And the lack of towels and socks strewn all over the place. And the discovery of unknown sleepover friends. And the milk returned to the refrigerator.


Ah, empty nest.


Literally within days of the second of our two boys leaving our home, my wife had his bedroom painted pink.


There was no mistaking the message, yet she’s the sentimental one and the one with the parental instinct. I would have chosen nature’s way and just eaten the young before they had the opportunity to suck all life out of us.


This past Saturday evening we went to the house of some friends for a “planning session.” We’re traveling together to Europe in September, literally minutes after their nest becomes seasonally empty.


They have the right idea.


Empty NestDon’t get me wrong. I love my kids and am very happy when they come for a visit, have dinner with us or call.


I’m also happy when they leave.


There are lots of other things that make me a bad person. Those feelings will just have to stand in line.


When I see Facebook postings, as I did this morning from my oldest son who is currently in Cambodia, I’m glad that he’s not here for me to look directly into his face. 


“Got my first massage today. After around 45 minutes she told me to turn over and giggled. She then flipped on a TV and played me the last fifteen minutes of “Homeward Bound”. Incredible Happy Ending.”


At least this way, I don’t have to ask if the happy ending was related to the movie.


Sharing information like this so readily makes me appreciate how Facebook may end up being the $100 Billion IPO that Friday’s breaking news indicated. Getting that kind of information from Cambodia in real time is priceless, although the “happy ending” may have put my son back an extra few thousand Cambodian Riel.


At more than 4,000 Riel to a dollar that IPO is going to be immense to the man on the street in Phnom Penh.


The bottom line is that my kids are always welcome to come back home at any time and for any reason, even if there are guns blazing.


That’s life and it may be what ultimately distinguishes us from the animals. What other species has members of the younger generations returning to the fold?


Despite the fact that the Supreme Court has defined corporations as being indistinguishable from individuals, in the corporate world it really isn’t that easy to come back home.


About 4 years ago I wrote about Michael Dell’s return to take over the faultering enterprise.


From a shareholder’s perspective four years is long enough of a time to say that it hasn’t really worked out that well, unless you take the position that without the return of Michael Dell the company would be further engulfed in the cesspool that the computer commodity business has become.


I’m always amused when analysts suggest that it’s too early to tell how Dell’s second tenure is working out.


Dell has a special place in my heart because it is the very first stock that I sold at a loss after I had start6ed utilizing a covered call strategy. At some point it dawned on me that the number of option cycles necessary to make me who again may have exceeded my life expectancy.


That may be the true definition of “dead money.”


With Jerry Yang’s re-departure from Yahoo! that chapter has at least been been re-closed.


On the other hand, two notable exceptions, Charles Schwab and Howard Schultz do show that the return of a founding father sometimes is just the right tonic for a floundering business. Neither of those two relied on a strategy of lower pricing to regain market share, as Schwab is more expensive than its peers and Starbucks is in a class all by itself. Instead, they just restored the cache through inspired leadership.


A statistical analysis shows that a surname begininng with the letters “Sch” is highly correlated with a successful return to the helm once left behind. Maybe it has nothing to do with inspiration or vision.


When it comes to stocks, I’m always happy to welcome back home, other than for the few that are dead to me.


Dell.


Just like people in your life, they bring you joy and then they can disappoint, as well. Hopefully, when it’s all said and done, the net result is enjoyment.


Barely a week ago, I had my shares of Riverbed Technology assigned. Riverbed is one of those companies that I have, more or less owned continually over the past four years, with the only respites coming due to assignment.


According to the Employee Benefits Research Institute, at my current age, the average person has as much saved up as RIverbed Technology has generated for me in options premiums since August 2008.


Normally, I would have expressed the number in terms of my “1964 Color TV Metric,” but I wanted to be a bit more obscure on this one. I doubt that any reader is going to do the minimal research to figure out how much that figure is, but RIverbed Technology has always left me with a “happy ending” even when taken away due to option exercise.


Like my son, I like “happy endings.”


I suppose that had my shares not been assigned last week, I’d instead be faced with disappointment upon learning of Riverbed’s plunge coming on expected earnings, but poor guidance and getting caught in the Juniper Networks bad news, just as it was caught up a month ago in Oracle’s bad guidance and statement that it was seeing a slowdown coming.


Sometimes it really is true when your parents told you not to hang out with certain people or groups because you’re likely to get into trouble.


Riverbed travels with a volatile crowd and gets carried along for the ride, especially when it’s a downward ride.


By the same token, sometimes it’s true when you told your parent that it really “wasn’t my fault.”


But I was more than happy to welcome RIverbed back into my empty nest.


After all of those years, there’s a place in my heart, even though this is all supposed to be an emotion free zone.


With shares down a bit more than 20% in the aftermath of the earnings release, it was time to re-open the doors.


Now if it was your child returning to the roost after a week you’d probably want to do everything you could to get them right back out the door and give it a real chance. That’s the advice you’re given when sending your kid off to school to be away from home for the first time. If every kid who moaned about wanting to come home after the first week of life in the dormitory, college campuses would be ghost towns.


But look, even a parent who always gives their child the benefit of the doubt gets wary at some point and takes steps to protect themselves and their interests.


For me, that some point was immediately, as that’s how long I waited to sell the monthly call options despite having still three weeks to go until expiration and further price appreciation.


Or decline.


I love Riverbed, but its unpredictability makes me appropriately wary.


Invcreasingly I’ve come to rely more on selling the weekly variety of options, but sadly, there aren’t any for Riverbed.


The monthly options make me feel more like a parent that’s looking down the road and seeing the empty nest still 20 years away. Those weekly options are just great for feeling the grip of servitude being eased in the very near future.


By the time the days’ trading settled out, my shares were already in the money.


No matter. Even if it all gets said and done tomorrow, it would end up as a 4.8% gain for the three weeks of putting up with the equivalent of dirty towels and hidden away beer cans.


ANd I know that someday, maybe someday soon, it will be time to say goodbye to RIverbed once again.


But we both know that we’ve gone through the motions before and we both know that there will always be room for an old friend that’s almost part of the family.


The empty nest is great, but the nest was pretty great, too.


 


 






 

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Recent Trades Security Type Action Type
January 28, 2012 HAL Option Assigned Weekly
January 28, 2012 GMCR Option Assigned Weekly
January 28, 2012 AAPL Option Asigned Weekly
January 28, 2012 MS Option Assigned Weekly
January 28, 2012 MOS Option Assigned Weekly
January 28, 2012 V Option Assigned Weekly
January 28, 2012 BP Option Expired Weekly
January 28, 2012 AXP Option Expired Weekly
January 28, 2012 GOOG Option STO Weekly
January 28, 2012 DE Option Expired Weekly
January 28, 2012 NFLX Option Expired Weekly
January 27, 2012 RVBD Option STO Monthly
January 27, 2012 RVBD Stock Bought
January 26, 2012 FMCN Option STO Monthly
January 26, 2012 FMCN Stock Added
January 26, 2012 MS Option STO* Weekly
January 26, 2012 MS Stock Added
January 25, 2012 ZSL Option STO Monthly
January 25, 2012 AXP Option STO Weekly
January 25, 2012 ZSL Stock Added
         
         

  

 

 












 

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Copyright 2012 TheAcsMan

A Test of Faith






You often hear stories about deathbed conversions or returns to faith near the moment when there’s not much left to lose by professing one’s faith.


So what if an unexpected profession of faith leaves your followers and fans behind in a world of even greater uncertainty?


