My family (3 kids, wife and I) just completed a 2800 mile trip around the US East coast this week. We went NY => NJ=> PA=> WV=> OH=> IN=> IL=> WI=> IL=> MO=> TN=> KY=> NC=> TN=> VA=> MD=> PA=> NJ=> NY

The main feature that I would like to note is that there is plenty of business all over the US and every Joe Shmoe is drilling for oil in his back yard. There are plenty of places that sell oil drills and virtually all the oil wells in all the states were running. How would that impact the price of oil?



 In Vic's recently cited Nutmeg of Consolation, my favorite so far, Aubrey has his ship dressed as a sloppy merchantman, and he and the deckhands are in costume as merchantmen in a level 1 deception as they try to trick Cornelie a French Ship to allow them to get close enough at anchor to blast them by surprise. They ruse is pierced, and a chase ensues in a level 2 deception. Aubrey is trying to lure the French Ship out in to the Straight where he can turn up wind on him and blast him at close quarters with his powerful but short range guns. Aubrey sails slow enough to make the French captain want to chase him, and has to pretend he can't sail faster, without being obvious that he is sailing slower than he can in order to convince the French captain to not give up, and to give chase. Aubrey rigs a decoy for the French ship to follow at night as he plans to set up an ambush. They lob cannon shots at each other during the lengthy "chase". Rather than the plan coming to fruition, a lucky shot holes the French ship which takes on so much water that it founders, all hands exhausted from pumping. Victory by different means.



VN.pngIn considering the phases of the moon I found the following two passages partially illuminating:

"Considering the moon as a circular disk, the ratio of the area illuminated by direct sunlight to its total area is the fraction of the moon's surface illuminated; multipled by 100 it is the percentage illuminated. At New Moon the percent illuminated is 0; at First and Last Quarters it is 50%; and at Full Moon it is 100%." Source

"When a sphere is illuminated on one hemisphere and viewed from a different angle, the portion of the illuminated area that is visible will have a two dimensional shape defined by the intersection of an ellipse and circle where the major axis of the ellipse coincides with a diameter of the circle; if the half ellipse is convex with respect to the half circle then the shape will be gibbous, bulging outwards, whereas if the half ellipse is concave with respect to the half circle then the shape will be a crescent." Source

The explanations made me start thinking of the angle of incidence and the angle of reflection, and the % of the time that a market is above zero and below zero, and other concepts engendered by the phases of the moon.

I wonder what other ideas about markets are generated by considerations such as the above. Also, a layman's proof of the ellipse/circle statement might be helpful to speculation.

Jim Sogi writes:

Speaking of moon effects, there is one of Vic and Laurel's classic penumbras forming off the 1400 round in S&P off this recent high.

Also, the other image I got is the kids playing jump rope with a kid at each end spinning the line around. There is a definite drift to the spin in one direction, but one can play the spin until tapping out or whatever they call it. Its definitely tradeable though may or may not show on radar of a fixed wavelength. The game is different at the bottoms than at the tops for sure. Do kids play this game anymore?

Andrew Moe adds:

Reminds me of earnings season. First Alcoa, then a handful of others. The first sliver of the waxing moon. As the days pass, the number of companies reporting earnings steadily increases until a full globe of information illuminates the markets. Hunting/gathering levels peak just as the flow of earnings begins to dissipate. Next comes the struggle for survival on diminishing resources as the moon wanes into oblivion. Only the strong will survive the dark days until the cycle begins anew.

Phil McDonnell enlightens:

Phil.pngThe side of the Moon facing the Sun always looks like a circle from the perspective of an observer on the Sun. The simplest way to understand how the shape of the visible lighted portion of the Moon changes is to view the circle of light as a rotating circle. It is well known in mathematics that a circle rotating on a North South axis will appear as an ellipse in general. It will only be a true circle when viewed full on.

From the perspective of a viewer on Earth the circle of light on the Moon is rotating once every 29.5 days. So from the Earth perspective the line between day and night on the Moon will generally be visible as an ellipse because it represents the edge of our rotating circle of light. However the lighted edge of the Moon is still circular at all times so the edge of the lighted portion will always be described by a circle. Thus the combination of one edge bounded by a true circle and the day-night line of demarcation by an ellipse will always be true.

To understand the convex concave claim we need only consider the ellipse formed by our North South rotating circle. When the Moon is exactly half full corresponds to when the circle is rotated by 90 degrees and faces us edge on. At this time the ellipse appears to collapse to a straight line because the circle is edge on. This is what happens at first quarter and last quarter Moons. During the Gibbous phase the ellipse will appear convex from Earth because what we are seeing is the convex portion of the lighted ellipse. Similarly during the crescent phase (either waxing or waining) the visible ellipse will be the concave portion of the lighted circle.



Aoccdrnig to rscheearch at an Elingsh uinervtisy, it deosn't mttaer in waht oredr the ltteers in a wrod are; you can sitll raed it wouthit porbelm. Tihs is bcuseae we do not raed ervey lteter by itslef but the wrod as a wlohe. [Internet meme].

The realization that visual literacy is contextual, that individual words can retain their integrity of meaning, even with multiple misspellings, if their sentence structure remains intact was an offshoot of Chomsky's revelation about universal grammar. Unfortunately, it led to conclusions and results far more vicious that his political theories have. Beginning in the 1970s the professional education establishment decided that reading could be taught by words rather than syllables, and that spelling was optional. The tedious repetition of the alphabet and the learning of words through syllables could be dispensed with, and the social tyranny of "proper" English could be overthrown. What this marvelous theory of "whole word" education failed to consider was that language first enters the brain through the ear and not the eye. Learning to read is a matter of attaching symbols to sounds. What the theory also ignored was that the writing systems that had a symbol for every syllable — cuneiform, hieroglyphs, Chinese — were inordinately difficult compared to alphabetical ones — and that no writing system, not even Chinese, was purely ideographic — i.e. with each symbol representing a word.

The result was that the mega industry of pre-school, Head Start, et. al. — the educational-civil servant complex — had produced a literacy rate lower for the country than it had been in 1820, when there was no public education at all. In deciding to throw away the alphabet and the wonder of its extraordinary fuzzy logic (26 characters being able to symbolize millions of syllable sequences), the whole-word theorists were following the logic of Chomsky's original bias against commerce itself. After all, our American alphabet has its origins with the Greek traders and pirates who took up Phoenician alphabetic writing as a way of keeping tallies on their inventory and plunder and placing orders for the next trade.



When I was a kid, I was always looking for an easy way to make money. My dad used to point out laborers working in the hot sun, explaining that "Those guys were the ones who didn't care about their grades." As always, my dad was 100% correct, and I didn't want to end up like that, preferring to make money in an easier manner.

Since I liked to play games as a kid, I tried to get as good as I could at whatever game I could master, then play it for cash. I found limited success, but after awhile, my friends avoided playing against me like the plague. During high school, I used to spend a lot of time playing poker in various places that would be considered to be shady, but those games were out of the orbit of my friends and presented opportunities to make money. I played a pretty tight- mechanical game those days, and observed the sharp type of guys, and how they operated. It was in those games, from those guys, that I discovered the beauty of proposition bets. A proposition bet is one of those "I'll bet you that….." followed by what would seem to be an impossible outcome, and a guaranteed win for anyone who would take the bet. Of course, the person taking the bet would be opening his wallet right after he lost. I watched those guys making different prop bets, then filed them away for further use. Since I was rather studious, I went down to the library and found volumes upon volumes of ideas for proposition bets. By the time I was in college, I had a repertoire of at least a thousand different bets, plus variations on each of those bets. I had so many bets tucked away in my brain, and also in my journal, that I could come up with a bet in almost any situation. My immediate friends stopped betting with me after awhile, and I had to find places where greedy people congregated, such as the track, poker games, bars, and the exchange. People would take my silly bets and be surprised that I could really tie a cigarette in a knot without breaking it. They would be amazed that Jackie Robinson wasn't the first black baseball player in the majors, and they would literally fall flat on their face when they found out that George Washington wasn't the first president of the US. The best people to pitch the proposition bets to were the greedy, gamblers, sportsmen, and speculators, as they would think they had an edge when in reality they had no edge at all. Gamblers were great, as I devised little card games that looked like a certain loss for me, when I really had a 4% edge. I'd play those card games with a freeze out condition, guaranteeing my 4% grind. If I lost on those games, I paid with a smile. Some of my little card games like "Face-up poker" offered me a 100% edge. Sportsmen were great, especially when they found out that I could tee off with a driver, and make that golf ball go a mile on a flat surface(OK, I did that one the day the lake froze over with sheet ice which happens to have the lowest coefficient of friction in nature). Speculators took my bets with glee, as they didn't think I could really throw a pumpkin across the trading floor…after market hours, of course. I made a lot of money off of those bets over the years, and the people I considered to be suckers were paying my bills I would allow myself to be the victim of a prop bet (after getting the price as low as I could), and would use that bet later and eventually make a profit.

The market offers a thousand prop bets a day, with millions of suckers waiting to be fleeced. A few months ago, a fraternity brother of mine who's a broker called me offering me a great investment priced at 98. I hit the offer, and later in the day saw the great investment (I won't say what it was, it was so bad), offered at 90. Even though I was angry, a little voice in my head told me that I shouldn't have whacked him so hard in college betting him that he couldn't fold a sheet of newspaper in half 11 times in a row. I made 20 bucks on that silly bet in college, and lost a thousand times more on that slam dunk investment. I guess that suckers come in all shapes, sizes, and colors and that at one time or another, we're all suckers.

Nowadays, I don't do prop bets, but will bring them out at a party and show them for free. People will be amazed at my cleverness, and be mildly entertained. I do see that gleam in some eyes that tell me that someone's going to get fooled or taken for a lot of cash the next day.

Steve Leslie adds:

As far as winning money. There is a great line from the movie Rounders. Matt Damon quotes Canada Bill Jones one of the great characters in the world of gambling. "Some people think it a crime to take money from people, I consider it a crime not to."

Some other famous quotes from Bill Jones were:

"A fool and his money should have never gotten together in the first place."

"A Smith and Wesson beats four of a kind."

There also is the old story of Canada Bill playing in a crooked faro game in New Orleans. It was in the back room of a barbershop. One of his associates, George Devol found him there and saw immediately that the dealer was cheating using a "two-card" (rigged) box. He begged Bill to quit the game. "Can't you see this game is crooked?" Devol asked. "Sure I know it, George," sighed Bill with resignation, "but it's the only game in town."

Let me say this about poker. Nobody and I mean nobody ever helped me learn anything about how to play the game. Everything I learned I paid for. I remember a line that an oldtimer used on me that resonates to this day. I was in a pot against the wizened and very seasoned veteran and I put in a healthy raise prior to the last card to come out. After a bit of hesitation my opponent made the call. The last card came and I bet he raised and I called. He turned over the winners. I knew he beat me on the last card. I responded with "How in the world did you make that call with the last card coming?" He looked at me and said "you paid to see my cards, lessons cost extra."

From that moment on, I learned that if I was ever going to get any better it was up to me and nobody was going to give me a get out of jail card free.

After 30 years of buying and selling stocks I have learned one inviolable lesson that the same rule holds true today as it did so many years ago. "Either learn how to play the game or bring more money."



Knock knock!

Who's there?


Uptick who?

No Uptickrule 7/6/07

Some have suggested recent volatility may be linked to repeal of the uptick rule as of 7/6/07. Certainly volatility has been high since then, as shown by F-test comparing variance of post no-uptick with the prior period (at least in terms of SPY: stdev of cls-cls returns 93-7/5/07 vs 7/6/07-present):

Test for Equal Variances: post, pre1

95% Bonferroni confidence intervals for standard deviations

.     N     Lower    StDev     Upper
post   203 0.011560 0.012853 0.014457 (post-7/6/07)
pre1  3635 0.010327 0.010599 0.010885 (prior)

F-Test (normal distribution)

Test statistic = 1.47, p-value = 0.000

Levene's Test (any continuous distribution)

Test statistic = 18.53, p-value = 0.000

But in comparing the post-no-uptick period of 204 days to the 17 other non-overlapping 204 day periods since 2004, the recent period is not that unusual (see attachment: 1=post uptick, with 95CI for variances), and it would be hard to argue much beyond partial causation.



JGB (Japanese Government Bonds) futures were limit down on Friday, after CPI was confirmed at a rise of 1.2% yoy. CPI in Japan includes energy, so the rise was widely expected. Nonetheless, bonds were crushed. Indeed, since the recent peak of bond prices in Japan, which followed the Bears Stearns news, JGB futures have fallen close to 7 full points. Each point represents about 9.2 bp of a 10 year bond yield. Given the extraordinary low level of rates in Japan, such a move is unthinkable in percentage terms. Heres the rub: prices in Japan, excluding food and energy, akin to the USA CPI measure, rose just 0.1% yoy. Wages are declining and consumer spending is flat-lining, so it hard to see a real inflation problem arising here anytime soon. I am not a long term JGB bull, but if you think stocks are temporarily overbought and bonds oversold, then JGBs represent a great trading opportunity. Be careful though. The contact size of one JGB future is approximately 10x the size of an equivalent CBOT USA 10y future. JGB fututues are listed on the Tokyo Stock Exchange.



Floridians tend to think about stockpiling food around the beginning of the hurricane season or at the first instance of a storm brewing off the coast of Africa. Take a run over to Costco or Walmart and load up on water, paper products, canned products, batteries (especially when the governor implements the tax-free shopping, hurricane prep. days), etc.

My earliest remembrance of bulk purchasing as an "investment" strategy was reading it in an Andrew Tobias book back in the 70s—in the inflationary times after the Arab Oil Embargo.

