What’s Next?






 


Most successful business leaders and individuals would agree that your business has to keep constantly moving forward and even re-inventing itself, if necessary.


In hindsight, some less than successful corporate shepherds will agree that moving forward is a better idea than just “seeing what develops” and then finally reacting.


As the case of Kodak has shown, nothing really develops anymore and no one really wants to buy cheap printers from among a plethora of cheap printers available from established market leaders


Dead SharkTreading water isn’t a very good option, because sooner or later, you end up sinking or being eaten by a shark. As so poignantly stated in “Annie Hall,” a shark….. has to be constantly moving forward or it dies.


Sears anyone?


But just look at IBM.


How much does the 2012 iteration resemble that of 1985? The change at IBM was more than just a move away from the obligation to wear white button downs.These days, if you seen an IBM logo on a laptop, you can be certain that it’s not going to be anew ultra portable.


Been there, done that and moved forward.


Whether through acquisition or playing to the strengths of your key players, successful companies manage to be ahead of the curve and anticipate the movement of the marketplace.


They don’t ask you for your zip code when you buy a pack of off-brand batteries


This past Friday was a big day for Standard and Poors and specifically for their Sovereign Ratings Committee, headed by John Chambers, the one not of Cisco fame (or infamy, depending on your perspective.)


Chambers had caught some significant missives hurled his way after his committee downgraded US debt just a few short months ago.


I was among those a little upset with the call and even had the audacity to question Chambers’ credentials, since after all, he was neither an economist, an MBA or anything remotely related to  such weighty  fiscal analysis.


He held a Masters in English Literature from Grinnell College. A fine institution, I’m sure, as they do not currently offer programs that allow the entire curricula to be accessed while in pajamas only.


In the meantime, he’s been a busy guy, in charge of a committee that is becoming a household word.


This time attention was all on the European Union and the downgrade of France’s national debt, in addition to its downgrades of Italy, Spain, Cyprus, Portugal, Slovakia, Slovenia and Malta.


Or as most people would refer to the final three: “Who?”


On top of that, with the creation of the European Union, Standard and Poors was able to also downgrade the derivative creation, the European Financial Stability Facility, as its rating is based upon the ratings of its component nations 


Let’s face it. The invention of the European Union has been great business for the rating agencies. A mere 20 years ago, what kind of sovereign debt was really there to even bother assigning a rating to? Even China wasn’t on the map a generation ago, much less Slovakia, Estonia and some lesser known countries.


European Financial Stability Facility?


That’s like a bonus for the rating agency. It’s not even a country. Who would have imagined that there would ever be such a thing that would even need to be rated?


But you have to recognize when you’ve hit your peak.


Bruce SPringsteen sang “Glory Days” as sad testament to those who don’t realize that the peak has come and gone and are caught in that downward spiral.


Standard and Poors’ glory days are now and it needs to realize that.


Or die alongside the shark


First there were the “BRIC” nations, Brazil, Russia, India and China, which at the time were a reflection of the booming economies in the nations that were driving world growth. Those were heady times.


Then we all remember the “PIIG” nations, the ones that reflected the frightening downside of the faltering banking systems of the likes of Portugal, Italy, Ireland and Greece. 


Once S&P gets though the next ratings assessment on the CRAP nations (Czech Republic, Romania, Austria and Poland) it will need new markets.


But that’s where the real genius of John Chambers comes to play. He knows that in a changing world you do play to your strengths, so Standard and Poors will soon be expanding its reach.


With Google’s recent purchase of Zagat and its famed restaurant ratings guide, it’s clear that this is the next big market.


But Chambers has his sights set on so much more.


Beginning soon, insiders tell me, Standard and Poors will take the restaurant and movie review world by storm, distinguishing itself from the universe of review services on the basis of its fluency with the wriotten word and literary stylistics.


Taking a page from Ted Turner, who decades ago decided to colorize the world’s great cinematic efforts, Standard and Poors will start by issue reviews of classic movies and restaurants.


Early word has it that there will actually be downgrades of “It’s a Wonderful Life” and “Citizen Kane,” while “Hardee’s” restaurants will be getting a strong vote of confidence.


Clearly, the impact on related businesses is for the investor to consider.