Screw them. When you see the white light, it’s every man for himself and the adoption of the Captain Schettino rules applies, whereby woman and children have to fend for themselves while the captain of the ship trips his way past those pearly gates ahead of the rest.


Who knows, there may be limited seating.


A Test of FaithMany famous and infamous people have purportedly had deathbed conversions, including Darwin and Stalin, but the reports of other such conversions may just be wishful thinking or generated for proganda purposes alone.


Based on the appearance of the term “ProShares UltraShort Silver ETF” in the word cloud that accompanies this blog you might be lead to believe that I worship at the feet of some silver idol.


Not really, but you would be right to have that suspicion, as it does seem to appear with great frequency.


By the same token, the constant “God Damn” refrain doesn’t necessarily reflect belief in a diety.


I’m not particularly religious, although I don’t know if I’ll be one of those undergoing the end of life “seeing of the light” experience.


At the moment, there is a 24 hour “Yahrtzeit” candle burning in our household, as is the Jewish tradition to mark the anniversary of a close relative’s passing. Still, nothing really religious, just adherence to tradition and maybe trying to keep my options open in case “The Big Man” chooses to exercise an option over whether those last minute attempts to enter the Kingdom will be honored.


Szelhamos, who wasn’t particularly religious would probably be pleased that he’s remembered. In the slight chance that such a possibility exists, then “why not?”


My sister started a Facebook page for our elementary school, a Yeshivah in The Bronx.


If you’re not familiar with the term “Yeshivah,” apparently based upon the remembrances of those sharing on Facebook, it is alternatively a wonderful place of learning and a wonderful place for the expression of sadistic and irrational behavior by Rabbis.


I went to grade school when corporal punishment was still permitted and even encouraged by parents.


Other than one particular Rabbi in the third grade, whom I credit for teaching me to behave myself in class, I don’t really have the same kind of memories. I learned to behave because I valued not having my knuckles pounded by the edge of a wooden ruler.


My sister recently asked the group of about 100 alumni of the now defunct school a question regarding faith. She asked how they would currently describe themselves in that regard.


The response covered the gamut from atheist, to converted to orthodox.


Faith undulates, as well. Look at Bob Dylan. It can run hot or cold as the moment sees fit.


Look at me.


Even among the Amish, there’s an expectation that thre will be a time to explore and to question the path set out for their lives. The ultimate expectation is that they flock will return home and forever stay on the righteous path.


Which gets me back to silver, the lesser of the precious metals.


Remember, no one of any repute staked his life and reputation on trying to turn lead into silver. The Golden Calf was gold, wasn’t it?


Right now, despite the relatively small position that silver has in my portfolio, in the form of an inversely leveraged ETF. it’s taken an unduly prominent position in my writing and fretting.


Silver has been like the devil or the snake in the Garden of Eden.


One of my very basic tenets has always been to avoid speculation. Nothing defines speculation like precious metals and leveraging on top of that.


Yet, Silver has also tested my other core tenet.


Avoid greed.


All throughout history the precious metals have done that to mankind.


In the case of the ProShares UltraShort Silver ETF, the rich call option premiums are snake-like enticing and have been part of a core strategy for me the past 6 months.


Just grab those premiums and sit back in the faith that silver will undulate.


But over the past two weeks my faith has been tested as silver keeps going up and up and the ETF, as result, keeps going down and down. That’s in real distinction to its pattern over those previous six months when it was up and down and then up and down againa nad again.


That’s a pattern that I could live with.


So while the market has been doing very well in 2012, I’m finding myself in an uncharacteristic position ever since I adopted the aggressive call option writing stratgey so beautifully described in wannabe Award winning book, Option to Profit.


That position is one that’s trailing the S&P 500’s performance for the past three weeks.


That will cause a crisis in faith.Scratch that. Ha caused. Make that “has caused.”


As anyone who follows trends and popular opinion, you will know that once something appears on the radar screen, that tends to be the kiss of death.


In the case of precious metals, everytime a gold bar has found its way onto the front cover of TIME magazine, that spelled the end of the bull market.


Crocs? Same.


Last years’ winning mutual fund sector is pretty much always this years’ dog, and not in a good way.


In the case of the covered call writing strategy, the proclamation by Barrons Magazine that it was the only winning strategy may have just been the kiss of death.


The problem with getting older is that it’s a bad time to lose faith, especially if you are by nature one who sees a role for faith in all aspects of life.


The difficulty comes in the fact that it’s hard to put faith into something new, unless you happen to be a at death’s door, in which case there’s not that much time to mull over the options.


So it’s very distressing to think that an aggressive covered call strategy has run its course, or is just not the right strategy for the moment.I’ve always understood “I want a new drug,” but not “I want a new faith.”


Mind you, questioning faith is not a very good thing to do while enrolled in Yeshivah or any other religious organization.


Faith requires faith.


Not questions and certainly not doubt.


As far as the covered call strategy goes, the potential for underperformance during an unbridled bull market isn’t surprising. That’s just the trade off that you make for accepting the options premiums. You have to give up something, especially if you;’re selling near the money options.


I get that and that can’t shake my faith. Despite the fact that the premiums may be the Devil, a dalliance doesn’t undermine faith. It may actually enhance it.


But still….


It is about the money and the bottom line.


In the case of the ProShares UltraShort Silver ETF the problem really hasn’t been its sustained drop. Sure, its been distressing, but it hasn’t been the root cause, because there have been plenty of sustained drops over the past few years and those have been weathered pretty well.


The problem has been that since the new option cycle began this past Monday its done nothing but go down and I haven’t found the opportunity to hedge the positions.


The last time I owned a naked stock for more than a day or two was during circumcision and maybe during college streaking days.


How convenient. I can blame timing and circumstance for the failing and concurrently help to sustain my faith.


But in reality, it was greed that came into play.


Yesterday, before the Ben Bernanke press conference, both gold and silver were giving back some of their gains and I was getting ready to sell call options on a portion of my shares, which were all purchased at varying price points.


But greed convinced me to wait for an even greater drop in silver prices before making the hedges come to life.


Greed is the Devil. The time never came.


Greed is what destroys faith, if allowed.


The only way to fight evil is with faith and in this case, avoiding the use of margin by usury loving bastards.


Check and check.


Crisis averted.


 






 

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Recent Trades Security Type Action Type
January 26, 2012 FMCN Option STO Monthly
January 26, 2012 FMCN Stock Added
January 26, 2012 MS Option STO* Weekly
January 26, 2012 MS Stock Added
January 25, 2012 ZSL Option STO Monthly
January 25, 2012 AXP Option STO Weekly
January 25, 2012 ZSL Stock Added
         
         
         

  

 

 

 

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Copyright 2012 TheAcsMan

What the Hell? (Part 2)

“What the Hell (Part 2)” bears no relationship to “What the Hell” from October 2011, except for maybe the sense of misplaced umbrage..






Most people go through two stages of life when they really like certainty and predictable patterns.


Really young kids and really old people. Both tend to get very cranky when their schedules are thrown off or they don’t get what they were expecting when they were expecting.


I’m neither of those demographics, being uncomfortably in-between, but I do need the predictability in life to keep my balance intact.


I, too, can get cranky.


What the Hell?For as long as I can remember, ever since I’ve been interested in the release of the  “Federal Open Market Committee” (FOMC) statement on those Wednesdays, they have one of their eight annually scheduled meetings, the statement has been released at 2:17 PM.