It makes sense if you have the room to do it and you do not end up wasting the food or products. You save on gas, trips and time to the store and you always have something in the pantry when you get home from work–so you may feel less need to eat out at an expensive restaurant. It is a bit of the squeezing a penny till it screams philosophy. It takes a bit of discipline to cut down on expenditures but trimming 10% and saving it is likely possible for many to do.

From an article by Brett Arends in WSJ Online:

Stocking up on food may not replace your long-term investments, but it may make a sensible home for some of your shorter-term cash. Do the math. If you keep your standby cash in a money-market fund you'll be lucky to get a 2.5% interest rate. Even the best one-year certificate of deposit you can find is only going to pay you about 4.1%, according to Bankrate.com. And those yields are before tax. Meanwhile the most recent government data shows food inflation for the average American household is now running at 4.5% a year. And some prices are rising even more quickly. The latest data show cereal prices rising by more than 8% a year. Both flour and rice are up more than 13%. Milk, cheese, bananas and even peanut butter: They're all up by more than 10%. Eggs have rocketed up 30% in a year. Ground beef prices are up 4.8% and chicken by 5.4%.

Andrew Tobias calculates a 50% return by buying wine at 10% off in bulk.



In a gentler day, Charles Dodgson ("Lewis Carroll") wrote a conversational essay:

Eight or Nine Wise Words About Letter Writing

He anticipates all the modern conveniences of word processing, email, and describes a system for keeping a file copy, and generating a precis and index of correspondence of various type. He also has a foreshadowing of practice I usually attribute to Harry S Truman after HST incautiously sending his letter to critic Hume (my statement of the practice follows):

Write freely, to organize ones' thoughts, and to capture and spend the emotion, but then place the draft in the top desk drawer to age a bit before sending.

I see 78 'composed' but unsent email in my 'pending' folder. Most will never be seen by the recipient I initially started writing them for.

Back to the Dodgson quote:

Another Rule is, when you have written a letter that you feel may possibly irritate your friend, however necessary you may have felt it to so express yourself, put it aside till the next day.

Vincent Andres adds:

French diplomat Talleyrand was doing that with some of Napoleon's letters. In some cases, 2 or 3 days later, Napoleon asked, if it was not sent, to destroy the concerned letter…. and was quite happy it was still doable.



How many things are there in baseball, the swings, the runs, the cycles, the signals, the deception, the consistencies, the standings, the All Stars, et. al., that are directly relevant to trading and could make us better?

Allen Gillespie replies:

I grew up a Braves fan and unfortunately after watching them win many pennants but only one World Series over a decade of dominance I can say this: there is a significant difference between championship teams and good regular season teams.

This is andedotal, but their one champion team I think won close to 30 games in the 9th innings. Spec lesson: never give up, keep it tight, and focus in the clutch. 2) The Braves have always had deep pitching — which helps in the regular season, but in the playoffs things change as teams shorten rotations, and so the Braves were always a bat or two short in the playoffs. Spec lesson: play the late months (Nov, Dec) — more offensively than the long season months. 3) Champions, even when they loose during the season, rarely get blown out because there is too much pride. While I have never been a Yankees fan, Derek Jeater did earn my appreciation when I saw him in some meaningless game during the season hustle to catach a fly while crashing into the stands on the 3rd base line and busting up his face a little to make an out.

Tim Melvin expatiates:

First, it is a long season. Although you have to play to win every day, no team ever has. Winning 100 out of 162 is considered a mark of greatness. A trader who wins 60% of the time day in and day out will probably also reach greatness. There will be losing days in the market as well. Shrug them off and learn from them. There is another game tomorrow.

Swing for the hits. the home runs will happen on their own. Sluggers who routinely swing for the fences every at bat may hot a lot of home runs. they will strike out a lot as well. Good hitters look to make solid contact knowing that the home runs will come when the conditions are right. a fastball inside or a curve hanging out over the plate. The major concern is to put the ball in play and advance the runners. In trading the objective should be to make good trades. the home runs will happen on their own when the conditions are right.

Focus when the play starts.
Baseball players seem to stand idly around between pitches. But watch how they focus once the pitcher steps on the rubber. Once you hit they key to enter the order, it is time to pay attention.

Situation matters. It is okay to steal second in the third with no outs and no score. In the 8th with the game tied and two outs it is usually not such a great idea to waste the potential winning run. A bunt early in the game with the bases empty and a three run lead does not make a lot of sense either. But in the ninth with a runner on first, no out, a tie and the top of the order coming up, its time to lay one down. If the markets is making new lows several days in a row, it might make sense to buy big on the long side. if it has been making new highs, maybe not so much.

Sometimes you just don't want to pitch to the guy. If a power hitter is up, a base is open and the game is on the line, it might make sense to just walk home and face a less powerful hitter. Sometimes, the small loss is the best one if it appears powerful forces could cause your trade to go strongly against you.

The game is not over until the last out.
Keep playing. baseball is riff with stories of 5 run comebacks in the ninth. So is trading. Stay focused and look for the chance to rally.

Defense matters. Ask the Texas rangers. You can play powerful offense but if your pitching and defense callow the opponents cheap runs, it is hard to be a winner. If you have large winners combined with large losses all the time, it is tough to win over time.Not every team will win the World Series. Only one will. But a winning record and playoff appearances fill the seats with fans. Not everyone can be the best trader at every time, but you can be a winning trader.

If you can steal the other teams signals, or just figure them out, you have an advantage. In the market you can gain one by being aware of what large successful traders and investors are doing. Thanks to COT reports and sec filings, it is easier for investors than ballplayers!

What position are you playing and what is your role? Pitchers and catchers are involved on each and every play. Fielders have to watch every play but are only involved when the ball is hit their way. The designated Hitter is only involved three to five times a game at most. Short term day traders are in every minute of every day. Macro oriented traders only when the markets move towards their entry points. Longer term investors only when conditions are exactly correct for entry. Knowing what you are trying to achieve and what style fits your strengths can be critical to your success.

It takes more than one person. Ask Barry Bonds or Nolan Ryan. you can be the best ever at your position but if the team around stinks it will be hard to succeed. in trading I think this goes beyond just the coworkers and analysts you might work with and take advice form. our team is those people we surround us with, bounce ideas off of, celebrate wins and suffer losses with at the end of the day. Our team is our family, friends and confidants. I do not think anyone can be successful without having the strong network of friends with them along the way. It is like being a pitcher with no team. you cannot just be good, you have to perfect as any ball put in play is a run. Pretty damn lonely even if such a perfect person were to exist.

Be ready when called on. Recently jay payton of the baltimore orioles went 5 for 5 as a late inning pinch hitter. it is a big reason the Birds are winning right now. Same with the bullpen. Even when market conditions are not right for your type of trading, stay sharp and focused. You never know when a late inning rally puts you in a position to come off the bench and drive in the game winner. Markets and games can change in the blink of a surprise fed announcement or a three run homer. be ready.

There is more to life than baseball. You must practice your skills, study your opponents and work hard. But it helps to be able to relax away from the game and enjoy other endeavors as well. Same with the markets. Study learn, anticipate, but take the timeout for books, music, friends, family and all the other things that actually make life so damn good. Maybe even take in a baseball game once in awhile…

Dean David adds:

In hitting it is important to let the pitch thrown determine what type of swing you offer. As an example, Rudy Jaramillo teaches hitters to try to hit outside pitches to the "opposite" field. Frequently this approach results in a firmly struck single, where attempting to "pull" an outside pitch will result in a weak grounder the opposite way or a "pop up". It appears that this is lost art early in the season as many hitters look to bolster power numbers by pulling every pitch without regard to its location. Strategy for the pitching coach would be to pitch away to hitters that have yet to demonstrate a willingness to "go with the pitch". This is an addendum to Mr. Melvin's comments about the importance of singles.

Jeff Watson comments:

In baseball, one must always be on the lookout for a pitcher who throws a spitball, a 3rd base coach who steals signals, and a batter who uses a corked bat. In trading, one must look for the same type of behavior.

Alston Mabry notices:

Some similarities between baseball and markets:

Random events are interpreted as meaningful: "Have you noticed how many times you see the guy who made the last out on defense be the next guy up at the plate?"

Talking heads use meaningless stats to produce commentary: "Rodriguez is hitting .243 for the season, but on the road against left-handed pitching, he's only .218."

Lots of fresh data produced every day.

Quants taking innovative approaches see some success, e.g., Boston.

People will, in fact, cheat to get ahead.

The public gets tapped to support the infrastructure.

In the long run, the better teams steadily increase their lead over the poorer teams. In the short run, e.g., the playoffs, "anything can happen."

Phil McDonnell writes:

Some years ago I coached my son and daughter' teams in baseball and softball respectively. In particular one phenomenon noted was that there was a king of the hill effect. We recall that king of the hill is the game where one kid stands on the top of the hill and all the others gang up to bring him down. Then a new king emerges and the gang has a new target. Needless to say no one ever remains king for long.

In my Little League days the effect was the same. Aware of the king effect our team somehow managed to lose every single pre-season game in every year I coached. Naturally one took the opportunity to mention it to every other coach in the League.

On opening day we made slight adjustments to the line-up. Somehow we managed to win 7 out of the first 8 games - yes, every single year. We played about 16 to 18 games each year so that was about the mid point of the season. Usually about then people started to try to figure out the standings. At that point the season got a lot tougher. Coaches would know that we were on top and invariably we would only see the best pitcher on each team. The only advantage that our team had in the latter part of the season was that my batting order simulation model was getting smarter because it had more statistics on our players as the season went on. My estimate was that the model gave us about a 1 to 2 run edge in every game and the average number of runs was about 6 so this was considerable. Still somehow we managed to come in first or second every year, but the headwind from the king of the hill effect made it much more difficult.

The parallels with the top trader or money manager each year are profound. When a manger is on top two things happen. First his style or technique becomes reverse engineered and his trading space become more crowded. Secondly the king of the hill effect is at least as strong in trading as in baseball. If one was number one last year then literally everyone else is out to get you. Literally the other managers and traders cannot afford to let anyone stay at number one too long. They would lose all of their accounts to the top trade. So they have no choice but to gang up to survive.



 At this time of year in Oklahoma I mind our flag closely. The Stars and Stripes are tattered and torn after a windy winter. Yet I should not take it down too soon. I know the winds pulled in by the Passover moon will bring hours in the middle of the nights in the storm shelter, waiting. The whipping crack of the torn ends gives an early alarm to the slumbering but alert ear of the household head. The folks here also need the reassurance of the proud familiar guard of our Stripes furling above their doorpost. Often with these early northern tornado watches comes a cold rain, which can turn the next day to ice.

The sharp winds and vigilant nights make the milder cold sting all the same. A quick morning glance to the flag shows the strength and course of the day's wind, giving direction for the day's apparel. These cloudy days make the morning late and the evenings early, bring a mood of eternal winter. But a closer monitoring of the flag shows a few more days of southern breezes. At this sign it is time to plant the pale vegetables, which would wilt in the sun, and the rooted crops, protected from the mild cold.

Yet, the shifting winds pushed in from the south by the Resurrection moon bring a sense of purpose to the risk. My morning run often start with a bombardment from our maple's helicopter seeds scattering across our drive. Some bet early on the value of timing given by the northern winds, some later on the warmth of more assured growth but competition given by southern winds. The fierce shifting winds give the seeds their calling to randomly cover every inch of our lawn. At the end of the day's run I am greeted by a chorus of praise from a congregation of colorful tulips, underneath the doorpost banner. Their arms are raised and heads bowed, with their cups half full, shouting their gospel songs amplified by the sunrise after the night  storm. Signaling that it's time to get busy and fill my humble garden.

Here in Oklahoma I often ponder when to invest in that new flag, not too early lest it be torn and our Stars disappear with Orion, nor too late to add to the beauty of the spring rising.



Valdez Alaska is at the edge of the civilized world with literally millions of square miles of wilderness several hundred feet from your doorstep. The size is beyond comprehension. Each ridge and valley and glacier in the close by mountains can each contain Manhattan and there are scores of peaks and glaciers in each area, and thousands of peaks stretch off in the distance. As for Global warming, two days running had record cold temperatures for April and the glaciers are the size of the Hudson river stretching off into the distance. The amount of knowledge the heli guides must learn at a minimum to survive is huge, but attempting to understand the millions of changing variables out in the mountains is beyond human ability. Traders often consider the market to be complex, and having many random variables, but even then, the horizon is limited to mostly fixed rules, and a relatively closed system. The open system of rapidly changing and huge variations in weather, snow, wind, at various aspects,locations, altitudes, is huge. The risk is death. Yet many young or adventurous crave the adrenaline rush of flying around the steep craggy peaks and standing at the top of a precipitous chute through cliffs in deep and variable snow conditions. It is like an addictive drug. The risk of death is real, and the skill level required is very high. Mental attitude, physical condition, and skill in riding the conditions are prerequisites.

The roar of avalanches regularly interrupt the absolute silence of the clear and still mountain air. The helicopter lands at the top of steep craggy peak, with less than a 4 foot area or less at the top to get out and huddle atop with the equipment. On each side there is a 3,000 foot drop, straight down, with cliffs on both sides. The guide tests the snow to try determine is stability and tendency to avalanche and determines the safest line through the cliffs to the glacier below. The hill is so steep that when standing next to it that you can touch it with your hand. Skiing down through the powder sets off "slough" which slides down the hill in increasing cascades and must be avoided. Huge crevasses big enough to swallow a helicopter are covered by unknown snow bridges and must be avoided. The debris from avalanches with the consistency of concrete must be avoided. Safely maneuvering to the bottom is a thrill up there with winning a big trade on high leverage.

Valez is a sleepy little town with one grocery, a few hotels and restaurants, and a handful of rental cars. People are friendly and don't seem to have much work in the winter. Things are cheap compared to Hawaii. People there are salt of the earth. Many Europeans were there with the strong Euro. I met Swiss and Germans who were friendlier than usual. The Serbs were there.

