Category Archives: Uncategorized

Update: On this Good Friday, I’m repeating this blog entry originally posted on December 16, 2011, written the day after ranting a bit about Dennis Gartman and receiving more hits than for any previous blog. Fast forward 4 months and history repeated itself in terms of hits when I carried on about Rakesh Agrawal’s disclosure about having purchased puts on his raison d’etre, Groupon.

I need to grow up, but I do need to face up to the fact that my raison d’etre is getting those hits..

Probably from even before the time that ancient cave dwellers were able to make wall drawings people have been asking the question.

“Why does it seem that the evil among us thrive?”

The corollary, “Why do bad things happen to good people” is frequently asked and was the topic of a very popular book in the early 1980’s.

That particular book may in fact be the last one that I’ve read, but I’m not certain if there’s a connection.

Whatever version you take or don’t take your Ten Commandments, it’s clear that good behavior has to be spelled out as do the choices that should be made.

Don’t kill.

Oh. Don’t. Don’t kill. My bad.

I’m not a particularly deep or profound thinker although I took many more than my fair share of philosophy and theology classes in college. In all likelihood I owe my inability to recall any discussions of good versus evil due to an everpresent fog.

Watching episodes of COPS week in and out over the past quarter century it’s clear that the likelihood or high probability of reward is not what drives people to do evil things.

In those cases it’s probably stupidity mixed in equal parts with alcohol that’s responsible for the repeated journeys down the wrong path.

Sometimes it’s profit motive.

Somewhere along the line I’m certain that the expression “the meek shall inherit the earth” was highlighted as an answer to those wondering about the inequity in the world we happen to live in.

Presumably the meek are the 99%. Wherever the other 1% goes it certainly going to appear much more spacious in comparison.

Since human nature is increasingly defined in our fast food world of instant gratification by “I want it now.” the lure of getting a reward in some other as yet unproven world is getting increasingly elusive.

That makes it much easier to rationalize evil deeds. The reward, if any, is now. Let the meek wait in the wings.

When it comes to mentioning people by name, especially in this blog, I tend to do so only when I have something good to say. Something positive. Something laudatory.

The case of Dick Bove is an obvious example of me doing precisely the opposite.

The reality is that the people that I say positive things about don’t need my approval. It’s easy to recognize those that provide added value to the world.

Occasionally, I’ll use someone by name to illustrate what I think will be a funny stream of thought and in those cases it’s not typically in a positive light..

I’m usually wrong about that, as I don’t read people very well, but I least I think the contexts are funny.

Interestingly, on the topic of the Ten Commandments  I did have an opportunity to chat with Newt Gingrich the other day and wanted to get his take on some of the more timely commandments.

His take on adultery was interesting, as he believed that adulterers were essentially a “made up people,” exisiting only as a result of marriage.

His reasoning made a lot of sense, but then you also have to take into consideration the existence of that hot babe in the cave next door.

But see, I used Gingrich, as an example and used his name.

I don’t typically do that, other than in a joking way.

Evil? I don’t think so. I think it’s a good natured way to point out the ridiculousness of things. In this case, all things Gingrich.

Up until the other day my single most popular blog posting, based on the number of hits in a day, was about Herb Greenberg. In that piece I tied my contrarian perspective to measuring how his increasing Twitter popularity was likely related to an upcomiong bullish trend in the markets.

That was an easy piece to write as I greatly respect Herb Greenberg and the role that he plays in ferreting out what many may consider to be “evils” in the marketplace. I think that I’m able to segregate the part of me that may recoil at the mention of a stock that I own from the part of me that respects the objective and probing analyses.

But yesterday I took a decidedly different approach, reminiscent of the “Angry Man in the Street” character of the old, the very old, Steve Allen Show.

You can read it for yourself. Not only did I right a rant, even though I benefitted from what I perceived to be unethical behavior, but I Tweeted incessantly about Dennis Gartman’s decision to publicly disclose that he had liquidated his gold positions, while his clients could not do so.

I may be very wrong in this regard, but it seems as if his clients would be potentially hurt by Gartman’s very public comments and actions.

Had I not known better, but on the basis of the number of Tweets that I had written, I’d have thought that I’d become some single issue lunatic living with 80 feral cats in the basement of my parent’s home.

Well, wouldn’t you know it, in terms of hits onto the blog, bad outswamped good.