The regularity of the timing led me to scoff at the reports that would cite the release as being anticipated at 2:15 PM.


Amateurs.


I never particularly cared why they chose an odd time, perhaps because it is a prime number and, after all these are economists and numbers wonks, but that was the routine.


By contrast, I do care why Comedy Central starts many of their shows at bizarre times, yet I’ve never been able to uncover an answer. I doubt that the prime number theory applies. Math is frequently not a strong suit for those in the entertainment end of the entertainment business.


In fact, I’ve always been so attuned to the FOMC announcement that it became a reason for regular party giving with a countdown to 2:17 PM among me and my many friends and admirers, although most of the time it was just me.


And by most of the time, I mean “always.”


Comfortably seated at 12:28 PM, the characteristic voice of CNBC’s Hampton Pearson cut in with a reading of the statement.


My first thought was that Pearson had gone rogue and decided to flip the middle finger to the embargo on the statement and  decided that he alone would control the markets.


I thought we’d hear doppler like screams coming from Hampton Pearson as he was being hauled away by SEC security people further away from the microphones.


But no.


How did I not get this message? The Cheetos aren’t going to eat themselves now that the sense of party had been replaced by the sense of outrage and feeling of betrayal.


The announcement came with no unusual fanfare, just the usual post-release commentary, which hasn’t been especially insightful for the past year or so, as nothing changes.


With today’s report, the expectation is that there will be continued “no change” until 2014.


What did change were the prices of gold and silver which had opened the day with a long overdue drop, albeit small. That mad me happy, as I have a significant position in the ProShares UltraShort Silver ETF and that’s been getting brutalized recently. Even worse, I’v had only very limited success in writing the richly priced call options on portions of those positions.


Sadly, that early afternoon reversal was really stunning.


But still, the academic question is “what the hell?”


My personal belief is that the FOMC got spooked by the recent CNBC series on CNBC where Steve Liesman so capably concurrently portrays the Federal Reserve chairman, a dovish and a hawkish member of the committee.


Probably wanting to undercut Liesman’s growing influence and popularity with the spot on portrayals, right down to the obligatory hawkish bow tie, they took pre-emptive actions. Although, the purely fictional basis of the meeting as portrayed by Liesman was made clear by the lack of a well trimmed beard on his Federal Reserve Chairman figure.


So we’ll never know if the character was based on anyone of importance. My guess is that it could have been Ben Bernanke, especially since Liesman didn’t don a toupe.


With lots of hopeful eyes, including my own, focused on the market this morning in anticipation of a strong open following Apple’s great after hours price pop, there was just a prevailing yawn.


That changed after the FOMC announcement.


What didn’t change was the Google drop. For some inexplicable reason it was very weak today. The only news out was that it was planning to add more emphasis on Google+ in its search results. Apparently, that uncovered some critics who believe that will clutter the results with less relevant information that may have come from, say, Twitter, instead.


That and some Privacy Policy stuff. If that leads you to switch to Bing or Yahoo!, then Google probably didn’t really need your business, anyway.


With Google recently deciding to not pay for the Twitter API feed necessary to populate its results, they must have some reason to believe that Google+, even in its cranky infancy may be a reasonable proxy to the Tweet, at least enough so so satisfy the needs of people requiring 5 minute old information.


You know, the ind that has been tested, verified and validated.


Does anyone really believe that if there was an apparent adverse effect on the quality of search that Google wouldn’t toss out Google+ in a heartbeat or at least ante up the money to access the Twitter data? It hasn’t exactly shown allegiance to its own “forever in beta” offerings over the years, so it wouldn’t be unheard of to see them do an about face if it jeopardized the profitability of search.


It’s all about the search.


Now what I’ve spent the day doing is searching for “mea culpas” from any of the “talking heads” that yesterday warned about Apple’s typical large price drop after earnings were reported.


To distill their comments to its most basic essence, you would have to have been an unmitigated idiot to consider picking up shares in advance of earnings.


As I mentioned yesterday, the unanimity of those reports helped to scare me straight. They also helped me realize that I’m not quite the bad boy rebel contrarian that I thought I was, since that should have been a clear signal to buy more shares.


So it came as no surprise that my search turned up no results.


What the hell?


No one scratched their heads to offer up anything in response. “Yeah, I missed that one. My bad,” would have been sort of nice and refreshing.


Certainly an apology isn’t needed, because clearly, two well versed people can look at precisely the same information and come up with competely different conclusions.


The emphasis on the history of Apple’s share price plunging immediately after earnings release is more support for the blog from earlier this week that “Experience is Meaningless.”


Basing an opinion, however on the fact that over the past year Apple shares had plummeted each time after release of earnings, is akin to basing your betting strategy on the fact that the last four spins of the roulette wheel turned out to have been “black.”


The only lesson learned is that no one has really figured out a better way to put pants on, so until that time, don’t get scared straight from someone whose fly is down at least half the time.


What did make sense, although I didn’t do so, was a $420 straddle, with the contract expiring this Friday. Either way, as long as the movement was big, there’s a winner to be had, but I doubt that I would ever do that, since it’s not in my core DNA to buy calls or puts.


I may need to re-think that intransigence, especially when it comes to those companies that have a history of big moves in response to earnings.


But then again, why wait for quarterly earnings when I can go to a casino seven days a week?


At least there, I can be served a free drink to help soothe my crankiness and might even find some mistakenly tossed out voucher.


The odds of that happening is much better than picking up a gem from the “heads.”


Told you I get cranky.


 






 

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January 25, 2012 ZSL Option STO Monthly
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Scared Straight






Given the fact that we’ve never even been able to teach any of our puppies any trick at all, the saying “you can’t teach an old dog new tricks'” while perhaps not true in every situation, is definitely true in my household.


Maybe I can blame that on “Low T,” as it seems that just about everything else is being piled on its shoulders. Besides, that would make sense, especially if both trainer and trainee suffered from that malady.


In Laszlo’s case, his descent into “Low T” came fairly suddenly, so I do  wonder whether his reluctance to learn any tricks is just a manifestation of his passive-aggresive behavior.


Although I’m at the point that I’m not likely to learn much new anymore, I’m getting increasingly proud of my ability to adapt, if not learn.


I’ve certainly recognized my advancing limitations as I’ve completely given up on the idea of learning even the most simple of technical analyses.


I don’t even do cost averaging anymore, but I continue to be able to count by “fives.”


But over the past few years, I’ve noticed the ability to make some behavioral changes as push would come to shove.


Monday was a good example.


Armed with lots of cash due to the assignment of about 60% of my portfolio, in the past, I would have felt compelled to burn through all of the funds, regardless of where prices were headed on that day.


If they were heading down, that often was fine, as given the market’s behavior, there would be a predictable bounce upward sooner rather than later and then why not buy at a presumed bargain price?.


On the other hand, there really was no rationale reason to rifle through the money chasing rising share prices.


But I did, over and over again.


Not yesterday, though.


Restraint and judgment helped to start this morning with a decent amount to still play with, looking for what appeared to be bargains that weren’t there yesterday..


Had retraint not been there, I would have picked up shares of Deere at about $2 more than where they were purchased today.


Scared StraightI felt good about that, although that’s just a small step resuting in a small advantage. Mostly, I’m proud of that small step because I did it all on my own.


Learning how to exercise restraint to prevent premature speculation is a big achievement.


But sometimes you need others to help you and sometimes they have to take drastic actions to scare you straight.


In my case, I needed to be scared straight into inaction.