The study of snow is a complete science in itself. The natives are said to have 26 names for snow, but in fact there are hundreds of various snow conditions and combinations. Traders would be well advised for their survival to take similar notes and identify the conditions such as Vic has proposed in the table of elements. The guides have notebooks and check the temperatures of then snow at various depths. The take photos of the surfaces. They compare notes. The names of the snow they make up are "chalk", "sugar", "powder", "chowder". How about naming some of our market conditions? Today's early market was mushy with slough offs. Recent market action reminds me of the snow conditions. The snow falls and can set up. The prior condition and temperature of the surface affects its ability to adhere. So prior market conditions affect today's market action. If the conditions are unstable, the snow can build up tension, and then suddenly release in an avalanche. It seems that we have experiences such a phenomenon in the markets. April 23 for example in the after market small avalanche. This reflects the craggy peak from yesterday and the last few days causing an unstable underlayer and steep aspects making is hard for the new money coming in to have a stable base to adhere. On the other hand, a solid base, as in O'Neill type terms, might give a good surface for an ascent. There are crevasses in the market action that can by avoided by identifying conditions where they might occur. One can examine prior market action and determine how it might affect today's or tomorrows market conditions just as the guides test the snow to predict how today's run might go. For example some big steep runs in markets might presage more similar. Or a day of flat action might predict more, but after several days of flat mush at high altitude might increase risk of avalanches. It's a fun exercise.



Several years ago peanut butter prices went through the roof. I simply quit eating it for a time till the price fell. I ate a lot of rice in Korea while stationed there in the Army. At that time people in the villages had out houses and the 'honey dippers' came through on Saturdays to bucket out the human waste and loaded it onto a large truck. When the honey dippers came the streets cleared! The waste they collected was taken somewhere to be spread and dried and later used on the fields for fertilizer of rice. Monday in Columbus, OH I ate at a favorite restaurant of mine, Polaris Grill, and had spicy Havana Mahi and rice and black beans and a nice sauce and veggies. I can see our own local Chinese carry-out having to boost prices soon due to rice increases. As with peanut butter, I will cut back on my rice consumption if necessary.



1. It is interesting to observe the earnings changes, surprises, and outlooks.

Here are some figures for S&P 500 from Bloomberg as of 4 18 2008:

number reported 100

higher 59

lower 41

weighted by cap -38%

pos surp 58

neg surp 42

Previously reported outlooks for the first quarter from sp 500 companies was 51 up an 146 down from previously reported estimates.

In short, the big companies , especially the financials reported down earnings, most companies reported up earnings relative to last year and previous estimates, and the estimates had been revised lower over the previous quarter.

Continuing operations earnings from most companies continue to be up, but non-recurring writedowns are not considered. And this is probably how the earnings increases each year tend to be much higher than the changes in book value adjusted for dividends.

2. One wonders these days if when some sectors show bad earnings, that apriori makes it likely that other sectors will show good. For example the financials show bad, but the others are good. 70% of companies are beating forecasts in all industries except fimancials. Presumably consumers and businesses have a fixed stock of desire for spending and when they don't spend it on one sector they spend it on others? 

3. The more I reflect, the more I am convinced that reading Patrick O Brian's works and Ben Green's is the best training for the budding speculator. The changes in strategy, the planning for all contingencies, the deception, and the proper framework for a trading platform are better covered there than anywhere else. The Nutmeg of Consolation is a good place to start for direct lessons in speculation . 



A news item in the Financial Times reminds me of technology industry component shortages:

"Vichai Sriprasert, president of Riceland International, a leading rice exporter in Bangkok, said several of its customers, including governments, were buying far more than they usually did amid fears about scarcity.

'It is panic,' he said. 'My customers are demanding double the usual volume. We would not have enough supplies for all the demand we are facing.'"

When faced with a component shortage, my company allocated the available supply among its customers using techniques such as filling X% of each customer's open orders. Customers learned how to maneuver for larger allocations. When told their deliveries would be delayed because of a part shortage, many customers doubled or tripled the sizes of their orders, trying for a more favorable position in the queue. The book to bill ratio would soar as more orders poured in.

The new orders greatly increased projected component demand. The hapless supplier that was already unable to deliver sufficient material now would now be told we needed twice as much. Our executives would call the supplier's CEO demanding an action plan for when we could get parts.

At some point, the parts would finally flow through, and we would begin to make some shipments against our huge backlogs. As soon as we started shipping full orders, customers would cancel all the extra orders they had placed. Manufacturing managers called this phenomenon the "dreaded diamond". The usual result was a large inventory writeoff six months later as it became clear that all the hard work to increase supply had resulted in a mountain of inventory that could not possibly be used up before the technology became obsolete.



To the extent which moving averages may convey information, there might be a better way to model the decay of investor (emotional) memory decay. Presumably t mattered more than t-1, which mattered more than t-3.

Many biological processes scale logarithmically, so here is an lnMA of daily range which weights each day less by ln(countback) (here for n days). r = range = SPY (H-L)/C:

nD lnMA = {r[0]/ln(2)+r[-1]/ln(3)+….r[-n]/ln(n)}/n

The most recent day's range (r[0]) is scaled by ln(2) to avoid the divide by zero problem.

Attached is simple 10d MA for SPY daily range, vs 10d ln MA, vs 1/10000 SPY close (I used 1/10000 to put it on same scale).



Speaking of neighborhood businesses I note for some years: I have a theory about the profusion of flower stalls and ranks upon ranks of fresh blooms on practically every block in the Big Apple. Since I never buy for myself, and it is usually rare for men (other than the homoerotic) to buy flowers for their singular singleton apartments, who exactly buys these daily refreshed buckets of beauty?

My theory is that so many people are workaholics, that nearly all relationships, married or [merely] cohabitative, are on the slender lip of breakaway, fall-away or breakdown. The men in such relationships, and occasionally the women, returning home late from labors in the mines and pits, feel beholden to their opposite numbers for not making a fuss. They buy apologetics on the quick: transmuted, translated and hybridized floral tributes. What partner and love can resist a dense evidence, a spray of beauty unexpectedly gracing the front entry or the nook near the vestibule?

Thus, when I see men of a midnight toting the cone-shaped waxy paper-engirded crimson-riot blooms in pink champagne and magenta, jonquil and plum, I mentally take a post-it: Here is a man who loves his dame, a man who has failed to arrive home in time for the supper that lies, neglectedly, warmed and re-heated, who semaphores to his beloved that it is no fault of lack of love, only lack of time. Hurrying through the darkened night, he cradles and ferries to his beloved the simplified language hues of laconic but no-less heartfelt love.

His labors on the Board and the Exchange are worthy, but they do not, in the end, quite surround us with the embrasure of affection and approbation we crave. But the loved one's silent and vibrant support and affection despite the lateness of the hour upon hour lends strength, courage and heart to leave again the comfort temples and re-achieve, anew, the dawning day's tests and trials, from near shores and far.

Thus the flowers that hectically and gloriously tier our blocks of Manhattan and environs.

And another day is done.



 I am right now in the process of setting up a 529 plan for my daughter. For those not familiar, it is a college savings plan where the growth of contributions is tax free if applied to education. It is a very good deal. But the main point is that she is 9 months old now, so at earliest this is a 17 year investment, by far the longest I have ever entered. Interesting to think where the developed markets will be in 17 years. All the crises, euphorias, recessions, recoveries, bubbles and busts we will see. But ultimately all those moves will look like rings on an evergreen tree against the backdrop of time. And I also planted a few young spruce trees in the back yard to chronicle the occasion.



 There were all sorts of records in stocks and bonds last week with stocks having their sixth best week in history, and bonds having their 10th worst week. Strangely, only once before have stocks moved up and bonds down this much, the week of March 21 2003, when bonds were down 4.5 points and stocks up 54. Because of the small number of observations the expectations next week for the events singly or in combination are not meaningful.

In retrospect, this was a natural result of the increased liquidity provided by the Central Banks. They were able to get the stock market up, but in the process they raised the specter of inflation again and commodities went through the roof and interest rates had a climactic increase. Thus, the bond vigilantes came to the fore again and forced the Fed to trot out their higher ups to say they are very concerned now about inflation, this coming of course after the 3% rally in stocks so as not to hurt the market too much.

The key event in the climactic moves had to be the big brokerage house bail out. It always seems that the destruction of a big institution is the key to renewed success in the market. It was that way with the big commodities firm, the big Nobel Prize fixed-income fund, and also the big banks and brokerages of the past including Barings in two events separated by 100 years.

The epyphytes like the orchids find it much easier to get to the light after the leaves of a tree have fallen, and they can grow quickly since they don't have to waste their energy in growing support structures of their own . Think of the countless businesses and opportunities for making money that will come now that all the weak assets have been, or are in the process of being, withdrawn from the asset pool.

The same thing happens when Walmart enters a town. A few slow-moving competitors like Kmart might find their business depressed, and the local hardware store might find that many of its customers prefer the lower prices Walmart offers. But these lower prices lead to increased spending and new businesses arise that quickly fill the vacuum.

Such can be expected in the next several years in the stock market, until the weight of the epiphytes is so large that the limb breaks.

Bill Craft adds:

Spanish Moss, a southern epiphyte enjoys a shaded environment whilst dangling from trees within the shaded canopy. Tillandsia usneoides are bromeliads, related to Pineapple.

Contemplating the dangling plumes of graybeard(s) on a recent trip, I could see the colony living off structure created by tall, towering trees intersecting the mists that provide life giving nutrients.

The support and sustenance offered here rhymes.

Steve Ellison expands:

A corollary might be that, when interest rates rise and credit is restricted, and a big institution has not yet failed, markets will behave in very unexpected ways in order to locate the vulnerable institutions and force them to liquidate at distress prices. As Damon Runyon said, "One of these days in your travels, a guy is going to come up to you and show you a nice brand-new deck of cards on which the seal is not yet broken, and this guy is going to offer to bet you that he can make the Jack of Spades jump out of the deck and squirt cider in your ear. But, son, do not bet this man, for as sure as you are standing there, you are going to end up with an earful of cider."

As an example, Goldman Sachs said that the results of pairs trades in August 2007 were 25 standard deviations away from historical averages.  The market was doing its best to find someone vulnerable.

Stefan Jovanovich objects:

The line quoted is not from Damon Runyan's Idyll of Miss Sarah Brown but from the screenplay for the movie of Guys and Dolls. The credit should go to Jo Swerling and Abe Burrows who wrote the book for the musical and Joseph L. Mankiewicz and Ben Hecht who reworked the musical into a movie.

Kim Zussman drifts off subject:

Here are some fortune cookies appropriate to these difficult times:

You can't know what you were trying to find until seeing it in hindsight

The thing you are looking for won't occur until you are so discouraged that you stop looking

The obvious thing is only right if you decide it is too obvious to be right

The cynical interpretation is only true when you don't act on it

Wealth and philanderosophy are the secular cousins of immortality



It is interesting to observe all the hot headed banter of late about the transparency and accuracy of the daily Libor fixings. SMR, Wilmott, Bloomberg, Reuters and even the esteemed WSJ have picked up on the story. The fixings are published by the British Bankers Association (BBA) each day at 11:00 am London time. The current rub is that the fixing panel is artificially setting Libor too low in order to mask rapidly rising inter-bank borrowing rates. The Libor fixings are extremely important and represent the floating cost of a three or six month swap versus a fixed rate. It's a huge market in the USA, Europe and Asia. Manipulating Libor is as old as Stonehenge. Why would anyone be surprised that banks set Libor at rates favourable to themselves? The spread between Libor and official central bank policy rates are near all-time highs globally. That means that central banks have yet to nail and close the current credit fiasco.



 Now with a Dow Theory buy signal hit, big up week, breakout to many week high and >100d moving average, we get a real-time test of positive momentum in stocks.

We never hit the "bear market" cutoff of -20% from the October (all time) high. Presumably they will conclude this was a nascent recession doused out by Helicopter Ben; definitely not what NBER's Feldstein was calling for. Those hoping for a big drop to buy will have to wait for another financial bail-out, which won't happen until we are back to 1500 as everyone piles in afraid to miss the rebound.

Or not.

You can pick your poison or you can pick your antidote. But you can't know the antidote for your poison.



INDOCTRINATE U A Documentary by Evan Coyne Maloney

Not my favorite screening duty, documentaries. I regularly view and judge several hundred in the course of film festival judging, and many, while important and often necessary, are grim. But my jurying of a new doc, screened for the first time at the Directors Guild of America theater, and generously hosted by the Manhattan Institute, was not only clever and welcome, but also quite often laugh-out-loud funny. If a documentary on the wholly-owned left-wing dominance of higher education can conceivably be funny.

Evan Coyne Maloney, the filmmaker, is the progeny of two hippies of the 60s love-and-flower generation. They must have done something right. He is affable, persistent, smart, discerning, sarcastic with a cherubic smile, and always, scrupulously polite. Maloney and his cameraman visit college campuses around the country, from the royals of Harvard, Yale and Princeton, to the more rural or less noteworthy college campuses in flyover precincts.

Maloney’s goal: How neutral are teaching faculties at our nation’s expensive and highly regarded (at least until this film and Ben Stein’s forthcoming exposé of a similar nature, “EXPELLED,” become de rigueur viewing) colleges?

Whatever he attempts to ask, whether on the absence of men’s studies or resource centers (grim-faced females in Che Guevara-plastered offices stare stolidly at him, not ‘getting his point), the attacking of Republican students for posting provocative yet inoffensive fliers (lawsuits that invariably and ignominiously spell loss of thousands for the colleges foolish enough to pursue such groundless suits), the location of the diversity office to ensure diversity of opinion (huh??), or the ratio of left-liberal professors to conservative (the smallest ratio of Marxist-leaning ‘liberals’ to conservatives is 7 to 1; the highest is 134 left-wing teachers to 12, conservative), to how alternative papers on campus are received (entire press-runs are routinely stolen, in hundred-weight batches, as soon as they hit the stands), he is stonewalled, thwarted and…threatened with arrest.