Sorry Herb, but flinging arrows seems to be the way to fame.

Now, being one who lives entirely off of the stroke of an ego that comes from a mouse click, that has to get my attention.

It’s the proverbial battle of good versus evil.

Since I’m into corollaries and asking unanswerable questions, that further raises the concept of “is it acceptable to fight evil with evil?”

Sadly, there’s an incredible amount of positive feedback that comes along with successfully getting away with evil acts.

To some degree I wonder if selling call options is an evil act in and of itself.

Not that I’m likely to change my ways, at least not as long as it keeps being rewarding, but doing so exploits others.

Those others are the ones purchasing the call contracts.

You know who they are. They’re the ones that want to generate greatly leveraged returns to satisfy their avarice for riches, although I’ll just conveniently ignore those doing so to protect their portfolios.

Should I feel badly about capitalizing on someone else’s greed? After all, look at all of the evil conferred on society by leverage gone wild.

Boy, now we’re getting into the realm of the “Seven Deadly Sins.”

I suppose that I can take some solace if I sit and realize that there’s a good chance that someone will be purchasing some of my ProShares UltrsShort Silver ETF shares for $12, as it currently sits at about $15.

Now that’s really mean.

But it does pay. And in this case for some unknown call options purchaser, very handsomely at that.

By the same token however, I’m not being hurt too much. After all, I bought that batch of shares for $12.01 about 9 days ago and received $0.64/share premium. Even after expenses that will work out to a 5% ROI.

Hmmm.

So here’s to a world where we can take turns at being evil.

I’m good now, so I guess it’s your turn next, Dennis

 

 

 

 

 

 

Today was one of those days that if you were an investor in gold you might be able to remember where you were on this day even 20 years from now. When I say that, just to be clear, I mean 20 years in yen terms.

In fact, I remember where I was 30 years ago when the bottom fell out from under gold and silver. I actually was invested in futures at the time. Not quite as much as the Hunt Brothers, but for me, I was invested much more than I should have been by any measure of sanity.

Fast forward and imagine gold driving away in a white Bronco on the LA freeway. Maybe good advertising for Ford, but not so good for retaining the adjective “precious” in front of your metals holdings.  

If you’re Mr. T your personal net worth plummeted today, but even if you could jump off the ship you would likely sink wih whatever holdings remained, unlike your Captain, who had the foresight to jump ship earlier, with the lone flotation device aboard, without alerting the crew and those that trusted him to guide them on their journey.

 Metaphor? Not really.

 Captain Gartman. Good move driving that Bronco and jumping that ship.

 Did I mention that he took the map that also gave the location of all the sharks in the water?

I don’t own gold in any investment form, unless you count the potential value of my body if all of its component elements are sold upon my demise. I didn’t get those dental crowns as an investment. I got them because of bad habits.

Too bad there’s no market for cholesterol.

A few months ago while on CNBC, James Altucher raised some eyebrows, as he usually does anyway, when he pointed out the obvious.

“It’s a rock.”

Alright, in deference to my geologian readers, that’s not totally accurate, but even you you have to admit that you understand exactly what he was saying.

Yes, it’s precious, but how many times have you heard comments like “you can’t eat it, it won’t keep ypu warm, etc..’?

Usually, those kind of comments come from the likes of people that either can’t afford gold at its current price or by choice haven’t invested in any because they think it’s overpriced.

Those same people often discover that it can be eaten or keep you warm if it’s at the right price.

Forget the axiom that value is determined by whatever someone is willing to pay for the asset.

That’s only true when supply is well in excess of demand.

When it’s the other way around there’s no rational basis for price. Factor in fear, greed and the all too popular, FOMO.

The other day, Dennis Gartman, a noted investor, newsletter writer, talking head and whatever else he does announced that he had gotten out of gold.

Good for him.

It was actually indirectly good for me as well, as I own many shares of the ProShares UltraShort Silver ETF which goes up as the price of silver, another of those precious metals, goes down.

But what I really don’t understand is what Gartman was thinking.

In fact, he only sold gold from his personal account and very publicly proclaimed that fact. Reportedly, the managed accounts that he has for his clients preclude him from making such changes until the end of the month.

So it really was good for him.

His clients? Eh, not so much.