As advertising rates go down for showings of “It’s a Wonderful Life,” consideration must be given to lightening up on media holdings, particularly those sensitive to seasonal revenues.


Would you not want to get in on the deluge of new customers to Hardee’s?


The beautiful thing is that the potential for S&P is unlimited and the nimble investor shares in those opportunities.


But why stop there? Who wouldn’t want independent ratings of everything?


I for one would like to have Chambers ply his new vision and review the value and worth of “Consumer Reports.” Maybe if that option had been around earlier, I wouldn’t have been walking around with this anger over my purchase of a 1980 Pontiac Phoenix.


Maybe had that been done in 2000, Gore would have easily won Florida’s electoral votes.


Obviously, a natural area for issuing uprades and downgrades would be on our individual actions or thoughts. I don’t have the patience to wait for 1984, when I can have it all now.


For one, I wouldn’t have minded a downgrade of my poorly conceived idea of this past Friday to sell call options on the Amazon $175 call options expiring that same day.


When I scan the grocery store aisles for toilet paper, a rating from the Sovereign Debt Committee would go a long way toward allowing me to choose with confidence and to use the product without fear of future chafing due to inadequate support structure of the underlying plies.


Real synergy arises when you realize that the Sovereign Debt Committee could actually print its latest report on the CRAP nations on toilet paper itself. Or, if truly forward looking, could market nation specific toilet paper, made entirely of their debt instruments.


Now we’re really talking out of the box thinking.


And revenues.


The kind of revenues that could make the Sovereign Debt Committee an attractive spin off to help an therwise faltering McGraw-Hill.


Obviously, the real payday for Chambers would be the purchase of the spun off Soverign Debt Committee to Google, which could then assign Chambers to use his educationally derived skills and write copy for their Daily Deals division to go head to head with Groupon and LivingSocial, until Google does what it i ordained to do, which is to let it die an ignoble death.


Maybe in this case, even movement isn’t enough for this shark.


 

 

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Today’s Trades Security Type Action Type
January 17. 2012 GMCR Option STO Weekly
January 17. 2012 CAT Option STO * Weekly
January 17. 2012 CAT STock Buy
January 17. 2012 MOS Option TO Weekly
January 17. 2012 MOS Stock Added
January 17. 2012 JPM Option STO Weekly
January 17. 2012 JPM Stock Buy
January 17. 2012 VMW Option STO Monthly
January 17. 2012 VMW Stock Buy
January 17. 2012 AXP Option STO Weekly
January 17. 2012 AXP Stock Buy
January 17. 2012 AAPLL Option STO Weekly
January 17. 2012 CHK Option STO Monthly
January 17. 2012 CHK STock Added
January 14, 2012 AMZN Option Asigned Crumbs
January 14, 2012 AAPL Option Expired Weekly
January 14, 2012 AXP Option Assigned Weekly
January 14, 2012 GMCR Option Assigned Weekly
January 14, 2012 GMCR Option Expired Weekly
January 14, 2012 GS Option Expired Weekly
January 14, 2012 HAL Option Expired Weekly
January 14, 2012 MOS Option Assigned Weekly
January 13, 2012 AMZN Option STO Crumbs
 

  

 

 






































 

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Third Party Candidates






A lot has been said about the recent Jockey underwear survey regarding who people would rather see in their upcoming ad campaign. Hurriedly arranged, the alternative new campaign had to be launched when news came that Chaz Bono would not be ready in time for the spring collection, due to some unfinished business left dangling.


Reportedly, the nation was evenly split in their opinion, but voting continues.


What a surprise. Although in our very recent past, evenly split is an apt description of just about everything with regard to our positions on political, social and economic policies..


As it would turn out at the end of Saturday evening, in the playoff faceoff between the two undergarment models, the “Brady Bulge” easily beat the “Tebow Twinkie.”


By “beat,” I meant was victorious over, as this is a family friendly site.


Ed Asner for Jockey UnderwearAs someone who has long supported the cause of third party cadidates, I’m going to cast my vote for either Ed Asner or Danny DeVito, if the survey ever gets past my Caller ID defense mechanisms.


I’m really having difficulty trying to get the image of Tebow in his tighty whities doing his genuflection and then being greeted by the inadvertant escape of his He-bow. You know, the thing he uses when he needs to Wee-bow.