His cheerful and diffident requests are met with flinty official agita. The response? Invariably the same: When the camera duo shows up, there is instantaneous recourse to campus or muni police. Not a single administrator attempts to answer his polite requests. The relevant parties quail and cringe from the camera, repeatedly demand he turn the camera off, and seek the nearest escape.

The packed house I viewed the film with laughed as the film proceeded, anticipating the response of yet another administrator who denies he or she is in charge. Maloney sits in anterooms all day, while colleagues of the designated official deny the job, schedule or existence of the person he has come to interview. We laughed throughout, though the topic is sober, and actually kind of frightening.

Brave students in each campus confide that they end up mum in classes, lest they forfeit grades or become the butt of verbal attacks. Contrarily, conservative students with complaints are rarely helped, abuse against them is ignored, their problems somehow lost or forgotten. Verbal abuse and vicious calumny against one hip Sikh student, for instance, amount to death threats—never acted on. Students responsible are never disciplined.

Toe the line or be ostracized, attacked, ridiculed. Pro-choice, only. Pro-gay marriage, only. Pro-affirmative action, only. Professors who are ‘liberal’ (in the new sense of illiberal and lockstep mindset), quash adverse opinion and keep a watchful eye out for those not like them. Teachers who are conservative say nothing, so as not to out themselves. “If I admitted I was a conservative,” one Stamford Professor of Biology says with a rueful laugh, “I lose my job.”

The way her students ‘know’ she is a non-majoritarian non-radical (shhh) right of center professional?

“It's not what I'd say in class. Because all I do is teach biology, as I was hired to do. It’s that I never start every class with a harangue on how Bush and co. are bad. Or how Iraq is a mistake. Or how white America is evil.” For the radical teachers, no matter what the course content, every class includes a discussion on RGE: race, gender and ethnicity. Even decorating. Even math.

A shocking episode shows Republican Steve Hinkle, a student subject to unremitting attack for posting a flyer announcing a presentation by [black] conservative C. Mason Weaver, author of It's OK to Leave the Plantation, in a Cal Polytech student center. That groundless lawsuit sets the taxpayers back $40,000—and Hinkle won on every (ludicrously unpremised) count.

The lesson, a familiar one to those who follow the issue, is that the people who run the universities are not willing or able, perhaps, to defend in public what they teach in private. They can’t take the heat when the camera is turned in their direction. Affronted and furious, they want the meticulously diffident Maloney carted away. Charges of ‘racist,’ ‘fascist’ and ‘nazi’ are regularly hurled at those who politely differ from the mainstream teacher-led doctrinaire brainwash.

Indoctrinate U undercuts the usual reaction to complaints about campus repression: These are no recycled anti-PC tall tales. No way. Maloney shows that censorship, lack of choice, forced views and indoctrination run both coasts, public to private higher-ed launchpads, rarefied elite ivies to the West Coast’s Foothill College.



My best friend's boat, Hanai O'Kalama, is a tough hi powered hi tech fishing vessel rigged for surf/fish exploration in rough water. Its equipped with the best GPS,fish finders, and auto steering and the best fishing gear. We left port in the evening looking for Opelu, a small sardine like fish. Oddly, the porpoise have learned that the sound of the fish finder sonar means free meals, so we have to turn off the sonar to avoid the smart adaptation to hi tech by the porpoise.

Heading up north in the complete blackness was only possible with the GPS with a strange glow running through the pitch black sea like a space ship. The mind can play tricks making you want to turn into the shore, where sure disaster awaits. Instead the navigator must stick to the instruments, and plot the course on the GPS. Several hours later, early in the morning we arrived at a remote anchorage surrounded by rocks and reefs with a narrow pass and head in the blackness following previously set way points on the computer charts and arrive within feet of the perfect spot. This was not possible even 10 years ago. The point is that one must rely on the proper tools and computer data and way points to navigate safely in dangerous waters. It is not enough to rely on the senses or the intuition even after years of navigation in those situations. It is beyond the human ability to navigate in such conditions without the hi tech aids. One has to avoid the quirks of the mind that would lead one astray. Such lessons are good in today's markets as well.

Nor is it enough to rely completely on the hi tech aids. My neighbor in his 55 foot boat had his GPS and autopilot on coming back from Maui at night, and either fell asleep or the GPS was wrong and he ran the boat up on the reef and ended up in the water luckily only losing his lifelong boat. On Hanai O'Kalama, the GPS is not connected to the auto pilot for that very reason. It lulls one into false security or overconfidence. It is better to stay at the helm and keep an eye out for those things that the machine cannot see or know, Like the whales jumping out of the water and stuff floating around in the water.



There have been a number of posts on this web site over the years highlighting the importance of good equipment, and it is as important today in the markets as it always has been. Information, accurate information, is, of course, the most important type of equipment for the speculator. The hardware and software employed to deliver accurate information in the most efficient manner is also paramount. In an ideal climate, Hardware/Software is to Accurate Information as the Chicken is to the Egg. Or, is it the Egg to the Chicken?

But something has changed. The markets are always interesting - whether the day-to-day ranges are tight or like the last several months where ranges have expanded considerably. Information, the lack of accurate information, is the cause for the elevated vol. This is a problem that hardware/software can not fix.

I am reminded of Bar-B-Que. Good meat will always taste better when cooked on a high caliber grill versus a poor one. But, a bad piece of meat will always taste bad regardless of the grill.



Hayden would have laughed. That after hours Intel pop was like a surprise symphony after everyone was lulled to sleep by recent slow markets. To follow Vic's metaphor, its like the country dancer, letting his gal out for a quick spin after the song is over. There is also the floor clearing function with a violent spin, it clears the floor of other dancers making room for more movement on the next song. Maybe the market is getting like the clubs, its getting to the point where the song never really stops but just keeps morphing in a steady stream of never ending music into the late after hours as various foreign players step on to the dance floor till dawn.



As the market goes back and forth, trying to scare out the longs and then the shorts in one market or the other, stocks, bonds, et. al., and a call for more barbecue appears on this web site, one thinks of Beethoven's meeting with Rossini, when Rossini came to pay honor to the downtrodden, overlooked Beethoven in 1814 while he was in eclipse to the popular Italian operas. "Give us more Barber" Beethoven said, "and whatever you do, stick to comic opera."

What we need is more square dancing. The market going back and forth, in its very civil way, around unchanged, it's like a do si do. We need more square dancing insights (and other dancing insights) into markets.

Art Cooper replies:

It reminds me of a merengue, the partners circling each other slowly and majestically (although the tempo of the music might become frantic), sometimes twisting their handholds into intricate pretzels, sometimes separating completely while remaining "tied" to each other, their steps remaining small, each partner suggesting actions which are never quite realized.

Jim Sogi adds:

In ballroom dancing you have the basic box step, a square pattern, then after a few of those, a line step. I'm not sure what they call it, but when you dance forward or back and cover some ground. Like the market did last week, then down. Now box step, then… In country dancing, a move is sometimes punctuated by swinging your partner around in a spin. It all has a nice rhythm and feel to it with a lot of back and forth motion and various patterns set to a cadence. Our markets sure have a nicer feel to it now than the head banging mosh pit earlier this year.

Recently, The Sunbaked Spec gave me an Indo Board to play with.  Its lots of fun. It's a board on a single roller and you have to balance on it, and roll it back and forth. At first I couldn't understand why he gave it to me, but now I do. It's the perfect physical demonstration of how the markets have this tendency to roll quickly to one side or the other. Like Friday with the down volume multiples of up, or today slamming the other direction up, and Monday and Tuesday balanced in the middle. Its fun, but you have to watch out because if you are off balance, you will fall on your butt. Kind of like trading.

Duncan Coker comments:

This market of late is definitely a Quick Step, one of the fastest and most complex of the Ballroom dances. It is full of syncopated steps, explosive running and hopping moves with lots of rotation and momentum. It has some similarities to a waltz but is a dance in 4/4 time. But many of the step are 1/8th note duration and very fast. It was most popular during the Jazz Age, when the wire houses, pools and syndicates moved the markets, when fortunes were made and lost at the bucket shops and curbs.



For some time, I've wanted to give my dissertation on the art of BBQ, Texas style. I fondly remember my years in Texas where I enjoyed many a fine BBQ delight. I must confess that the cuisine they have in Kansas City is awesome too. It is quite a study how the simple art of cooking on a grill can vary so much over the country. I'm sure someone has written on this topic.

When I was moved to Houston in the early 1960s I came to enjoy Texas style barbecued brisket. After LBJ took office his caterer, Walter Jetton, became famous for cooking at gatherings at the LBJ ranch. In 1965 Walter published LBJ Barbecue Cook Book and I started following his recipes. I recall serving BBQ venison at a New Year's Eve party that was very popular with my guests. The trick is to slow cook the brisket to tenderize it. Key to this style is to have a light "mop sauce" to baste the meat. After the meet is cooked, it is sliced (across the grain) and slopped with "serving sauce". It sounds complicated but it is well worth the effort. Sort of like making homemade Neapolitan tomato sauce rather than buying a jar of sauce. Well worth the extra effort.

Recently I was able to find a copy of Jetton's cook book. Isn't the Internet a marvelous resource for finding out of print books? Reading it sure revived old memories.

And then there is the enigma of why beans are banned from Texas chili. But that is another story!



It was service payment day minus 1, a traditionally very bearish day, and the ppi reported tomorrow is forecasted to be up 0.7% and the wire broker house issued a very bearish forecast (in opposition to rational expectations) that the market will go down 7% and then up 5% in the second half; considering all these it was an extremely positive day.

Brokerage houses are reporting the number of days they made money each quarter on proprietary and the magnitudes these days and it's amazing to see they make money, in Lehman's case for example, all but 2 days. Others have similarly impressive records. But considering the bid ask they must pay, and the magnitudes of losses that they must extract without risk from the weak, and the tendency of markets not to do the same thing too often, I consider the reports on their surface an impossibility . What is likely is that they report profits from transactions, including principal trades when requested to make a bid or offer to clients.

I received a must unusual heads up from psychiatrist Ms. Moonnut. She told me the key to market movements is Oprah Winfrey. She controls all the women and the women control all the money, and she tells them whether to be positive or negative through " the Secret " or something. I have given up watching financial news since the upside down promoter advertiser is always on, predicting Dow 5000 when I'm long, but I believe that it might be apt to watch Oprah instead.

Every now and then the stock market goes thru a period when there are runs of up or down opens. As of Monday, there was a run of exactly 5 down opens and exactly that number has occurred 53 times. Believe it or not, the opposite of exactly 5 up opens in a row has only occurred 23 times, and it's bullish after the 5 up opens.

There has been much talk about how AA and GE dismal earnings already reported are harbingers of the future. That it overrides the 50% prediction of 4th quarter earnings increases. I would demur on many counts. First, of what moment is it if earnings go up 15% on the year with a down or up quarter. Second, GE was down because they couldn't sell and AA is a commodity.

Jeff Watson writes in:

I read "The Secret" to appease one of my new-age friends who regularly buys into the snake oil du jour. "The Secret" tries, through pseudoscience, to explain "The Law of Attraction." Since the theories in that book cannot be proven or replicated using the scientific method, I remain very skeptical. However, one might postulate that there is an inverse correlation between the true believers of the theory, and success.

Nigel Davies adds:

If this is the same 'The Secret', it's an area I started investigating recently, much to the dismay of one of my more scientifically oriented friends.  This was due to the fact that this book was based around the ideas of one Charles Haanel in his one hundred year old book 'The Master Key'. And I got to Haanel as I understand he was a student of Baron Fersen, who practiced a form of standing still exercise similar to Zhan Zhuang.

All these guys were into mind over matter ideas, which recently received some attention due to some apparently very dodgy quantum theories of the mind body relationship, culminating in the reopening of pseudo-science flood gates with 'What the bleep do we know anyway'.

What can one conclude from all this? Perhaps mainly that Grandmasters really need to keep busy playing chess so as not to get sidetracked. But if there's any truth to this quantum stuff, Oprah and friends better be thinking very positive thoughts to counteract the presumed good guy who's telling everyone the US is in recession already



It is true we can't predict if, when or how far oil prices will fall. But we can predict that vast investments will continue to flow into oil exploration and development.

The NYT recently ran a story on the huge Bakken Formation in North Dakota (but only page A19). This oil is spread widely along a deep and thin layer and can be recovered only with new horizontal drilling technologies. According to a recently released U.S. Geological Survey study, 3 to 4.3 billion barrels can be recovered with current technology. Higher prices and new drilling techniques raised proven reserves in this field way up from 151 million in 1995. A billion here, a billion there, and pretty soon we are talking about a real oil find.

Three billion barrels of oil "created" with new technology in just 10 years–and that's just in North Dakota and eastern Montana. Who says oil is a depletable resource? And who knows how much more oil might be discovered if most of the western U.S., Alaska, and off-shore were not federally-owned and off-limits for oil exploration.

Of course it will take time to build out the infrastructure to bring significant quantities of this oil to markets. And no doubt an array of special interests will line up to slow development and search for endangered North Dakota species (only nine animals and one plant listed so far).

Consider too that the Bakken field could lower prices today if the federal government had the good sense to choose North Dakota for a second Strategic Oil Reserve. The federal government could loosen oil supplies and push prices down today by stopping oil purchases for the current 700 million barrel reserve. And oil prices might be pushed down further–and the Federal Deficit reduced–by slowly drawing down today's reserve to, say, 500 million barrels, as a new North Dakota reserve were established.