Now, if I was a Gartman client and a portion of my funds was tied up in gold, I don’t think that I’d be very happy to hear the steward of my account proclaiming to the world that he’s liquidated his personal gold holdings and I’m left with the bag.

Hey. What? He did what?

From my perspective and perhaps limited advantage, he sought to protect his reputation at the expense of his clients’ pockets.

Imagine, as an investor, there you are in a perfect position to watch the value of your portfolio plummet because the captain of the ship not only jumped, but let the world know that the ship was sinking before he let his crew know.

Captain Gartman.

With captains like that you don’t need Somali pirates. Especially when the captain alerts the pirates to your exact coordinates, what assets you’re carrying and what meager defenses you maintain.

My guess is that Captain Gartman would sell immediate salvage rights on his way out.

As a captain, Gartman may defend himself and say he doesn’t know the meaning of the word “fear” and didn’t act out of such emotion.

I might add that he doesn’t know the meaning of the word “fiduciary” either and certainly didn’t act in that manner.

But back to those ProShares UltraShort Silver ETF shares..

I’ve droned on about them for a while. Even though my average cost is $13 and with yesterday and today’s big drop in silver prices, it is up to about $15, my profit is predominantly from its sweet options premiums, even though the ETF capital gains are looking good, too..

Slowly and against my better judgment, those shares have become about 15% of my portfolio, making them well out of proportion to any other single holding.

But the premiums have been so precious.

Happily, I’ll be losing about 20% of those shares at $13. I would be happier if they were going to be assigned at $15, but those shares were purchased at about $12 and have gotten more than their fair share of premiums.

In the meantime, if the shares do close above $15 by Friday’s bell, I lose all of my shares.

Normally, I’d be somewhat saddened at losing such a money maker, but I’m beginning to salivate at what appear to be some bargain prices right now for lots of my other favorites.

The situation happens with regularity, but what makes this different is that I may have lots of cash available to pick up those bargains on Monday.

Caterpillar, Halliburton and Freeport McMoRan are yelling to me. They may not be precious right now, but they will be once again.

And if it should happen that I lose my ProShares UltraShort Silver ETF shares, guess what?

Yeah, Silver will go back up again and the price of the inverse and leveraged ETF will go back down.

Been there and done that.

Although the value of assets can rise and fall, if there’s inherent value, they will rise again.

Just look at Gold and silver.

Sure, it may have taken nearly 30 years, but their precious status returned.

Reputation? That precious attribute that you can work a lifetime to attain? That’s not so easy to resurrect.

I’ve never had the “privilege” of being a Dennis Gartman client, but his reputation and credibility have lost whatever luster they had, at least in my eyes.

Not so precious, anymore. 

 

 

 

 

As a relatively “unsocial” kind of guy, I’ve been very slow to adopt to social media. In fact, it was only at the advice, suggestion and arm twisting by my kids to use social media as a tool to sell books and get people to read this blog, did I reluctantly agree that they may be right.

Ego is an amazing thing.

Over the past 25 years, the only other things that I was slow to adopt was the one time ubiquitous “PDA” and the “mullet.”

Palm, Treo, Handspring. Whatever the names and models were, it’s all a blur, I never went that way although I may someday go for the retro look as nostalgia is due for its next generational comeback.

I’ll think about that after tonight’s Hall and Oates concert.

Today was just another one of those laughable days in the rumor mills. Good thing, because it was an otherwise utterly boring day with no news coming out of the EU and with Herman Cain out of sight.

As trades go, I sold Caterpillar calls, bought some more ProShares UltraSilver ETF and subsequently sold calls and that was all.

Boring.

As much as I took delight in my accurate prediction about retail sales, when it was reported that they were disappointing (in advance of the revised results after Christmas which will indicate that they were better than expected), it was still a tiresome day.

The best rumor and the one that got the most attention was about Netflix.

I own Netflix and have for about a month or so. In that time I’ve sold lots of weekly calls. Sometimes I’ve had the shares assigned and other times not.

Sometimes I’ve bought the shares back and sometimes I haven’t.

This week started with a reduced holding due to an assignment of a portion of my shares, but as luck would have it, the rumor mill started early.

And often.

Monday started with the rumor of a Verizon buyout of Netflix. WIth the market spending most of the day down 2%, Netflix was up about 7% in reaction.