As I think back to my voting record I’ve voted for the following third party candidates: George McGovern, John Anderson and H. Ross Perot,  while ignoring the likes of Ralph Nader or Pat Buchanan.


I know that strictly speaking George McGovern doesn’t qualify as a third party candidate, but I think his performance that year was on par with the likes of Strom Thurmond, George Wallace and Robert LaFollette.


To a very large degree anyone running as a third party candidate has to have large doses of narcissism and denial running through their veins. So much so that they’re willing to see the side that they’re more closely aligned with lose, due to the siphoning of votes.


Danny Devito - A True Team PlayerNeither Asner nor DeVito would ever do anything like that. They could just as easily lead or be a team player. Having appeared in an underwear shot in “It’s Always Sunny in Philadelphia,” DeVito has already proven that he has the literal and figurative goods. He is also willing to supply a wide angle lens for appreciating the full effect.


John Anderson may not fit into the narcissistic category either, but the other recent candidates certainly have changed election outcomes. Although I’m not really certain who Ed Asner would take votes away from, unless the mainstream dichotomous choice was between Tim Tebow or Danny DeVito.


In that case, Tebow slips in, but not before matrimony.


At this point who knows where Ron Paul is heading, but theres no doubt that he would receive lots of support in making that decision from those on the left side of the aisle. From purely a conceptual bais, probably no one would be more in favor of dropping the unwritten rule that ours is a two party political system than Ron Paul.


Why? Because it’s a rule, of sorts. That’s reason enough. If the good Lord had only wanted two parties he would have only made two human genders.


Well, that’s where he lost the evangelical vote. That and the legalization of heroin thing.


“Beats me” how he can get them back. And by “beats me” I mean in a self-pleasuring fashion.


Alright, maybe trying to meld evangelical views with libertarianism isn’t a great idea.


I was watching David Letterman’s interview with guest Senator John McCain the other night. It was really a good segment. I’m still struck by the comment that John Stewart had made a few years ago that he would have voted for the John McCain of 2000 if he had run against Al Gore in the Presidential election.


Politics does strange things to people.


Even good people. Don’t even think about what it does to people that are already inclined toward narcisism and entitlement.


Do you know what would be just punishment for that kind of person?


Change their name to “Newt,” or if you’re really feeling feisty and hot under the collar, just call them a “Newtchebag.”


One of the things that Letterman was hammering at, and McCain obviously agreed by body language, facial expression and non-spirited defense, was that perhaps the two party system was broken and both sides were to blame, but that it was probably still better than the alternatives.


Alright, maybe we don’t want the typical Parliamentary system where bizarre coalitia are formed and the smallest fringe party can hold everyone else hostage.


Just look at the European Union. Remember the curveballs thrown by Finland and Slovakia?


But is three really too much of a crowd?


The thought that only dichotomous choices are appropriate has long been the paradigm of life.


You either have one spouse or you don’t. Pity the Romney’s of centuries past that had to fee to “Old Mexico” in order to rid themselves of societal dichotomy.


But the thought that only dichotomous choices are appropriate has also long been the paradigm of personal investing.


You either buy or you hold.


That used to be the same with sell side analysts. Only in the past few years has anyone ever been so bold as to offer a sell recommendation. Doing so was probably as unsettling as the first time someone wore something other than a white button down shirt at IBM.


Black and white is great if you want people to act out of their visceral senses. Offer total opposites and make it easy for people to choose without the need to get bogged down in thought processes. The lack of regard for the ability of people to actually think is widespread. It explains why there are severe restrictions on the number of insurance companies that can offer health insurance in a given state.


Too confusing for the populace.


Without a doubt there are those that are paralyzed over the very prospect of having to make a choice or decision. You know the type. Maybe you were one of those kids that would take an hour to choose their socks each morning, even if they were going to be completely enveloped in snow boots.


But choice is the very essence of a free people.


Szelhamos used to tell me that under the Communists in Hungary, if you wanted shoes, the choice was brown or none. If you asked about black shoes the answer was “re-education,” perhaps on the Siberian campus, for good measure.


I’m glad we have choices and by choices, I mean options.