The Federal government could contract with private firms to drill and cap a second 500 million barrel reserve in North Dakota, and expedite permits for infrastructure supporting the North Dakota reserve. And with a few billion barrels already "stored" in the ground in North Dakota, the federal government would not have to buy and ship it from Saudi Arabia to pour into expensive underground chambers in Texas, Louisiana, and Mississippi.

Current strategic reserves are located near major refineries so they are available if oil imports are cut. Allowing firms to build new Western and Midwestern refineries capable of handling North Dakota crude would further diversify U.S. supplies of refined product. State and federal governments need only get out of the way of private firms who have long tried to build new refineries and refining capacity.



Even though Immelman, won this mornings Masters by three strokes it wasn't without a few quick heart beats.

His preshot routine looked a tad nervous through out, however it gave him just what he needed, at a time when maximum anxiety wanted to play with his mind.

The most telling moment for traders however was the lay of his ball after his drive on the 18th fairway. The previous three holes hadnt been kind, and after he drilled one up the middle on the last hole he must of thought the worst was now far behind him, and victory was his. However as is the case more often than not, this is a journey until the the very end, and his ball came to rest( in the middle of the fairway) in a large divot! How his heart must of sank. This Green Jacket and with most outcomes really wanted in life was going to come, if at all, kicking and screaming. Well now the rest is history , he spoke with his caddie, talked about yardage, looked at various shot options, then years of experience held out and he drilled his second shot onto the dance floor, and victory after two regulation puts was his. The comparisons with trading , that is holding risk steady, take smart options and having a well defined pre trade routine are Im sure self evident, but there maybe no better sport to compare with then 18 holes of golf.

…. as I watched it , I thought of the John Dalys of the world, and the OJ Simpsons and believe that it is by far the better option, to not be the most gifted athlete, but be the one who has worked his fingers to the bone every step of the way, and all those life experiences will deliver in the end, and make you in more ways then one, all the better for it.

Sam Humbert adds:

My takeaway was a bit different. Browsing the morning newspaper, the spin was that Tiger had failed — after #11, he coulda/shoulda converted the 'energy' from his birdie into a back-nine run…

From NBC sports:

Even Woods seemed baffled by it all, just as he had been all week. Woods might have been the only player at Augusta National who wanted the wind to blow, but when it, did he couldn't take advantage of it.

This strikes me as analogous to the after-the-fact market commentaries on Bloomberg et. al. that are so often ridiculed by the Specs. In fact, Tiger shot ~5 strokes better than the average of the other leaders on Sunday, and, had he been fewer strokes behind coming into the day, would have been lionized by the media his heroic effort, shooting par on a very tough day, as others crumbled, capped by a clutch put on #18 to seal the victory, yadda yadda. .



I have been partially invested in Canadian Royalty Trusts for 2 years that have returns above the risk free rate.

Does anyone have any opinions or insight into this type of investment?

From what I've read their high return rate seems secure as long as oil is above $50/ bbl.

Alan Millhone gives a quick assessment:

Oil above $50 ?  I suspect you are safe for decades! 

Stefan Lewellen replies:

I know nothing about Canadian Royalty Trusts, but I can recall many instances in the past where a seemingly "risk-free" investment offering high returns has actually led to heavy losses.

One must remember that as the price of oil drifts higher, the economic story behind developing alternative energy sources becomes more and more compelling. These projects may not make any economic sense at $50/bbl, but at $150/bbl they may be quite profitable. At some point, such substitutes (or some other new development) will reduce the demand for oil – and oil prices will decline appropriately. Whether this happens in six months or twenty years is anyone's guess, but the fact that there is some non-zero probability that prices will fall below $50 makes this a strictly risky investment (in my opinion). If the probability of low oil prices is extremely small relative to the return premium over the risk-free rate, this could still be an excellent investment – but I'm not sure I would classify it as an investment of the risk-free variety.



I assume many of you know about the commendably and excruciatingly watchable "Bank Job".It is involving from the jump (in the early 1980s, UK) to dénouement.

Terry (two-day beard tough guy Jason Statham), a car-repair minor player in constant hock and debt to bigger petty criminals in London, gets offered the chance of a ‘quick-take’ bank robbery that dangles the possibility of living the better life, courtesy the temptress, ripe ex-lover Martine Love, though Terry has the presence of mind to distrust her contacts and motivation, as they say in acting class. There is far more to the plot than a simple burrow into an unremarkable safe-deposit vault and hauling off the consequent goodies.

His motley band of inexperienced mates don’t reckon on the higher-ups who are remotely assisting them in the expectation that they’ll secure some extremely compromising photos that had better not come to light. The ever- oleaginous and fecund David Suchet adds another sweaty ruby to his host of memorable skeaves with attitude. SAffron Burrows is suitably stunning as the silky ex-model babe in the stylized coveralls. Director Donaldson keeps the action taut, the conversation deftly scoundrel-red, and the upstairs/downstairs worrying at a strung-out high-wire tension.

The acting is first-rate, the story unbelievable, but made all the more enjoyable when you realize it is a true story. More to it than just a highly unlikely heist, but exquisite women, moments of humor, high dudgeon, cops-‘n’-robbers, a tinge of scandal, Parliamentary misbehaving–all the ingredients for a great stew of an entertainment.

Few special effects, gritty cinematography, manly men and womanly women. Even my CCC (cautiously critical companion) remarked what a refreshingly bracing experience it was. The best movie-movie I’ve seen in a batch. People with a long memory will be able to hazily recall the actual story and high-class to-do from thee decades ago. Bumper suspense, lots of back-story, changes of venue, exotic politics, going back to naughty times that bring you right up to our former gubernatorial cash-and-carry Spitzer hi-jinks.



What is it about heists, and big scores, and Bolivia? Just watched Butch Cassidy and the Sundance Kid for the first time in a long time. And couldn't help but enjoy William Goldman's terrific writing, much of which seemed very relevant to speculators.

A selection:


(In the beginning, Butch watches a very solid, solidly-guarded bank being closed up for the night.)

Butch (to the Bank Guard): What happened to the old bank? It was beautiful.

Guard: People kept robbing it.

Butch: Small price to pay for beauty.


(The moment of recognition, of reassessing one's positions.)

Macon: I didn't know you were the Sundance Kid when I said you were cheatin'.


(Right after the "knife fight" with Harvey.)

Butch: Hey, what's this about the Flyer?

News: Well, Harvey said we'd hit it both this run and the return. Said nobody's done that to the Flyer before, and no matter how much we got the first time, they'd figure the return was safe and load it up with money.

Butch: Harvey thought of that?

News: Yes sir, he did.

Butch: Well, I'll tell you something fellas, that's exactly what we're gonna do.


(A regime change in pursuit.)

Butch: Ah, you're wasting you're time. They can't track us over rocks.

Kid: Tell them that.

Butch: (Looks for himself.) Who are those guys?


(Butch and the Kid finally escape Those Guys and return to Etta's. They read about the posse in the newspaper.)

Butch: Hey. It was Baltimore. And La Fours. You know who else?

Kid: Who?

Butch: Jeff Carley, George Hyatt, E. T. Kelleher.

Kid: (Looks at the paper.) Jees, we lucked out getting away, you know that? Why would these guys join up and take after us?

Butch: Oh forget it. A bunch like that won't stay together long.

Etta: They will. If Mr. Harriman has his way.

Kid: Who?

Etta: Mr. E. H. Harriman of the Union-Pacific Railroad. He resents the way you've been picking on him, so he's outfitted a special train and hired special employees. You spent the last couple of days avoiding them. It's really sort of flattering if you want to think about it that way.

Butch: A setup like that costs more than we ever took.

Etta: Apparently he can afford it.

Butch: That crazy Harriman. That's bad business. How long do you think I'd stay in operation if every time I pulled a job it cost me money? If he'd just pay me what he's spending to make me stop robbing him, I'd stop robbing him.


(Butch and the Kid get jobs guarding the payroll for mine operator Percy Garris, played by the great Strother Martin.)

Butch: I think they're in the trees up ahead.

Kid: In the bushes on the left.

Butch: I'm telling ya, they're in the trees up ahead.

Kid: You take the trees, I'll take the bushes on the left.

Garris: Will you two beginners cut it out.

Butch: Well, we're just trying to spot an ambush, Mr. Garris.

Garris: Morons. I've got morons on my team. Nobody is going to rob us going *down* the mountain. We have got no money going *down* the mountain. When we have got the money on the way *back*, then you can sweat.


You can watch the movie, in segments, online .

Marion Dreyfus adds:

Wm. Goldman has always been one of my most cherished reads. He is invariably intimate, clever, personable and cunning in resolving his plots. His films are always champions of amusing interactions, psychological insights and ebullient plotting. 

Stefan Jovanovich relates:

I once chauffeured Dad and Bill Goldman and one of his friends buddies to a Mets game. Seaver had one of his rare off days and the score was something like 9 to 1 by 6th inning. Dad wanted to leave early and beat the traffic but Goldman and his buddy were determine to stay. As the game ground to its inevitable conclusion, they seemed more and more interested, even animated. It finally dawned on my father that the author he was courting had a more than trivial bet on the over-under -which he won.

Vincent Andres says:

Reminds me another terrific movie from/with Paul Newman about optimism at its top (i.e. life at its worst) :

Sometimes a Great Notion (aka NEVER GIVE AN INCH)

A really great movie in my rememberings.

"Hank Stamper (Newman) and his father Henry Stamper (Fonda) operate a logging business in Wakonda, Oregon. The town comes to grips of economic despair, due to the local union's strike against a large lumber combine. When the Stamper's are asked to join the strikers, they refuse and are considered traitors. However, Hank continues to push his family on cutting more trees, despite Hank's wife (Remick) wishes for him to stop. Shortly later, Leeland Stamper, Henry's other son and Hank's half-brother, returns home after years of absence, which causes more unrest."

Stefan Jovanovich replies:

Vincent proves yet again his impeccable sensibility. SAGN is Kesey's best novel (the only one where his politics did not override his gifts as a writer), and the movie has Richard Jaekel, who was a wonderful actor. It also has a more than decent portrayal of the actual work of logging. (My claim of expertise here is based solely on one summer spent bucking logs for a gyppo outfit in the early 70s in Oregon - truly the hardest work I have ever seen or done.)



Greg NormanGreg Norman was a guest on Fast Money on CNBC today and he gave an interesting perspective about his company and how it relates to the economy. Greg Norman is as tenacious a businessman and head of a diverse company today, as he was when he played golf on the PGA tour and around the world. He once held the world's #1 ranking for 331 weeks and won over 88 tournaments worldwide as well as two major championships. He does not play as often as he once did but still manages to be competitive on the Champions Tour, placing in the top five in recent major championships. He has recently divorced in a private and, by some accounts expensive, divorce and has become engaged to Chris Evert, former world's number #1 ranked tennis player.

It is notable that his company can be perceived as economically sensitive and a good indicator because of the lines that they serve. His company services the high-end market most notably clothing, golf course design, real estate development and fine wines. His turf business was the turf of choice for Superbowls XXXIII in Miami and XXXV in Tampa as well as Turner Field in Atlanta.

He mentioned that golf course expansion in the United States has effectively come to a standstill. Golf courses are closing  at roughly the same rate as they are being built. This is a trend that began several years ago. Rounds of golf have effectively been flat. There are approximately 27 million people who play golf annually in the U.S. This number has also been flat. He attributes this to the decline in the residential real estate market where a golf course is the centerpiece of a development community and in light of the softness these past few years.

He also went on to say that where the United States market has been challenging – eighty-five percent of the profits for his company have come from overseas.

With respect to golf course design, they are actively working in Vietnam, particularly in and around Saigon.

Other areas that look promising are South America — Brazil and Argentina – and there is great zeal for the game there. South Africa has not been as well received due to demographics. Looking forward, India is a country that they are excited about and positioning themselves for to be actively involved in.



TurkeyTomorrow morning is the start of the Missouri Youth Turkey Hunt. I'm up at the farm with my two sons and my father. The alarm will go off 4:30 am, we'll eat a hearty breakfast and then head out to the woods.

This year is going to be completely different from years past. Normally it's cool in the morning then warms up quite nicely by midmorning. However, we're having some "anti-Gore" weather this year. It's freezing cold outside. High temperature today was 39, and the same is forecast for tomorrow. Unfortunately, it's supposed to be very windy all day be snowing too!

I've hunted turkeys in the snow only once, way back in 1988, so this is a completely different situation than we're used to. As I always do when I come up to my farm in northern Missouri, I bring extra clothes for all kinds of weather. I normally bring too many clothes, but this year, I'm glad I have all those extra clothes.

It pays off to be prepared — even when preparation meant 20 years of packing extra clothes that I never used.

1988 marked the beginning of a great run for me in hunting and trading. I started in the financial business in 1987 and immediately got whacked by Black Monday less than a year into my tenure. 1988 was the first year that I hunted in north Missouri and discovered the true joy of hunting in an area replete with wild game.

It snowed in 1988 and it's snowing now. Maybe that's an omen for another 20 good years!



Assuming one's net speeds are up to snuff, where would the IT pros look next for bottlenecks?  Running IB, R, Excel, with a decent sized data import and IE with about 20 tabs open on an AMD 64 bit 2.4Ghz single core with 3 GB running XP_64 and two monitors on a 500Mhz+ video card feels increasingly sluggish.  Would like to move completely to Linux 100% of the time as my quad core with 4GB never has any processor/memory response hiccups but a few apps are just better on XP (unfortunately); e.g. can not make the jump to Open Office.

Vincent Andres replies:

1/ Any browser with 20 tabs open is something really heavy (this may well be the main bottleneck). And some "tabs" are very heavy.
2/ Depending on what you do with your IB screen(s), it may also be heavy because of the Internet data refresh.
3/ Data import

As for the dual screen, but I would be surprised if it's 100% managed by the video card.