Although I did my obligatory sale of calls, as has been my recent habit, I was a premature speculator and sold the calls a bit too early.

This morning, in the pre-market, the rumors started anew and Netflix surged.

Now if they were as good at streaming speed as the quick fashion in which the stock price gave up the ghost in the pre-open following a suggestion that Verizon was denying any interest in a buyout, they’d have a pretty great product,

The rumors and their rationalizations were fascinating.

Sometime in the past 24 hours the speculation was that Verizon was fueling the rumors to drive up Netflix’s stock price to make it a less attractive take over candidate for anyone else.

This is the kind of rumor that may be referred to as a “conspiracy.”

Interestingly in my area, Verizon FIOS ads still tout the ill conceived and subsequently aborted Netflix pricing plan as a reason to make the switch over to FIOS. It’s not really accurate, but that really doesn’t matter, because it was accurate at one time. For a couple of days, for that matter.

That seems like a better strategy to make it less appealing to anyone else.

Attack their business through that good old American concept of competition. Sure, unfounded rumors are good, too, if you want to cause your opponent to stumble a bit.

But driving up their price?

Then it was a return to the plain vanilla rumor that started it all.

Verizon was planning to buy Netflix.

Although a Verizon spokesperson later said that there were no such talk, many in the investing world believed that the issue was not whether there would be a buyout, but whether anyone would figure out that the holdup was due to both parties being caught up in a Verizon telephone menu loop. All that’s needed is for someone to realize that all they have to do is press “O” to be connected to a buyout specialist.

In the meantime, Netflix was then played to the vest. No one really knowing which way to go.

As a seller of options I like movement because volatility drives up premiums. But once I get those premums, I love stagnation. That may also explain why I haven’t matured one bit after 27 years of marriage.

So while the Netflix story plays out, and my time horizon is only a week at a time, attention was turned to Zynga.

Zynga is one of those social media phenomena that I haven’t adopted.

Best known for its Facebook resident games, especially Farmville, it’s due to come public at the end of this week.

As opposed to most other recent tech and social media IPO’s, Zynga is different in a number of ways.

One is that it is reportedly and surprisingly not a fun place to work. Brain drain is especially expensive when brains are your leading commodity. An unhappy mind is not a creative mind.

What was especially interesting is that in advance of the IPO, one analyst has already come out with a “sell” recommendation based on an “underperform” prediction.

Now I know knothing about Zynga or its products, but I do know that investors are willing to pay for growth opportunity.

Zynga is so heavily tied to Facebook, there’s obviously a liability asociated if Facebook heads in a different direction. Ask any Apple suppliers that have seen the Golden Goose seek better priced vendors.

But really, how much more is Facebook itself going to grow?

How many more new games that set the social media world on fire, especially without cannibalizing its exisiting game base, will Zynga put forward?

Besides, once they’ve seen the next big fad, how are you going to keep them down on the Farmville?

Seems to me that buying Zynga shares is akin to buying out a floppy disk maker about a decade ago.

What Zynga needs is something that will capture the interest of the 1%, like me, who don’t want to get their virtual hands dirty by playing Farmville.

Maybe “Rumorville” is the next logical step. Trade in the green of the farm for the green of the portfolio.

Buy and sell analytical tools, inside information, algorithms and television appearances.

Want to be a talking head? No problem. All you need is the right currency. “Want to be a rainmaker?”

Immunity from prosecution? You can buy it, just like in real life.

I suppose that if you’re on the short end of a rumor it’s not very funny, but that’s the chance you take, especially with all of these momentum stocks bouncing around.

For now, as long as Netflix stays above $65 and trades in a predictable range, I can be a very happy guy.

Maybe even enough so to be a sociable kind of guy, as well.

Nah.

 

Follow me on Facebook and Twitter. Clearly my overt display of anti-social behavior is a cry out to be liked.

 

 

 

 

 

 

“I asked her name, she said blah…blah…blah…she wore 9/10 pants and a very big bra…”

O.K. I’m back…..

My “Any Of You”  thread includes a stock ticker. MGIC Investment Corp, whose ticker is MTG. It is probably my favorite stock of the past two months.

It has formed a chart pattern called a cup and handle.

The “Cup and Handle” was first described by William O’Neill in his 1988 book “How to Make Money with Stocks. It is also the same William O’Neill whose name shows up on my caller ID when someone using his good name is pitching a free no obligation trial leading to a subscription to Investors’ Business Daily.