Not to overly “beat” it to death, but the ability to use a third mechanism to protect yourself from the unpredictable nature of the markets, as they are subjected to “eurosis,” greed and rumors is priceless. As difficult as your past may have been when selecting your socks or your stocks, the use of hedging mechanisms are simple and are likely to protect you from languishing in portfolio equivalent of Siberia.


In this case, “priceless” can be quantitatively analyzed for its influence on your portfolio.


Even though I do post my transactions, I’ve always resisted ever placing any performance data. Besides the fact that its information only between myself and my IRS agent, there really aren’t any restrictions on me from making whatever claims I like.


I wish it had been like that when I was the Chancellor of Germany.


Regardless of what my personal performance statistics are at any moment in time, sometimes, some things are best left hidden and out of the public view.


In the case of underwear, that’s one of the unwritten requirements.


Kneeling to honor your personal Savior can be tricky.


As I continue to ponder the survey choices I’m glad that I live in a world where Ed Asner and Danny DeVito can have a greater and longer lasting influence on society by virtue of their art and other activities than guys who can throw a ball and fill out a highly fitted piece of expandable material.


And by “expandable material,” I mean the underwear.


I’m also glad that I live in a world where we can honor Dr. Martin Luther King and celebrate his life and ideals, although I still don’t know why the markets need to be closed, especially since that means I have the burden of thinking for an additional day of how to remake the portfolio after about 30% of its value was assigned, as I say goodbye to Amazon, Green Mountain Coffee Roasters, American Express and Mosaic.


Someday, we will say”goodbye” to Tim Tebow and Tom Brady, future footnotes to society’s history, yet neither their ephemeral star nor coming in third of fourth to Asner or DeVito should carry shame


Foot notes are important, too, but will always take a second seat to TrollFoot Notes.


 

Postscript:  Join Ed Asner and “Asner’s Avengers in their fund-raising effort to support Autism programs and research.




 


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Today’s Trades Security Type Action Type
January 14, 2012 AMZN Option Asigned Crumbs
January 14, 2012 AAPL Option Expired Weekly
January 14, 2012 AXP Option Assigned Weekly
January 14, 2012 GMCR Option Assigned Weekly
January 14, 2012 GMCR Option Expired Weekly
January 14, 2012 GS Option Expired Weekly
January 14, 2012 HAL Option Expired Weekly
January 14, 2012 MOS Option Assigned Weekly
January 13, 2012 AMZN Option STO Crumbs
         
         
         
         





  





 


 














 

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We are All Sinners






I have no business giving advice to anyone or making predictions. My track record is pretty abysmal.


I’m also a sinner.


Years ago, when running for the Presidency, Jimmy Carter, the Governor of Georgia, a gentleman peanut farmer, Naval Academy graduate and nuclear engineer (there’s a combination you don’t hear often) showed the good judgment to submit to a Playboy interview.


The Devil in MeProbably the most memorable part of the article, beside the full frontal view of the future president in a man thong, was his admission that he had  lusted in his heart and “commited adultery in my heart many times.”


If you’re unaware, the adultery thing is big. Big enough to have made it into the Top Ten Sins list.


Just imagine that if coveting your neighbor’s wife made the list, just how badly adultery must trump coveting.


To this day, no other Presidential wannabe has submitted to a Playboy interview, not even Bill Clinton, of “boxers versus briefs” fame and other things..


The point of this is that in 10 presidential election cycles, I’ve only correctly picked the ultimate winner just 3 times. So you really don’t want to follow my path.


I’m completely agnostic as to political party when it comes to national elections and have always voted along a “who has the best chance of losing?” platform.


I’ve even been known to vote for a third party candidate if it meant preserving my voting record.


Jimmy Carter, for whom I did not vote, was essentially saying what we all knew, in that he was a despicable human being, at least in heart and mind.


Alright, maybe I read a bit too much into that single quote.


At the time, people were stunned both by the fact that he agreed to the interview and that he admitted that even a pious God fearing public servant was a sinner.


Back then, in the hierarchy of sins related to fantasies, you were more likely to be excused of wishing you could murder your boss than for lusting after his spouse.


In the world of stock investing there are sinners, and most everyone will agree as to who they are.


The short sellers.