Do you remember that series of specials describing the seemingly drastic and harsh measures taken to deal with hardened bad boys. Lots of yelling, lots of crying and then success.


Okay, maybe a suicide or two, as well, but by the end of the episode, all we saw wa success.


There was probably a lot of bad breath, too. That would get even the most hardened to go straight.


Another “dead ender” rescued from a life or misery, crime and dependence on society, at least until the cameras were on.


By the way, I do feel a need to remind readers that the version of “Scared Straight” that I’m referring to is not the same as practiced by Marcus Bachmann.


But yeah. That’s me. Bad boy to the core. I needed the drastic kind of medicine.


In the past, I’ve written about how investors need to avoid the emotions of greed and fear. I’ve also thrown in “envy” and its derivative “fear of missing out.” Not really emotions, but they’re something.


But now I think it may be alright to be afraid.


All it took was being scared straight by what could have been disastrous results following some reckless behaviors taken during the last earning’s cycle in October 2011.


I’ve chronicled it before, but in quick succession I bought shares of three momentum stocks: Amazon, Netflix and Green Mountain Coffee Roasters.


By itself, that’s probably not a terrible thing to do, although doing it all at once is a little harder to justify.


In hindsight, looking at the charts, which I rarely do, they were hitting their peak levels, with the exception of Netflix, which had already come down by 50% or so.


I could probably rationalize those purchases as wanting to satisfy that small portion of me that still likes to speculate, as my remaining expression of living dangerously.


But the really stupid thing to have done was to have purchased those shares right before earnings were released. To be fair, they did seem like “screaming buys” at the time.


And people to respond to screams, sometimes even exiting their own behavioral DNA.


But you know how it is. The people that need to be scared straight are the ones that think they can take an easy ride to a good life, without paying the consequences.


Although the call options were great immediately before earnings, the reulting screaming free fall in the share’s prices made it a real uphill climb in using successive week’s option sales to try and cushion the drops.


Lesson learned.


So here I was this morning, with no one around to scream at me, no one to watch over me so that I don’t become one of those recidivist statistics.


The cash that remained wasn’t red hot, as I’ve learned that a level of restraint cools it off, bit it was still smoldering.


I looked at share prices of Apple and Amazon and so much wanted to add to the former position and re-establish the latter.


“Money, money, money.” That was the chant that I heard being screamed right at me.


That is until I realized that Apple was reporting its earnings after today’s close and Amazon just a few days later.


I hemmed, I hawed and then circled around the coffee table a few times, especially after salivating over the weeklycall premiums.


Then, to complicate things even more, every single commentator and analyst pointed out that over the past four quarters, at least, Apple has plummeted after announcing earnings.


Being the contrarian, to me that only mant that Apple would go up after announcing the latest numbers.


There they were. The proverbial angel and devil, one on each shoulder.


I wanted it so much, but I didn’t want to go back into the dark place.


Instead, I went for the “bargain” priced Deere and picked up more shares of Morgan Stanley, which also goes ex-dividend in a couple of days.


I don’t know what gave me the strength to resist the temptation this time around and only time will tell how long I can keep behaving in a judicious way.


Maybe it was a testosterone surge or maybe it was the fear.


Maybe I should try screaming at our dog and give him a shot ot testosterone


 






 

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Today’s Trades Security Type Action Type
Januaty 24, 2012 DE Option STO Weekly
January 24, 2012 V Option STO Weekly
January 24, 2012 FCX Stock Sold  
January 24, 2012 MS Option STO Weekly
January 24, 2012 MS Stock Added
January 24. 2012 DE Stock Buy
         
         
         

  

 

 

 

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Under the Radar






This Monday morning, which was just a dreary and cold mid-Atlantic day, there wasn’t too much to cheer about.


Over the past three years, I’ve been drafted into the culture of football and now find myself, somewhat uncharacteristically, actually caring about games.


Culture. Football. Talk about oxymorons.


Just a few short years ago my only foray into football would have been to watch about a half’s worth of the Super Bowl and take the occasion to excuse the non-stop ingestion of deep fried anything.


I looked at the Super Bowl as being Saturated Fat Sunday.


Now, I even have four pro football games under my belt, although if given the opportunity to go to a game, the weather is still a factor in my decision process, as well as who’s going to be singing the National Anthem.


I’m still far from a fanatic. I even turned off the New York Giants game last night during overtime and never even bothered to go down to the basement and turn on the big screen TV to get a more real-life feel.


It’s not as if I had to be up early the next morning, it’s just that I was probably depressed because Simpsons episodes had been pre-empted in favor of the football game and I’d already seen that eposode of Chappelle about 300 times.


I did take the Baltimore Ravens loss harshly, though, particularly knowing that my kids are big Ravens fans. The manner in which they lost the opportunity to tie the game and force it into overtime was especially hard to accept, as an easy field goal was not as advertised.


The big news this morning was that loss and the resignation of the co-CEO’s of Research in Motion and the subsequent appointment of a new CEO.


The two items are not in any way related, but then did become so.


Under the RadarThe question of the day on CNBCm tied it all together as they asked who likely got more sleep last night, Billy Cundiff, the Raven’s kicker or Thorsten Heins, the new RIMM CEO?


Ordinarily, being named new CEO is a pretty positive thing, unless you’re Leo Apotheker.


In this case the market didn’t react terribly kindly to the announcement of Heins’ ascension, especially since he was considered to be somewhat of an insider who may have also been asleep as the ship was sinking.


Oh, and the accent didn’t help either as the prevailing joke was that RIMM hired Leo Apotheker’s son.


I don’t know what kind of jokes are circulating today regarding Cundiff’s miss, but I doubt that there are many. People take their football more seriously thatn they do their stocks.


One was tragic, the other just business going about business.


Today would have been a good day for both of those guys to have stayed under the radar.


I’ve always liked that philosophy, although as I’m getting older, I tend to be moving toward the draw of the radar’s waves.


In fact, what a great opportunity to remind you that there’s still time to vote for me, repeatedly, in the “Finance” category of the “Shortie Awards.” Earlier today I was tied with Suze Orman, so I’m hoping that with your help I can pull ahead and parlay the victory into my own branded debit card.


One of my sons is reading Orwell’s “1984.” about 35 years after I read the book and truly felt the fear of that kind of future society. I don’t think that he senses the invasion as much as those of my generation who actually valued privacy and even anonymity.


Too much attention can never be a really good thing, despite the adage that “there’s no such hing as bad publicity.”


I certainly understand why there are times in life that you do want to elevate your profile, as you can’t win a popularity contest unless people know who you are.


Jon Huntsman?


Even Buddy Roemer didn’t know who Jon Huntsman was.


I suppose that it is possible to win a popularity contest if people just check the wrong box, but who’s to say that Patrick Buchanan and Ralph Nader weren’t wildly popular amongst elderly Jewish voters in Florida?


Maybe Mitt Romney will be hoping for that kind of Florida repeat in Florida. Maybe he should tell people that he’s Jon Huntsman and then offer to check the boxes on their ballot for them.


When it comes to stocks, I don’t particularly like it when the limelight is on a stock that I own.


Nothing good comes of it and if it does, it’s just a set up for a fall, so best to abandon ship. Good news is a good time to bail and take profits.


These days that easier to rationalize as we’ve learned that captains no longer need to feel bound to go down with the ship.


Although I don’t like the spotlight to be on my shares, I definitely don’t want the ones that dwell with the mushrooms in the basement. It’s hard to sell options on shares of companies that no one really knows about, so there has to be a balance.