I need IBD like I need IBS. Just talk of Taco Bell makes that bowel irritable. Yet, yo quiero Taco Bell.

Maybe a nice soothing tea instead.

Anyway, the Cup and Handle represents a bullish continuation pattern.

After the handle is formed and hurries to the resistance line which is predicated by the tops of the shoulders as well as the head….ah “head” one of my favorite words…say it again “head” I will be back in a minute….O.K I’m back…the thrill for all chart watchers occurs “THE BREAKOUT”

Not the OXY 5 breakout where you have to cleanse properly like Jessica Simpson., this is the cash money breakout. Not cashmoney as in the rapper crew….this is DOLLARS AND CENTS….blue skies….no resistance type of breakout. This is what we wait for as we have nurtured the formation of the cup ourselves from early August till early December.

You are in a relationship with the cup.

You watch it go up and down. You tell it where to go.

You get mad at it when it goes down and you give it an “ATTABOY”  when it goes back up.

As you get confirmation of the formation of the handle you realize you have fathered the cup to finality. You have led it down the preconceived path that was destined for your precious cup

Ah, what a proud PAPPA.

As MTG prepares to leave its nest and head for blue skies you realize the hard work it took to get to this point. How many ups and downs did it take to reach the end point? But you needed all the ups to realize the downs and all the downs to realize the ups. Without all this there would be no cup and the handle would have nothing to attach itself to, thus voiding the breakout.

No ups, no downs?

That means no handle and no breakout. All the ups and downs are IMPORTANT….they are VITAL…to complete one’s journey….one cannot be accomplished without the other….

It all boils down to that classic “WHAT GOES UP MUST COME DOWN” unless it has lasted for 4 hours then quickly call a doctor or in my case screw the doctor I am calling 1-800-…or maybe I should just screw the doctor if I am going there any way.

I think I am on to something here.

“You ….you got what I need but you say he’s just a friend…..yeah you say he’s just a friend…oh you…you got”

O.K. I’m back….

Life as a stock is no different than our lives when it comes to ups and downs. Both need the ups and the downs to form the end point. You just do not realize the relevance of the parts at the time of formation but it becomes crystal clear in the end.

As for MTG, I give you a personal thank you for the opportunity to watch you grow from a little $2.16 kid to a $3.78 teenager and looking forward to your $5.26 tenure as an adult.

PAPPA is proud but after $5.26 you are on your own as I need to nuture my other kids.

“The cats in the cradle and the silver spoon…..”

 

I have a very cloudy crystal ball.

The cloudiness is internal and is just reflective of my own degrading and poorly capable neural mechanisms. It just doesn’t know how to deal with data and apply appropriate weightings to streaming information. It also seems to be incapable of consistently recognizing when patterns are likely to reverse.

My crystal ball is also in need of dusting as lots of extraneous factors get in the way of rationally approaching the prediction business. Some of those external factors may be personal baggage, while others just represent the irrational world as it attempts to interpret facts and rumors.

Anyway, my crystal ball is in constant need of dusting.

So I don’t begin to believe that I know what’s going to happen by even the next keystroke. I’m envious of all of those that regularly appear on TV and are able to forecast the future.

I’m especially envious of those that don’t care about the eventual outcome of predictions and who don’t believe in the concept of “report cards.” You can either look at predictions as being purely of entertainment value or as a guide for how to live your life.

I don’t see them in either of those ways.

In a perfectly ordered world simple mathematical principles should help to explain all events; past, present and future.

Maybe that’s the way it is on our newly discovered twin planet, Kepler 22b, the one that they’re calling “super earth,” but it sure isn’t that way here.

Yet mathemeticians, statisticians and physicists are widely sought after by financial firms who clearly believe that the market continues to be a rational place that can be dissected into a collection of equations that cascade with great predictability.

Given that the little guy doesn’t move the needle very much, I can only believe that in a zero sum game the big winners of the day are very similar to the big losers of that same day, in that both place great reliance on high priced objective tools that are used to predict the behavior of a rational market.

I can also surmise that those that win on one day are every bit as likely to lose on the next, as is the opposite true.

Otherwise, we would see the extinction of those that are in the habit of losing and then it would no longer be a zero sum game.