They’re the people that are betting that stock prices will head downward. They sin not just in their hearts and minds, but in body and soul. They spread fear and gloom and wish and hope for bad things to occur. They find themselves naturally cheering when natural disasters.strike.


How un-American is that?


Very, but it gets even worse. The short sellers actually have even more evil Overlords, those that find joy in using leveraged short ETF trading vehicles.


Just as for millenia people have been blaming the Jewish population in the midst for all of their problems,. short sellers are the Jews of the market.


They get blamed for just about everything.


Sure, occasionally new enemies arise, such as algorithms, high frequency trading, insider trading and other egregious violations of “business ethics,” but when you get down to private and casual conversation, the truth comes out.


The short sellers have replaced the horns on their heads with crisply tailored Armani suits, ultra-rapid speech patterns and lots of coffee.


In a page taken from the playbook of every despot through history, when things start going badly, always look for an internal enemy. If none is available, then go external.


Short sellers are the root of all of our problems.


Certainly, you have to remember the regulatory response at the height of the financial and banking crisis.


No short sales on the financials. They even sought to enforce existing regulations regarding naked short sales. How desperate of a move is it when you start enforcing regulations?


And who could forget the always entertaining Patrick Byrne of Overstock.com, now trying to rebrand as O.co


In a near and somewhat sad, yet comical, paranoid fixation on short sellers, Byrne has created a place for himself in some sort of Hall of Fame, yet despite years of non-performance and floundering of his company, he remains CEO.


The rants are pretty amusing and do seem to follow in some lessons learned from generations of anti-semites.


It is somewhat ironic though that Byrne chose shortening the name as his approach to rebranding. He’ll probably blame the resultant consumer confusion on the shorts.


So here we are, at the precipice of JP Morgan announcing its most recently quarterly earnings.


And here I am with no shares of JP Morgan, not having held shares for 6 weeks.


Over the past two years, JP Morgan has almost continually been in my portfolios. It was one of the first stocks upon which I sold weekly call options.


Week after week after week.


During that time period I’d occasionally lose shares to assignment but would always buy them back as the price retraced, just in time for the next ride up.


But not this time.


I missed the entire $32 to $36 move.


So here I am lusting in my heart.


But it’s not the mild kind of coveting lust, wishing that I had owned shares.


No, it’s more the adulterous kind of lust, just wanting to go down on that stock.


Sorry for being so crude, but that’s the best allusion I could come up with.


Just like a short seller, I’m hoping for JP Morgan share price to make a marked move downward after it announces earnings on Friday.


Jamie Dimon has been in the news of late. It seems to me as if he’s actually trying too hard to put a good face on things, making me think that there’ll be a disappointing earnings report forthcoming.


But still, even though I have no vested interest, I find myself thinking evil thoughts, joining the class of investing sinners.


Is it a sin to lust for a downward move yet take no actions to support that lust?


Yes, Jimmy Carter proved that in a different ecosystem that is surely transportable to the current situation.


And so, I find myself a sinner.


Every trade has a winner and a loser.


Zero sum kinetics is the lay of the land.


Unlike real life situations when the victim may be know to you, when investing, the victim is unknown, unless you’re that victim.


But I do find solace when I realize that by selling call options, I’m doing my best to do battle with one of the Seven Deadly Sins.


You remember those, don’t you, sinner?


Sloth, gluttony, wrath, pride, lust, envy and GREED.


What could be worse of a sin than buying call options? Using leverage of MF Global proportions, the buyer is hoping to strike it big with a minimal outlay of money.


So yes, I’m a sinner, but I am trying, until I realize that I also dewell among the Overlords.


I’ve found great joy and reward from ownership of the ProShares UltraShort Silver ETF, while lovers of silver have found sadness.


I don’t know quite how to reconcile all of these conflicting feelings. except to hope that there will be room for all of us sinners in the Kingdom of Security in Retirement


 


 

 

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As if Yesterday Never Happened






This is precisely why I need to get out of the house more often. Either that or do something to diminish my ability to understand, comprehend and discern the babbled word.


Or maybe just learn how to work the “Mute Button,” but I’ve never been very good with technology.


Oh, and add recall to that list. Sometimes being able to remember details is a bad thing.


The past few days Microsoft has been on a roll, above and beyond the market.