We probably have all more or less similar tasks. My choice has been to split my main tasks onto several computers. So the computer on which I do my main work (where I'm sitting the most): Open Office + R for little studies + Firefox + email + etc. It's separated from other computers used for the other tasks.

Keep in mind that, although the processor speed is always the highlighted number, our jobs go through a long chain (HDD, RAM, etc.), and all pieces are not always accordingly fast. And also that the more opened tasks, the more interrupts to the processor.

Bruno Ombreux adds:

I found that the biggest bottleneck on my machine was the ZoneAlarm firewall and antivirus suite.

I got rid of this horrible piece of bloated junk. It has been replaced by a hardware firewall and an antivirus that is light on ressources yet efficient: Avira.

A DSL router acts as an impregnable firewall, is very cheap and doesn't use any computer ressources since it is sitting outside. If one absolutely wants a software firewall, Comodo is much better than ZoneAlarm. It is free and light.

Another thing to get rid of is Windows auto-update. This can slow the machine.

Jeff Rollert remarks:

I have found putting all communication (e-mail/IM programs, browsing) on a single machine makes crashes far less likely and speeds things quite a bit.  I also use Outlook 2007 (a pig) and Firefox (with so many tabs open I can't count them).

I will also keep Firefox windows open by subject, with tabs like chapters.  Doesn't help speed, but it does help organize thoughts.



 The silo that a certain conglomerate might like to use to fill earnings with sales of grain and other assets purchased 100 years ago, might have run dry today and its stock dropped to its lowest level since June '04. Like a pressure cooker whose valve was finally released, the market, after staying with a hair of unchanged the whole week, including its Friday 6:00 GMT level of 1368, finally burst the dam, and dropped a fast 35 before closing down a mere 2% on the major US and European markets. The last healthy gasps were in Japan and Asia with the Nikkei up 2.5% and other Asia markets up 1% to 3%. Amazingly this earnings report was not released before the announcement to the big boys, and the staggering immediate 1.5% drop that ensued in the minutes after the announcement must have been dismaying to all who are accustomed to fair warnings on things of this nature. It reminds one of the Charles Addams cartoons about the old couple that manages to put up a facade of happiness for many years, until a small incident, perhaps the failure to take out the garbage, causes an explosion.

Alan Millhone enquires:

It amazes me that the first time 17% drop in one quarterly earnings report in over five years for the conglomerate drives down the market by almost 260 tics. Also Vic's mention of 'time delay' release of sensitive financial information reminds me of the ruse in The Sting, where they used delayed track reporting over the wire service to dupe Robert Shaw (who played Doyle Lonnegan in the movie) out of all his money at the betting window. Could big financial firms (not all) be using this type of delayed reporting to dupe the average investor who mostly trusts financials and P&L statements in order to try and make educated investments?



So often of late I hear the phrase "commodity X posts another record gain, on weakness of the dollar." Is there any true arbitrage that would cause a drop in the dollar versus euro, yen or another currency to translate into a rise in some global commodity, particularly oil? Or is this just another thing to say when no other explanation is apparent? I suspect the later, though it makes intuitive sense that a weaker dollar would be inflationary for global type products.

Heard another good definition of a bull market recently, as those times when all are waiting for the final shoe to drop. Which of course it never does.

I predict the Fed makes a tidy profit on the loans to Bear Stearns, when they are finally sold off, plus interest. Like Doc Greenspan back in the S&L days. Wonder if Bernanke was taking notes back then.



Since 2001 Morningstar has been rating stocks based on a Buffett-esque philosophy, including the usual Buffettisms like "moat" and "margin of safety".

In February they published a report card on how their ratings have been doing:

Here are the reported returns for their top ranked stocks*, along with the returns for the equal-weight S&P:

Mstar *The percentage returns for Morningstar are based on buying when a stock gets the highest rating, 5, and then selling when it falls to an "average" rating of 3.

A regression of Morningstar returns vs S&P Equal Weight returns gives:

(Morningstar return)=(-5.6%)+1.35*(S&P Equal Weight return)

In short, Morningstar was beaten by the S&P Equal Weight index in terms of both absolute return and risk-adjusted return.

I do like Morningstar. Their product is a really convenient and cheap way to get snapshot information on both stocks and mutual funds. I'm also impressed that they were honest and didn't try to bury this report, and that they compared upfront their returns with the S&P Equal Weight (rather than Cap-Weighted) Index. That is the appropriate benchmark for them because when they calculate their own performance, they weight their own picks equally, rather than by capitalization.

Still, it's yet another proof both that stockpicking is not easy, and that chanting Buffettisms (or even trying to apply them using a team of professional analysts) doesn't necessarily help.

Steve Leslie writes:

As I recall, Morningstar's 5 star rating system for mutual funds is backward-looking. They take the last three year returns and then break it into a quintile rating system. You are correct in that poorly performing funds can be victims of the style they employ rather than a reflection of their management skills and prospects going forward. Back in the 90s the 5 star funds were Van Waggoner, Aim, Janus and some of the really highly charged mutual funds everybody wanted these because of their raw numbers. Nobody wanted anything to do with value funds. The tables soon flipped and the high fliers fared very poorly in the bear market crash through 2003. Value funds took over, and then international funds. Interesting fact is that 80% of funds purchased are through a brokerage firm. Most likely due to the work involved in finding a mutual fund, evaluating it, and purchasing it. When I was a broker, we used Thomson Financial research as our database to evaluate funds. Schwab and Ibbotson have some pretty good mutualfund programs and tools as does Lipper. Kiplinger's Magazine is a good source to find quality mutual funds.

Sam Marx offers:

I like Morningstar because in all of their stock reviews they include a calculation of the stock's intrinsic value and indicate what type of moat the stock has.

Morningstar, however, is still in the last century when it comes to downloading their lists, such as screened items, portfolios, ranked stocks, etc., to Excel. Except for one very limited item no downloading to Excel is available.

Morningstar's attempt to cover options is very sparse.

Meanwhile their main competitor, Value Line, is excellent when it comes to covering options and downloading their lists to Excel. Value Line, however, needs an upgrade of the contents of their screen lists.



VietnamA few observations on Vietnam, from my recent trip to the Far East (Hong Kong, Vietnam, Cambodia, Macau):

1/ Despite a communist government, the people of Vietnam have embraced the free market with optimism and gusto. The high streets are bustling with independent operators and entry costs to setting up a business are low. All you seem to need to set up a cafe is a few small plastic chairs, a kettle and some hot water.

2/ Prices are absurdly low. Lunch can be had for $1. Dinner for $3-4. The first hotel we stayed in worked out at $5 each for the night; this included A/C, TV, free Internet access and a toast and coffee breakfast. Organised day trips cost between $10-$20, with food and all travel included. Inflation is running very high, at around 16% y/y, but prices have a long way to rise before they reach reasonable levels.

3/ Wages are low and the people are very thin, but the saving ratio may be high: one of our guides also worked as a fisherman and made a wage of around $50 a month. Of that, he saved $30.

4/ Copyright law is nonexistent. Pirate DVDs, photocopied books and fake clothing are normal.

5/ Eating dog is okay (eating dog meat on certain days of the month helps one get over hurdles in their life), but eating cats is illegal (they are needed to reduce the population of mice and rats).

6/ The people are friendly, modest, and extremely hard working, perhaps fuelled by the local coffee — it packs one heck of a punch. Social capital in Vietnam is a lot higher than in the UK: there is a strong sense of the wider community and people seem to have a greater respect for street furniture and for each other. I noticed only a small degree of opportunistic dishonesty with tourists, but this can be easily avoided.

7/ The stock market has been hard hit recently. However, good business prospects, rising prices and a fixed exchange rate make Vietnam an excellent investment opportunity, in my opinion.

I have a  selection of photos from the trip and I have written a few more notes on my blog.



Is the Subprime mess one more indicator of the devil may care, not my fault, no care no responsibility, times we are living in? Are the Fed bailouts the ultimate back up to keep this poor social situation alive, leading to a poor thought process for the next rogue trader, head fund manager, and for that matter retail trader sitting down at his platform.

Is this ultimately leading to a internal breakdown of our own risk mismanagement on our own accounts even though at the end of the day it's us on our private accounts and we will be ultimately responsible.

How can we change the situation - When is someone going to stand up and say, "I'll take the hit , I'll wear the pain , It was me!"

Janice Dorn explains:

Maslow's hierarchy of needs is often shown as a pyramid where people go from the base to the apex in terms of what they focus on. The lowest level (base of the pyramid) reflects the most basic human needs– food, health, sleep, physiological needs). The next level is shelter and safety from danger. The next three have to do with belonging (love, affection, socialization), esteem (self and from others) and-finally-the highest state is self-actualization (evolution to a higher consciousness, authenticity, achievement of individual potential, transcendence, creativity).

Humans are unable to progress to the higher levels when they are preoccupied with the needs of the lower levels. In order to distract people from higher levels, one need do nothing more than threaten their basic needs. When people are focused on their basic needs, they do not have the capacity to deal with powerful issues such as personal responsibility. They are too busy focusing on either feeding themselves, dealing with illness or worrying if they will have a roof over their heads tomorrow.

Throughout history, the best way to strip power from a person is to divert their progress up the pyramid by doing something that forces them to stay "stuck" near the base of the pyramid.

We are not evolving. Rather, it appears that there is a not insignificant amount of devolution occurring. As long as we look to "the powers that be to get us out of this mess, the less chance we have to move through the bottom two stages and get on with creative evolution. We will, as a nation, remain, worried, frightened, and sick. The way that power was taken from kings was to poison them. They did not die, but they stayed sick and thus fell down the pyramid to the lowest level.

The person that must stand up and take the hit and wear the pain is the person who looks back at each of us in the mirror. If we cannot do this, we will turn to everyone else to rescue us, to fix the mess, to take care of us, to save us from ourselves. The war against personal responsibility and individual empowerment is in full force. We are unraveling.

Alex Castaldo notes:

I was surprised by the headline in the Financial Times on April 10 "Banks take blame for crisis".  Maybe there is hope after all. 

Russ Humbert offers a deeper perspective:

While nobody wants to take responsibility for the sub-prime mess, the media has certainly laid blame at the feet of the capitalist. "Capitalists acting too aggressive", "Capitalists only out for their own self interest", are a couple of the "causes" I have heard from the media. However, if the origins and the incentives in the sub-prime markets are studied or in other words the true "cause" is explored, it clearly was due to the markets letting socialism creep into their midst.

The timing of the GSEs entry into subprime seems highly suspect.

The deterioration of underwriting standards can be understood, if you understand the rating agency or risk management was graded almost solely on industry average and industry statistics. Such "pooling" of risk management might as well been pooling of agricultural production. What happens is nobody works. It was a mad rush to capitalize on others' efforts.

Thankfully, the capitalist inspired puts in the contract led to most of those irresponsible enough to think they could get a free ride on everybody else's risk management efforts paying the price. The capitalist insisted they had a least enough skin long enough that they couldn't ignore it without getting caught. Thankfully, some of those capitalists caught this problem early enough and are driving a hard bargain to make sure this mess gets cleaned up fast and making sure it won't happen again. While this may be a high price to pay, just imagine if those aggressive capitalists hadn't all dived in at once. The march to socialism might have been slower, but like a boiling a frog, this would have slowly allowed the GSE's to eat a cancerous toxin, driving them to a slow painful unavoidable death. Or if the short sellers had not been allowed to price the actual risk, those executives responsible would have crippled the banking system and the economy for perhaps a decade, bleeding but not admitting wrong doing to stay in power (as happened in Japan).

Capitalist was the cure, socialism the cause.



Crew RaceProper preparation: Went to a boat race at St. Andrews recently and saw the senior crew rinsing and washing their boat one hour before game time. They said it adds a small fraction to their time and gives them pride. The importance of getting everything in place and order for your trading day, with every little thing, and every little extra and everything prideful is underlined. John Wooden's first meeting with his players where he teaches them how to wash their hands, and put on their socks, comes to mind.

Playing for keeps: Federer is having the worst start of a season ever, not getting into a final in his last six tournaments. Before he started competing for real, he played a series of exhibition matches with Sampras, and each went three sets into extras. He obviously was fooling around, trying to keep it interesting and this kind of "customer's game" is hard to extinguish — even the memory of it is odious for competition. How many times does a market player put on a reaching trade, for the fun of it, or just take a roll of a dice with a small edge after a series of big wins, and how often does he end up like Federer this year?

Pat EwingHall of Fame: Patrick Ewing was inducted into the Hall of Fame yesterday, and certainly Doc Greenspan would have been a better choice. His grotesque and sullen disposition, his outside game that prevented any rebounds, and the general aura that he created for the team during his last eight years there must have had much carryover effect on why the Knicks are still the world's worst. Sort of like the residue of the bridge player on the take-no-prisoners brokerage house that recently saw a 90% decline in stock price.

Success factors: The Memphis-Kansas game illustrates a myriad of truths about markets. First, the little things that were done wrong made the difference between success and failure. A Memphis player argued with the referee and saw Kansas score an easy basket while he procrastinated. How often does one argue with the floor, or the counterparty and lose much more than he would have by calling it a day? If litigation is involved, know that the legal costs in the typical court case are far greater than your net expectation.

KansasLittle things: The game decided by little things and letting up with Memphis ahead by nine with two minutes to go. It reminds me of days like today where the market was way up as of 1:00 or 2:00 or 3:00 and everything was grand for the bulls, the sun was shining, the water was beautiful (a la Memoirs of a Superfluous Man) and then one minute after the close, the market had dropped 2% from its three month high, a 20 day high, which, incidentally, took the longest to realize of any in the last eight years. One also notes that Chalmers seems to be the best thief in recent memory, and his four steals meant the difference between success and failure. Specialization in one market, one part of the day is often sufficient to give one the victory.