It would be a Charlie Sheen like universe with only winners prowling the markets.

As result, the only logical explanation can be that the crystal ball used by the big boys is every bit as cloudy, but is more capable of moving the needle.

Presumably, trading algorithms can only suffer from cloudiness of design, rather than being subject to dustty conditions, so they have me at an advantage.

The one thing my crystal ball has been good at has been to realize that computer storage media will evolve, leaving older prehistoric forms worthless as the hardware necessary to read the media of yesterday all become extinct.

So before the inevitable would happen I always transferred my files to the latest generation of storage. My old 5 1/4′ floppies gave way to 3 1/2″ less floppy disks, which in turn gave way to CD, then to DVD and then to various USB ported external devices. To my credit, I also foresaw the need to skip the Blu-Ray option.

The other day, while cleaning out a closet in preparation for Phase 2 of our re-carpet process, I discovered a long ago forgotten PC in a closet. It was a tremendously heavy first generation Pentium processor with a 1 gigabyte hard drive and no USB ports.

I remember thinking just how “kick ass” that sweet gig of storage was going to be.

And it was until the world invented music and photos.

In the time before there was art of any sort that computer was all that anyone could have ever needed.

I didn’t dust off that computer, but I did dust off an old statistical analysis program that I used to use back in the days when I actually did “research” and back when my existence may have offered “added value.”

I thought that perhaps a methodoligical approach to data could help my crystal ball see just a bit more clearly.

Luckily, I’d saved the installation disks, which had come on those 3 1/2” floppies onto a CD, in anticipation of the death of the floppy. I even knew where to find that CD, although I hadn’t used the program in about 10 years.

What prompted the need to dust that statistics package off was the desire to see whether there was any correlation between Friday and Monday market closes over the past 6 months.

My semi-casual observation indicated that there was some kind of an association, but I needed more confirmation.

Obviously, the very thought that I would uncover some previously undiscoverd correlation was delusional, as if all of the highly compensated people designing prediction models hadn’t already looked at every single possible relationship imagineable. I mean if someone has looked at variables such as Original conference of Super Bowl winner in a leap year, then days of the week had to be a given.

It’s just that no one ever told me.

Increasingly, it had empirically seemed to me that we were seeing large moves on Fridays which especially puzzled me if those large moves were to the positive side.

WIth all of the uncertainty these days, whatever happened the the adage of not wanting to be long stocks over the weekend?

Take this past Friday, for example. The market ended up just shy of 200 points.

Again.

In fact, we’ve seen 13 triple digit moves on Fridays over the past 31 weeks. 7 of those have been upward moves. Since George Bush declared that he had won a mandate in 2000 with less than 50% of the popular vote, I suppose that you could be justified in saying that 7 out of 13 represented a mandate of some sort.

But as it turned out, no matter how I sliced, diced and transformed the data, the chances of having a big move on Friday is not likely to predicate anything for the coming Monday. What is not likely to happen, though, is seeing a triple digit upward move on Friday followed by an equal move on Monday.

In fact, of the 16 triple digit moves on Monday, only 5 had been preceded by a triple digit Friday.

Too bad.

As the final week of the December options cycle comes to an end, I only need toi replace shares of Green Mountain Coffee Roasters and Netflix, due to assignment.

That means that everything else could benefit from a nice rise on Monday.

What I can predict is that on weeks that I suffer lots of assignments I love seeing Mondays open in a decidedly negative direction so that I could use the newly available cash to pick up bargains.

I can also predict that on those weeks that I don’t have much cash to reinvest I love seeing a strong jump out of the box so that I can sell optins into the strength.

I suppose that represents an algorithm of some sort. I may have to give myself a nice Christmas bonus for that one.

After dusting off the statistics program and evaluating the past 31 weeks of Friday and Monday closing data, creating subsets of triple digit moves on either of those days and then looking at absolute values, as well, I came to the conclusion that nothing really mattered.

“The trend is your friend” has given way to “MoMo” stocks that could just as easily become your worst enemy as your friend.

With all of the talk last week of a stock market melt up, coming fresh off the heels of the same people who the previous week had characterized the market’s move as reflecting a “dead cat bounce,” my inartful analyis says that there’s very little reason to believe that any melt up will happen on Monday.

If I’m wrong, I can always go back to my old profession and at least put that duster to the use for which it was intended.