Stick with boring household names.


Earnings season always represents a problem, even for these boring household names, in that you just know that the spotlight is coming and there are often irrational reactions to the news. After last week’s wild reaction to Google’s disappointing numbers, I took that as a good opportunity to pick up shares today, once attention was diverted elsewhere.


Like RIMM.


Of course, I did learn a lesson following the previous earnings season when in complete arrogance, which comes with being on the radar screen, I purchased shares of Amazon, Netflix and Green Mountain Coffee Roasters, all in advance of their earnings reports.


Although the losses on the underlying shares were really softened by the repeated options sales, I conveniently disregarded opportunity costs, when I could just as easily have foregone the excitement and invested in old favorites, like Microsoft or JP Morgan.


What I particularly don’t like is when an analyst gets on the air and spouts an opinion and then you see an immediate impact on the streaming ticker.


Once their on air, they don’t really care terribly much about the inherent worth of their recommendation. What they care about is the inherent worth of their appearance and how much additional value is added to their personal brand.


As an analyst, the more you’re on the radar screen, the less important is the content that you provide.


As a one time educator, I can tell you that as I got older and better known, my presentations were more about story telling and increasing brand value, than in adding worthwhile content and knowledge.


If you’re expecting to get some really timely news, It seems highly unlikely that an analyst, who’s being paid for his research and reasoned opinions is going to offer an opinion, but have his appearance preceded by a “Breaking News” banner.


Chances are pretty good that whatever that opinion is, whether it’s valid or not, it’s already well established on the radar screens of those that own the radar.


In keeping with the totally unrelated Heisenberg Principle, the attention paid to the shares creates a new reality. Sooner or later the real reality has to return, but for the individual investor the reality is often the opposite of the dream and the anticipation.


This an example of just how wrong the expression “why pay, when you can get the milk for free?” is, at least in regard to investment advice.


“The best things in life are free”?


Sure. In that case, I need to start an outrageously high subscription charge to read this blog.


Someday, probably someday soon, the heat and attention will be off Billy Cundiff. Like with the late Joe Paterno, it seems a sad trickle down of our very basic human nature that the most recent event occuring in someone’s life paints the majority of the picture.


We have probably heard the last of Billy Cundiff as a Baltimore Raven. For him, the radar scrutiny will soon be a thing of the past.


For Heins, it’s just beginning.


Looking at it from that perspective, I suppose that if we had to be on the radar screen it’s best to still have a long future of scrutiny ahead or at least to be able to choose at what point the rader will be turned off.


But for me? I’ll save you the trouble.


I’m right here, sitting on my La-Z-Boy and plan to be here for a long time to come.


 


 

 

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Today’s Trades Security Type Action Type
January 23, 2012 GMCR Option STO Weekly
January 23, 2012 ZSL Option STO Monthly
January 23, 2012 ZSL Stock Added
January 23, 2012 GMCR Stock Bought
January 23, 2012 V Option STO Weekly
January 23, 2012 V Stock Bought
January 23, 2012 HAL Option STO Weekly
January 23, 2012 HAL Stock Bought
January 23, 2012 FMCN Option STO Monthly
January 23, 2012 FMCN Stock Bought
January 23, 2012 AXP Stock Bought
January 23, 2012 MS Option STO* Weekly
January 23, 2012 NFLX Option STOP Weekly
January 23, 2012 CHK Option STO Monthly
January 23, 2012 GOOG Option STO Weekly
January 23, 2012 GOOG Stock Bought
January 23, 2012 RIO Option STO onthly
January 23, 2012 AAPL Option STO Weekly
January 23, 2012 MOS Option STO Weekly
January 21, 2012 RIO Option Expired
January 21, 2012 VMW Option Assigned
January 21, 2012 SLM Option Assigned
January 21, 2012 RVBD Option Assigned
January 21, 2012 MSFT Option Assigned
January 21, 2012 MOS Option Assigned
January 21, 2012 AXP Option Assigned
January 21, 2012 BP Option Expired
January 21, 2012 AAPL Option Expired
January 21, 2012 CAT Option Assigned
January 21, 2012 DD Option Assigned
January 21, 2012 DOW Option Assigned
January 21, 2012 FMCN Option Assigned
January 21, 2012 GMCR Option Assigned
January 21, 2012 CHK Option Expired
January 21, 2012 HAL Option Assigned
January 21, 2012 ZSL Option Expired
January 21, 2012 S Option Expired
January 21, 2012 TXT Option Assigned
January 21. 2012 GS Option Assigned
 

  

 

 




































































































































 

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Experience is Meaningless






Everyone knows that “history repeats itself.”


That must explain why we keep making the same mistakes. After all, since we all know that you can’t change history, why even bother?


Unless you’re Newt Gingrich. In that case revisionism seems to work, as long as he remains the victor and in charge of re-writing history.


For example, Newt’s current position, which seemed to make hostess candy Crowley’s eyebrows rise about 5 inches, is that his congressional reprimand for ethics violations occured only because he convinced Republican members to vote for the reprimand so that they could get back to the business of working on a balanced budget.


He credits himself with getting the Congress back to work and selflessly sacrificing his reputation.


After all, is there any politician that wouldn’t put nation before self?


History tells us that the victor writes history until the next victor comes along.


Once you call yourself an “historian,” you get a free pass and can alter immutable laws of time and place and make the details of the past fit nicely into the current version of the past. Again, being ascendant helps.


But we’re also said to be able to learn from history and especially to learn from our mistakes. In fact, “fool me once….” speaks to the expectation that we won’t make the same mistake a second time.


Sometimes, though, the past may lead us down the wrong path.


My guess is that it would be a grave mistake, perhaps literally, were Newt Gingrich to ask Callista to accept an “open marriage.” The fact that she reportedly supported the concept before their marriage probably has little predictive capability in 2012.


Groundhog DayThere’s no greater indicator of our pre-occupation with the concept of changing the past and our mistakes than the fact that the single most aired movie on broadcast television and cable is “Groundhog Day.”


I may have made that statistic up, but right now, I’m the one re-writing history.


Had we really been able to learn from the past there would have been Stephen Tobolowsky film festivals competing with Sundance and Cannes.


So clearly, we are all idiots, but at least Tobolowsky is front and center on Twitter and forms the basis for a more hopeful view of the future.


Not so long ago, only the spoken word was available to document our history and experiences. Life spans were short and there were people whose sole reason for existence was to maintain a culture’s hold onto its past and pass it on to the next generation.


During those days mistakes were often fatal. That’s a strong motivator to not repeat some dead guy’s mis-step.


With advancing life spans, the written word, film and video records and now digitized data available, one would think that we’d be pretty good at observing the past and using the data to accurately predict the future.


To get an idea of how that’s been working out, just go to your local doctor’s office and casually spend some time in the waiting room scanning through some aged issues of TIME magazine and see just how accurate the futurists turned out and how befuddled their tea leaves must have been. Who knew that you could smoke the stuff before reading it?


Interestingly, in the world of technology and start-ups, a past history of failure is far from fatal. There seems to be a real premium when recruiting to find those that have failed on someone else’s dime. The bigger the failure, the better, as it was assumed that the price paid for failure was borne by someone else and that the value of the lessons learned would accrue to the new entity.


Not that I’ve been a political watcher, but it would have been hard to predict for example, that the remaining Republican candidates for the nomination, each of whom tries to portray himself as the only true conservative, have blasted Mitt Romney for being a capitalist.