Steve Leslie adds:

I am reminded of the saying "G-d is in the details." This is generally attributed to Gustave Flaubert, who is often quoted as saying, "Le bon D-eu est dans le detail." Others have used this quote, such as Michelangelo and Le Corbusier. Paradoxically it is quoted by the architect Ludwig Mies Van de Rohe as "The Devil is in the details." Interestingly Mies and R. Buckminster Fuller are credited with the saying "Less is More." If one wants to get a healthy dose of attention to detail, watch a pit crew at a Formula One race. It is true poetry in motion. They can fuel a car and change tires in less than eight seconds.

Rodger Bastien comments:

I would agree that the difference in the Memphis-Kansas game was preparedness. The sequence leading up to the three-pointer by Chalmers that sent the game into overtime was badly mishandled by Memphis coach John Calipari and he knew it. You can't afford to overlook anything lest it cost you the game and it was evident that he didn't make it clear to his kids just what to do in that situation (which was clearly to foul to prevent the three-pointer). What's more, an immediate timeout should have been called with two seconds remaining in regulation — again, coach's fault. Reminds me of the poor judgment I too often demonstrate in fast market conditions…

Tim Hesselsweet suggests:

Be aggressive. The passive play of Derrick Rose, who advanced the ball beyond midcourt then promptly passed and ran to stand in the corner, diminished one crucial source of leverage for Memphis. Rose destroyed Texas's 1st-team All-America PG Augustin in the regional final and took advantage of UCLA's guards by penetrating to either score or draw additional defenders and find open teammates for easy baskets.

Alan Millhone notes:

Sean KempSaw on the news a current NBA player has 10 children by eight women and has not paid his support payments to any of them. Not a good example for any young athlete who aspires to greatness in basketball or anything else ! This player might get into the "Hall of Shame."

Nigel Davies assays:

There are two different forms of preparation here; technical preparation and psychological preparation via ritual. Washing the boat is technical whereas John Wooden's hand/sock washing would have been mainly ritual, which is not to underestimate its importance. Rituals provide valuable triggers to enter a particular state of mind.

At the chessboard both are used. For example one might study an opponent's games and/or prepare a particular variation (technical) before going to the board at a prescribed time (e.g. five or 10 minutes before the start), carefully filling out the score sheet, cleaning one's glasses or some such (all mainly ritual).

Good preparation includes proper consideration of both of these. And one of the main strengths of experienced players is that they often have their preparation routine well worked out.

J.P. Highland offers:

JuventusEuropean soccer is played in a way that guarantees the cream always comes on top at the end of the season. The winner is the team that obtains more points after a long 38 game season. The only problem with this system is that it leaves almost no chance for surprises. Real Madrid and Barcelona have won most championships in Spain, so have Juventus and Milan in Italy and Manchester United and Liverpool in England.

American sports are more socialistic, impose salary caps, revenue sharing, give a chance to bad teams to draft before winners and have a playoff system that gives a higher probability of having a winner th product of randomness by inviting underdog teams that are graciously called wild cards that can later become champions like the New York Giants.

Speculation is closer to the European system. You can get lucky some days and reap a good reward but in the long run the lack of sound money management and a strict trading plan will put you out of business.

Clive Burlin recounts:

I took an introductory flying lesson recently. I was shocked at how much checking gets done before you roll down the runway. While the instructor was going around the plane checking the propeller, flaps, gas, tail, etc., I was thinking to myself "you know, if you did half the amount of prep before putting on a trade, maybe your results would be a bit better." This thought was totally reinforced once inside the cockpit where the pilot sat with this long check-list seemingly checking every button and switch there was. A few more checks before take-off and we were barrelling down the runway.

Scott Brooks recalls:

Some years ago, I was listening to an interview of several NBA players and the focus was on Patrick Ewing. One thing all the players agreed on was that Ewing was cheap. He never picked up any tabs. Don't know if it's true or not, but I found it interesting that the biggest personal matter that they all agreed on, and spent a inordinate amount of time talking about, was his "cheapness."



PitcherI heard a spot on NPR yesterday about a statistics study of major league baseball that concluded that all the runs and records in major league baseball were consistent with randomness. I find that hard to believe, and that brings up the general feeling that many of statistics' conclusions are hard to believe. But there they are. A random generated time sequence has many apparent trends when looking at a chart. The tests of market statistics seem hard to believe, but are verifiable within its model. This phenomenon highlight the problem of purely subjective trading and the place of feelings in trading. Vic and Laurel's book talks about runs and hot streaks. Many of the conclusions arrived at scientifically are counterintuitive at first. It's like the greatest pain entry point of a trade is often the best entry.

Victor Niederhoffer remarks:

Jim is talking about the randomnes of basketball, and how the runs and streaks are consistent with randomness. They're consistent the same way the market is consistent. If you don't take account of the lead at the time or the changing significance as other markets move and time passes within the day and week, and you're an ignoramous, then yes, things are completely random.



This is the fourth close within one point of the close five sessions ago, and those proceeding four sessions have all closed within three points of that close as well — maybe one for the record books. After a 3.5% gain, one may expect some consolidation – though is this taking it a bit far.

J.P. Highland adds:

The way the overnight session traded and the sustained action above 1380 made me think the S&P would have a good move and maybe test the early Feb highs… but the 9:30 open was a little disappointing and the following breakout attempt ran out of gas way too fast.

Nothing left but to keep hustling.



NisonNison's Japanese Candlestick book talks about record sessions creating new highs higher than the day before's. They have significance in some situations. I've noticed the similarity with athletic competition records where new records just surpass the prior records by a hair. Like today we made a new high, but then fell back. We've had a series of new highs. I heard a college basketball team saying that after expending a lot of energy to win, they wouldn't do much hard practice while waiting for the next championship game. There seems to be a sense of let down or relaxing once the new high is achieved, the pressure gets released, or, as the press always says, profit taking.

Tom Marks adds:

One spectacular exception: Bob Beamon's astounding long jump at the 1968 Olympics. Records are broken, but rarely pulverized like this, as the numbers bear out. From Wikipedia:

Sports journalist Dick Schaap wrote a book about the leap, called The Perfect Jump. Prior to Beamon's jump, the world record had been broken thirteen times since 1901, with an average increase of 6 cm (2½ in) and the largest increase being 15 cm (6 in). Beamon's gold medal mark bettered the existing record by 55 cm (21¾ in.) as he became the first person to reach both 28 and 29 feet….The defending Olympic champion, Lynn Davies of Great Britain, told Beamon, "You have destroyed this event", and in track and field jargon, a new adjective - Beamonesque - came into use to describe spectacular feats. Beamon landed his jump near the far end of the sand pit in which jumpers land. The optical device which had been installed to measure jump distances was not designed to measure a jump of such length. This forced the officials to measure the jump manually which added to the jump's aura.



PotterArt is for the Artist. Words must be written, Songs must be sung. Visions must be seen. Not because they are valued; but because they are Ideas. The Artist understands that wealth, true wealth as opposed to simply being rich, stems from Ideas. Great Art is valued, if valued properly, because they express an Idea well. Not always because they express a grand idea.

There is the modern myth that the Artist must not be materialist or wealthy. Whereas the Trader, as an Artist, knows that all Artists are wealthy, but all are not rich. It would seem that a great Trader and the Artist share a similar soul.

For they both :

Take a loss. The modern myth largely stems from the Artist producing their best Ideas to bounce back from a loss. They both believe they can replace their losses with better Ideas.

Respect everyone. An Idea can come from anyone. Every trader has been on the wrong side of a trade against someone of much more limited means, brains and circumstances.

Generous souls. For if wealth comes from Ideas, Ideas can always flow. An Artist never will admit he is out of Ideas. Many only have one grand idea, but die thinking the next grand idea is around the corner.

There is never enough. If Ideas are wealth, Life is to be lived to its fullest. The trader that gives up simply to be rich and preserve their riches has given up on their Ideas. Like the Artist that has sold out, simply producing copies of his once great work. Their admitting that it was either great timing or luck; not skill and belief that their Ideas still matter.

Free souls. Comes from the empowerment of wealth coming from your thoughts.

Drawn to excess. Because Ideas are regenerative, its tempting to believe everything is. Like the young that are blind to time. Or the athlete that believes there is always another game, tomorrow.



CanaAs a very serious collector of art, I see people buy art for the purpose of investment all the time. I'm asked to give my opinion on the worth of a particular piece of art a few times a month. When the public sees headlines touting record price for Van Gogh, Renoir or Matisse, they rush out to buy art for investment. Some major companies have also put the shareholders at "art market risk" by owning large collections of art for investment purposes. The cottage industry of consultants that has sprung up dealing with the art investment field is full of swindlers, thieves, liars and cheats. The consultants, dealers, and auction houses are the ones who profit, not the average collector. Even some reputable dealers have been known to sell fakes, such as works by Dali, which are 99% fake (except for his signature). While it is possible to make some money in the art market, it is very improbable for the collector to profit. A collector should stick to buying art he loves, has beauty, wants to display forever, and is willing to bequeath to a relative or museum upon death. The art hanging on our walls and in our collections is owned by history, and we are merely the caretakers of the art. Incidently, despite the spin by Sotheby's and others, the mid-range market for good Impressionist art is rather soft. There are also some good prices to be found in the Old Masters. I used to tell my lovely wife that the price of good mid-range art fluctuates inversely with the number of margin calls on the Street.

Sam Marx remarks:

PollockI believe a lot of modern art is a fraud. Jackson Pollock's splatter paintings — how can anyone take them seriously? Yet they are sold for millions of dollars. A painting (not a Pollock) hung in the Museum of Modern Art in NYC for a number of years before it was discovered to be upside down.

Marion Dreyfus critiques:

Your grasp of modern art is not strong; if you know the continuum of the field's development, you would not say that. It marks a yahoo sensibility, alas. There are fraudulent practitioners, but Pollock is not one. Suffice to say there are less well researched and annotated and revered artists around to pick on. In general, if you are going to pick on frauds and fakes, better to pick on a very current artist whose chops are not yet firmly implanted in the historical record and universally accepted.

Just as there are 'collectors' without an ounce of sophitication in what they are amassing, there are quick-buck artists eager to make use of the investing/collecting sensibility when they adjudge the market to be a bunch of gullible wallets circling for a kill.

And though it sounds foolish, because much of modern art is nonrepresentational, if the artist is not present while the museum hangs the piece, it is forgivable if the canvas is not the way the artist intended: The average viewer could not tell which side was intended to be down, which up, so one ought not hold the museum guilty for such an understandable error.

Sam Marx retorts:

What makes Pollock’s work worth millions? One critic called Pollock's work colorful "wallpaper designs." I don't believe Pollock precisely measured the hole he created in the bottom of the paint can and a slight change in the hole size in the can of paint that he was dripping from would've resulted in a very different painting. If you don't have a precise control over what you're doing, I have doubts about it as a masterpiece.

Michael Bonderer assays:

RothkoSam, easy boy! Kindly try to put Pollock specifically, and the Abstract Expressionists of the budding NY School Artists more generally, in the context of post Hiroshima/Nagasaki, post WW II ethos and emerging Cold War ethos of the late 40s and early 50s, to understand their aesthetic and important place in global art and their brilliance. Particularly interesting would be for you to trace Pollock's pre-Abstract Exprisionist work to see how he as an artist developed and emerged as a leading Abstract Expressionist. As the atom's understanding came to mass consciousness, you will see bio-morphic imagery present in many artists' work, including Pollock's. This gave rise to the 'explosive canvas' of Pollock and others and the magnificient 'color-field' work of Rothko, as they all came to grips and a better understanding of where we as a society were going on a certain level from 1945 to the present. Collecting and investing in art is an aesthetic and a lifestyle, and to do it well you really have to immerse yourself, e.g., Paris in the 20s and 30s, NYC in the late 40s, 50s and 60s, LA and SF Bay area in the 50s and 60s and 70s and the LA Chicano art of the 70s and 80s and now Shanghai today with its phenomenal present day contemporary pieces and artists. Sam, I kindly direct you to the Art Tab on Costco's web site!

Lon Evans adds:

Should this be 1910, Sam, you’d be offering to pass on any available Van Gogh.

Adam Robinson offers:

Cana Alas, what's not strong is modern art's grasp on what moves the human heart.

If anyone wants to take up the affirmative position that modern art resonates with the human soul and psyche anywhere near as much as does any Old Master painting, I'll take up the negative banner onto the debate field with gleeful alacrity.

As a rule of thumb, in any field of human production, whether art or literature or essay writing or science, I lay it down as axiomatic that the time and consideration that ought to be accorded to the appreciation and evaluation of human products is proportional to the time and consideration that went into their creation.

Some might argue that talent or brainpower ought to figure in to the calculus of merit, also, so for those who like to quantify things, let's say,

PT x BP/T = k x CAT (production time of creation times the creator's brain power/talent equals some positive constant times the claim on an audience's time)

Show me a piece of art — or an idea even — that took two years of a human being's life to conjure and produce, and another that took two days, and the assuming the talent of the creator's to be the same, I'll give the later maybe 1% as much of my time weighing and appreciating as I will the former.

Michael Bonderer explains:

Tang ZhigangAnd therein lies the adventure and challenge. To effectively emmerse oneself into the Shanghai art and media cognoscenti and find the Shanghai Pollock and Rothko and Diebenkorn. Scour the streets and allys and lofts for the work-product of the Tiananmen-inspired dissidents and new-found 21st Century Shanghai sensabilities. Maybe even find the Costco art-mill progenitor and take him out for tea and latte and pick his brain. He may be nothing more then a knuckle dragger, but then again, he may point you to a street that is having a new showing Friday night.

Jeff Watson responds:

There are some prefectly dreadful works from the Old Masters out there. Just go to the Prado or Louvre, and you'll see plenty of examples. While I'm not a fan of most modern art, I do like some of it, and have one piece in my collection. Good art is good art, in any genre, be it music, literature, or theater, and the heart will respond to to what's good. Some have pre-existing opinions on the merits of a certain genre, and it could cause them to miss out on something beautiful. Pre-existing opinions have cost me a lot of money in the market over the years, and this has taught me to sample everything, and keep an open mind.