You remember Microsoft. You know, the company that was everyone’s whipping boy. Although, to be fair, it is enirely possible that I’ve misinterpreted the expression “dead money” and the snarky tones and sneers may have always been completely unrelated to the stock.


Back when I was younger, it was incredible how popular you could suddenly become if you had a Spalding rubber ball, when one was desperately needed for a stickball game.


If you dont know what stickball is (or was), think basketball instead.


Steve Ballmer Casts a SpellSuddenly, Microsoft is everyone’s favorite stock and no one is owning up to their past.


Instead of “dead money” it’s “undervalued.” All of a sudden Talking Heads are taking note of its dividend, the very same dividend that has long been decried as insufficient and not enough to make purchase of shares appealing.


The jokes.


Zune, Bing, WIndows cell phone, Vista, Clippy, Ballmer, Skype. It just goes on.


No one wants to admit that the own, want or need a Microsoft product. You never hear anyone sing “Oh baby you, you got what I need'” when it comes to Microsoft. People are ashamed and embarrassed.


It’s like admitting you crave veal or sauteed infants.


I’ve lost track of how many “experts” and “analysts” have called for Steve Ballmer’s resignation, firing or execution.


When you think about it, what better testament to the depth and strength of a company when it could have such a long list of failures and abandoned projects.


Have you ever heard of Google? Ever looked at their long list of litter along the technology highway?


The difference is that when Google abandons a project they do so because of their collective attention deficit disorder. They just can’t behave otherwise. Even force fed doses of Googlin and Googlall are virtually useless.


In the case of Microsoft, my guess is that nothing that we’ve ever heard of is a total and abject failure. Probably every project and product has something worthwhile that will add value to something that may just be a glimmer in a dreamer’s mind at the moment, but a necessary cog to make the dream come true.


And make billions of dollars.


Suddenly the Windows phone business looks promising, ultrabooks and Windows 8 are arriving and the world has reversed its axis of spin.


I’ve blogged about Microsoft a number of times and also included extensive discussion of the stock in the Option to Profit book.


To be totally honest, I haven’t owned Microsoft since July 2011, despite the fact that it has long been my favorite covered call and douple dip dividend play.


Sometimes you stray.


Although I looked elsewhere, there’s not much argument against the fact that as long as Microsoft traded in a tight range, essentilly reacting only to macroeconomic events, it was a slam dunk when it came to selling call options and collecting quarterly dividends.


To my great delight, my oldest son, who penned a guest blog for me, independently decided to write about his reason for buying Microsoft shares, as his first equity purchase, and somehow was able to tie it in with the rationale for the mistreatment of local Occupy Wall Street crowds in the DIstric of Columbia.


That’s my boy. What better way to express your true oppositional and contrarian self than to buy shares of Microsoft?


At least I’ve changed my errant path and own shares again.


As is my habit when I enter into a new position or re-establish an old one, I sell weekly in the money or near the money calls. In this case, I sold near the money monthly calls, compromising my ethos a bit, perhaps out of remorse and guilt.


Despite the fact that Microsoft fell about 1% in the after hours market on Tuesday when it announced that fourth quarter personal computer shipments were going to be even less than the previous disappointing numbers, it quickly recovered by mid-day trading on Wednesday.


And then some.


In Eric Jackson’s recent article in Forbes magaine, “Crowd Sourcing the Top 2012 Twitter Stock and Market Picks,” I chose Intel as my top short pick for 2012, although I will not likley be playing that conviction, because I neither know how to short, nor have the conviction to put myself at such risk.


Bearish on Intel, yet not on Microsoft?


Notice, I didn’t say “Bullish on Microsoft.”


For me, Microsoft works best when it’s dead money to everyone else. Besides, the sneers are amusing. The non-verbal communication is so much better than the verbal kind when it comes to many of the typical faces seen spouting their “opinion du jour.”


I wish that I was wordly enough to say “opinion of the moment” in French, but “du jour” will just have to do.


I don’t know what will happen with my Microsoft shares come next Friday, but I’ve vowed not to go this long without Microsoft shares in my portfolio, ever again. 


I guess that in a way Microsoft is really no different from any other stock that’s being discussed by the universe of Talking Heads. What I’ve come to realize is that taking advice from these guys is about as satisfying as watching a bootleg DVD when the video and audio are out of sync by a scene or more.