The attacks against Romney for his years at Bain Capital sounded as if Dennis Kucinich was ghost writing for even Newt Gingrich.


Now, reports that Romney may have been in the 15% tax bracket has the assaults coming anew.


Wolf in Sheep’s Clothing Syndrome? Because those couldn’t possibly be Republicans standing at those podia, at least not based on my experience. What really bothers me is that based on my past history of voting for losing candidates in Presidential elections, I’m likely to end up voting for one of those guys and there may be nothing that I can do about it.


Then, there’s also the famous quotation from George Santayana:


“Those who cannot remember the past are doomed to repeat it.”


That supports the concept that we can avoid making the same mistakes the next time around.


Probably the biggest mistake is to believe that history can, in fact, teach us anything.


The stock market is a perfect example of that.


All throughout the day, there will be a seemingly infinite number of charts shown and dissected on air. For each that makes it to whatever the digital equivalent of the air waves is, there must be an infinite number being studied elsewhere in cubicles, meeting rooms and in presentation halls.


So you would be excused for believing that all of the Ph.D’s would have this thing nailed with one algorithm or another.


And yet, how do you explain ignoring the axiom that warns of staying long in equities over a weekend when there’s uncertainbty on the horizon?


I’m sure that the actual saying is much more pithy, I just can’t recall what it is.


In fact, over the past 37 weeks, I like prime numbers, the Dow has gone up triple digits 8 times on a Friday, counter to the axiom.


And the reward for thinking that experinece was meaningless?


Two of those eight times were followed with up days on Monday.


Let’s see, I think that’s less than fifty – fifty.


Well, I for one, didn’t go long into the weekend, but I can’t give allegiance to an axiom for that. It’s that about 60% of my options contracts were exercised. For the first time in long memory, I won’t own any Goldman Sachs shares on Monday. Gone too are the recent JP Morgan Chase shares that were picked up in a rekindling of an old relationship.


Open relationship, I might add, as dalliances with old friend Microsoft came and went just as quickly.


In hindsight, I picked a bad two weeks to do what I’ve been doing for the past four years with religious fervor.


Besides, when has religious fervor lead us down the wrong path? You didn’t see the Israelites worship a Golden Calf a second time, did you?


They learned from their mistakes.


Common sense would tell me that I should learn from my recent mistake and turn on the “greed” compartment of my brain and forego the options premium income for the meteoric capital gains that history ordains.


What would Stephen Tobolowsky Do?Or I could look at the charts that I disdain and be reminded of the cyclic nature of everything that has true worth and inherent value.


Good companies exhibit cyclic share performance.


So which past is the one that will repeat itself?


I look at the band on my right wrist, “WWTD?”


“What would Tobolowsky Do?


The beauty of asking that question is that there are a couple of hundred roles from which you could derive the answer that best fits your working hypothesis.


Sort of like what politicians do on such a regular basis.


Now please, don’t interpret that as drawing a parallel between politicians, especially those that practice revisionism, to the more honorable practitioners of the thespian arts.


I don’t know Stephen Tobolowsky and certainly no Toblowsky’s were harmed in the creation of this blog entry, but his classic Groundhog Day character, Ned Ryerson, didn’t seem to learn from his past experiences.


Yet, despite Santayana’s unspoken thought that not doing so was the way down a dangerous pathway and despite the smugness of those who believe that we can control our future by mastering the past, Ned Ryerson knew better.


He kept right on smiling, despite obstacles he just kept plugging away and always maintained an optimistic air that made him Ned Ryerson. He was immutable.


What a great lesson. What a great character and performance.


Ned Ryerson showed that the past was meaningless, because there was always today to form the basis for a new past and to create a future not shackled by the past.


 


 

 

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Today’s Trades Security Type Action Type
January 21, 2012 RIO Option Expired
January 21, 2012 VMW Option Assigned
January 21, 2012 SLM Option Assigned
January 21, 2012 RVBD Option Assigned
January 21, 2012 MSFT Option Assigned
January 21, 2012 MOS Option Assigned
January 21, 2012 AXP Option Assigned
January 21, 2012 BP Option Expired
January 21, 2012 AAPL Option Expired
January 21, 2012 CAT Option Assigned
January 21, 2012 DD Option Assigned
January 21, 2012 DOW Option Assigned
January 21, 2012 FMCN Option Assigned
January 21, 2012 GMCR Option Assigned
January 21, 2012 CHK Option Expired
January 21, 2012 HAL Option Assigned
January 21, 2012 ZSL Option Expired
January 21, 2012 S Option Expired
January 21, 2012 TXT Option Assigned
January 21. 2012 GS Option Assigned
 

  

 

 







































































 

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Copyright 2012 TheAcsMan

It’s a New World (Szelhamos Rules Archive February 1, 2008)






 


The original Szelhamos Rules ran for precisely 1 year, from February 2007 – February 2008. This article originally appeared February 1, 2008 on the occasion of an earnings related Google share price plunge and the announcement of Microsoft’s bid for Yahoo!.


As a Google shareholder, I haven’t been very happy lately. In fact, I was upset about some of what I considered to be Google’s disregard for its shareholders even when it was approaching $750. Imagine the rants that are going through my mind now that Google is pointing another $40 points lower in the pre-open following yesterday’s earnings release.


Why exactly were we spending money on space shots?


Focus guys. Focus.


I understand why Richard Branson does it, but Google? Is there something to search for on the moon? Maybe they can use the lunar surface to house their servers in an ecologically friendly fashion.


So the word comes out today that Yahoo received a so-called “unsolicited” bid from Microsoft for $31, a hefty premium to yesterday’s close. It will probably take all of 10 minutes for Yahoo’s board to meet and accept this “unsolicited” offer. But just a few short months ago, Yahoo was at $31, without any takeover rumors propping it up.


And with Microsoft offering Yahoo shareholders a choice of cash or stock, I decided to pick up some shares of Yahoo at $28.50 and immediately sold some February $30 call options on those shares.


I’ll never be mistaken for an arbitrageur, but this seemed like free money.


Considering that Microsoft usually gets a free pass when it comes to anti-trust issues, and Microsoft said that the deal is not contingent on financing, this is a done deal.


As far as the European Union goes, who really cares? Microsoft never really even cared about the operating system and browser bundling debacle a few years ago. They’re smart guys with really deep pockets, who could easily figure out runarounds, while paying any imposed fines.


Those are just the cost of doing business. In the old days, it just would have been in the form of kickbacks and bribes.


Jerry Yang is now off the hook. He won’t be among the legions of ill-fated returning hero CEO’s who weren’t able to resurrect their moribund companies.


The question becomes how will two substandard search engines going to do against Google and will Google reflexively buy the 90% of AOL that it doesn’t already own and doesn’t need.


Google shouldn’t and won’t. But the very thought has breathed a little life into the lifeless shares of Time-Warner.


With all the talk about synergy, the ultimate synergy would be Yahoo paying Google to send Terry Semel into orbit. Maybe the architect of Yahoo’s fall into weighless orbit can help establish Google’s first extra-terrestrial colony.


Years from now, when the history of internet search is discussed, it will be Google that everyone will remember, with a few oldtimers recalling something else being around. What was that other one? Ya Who?


Microsoft’s offer for Yahoo is valued at about $45 billion. Based on what Google paid for its 10% share of AOL a couple of years ago, the remaining piece would be worth about $45 billion, as well.


Last week, I thought that Google might go down after Micosoft announced its earnings and I was prepared to pick up some more shares.