Although you may be tuned into their every word, all bets are off when the transmission has ended.


Circumstances change, news pours in and today’s hotter than hot buy is now “a neutral position.”


I’m not really certain what that means. I’ve never understood if that meant that there was just no opinion regarding the direction of price movement or if that was just a nicer way of saying “dead money.”


Suddenly, the fact that the Talking Head is spewing advice that happens to be free is utterly meaningless and certainly reflective of value.


That’s not to say that all things that are free have no value, maybe just the spoken word. You want value for free? Get Eddy Elfenbein’s Newsletter and read his blog, Crossing Wall Street..


Although Microsoft is a keeper an should be a portfolio mainstay, I’m still not a believer in buy and hold. That disbelief essentially stems from my own inabilities.


“It’s me. It’s not you.”


I’ve never been good at discerning a good stock from a bad one, although I do recognize pure crap.


But I’m also fairly terrible at assessing a timely purchase based on an appropriate price. Compound that with the inability to know when to pull the trigger and sell and you have the makings of someone who should never talk to anyone about stocks.


Or write about them.


In summary, I’m no Eddy Elfenbein.


That’s why I rarely stray from my list of “Old Reliables” and the comfort zone that they provide.


I like consistency and that appears to be just about the last thing you get from the Talking Heads.


Now, if Microsoft happens to crash and burn tomorrow, I’ll just believe that yesterday never happened.


How convenient.


 


 





 


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Today’s Trades Security Type Action Type
January 11, 2012 GMCR Option STO Weekly
January 11, 2012 GMCR Stock Added  
January 11, 2012 RIG Option STO Monthly
January 11, 2012 RIG Stock Buy  
January 11, 2012 MSFT Option STO Monthly
January 11, 2012 MSFT Stock Buy  
January 11, 2012 HAL Option STO Weekly
January 11, 2012 HAL Stock Added  
         
         
         





  





 


 


 





 

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Judgment: Flawed or Impaired?






PainAs I get older, I often find myself questioning very basic beliefs more and more.


I do, however, understand concepts such as why humans must have a mechanism to register pain.


For example, while it seems meaningless to have a kidney stone associated with pain, perhaps the utility of the pain is to send a message that you have to change some lifestyle choices.


That assumes, however, that human beings have the desire to practice preventive medicine or that they even have the ability to learn from past experiences.


Our judgment is often flawed, even in the presence of compelling data. I know and am constantly being told by Sugar Momma that I need to drink more, yet I continue a camel’s existence, coffee notwithstanding.


That kidney stone example may be stretching it a bit, just as it needlessly stretches that ureter, but more concretely, it’s probably a good idea to sense pain if you put your hand inadvertently on a hot stove burner. You really want to have some feedback mechanism that would give you the incentive to remove your hand before it became completely roasted.


Delicious, yet destroyed.


Forget about the more controversial beliefs, such as that of an expanding universe. Those more etheral thoughts are really getting harder to accept or even comprehend.


Human judgment is a strange thing. There’s no question that collectively we do learn from the past and as a species we are able to read the data and respond to reality as it evolves, so that as a species our ability to interact with the world constantly advances.


It’s on the individual level that I have my doubts.


Although an expanding universe seems to fly against the idea of neither creating or destroying matter, the ability to advance a species requires a positive sum game. The net balance after considering good outcomes from judgments has to exceed the bad outcomes.


You can argue that cows will not change their society because they neither create nor destroy outcomes based on their judgment. They will forever go on in the same way munching on whatever they can and marching into whatever abattoir to which they’re led.


Of course, if you sat around arguing about cows’ ability to advance their society, culture or species you’ve already made the bad judgment of spending time on that philosphical pursuit.


For anyone who has ever watched “COPS” it’s also obvious that human judgment can be impaired. Granted, on that show it’s hard to control for those felons that are purely acting on the basis of impaired judgment, as many who have such an obstacle to overcome are also faced with the obstacle of flawed judgment.


To do so, you’d have to assess the actions of someone who was normally in reasonable balance with the world and who has appropriate interactions with society, while successfully navigating through life.