It didn’t happen that way, but at these levels, I’m ready to pick up some more Google shares once I give the market 30 minutes or so to get over some of the initial emotional trades.


In the meantime, the pre-open market rally that was being fueled by Microsoft was then killed by the official jobs numbers. Even though the unemployment rate went down to 4.9% from 5%, the revisions were killers and 100 points just evaporated in a couple of blinks.


A decline in payrolls was not exactly welcome news, but the tends to validate the Fed’s decision to drop rates and may also be validating S&P’s call that the recession started 3 months ago.


In the meantime, a few months ago I had written about Rio Tinto, which is one of my longest holdings. I’ve had shares for more than 10 years. Back then, I wrote that the Chinese weren’t very happy about the prospects of a Rio Tinto takeover and a potential stranglehold on the materials that China needs to keep its engine going and growing.


And today China acted.


They’re picking up a piece of Rio Tinto, together with Alcoa, which had also been rumored as a potential suitor of Rio Tinto. Since I also own shares in Freeport-McMoran, BHP Billiton and Lundin Mining, the trickle down effect is welcome new, especially since this sector has really been beaten up over the last month. How nice that at 10 AM Rio Tinto is up $41, while Google is now down $41.


Yin and Yang.


No pun intended.


The only problem is that I have twice as much Yang as Yin.


Isn’t that always the case?


In the new world, the one that will be a post Google-Yahoo union, Microsoft will surge to an Avis like position in the world of search. They will be a strong, but still distant #2.


$45 billion is a lot to pay to be a runner-up. But sometimes, being the runner-up can put you within a heartbeat of being #1.


No doubt tha’s what America’s mayor has on his mind. Being #2 to the oldest President in history may have its advantages. There’s nothing wrong with the back door, if that’s what you’re interested in, although I don’t think that Giuliani or McCain will consider legalizing it.


With all of this talk about the Bush proposal for an economic stimulus package, my guess is that McCain and Giuliani are all for stimulating your package in the privacy of your own home, but aren’t totally ready to embrace an entirely new world.


The wonders of internet search back this line of thinking.


A Google search for “stimulus package” doesn’t seem to use an algorithm that identifies many economics related sites. Whereas there is still some debate over the nature of the economic stimulus package that should be created, the online community seems to be in near universal agreement that the stimulus package requires batteries.


Maybe Microsoft and Yahoo will be able to get it right.


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Reconnaissance






If you’re a purist, you know that “reconnaissance” is a term that is applied to the gathering of information regarding an enemy. Although typically done covertly, it isn’t considered espionage since it’s carried out by combatants or agents of combatants.


Today started a period of reconnaissance for me, but I really wasn’t trying to gather information on enemies. The great thing about being anti-social is that you usually are short on the enemies side of the ledger as you are on the friends side.


ReconnaissanceReconnaissance today started with evaluating the prospective daughter-in-law population.


As the first half of an 11 hour roundtrip today, I drove to New York City very early this morning to meet my son’s 6 AM flight returning from Israel. He had spent the last 10 days there as part of a great program called “Birthright,” which allows college and recent college graduates to make that trip at no cost along with others.


No strings attached.


When I initially dropped him off to begin the trip, I immediately noticed that within his group there seemed to be a very favorable female to male ratio.


Did I mention that all of the girls were Jewish? Did I mention that “favorable” meant many more females.


The group pictures that were posted online once they arrived confirmed that ratio and the one picture taken after romping through the Dead Sea gave me an opportunity to evaluate birthing stock.


Our evolutionary ancestors reportedly did that instinctively to ensure survival of the species.


Look, I figure if that was an important enough characteristic for our evolutionary ancestors to regard as being important, who was I to try and recreate the wheel?


So excuse me for staring.


Anyway, while the moon was still high in the sky, I had the opportunity to observe other parents waiting for their children also returning from their trip.


All prospective in-laws.


Years ago, probably before the age of 10, I can still recall asking Szelhamos how you could tell if she was Jewish, since the tell tale, albeit hidden physical characteristic that was a sign of the covenant was reserved for the male members of the tribe.


His response was simple, yet took me years to understand.


Nezd meg a segget


He was exhorting me to do reconnaissance of assets.


Clearly, I had no use for the ones that kept the bluetooth firmly attached to their heads and were chattering away for the additional hour’s wait, due to a flight delay.


That was a pretty ungodly hour to be blathering and I still find something unsettling about people that seem to be talking to themselves.


The fact that one of them may have had a cappuccino and had some residual foam around her mouth did nothing to ease my sense of unease.


As a pretty anti-social person, it does take a lot for me to respond to even the most enticing opportunities from polite people. It certainly takes much more for me to initiate any kind of interaction.


Scanning the terrain and eavesdropping on various casual conversations between people that had at least one thing in common, I actually inserted myself into a conversation and then commandeered it as I sensed good stock.


The subject was waiting for her daughter who, after quite a bit of comparing family histories, seemed to be a perfect daughter-in-law candidate.


It was amazing as two perfect strangers casually exchanged so much information, yet what was most encouraging was that the subject fully understood my reason for asking about her bra size.


But before her daughter appeared, my son made his exit from customs first, and as it turned out, my future daughter-in-law Hannah, wasn’t in his group. But no sooner did that news deflate my hopes, than a traveling companion came over and hugged and kissed my son.


She was then met by both of her parents.


I didn’t have the opportunity to do the same level of recon on them as I had on the nameless woman to my left, but they were definitely not on my enemy list and based on the most superficial of mating rituals that I’d observed, warranted consideration.


Mission accomplished.


Following yet another long drive, this time home, I had little energy remaining to pay attention to the markets.


I did take note of the fact that by the end of the day my year to date performance fell slightly behind that of the market.


That’s what sometimes happens when you think of covered calls as your friends and I certainly spent a lot of time with them lately.


In an up market, as we’ve had for the past 3 weeks, they can turn out to be your enemy.


And so, reconnaissance is now in order.


Although perhaps tomorrow will be the hoped for day of a nice drop in the averages, despite Google’s after hours 6% drop, the better than expected earnings from Microsoft, Intel and IBM are likely to offset any weakness on the final day of the options cycle.


Right now, good earnings are my enemy. Funny had that changes, but look at how quickly some shares, such as JP Morgan and Goldman Sachs turned it around this week after earnings were released.


So my reconnaissace will be to scope out the area of available stocks that also happen to be well priced.


Did I mention that they didn’t have to be Israeli companies or even Jewish?


Each of the past 2 weeks I’ve had to replace about 25% of my holdings, but it appears as if now I’m looking at replacing more than 50%.


Collateral damage is expected when selling covered calls, but this month is turning out to deliver unexpected and last minute casualties. Options expiration is like calling a truce. Casualties are always hard to accept, but even more so if they occur right before the truce.


And so, new recruits are going to be need for my buying surge on Monday.


Good luck trying to find “bargains” right now as if just about everything has been running up as of late, so it may be difficult to find shares that have good birthing characteristics and could yield healthy profits in the short term.


Back when I was first getting started with the covered call strategy, I often found myself buying back contracts before expiration and then waking up Monday morning to see that the shares had fallen to levels below where they would have been assigned.


I don’t really look at stocks as enemies, but those acted as if they were just that.


If anything, though, stocks are your friends. You just have to show them a little respect and treat them properly and neither expect too much, nor too little of them.