Those can be fairly powerful filters and are useful in determining who to keep out of your life and away from your family members.


Impaired judgment was a topic touched upon a few days ago when writing about the Percocet prescription that I had been given and how it might effect both clarity of mind and purpose.


Obviously, there are many times that you really don’t know whether your decisions were appropriate until many years later. The perfect example of that is how an American President’s legacy is really only fully understood by future generations as the consequences of decsions play themselves out.


In that regard, your children are the same. It takes a while to know, although you certainly get some clues along the way. I’m reasonably certain that Bernie Madoff’s mother probably would have had some reason not to be completely surprised by the eventual path that he took.


Otherwise, most decisions that we make tend to have fairly quick consequences. Everything else being equal, quick feedback from decisions should be more efficient in effecting change in our ability to learn from experiences.


Although I repeatedly say that I never have regrets regarding stock market related decisions, that’s not to say that I don’t question my judgment.


Most recently, I’ve had reason to question my judgment regarding sale of yet another series of contracts on the stock that I’ve beaten to death over the past few days.


Netflix.


I also have already expressed my doubts regarding proper judgment when I actually purchased the shares on the same fateful day as I most recently picked up shares in Green Mountain Coffee Roasters and Amazon


Flawed judgment? Impaired? I don’t know, but I do know that the net balance of those decisions has been negative.


The question becomes whether or not I’m capable of learning from the decisions.


Probably not.


Most of life is predictable. You live, you die and then fairly mundane stuff there’s stuff in-between.


The unpredictable events are memorable only becasue therre are so few and their outcomes are magnified as the mind begins to believe that “the exception proves the rule.”


That kind of philosophy probably arose from someone trying to justify a lifetime of bad decisions when faced with obvious facts.


I very vividly remember my first kidney stone attack about 7 years ago. Not only do I remember the pain, I also remember the words of advice. It’s just that I decided to fall back on relying on flawed judgment to disregard the advice.


I wasn’t impaired. At that point the pain was gone. My flawed judgment might have been averted if the impairment had continued.


The stock market, despite so many people living and dying on the basis of charts and algorithms, has never really proven itself to be predictable.


What I wonder about Netflix is how so many “smart people,” and presumably the very recent price rise had to be driven by deep pockets, which usually are found on people that are self-diagnosed as “smart” could have occured?


What kind of judgment was necessary to believe a rumor that on every level really didn’t make sense? Then compound that with the judgment that it was an investment worth pursuing.


It’s not terribly likely that it was the universe of individual investors that acted irrationally. The total sum of discretionary funds available for investment by that universe is dwarfed by funds that are professionally managed.


Today, an analyst was exceptionally blunt about Netflix.


Michael Pachter, of Web Bush Securities, may have taken his cues from the recent GOP debate tactics and didn’t even bother nuancing his words when calling out Reed Hastings, Netflix CEO, when he said “he’s crazy. He has lost his mind.”


It wasn’t much better for Whitney Tilson, who had previously been very wrong on the short side with Netflix and subsequently took on long positions in Netflix.


Here was a case when the filter wasn’t on. Was that good judgment or bad judgment being so blunt about fellow ‘smart people?”


From my perspective, Pachter was “pain,” but in a good and necessary sense.


When you do make a bad judgment regarding an investment, the pain may not be physical other than for the physical amount of money that you have left at the end of the day. The pain is emotional and obviously stress can effect physical well being, as well.


Pachter was sending that warning signal, although in this case, it was probably the individual investor that drove prices down an additional $2 after his pointed comments, as they scurried to get out.


My guess is that Hastings and Tilson also believe that Pachter is a pain, but not in the good sense.


Now couple that with the report that since December 19th, 2011, the only down trading hour of the day was from 2 to 3 PM. which happens to be when Street Signs is on the air.


Coincidence? Maybe, but among the reasons that I enjoy Street Signs is that the hosts, Mandy Drury, Brian Sullivan and Herb Greenberg don’t serve as cheerleaders. Instead, they serve out caveats and often give great reasons to be circumspect about “the facts.”


You have to like people that preach prevention and want to help spare you some unnecessary pain.


Oh, and they may also have been the ultimate judges in selecting this years’ “Word of the Year.”


In that regard, great judgment.


 


 


 


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