Part of the “Birthright” program is for the group to spend a couple of days paired up with members of the Israeli Defense Forces, as guides. Military service is obligatory for that small nation and most everyone serves. Obviously, that’s very different from the United States.


It’s likely that very few of the IDF members have ever come across an American participant in the Birthright program who was also in the military, as is my son, who is in the National Guard, while going through college.


That created an additional level of bonding and comraderie for my son.


As it turns out, he referred to one of the young soldiers as his future wife.


Maybe my reconnaissance was unnecessary. Maybe all I really need to do is let nature work its magic.


I’m going to keep that in my mind as we enter the next week or two. Maybe it’s time to embrace a short term bull market and not search for just the right opportunity that reflects price stability and favorable options premiums.


Nah. I’ll just go with Szelhamos’ advice and look for the assets wherever they may be.


 


 

 

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Today’s Trades Security Type Action Type
January 19, 2012 RIG Option Assigned Monthly
 

  

 

 












 

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Life’s not Fair






It doesn’t take many cycles of watching the nightly news to realize that there will never be a shortage of unspeakable tragedies. As soon as you hear about some horrible personal or global event that sends chills down your spine, along comes another, giving you barely a moment to catch your breath.


Unbelievably, each successive wave of bad news just gets worse and worse, yet as we become hardened to the bad news experienced by others, we just channel surf to escape the burden of our emotions.


It’s hard to deal with an unending flow of examples of how unfair the world can be, but the world became an infinitely better place for all that could afford a television with remote control.


For the ones who couldn’t, it’s just like a final nail in the coffin and further proof of just how unfair the world can be when you can’t even shield yourself from news of the realities gong on around you.


Lifes not FairBy virtue of your birth place, by virtue of your DNA and by virtue of where you may be standing at the moment, you may never have had a chance in life.


I mentioned Woody Allen yesterday and his eminently quotable line from Annie Hall, a movie that had more than it’s fair share of quotable quotes.


“I feel that life is divided into the horrible and the miserable. That’s the two categories. The horrible are like, I don’t know, terminal cases, you know, and blind people, crippled. I don’t know how they get through life. It’s amazing to me. And the miserable is everyone else. So you should be thankful that you’re miserable, because that’s very lucky, to be miserable.”


“Fair share?”


Actually, “fairness” had nothing to do with the surfeit of great lines from that movie. There was nothing coincidental about their occurence and nothing was there to pre-ordain their success or failure.


They were all earned.


In that case, life was fair, because there was an appropriate form and quantity of recompense for the uniquely inspired screenplay and movie.


If anything, though, you may argue that the quantity of recompense wasn’t at all fair, because so many more worthwhile actions receive far less financial reward or adulation from the public, like executing a key block that lets a game winning touchdown occur.


No one remembers the guy that sacrificed his well being for the greater glory of someone else who was already standing on a much higher rung of the ladder.


In truth, life isn’t fair in either direction.


Horrible things happen to truly innocents and wonderful things happen to those that may be far from innocent.


We all know the story of Jed Clampett.


By all accounts he was a good, hard working and God fearing man who was an abysmal failure in life. Not very fair, but he was then fortunate enough to blow an oil line while hunting for squirrel or perhaps some after dinner raccoon.


And then you have the likes of Qusay Hussein, son of Saddam, whose only redeeming quality was that he reportedly rarely raped the disabled.


His final moments may have been considered to have been the ultimate in fairness, whereas others would believe that it was unfair that he had escaped the judicial system.


Years ago there was a very popular book, When Bad Things Happen to Good People that sought to explain how that could possibly be the case, in an effort to reaffirm faith among those sensing its impending loss or even questioning the possibility of its very existence.


That book made such a big impact on me that I always cite it, despite the fact that I can’t remember a single argument in the book for maintaining faith when faced with an onslaught of terribly unfair events.


But the title says it all and that’s enough for me.


This afterrnoon I was sitting and staring at my spreadsheet that tracks trades and more specifically option premiums for the current cycle that expires in just 2 days.


If you haven’t downloaded the spreadsheets, you’re missing out on the ability to stare aimlessly at numbers.


I’ve mentioned before that I tend to think of money in terms of a “1964 Color TV” metric. That always puts it into perspective for me. I know that others may prefer the metric that looks at how long would someone have to work in order to buy a loaf of bread, but I’ve always been a 1964 Zenith 25 inch color TV, high radiation emitting, kind of guy.


What really struck me this day was after making some final trades for this cycle, was that the near final tally for the first month of the year was greater than my entire salary for my first real job as a dentist after completing my residency training.


I’m not certain, but it’s very likely that based on 1983 statistics, I may have been in the 1% right out of the gate, although that concept probably didn’t exist back then and certainly wouldn’t have been a position that merited disdain.


Since dentists tend to be “fairly” well paid, even at entry level positions, I think it may be patently unfair that a years’ worth of salary could now be made so quickly by just clicking on a few buttons. over the course of 20 trading days in a month.


For me, everytime I click on the “Submit” button to send a trade order, in my mind, I always see the Google “I’m Feeling Lucky” button.


On the flip side, as I listened to news come out suggesting that Amazon’s new Kindle Fire may prove to be more successful than previously thought, and have watched Amazon’s share price rise by about $12 from where my shares were assigned last Friday, I can’t help but think about the “unfairness” of that situation.


Based on our past experiences we each have a different take on what constutes fairness and unfairness.


Since I feel entitled to make trading profits, it can only be unfair it it works out otherwise.


I used to often think about “unfairness” as it came to earnings, particularly since I never worked a mere fraction as hard as did Szelhamos, not to mention all of the other things that he had to survive throughout his lifetime.


I once had a good friend whose father sold roadside popcorn at college football games. We used to talk about how bizarre life was when obscene amounts of money could be made with relatively little effort. particularly given our backgrounds


At that time I didn’t realize just how little effort you could actually get away with.


As easy as it may be to rationalize the dis-equilobrium in “fairness’ by thinking that it just as easily could have been me getting hit by a drunk driver, the reality is that many are spared the exposure to life’s unfair moments.


We don’t live in a dangerous environment where a stranger may unfairly choose to attack, nor are we without healthcare insrance such that a readily treatable infection would kill us.


Those are examples of unfairness that shouldn’t exist.


You don’t need a lofty philosophical or theologically based treatise to bring home that point.


Sometimes you just know that luck is such a big part of creating an environment that ends up treating you fairly.


I don’t know how a nearly 80 year old Woody Allen would now feel about the two categories of people, now that nearly half of his life has passed since “Annie Hall” bought his words regarding misery to the world.


Laughter can dampen the misery.


“Annie Hall” is said to be a play on “anhedonia” which is a pychaitric disorder that makes the individual unable to experience joy or pleasure. That is possibly the most unfair malady that anyone could ever strike anyone.


As unfair as life may be, even at it’s lowest depths, people can still find the incongruities in life that create humor, even in despair.


So, I will recover from Amazon, that as I began typing away has gone up another few dollars.


What I do know is that at some point, somone holding those shares will be thinking how unfair it was that the opportunity to sell those shares wasn’t taken before the next predictable drop.


Then I will buy them back and life will be fair again.


 


 

 

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Today’s Trades Security Type Action Type
January 18, 2012 CHK Option STO Monthly
January 18, 2012 HAL Option STO Weekly
January 18, 2012 ZSL Option STO Monthly
January 18, 2012 ZSL Stock Added
January 18, 2012 BP Option STO Weekly
January 18. 2012 GS Option STO Weekly
 

  

 

 












 

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