Steve Leslie ponders:

Why is it that a painting of a nude is considered artform when a photograph can be considered pornography? As an addendum, do I need Freudian therapy if I am a fan of Robert Mapplethorpe?

Why would someone spend millions for a stolen work of art yet know in advance that he may never reveal it for public viewing?

Along the lines of burglary, How can billions of dollars worth of artwork be stolen every year and vanish for decades?

What happened to all the artwork that the Germans plundered from France, Italy, Denmark and other places during World War II and has not been seen since?

Where does someone draw the line between art and garbage? Along those lines what, defines Dali as a genius and not mildly psychotic?

Was Andy Warhol an accomplished artist because he drew for Campbell’s soup labels or in spite of it?

Who else thinks that Frank Frazetta is genius personified?

Are dogs playing poker classified as modern art, especially with the Phoenix-like rise in popularity of the game?

Do velvet Elvis paintings increase in value?

Alston Mabry postscribes:

I enjoy using artwork as wallpaper on my computers. Two very good sources are Mark Harden's Artchive and WebMuseum. It is crucial to get a good scan, that has decent color saturation and sharpness. For example, Hopper's Cape Cod Afternoon from WebMuseum, in which the colors are very rich, and you can actually see the grain of the canvas.



 Home builders. Companies typified by Toll Brothers are up about 50% this year and the S&P home builders index is up 50% vis a vis its July 2007 levels. It is reasonable to think that just the way these stocks led the general market down, from 700 circa July 30 2006 to 200 on Nov 2007, that they will lead on the upside.

Evility. One of the evilest things in the world for a short is to see the a market go up 4% or 5% cumulatively up four days in a row, and then finally give them that one pull back down just one point or 1/10 of 1% the way the S&P did this week. It sets up to make all direction of change systems completely useless the next few days.

Ignorance. One of the greatest mistakes a businessman can make is to assume he is smarter than the market. An art dealer close to insolvency believed that if a Jeff Koons could sell for $30 million then old masters like Rembrandt were vastly underpriced and he bought them up on the principle that he would prove the market wrong. He ran out of capital and his Las Vegas partners took over the inventory. Has happened in many other fields.

Fed Model. The differential between 10 year yields and the earnings price ratio of 4.5% has to be the highest in history and that would predict the greatest market rise of the last 20 years, in the next year. And that's what Abbey Cohen based her predictions on. And it's a shame that she stopped making those forecasts just when they were so valid.

Employment. There is much talk about how when the market reacts well to bad news, it is good for the market, e.g the unchanged market on the 75,000 loss of jobs. By the way, I find the unemployment rate much more meaningful because at least both the numerator and the denominator have the same faulty seasonal adjustments and guesstimates of new jobs created by new businesses not yet seen. However, there is also the beaten favorite syndrome which comes up much too often in these cases, where what was supposed to happen the last race happens the next time out.

Stefan Jovanovich adds:

Regarding the home builders: the market's ability to forecast the unknown continues to amaze. Somehow it knew a month ago that the Senate Bill written this week would extend the tax loss carrybacks from two to four years for the home builders. If the bill is approved, the cash from the refunds may save the better companies from balance sheet collapse. Since the builders' inventories are actually shrinking (see Calculated Risk's March newsletter), an optimist could believe that the industry is about to pull out of its dive before it augers into the ground.

The household employment survey had far better numbers than the headline statistics. If you stripped out the American Axle strike and the construction sector, the decline in private employment was negligible. The one meme that is not being forecast is a mild recession. Therefore, as George C. Scott aka General Patton once said, the Germans will make a winter attack.



For SaleA person buying property for investment is doing three things simultaneously, even if he doesn't admit it:

1/ Running a real estate business, including headaches, deadbeat tenants, vacancy between tenants, etc., for which costs and lost rent should be included in an analysis, as these are not minor costs.

2/ Speculating on the value of property going up or down.

3/ Speculating on the value of the dollars borrowed for purchase going up or down.

The third one is often overlooked. Picture buying an apartment for $100K cash (in real estate terms, that means writing a check for $100K, no loan involved). Then picture that with inflation, after X years the value of the dollar went to 1/2 with no change in the value of the property. Selling it would yield $200K, which after taxes on the $100K "profit" would yield a loss of $50K in future dollars, or $25K in present dollars.

As an alternative, picture buying with 10% down and 90% borrowed. After X years the proceeds of the $200K sale go $90K to the bank (assume no amortization, for simplification), $20K to pay back the $10K down payment, $50K to taxes, which leaves $40K profit (in future dollars).

The interest on the loan makes things more complicated, of course. It means likely not paying taxes on other, similar deals that made a profit at the same time, so the above deal maybe should show a profit of $90K in future dollars. It also means that instead of choosing between paying $100K "cash" or $10K down and investing $90K, another option is buying 10 apartments for $10K down each.

Of course the interest payments are a cost, which need to be looked at. One good way to do this is to compare the interest rate to the "cap rate" for the property. The cap rate is the annual income divided by the property price, which is just the income from the property. It is, or should be, figured including all costs, including tenant hassles, but not include any interest costs. If the property is making 8% and the money costs 6%, that is a good sign, and will make the return on the 10% down payment really high. If the cap rate is 4% and the money costs 6%, the deal will lose money steadily, but perhaps be bailed out by a sale at an increased price. This is exactly what most deals look like, especially in recent years: they lose money steadily until sale to someone else who does the same thing and hopes not to be the owner when prices drop. This time around it may be a little different, as the loss to the "last" owner is increasingly spread among all taxpayers, but that's another story.

As much of the price increases lately have been due to inflation (narrowly defined by me as a drop in the value of money), and only some is due to an increase in the value of the property, buying with a loan is also a gain from shorting the dollar: profits are made from that "option" trade if the inflation rate is higher than the interest rate, which in effect makes the interest on the loan a negative number. This has made many people rich, who either aren't aware of this or won't admit it, preferring to think they made the money from choosing better paint colors.

As prices are dropping now, it strikes me as sensible to wait at least one or two years before buying. When cap rates are higher than interest rates, that's the time to buy, as everyone will be saying "I got burned, don't bother with buying property".



Among the tens of thousands of heart-breaking ironies in the history of the Second World War in Europe is the fact that thousands of Jews fled from Austria and Hungary to Serbia in 1938, 1939 and 1940 in hopes of finding safety from the Nazis. Hundreds of them died (along with 17,000 Serbs) when the Luftwaffe bombed the city in April, 1941 in what was, up to that time, the most successful massacre of civilians by air power in European history. (To this day the Guinness prize for the world record of slaughter from the air remains the Japanese bombing of Nanking.)

Almost all of the Jewish survivors of the bombing — along with hundreds of thousands of Serbs — were sent to the camp set up by the Ustache (Himmler's one successful venture in holocaust outsourcing). This is the reason - apart from human sympathy — that so many Jews have been active in uncovering the records of Jasenovac — the one concentration camp that has the distinction of having the vast majority of its victims be Gentiles and, as far as I have found, the only one whose establishing organization had its Chaplain General celebrated in a mass at the Vatican.



Street KingsIn tennis the secret is location, location, location. In movies, it's casting, casting, casting.

Among the still-gestating elements of "Street Kings," now on-screen, is the textured and mature work by Keanu Reeves. Forest Whittaker, always a standout, plays a role that is also layered and unobvious, though he seems perpetually ready to break out into a marathon sweat; here, it works for his cachet and role. Hugh Laurie, spot-on casting, was a hoot to follow. His appearance onscreen, as with Cedric the Entertainer's hangdog cameo-plus in a brilliant set of crimson wheels, elicited an audible sigh of endorsement from acolytes who recognize the beloved featured actors from other venues.

Jay Mohr and John Corbett, both, were worthy spots for our eyes to land, both working against type in prior filmic and tube outings. Both also thicker and older-longing. Maybe Keanu and these two took a bouillabaisse-thickening course so they'd finally look grown up. While they usually play cherubs, here, you knew they were up to no good. As with most police procedurals, the women play a decidedly ancillary role, though the wife of Keanu's slain partner was a model of subtlety and controlled rage.

To be perfectly truthful, from scanning the credits, we can often tell the malefactors and bad guys by an Insta-matic assessment of the variables, how far down the particular casting ring-toss is, then doing a fast Chinese menu of likelihood for almost any plot development. This film proves we can do it with the champs. Maybe too many Monk repeats have chiseled our detective chops.

The plot provides ample twisty turns and reverses, so most viewers won't really predict how a particular section will resolve. Good guys are bad; bad guys are good–or are they? We must admit our expectations for this film were not very elevated, but we were agreeably surprised, and the film could even sustain (yikes) a second viewing. The dialogue, especially, was fast and suitable to the milieu, revealing that script-writer cohorts are darkly familiar with the genre and dirty-copville. Evokes the Gere/Garcia/Travis 1990 pleaser, "Internal Affairs." We observe that this procedural evokes particularly convoluted scripting and storylines, quite a treat compared to the pared-down rom/com or sit-flic fare offered in many top-grossers lately. The periodic skycam overview of LA shown strategically throughout the film provided a "Batman" or "Blade-Runner"-like darkling threat-presence, evil glinting in the sick-yellow slits of illumined night windows lit when all should, one supposes, be extinguished.

A minor cavil is the gory evident whenever Reeves and "Disco" (Chris Evans) do their solo clean-up raids against the presumed bad guys. Another is the protagonist's girlfriend: Why is she Hispanic? How come he's taken to her hospital when he gets nicked? Why is she the nurse on duty when he is gurneyed in? Coincidences like this bug the nitpicky. Why, when all the cops get together for a kegfest, do they all seem to have Hispanic Playboy bunnies as main squeezes? It rang false, and every appearance of Amaury Nolasco got under my skin. These men are not themselves Hollyweird stars; as cops, they would not have access, one believes, to such choice non-native female pulchritude. Nor would they all catch the exact Barbie-doll replica as Reeves engages.

LA itself is cinematically captured as moody and patchy, not clichetic. Much like the 'patchy' police, a law unto themselves, never giving an inch: There are precious few honest ones. Or if they happen to manage to be, they don't get to stay alive very long. Subplots involving kidnapped illegals and drug-trade operators, while not new, are important for those who don't follow the news as closely as they should.

Caveat popcorn-er: This may not be your cuppa joe. But if you cotton to sweaty cop capers… all in, "Kings" rates Aces for entertainment, acting, plotlines - and high Jacks for resolution.



BullIn high school on the Great Plains I rode some bucking horses but never rode a bucking bull. With bareback and saddle bronc bucking horses you have something to hang on to besides a rope. Bull ropes weren't my idea of a great tool. I was always too scared. I was lacking the courage and guts factor. The bulls were too big, too fast, too unpredictable and it was too easy to get seriously hurt.

These days the bucking bulls are better, much better. Sure the cowboys are better but the athleticism of the bulls has improved. How do these cowboys stay on for 8 seconds? They know the bull. The know how the bull has bucked in the past. They know how the bull has bucked the last few times out. They talk to the cowboys that have had to ride the bull recently. The PBR is a fraternity, similar to the crowd down on the corner of Wall and Broad. Some cowboys have video tapes of the bull's bucking action. If you don't know how the bull is going to buck before he comes out of the chute generally a cowboy doesn't have a very good chance to stay on and make any money.

How would I get a video tape of the market ahead of time? Who can I talk to about what it might or might not do? I've found that talking to other market "riders" doesn't make me much money. It seems to be what's under my hat that counts, how I approach my "ride" and the amount of preparation I have invested. And as always, staying sharp, staying in the game and "riding" every day are paramount.

And some times good old fashioned courage comes into play, the guts factor. A good bull rider needs to know when and how to dismount from a bull if he makes the whistle. No one in the arena can help him, it's all up to him. As well using all the available tools for trading is smart and beneficial.

It's the courage and guts parts that can't be bought.



HendrixI missed the 60s. That happened because during the 60s I was an Able Seaman on cargo vessels supplying ammunition, construction equipment, helicopters, beer, cigarettes, condoms, to military in Vietnam. Back and forth, back and forth, over waves, through winds, past endless clouds floating overhead, all at 15 knots, dreary passages between the States and the Orient.

Never saw a hippie. Never saw a flower. Never smoked a joint. Never participated in an orgy.



PhilMost of us are aware of the benefits of portfolio diversification. The simple fact is that it pays to have diversified positions in different industries, countries and even diverse markets. The key to it all is to look at the correlation between the various components of the portfolio.

However there is another kind of risk that many investors are exposed to. It can be fairly assumed that the vast majority of investors are exposed to this single risk in all of their positions. Simply put it is the risk of default if your broker goes under.

There are two ways to defend against this risk. One is to assess the broker's financial position personally. In particular look at how leveraged the broker is. As a rough check one can simply look at the stock chart of the broker if they are publicly traded. If the stock has been tanking faster than the industry it is a clear red flag.

Secondly the investor can identify multiple brokers who appear sound. But even then it makes sense to diversify using multiple accounts with two or more brokers. Remember if a broker shuts down losing half your money is a whole lot better than losing it all. You can still come back.

None of this discussion is meant to assert that the SIPC, FDIC and the many other protective agencies cannot perform on their guarantees for investor safety. Probably they can. But in the eventuality that a decent sized firm goes down, the process to sort the mess will undoubtedly takes months or years. After all it is the government at work. At best you might get all your money back but a very long time from now. Certainly you will miss any buying opportunity which develops from this crisis.

George Parkanyi remarks:

That’s why I pay a little extra commission to deal with a Canadian big five bank’s discount brokerage and not, say, E-Trade (at least not in this environment).

Another point to add is that certain types of accounts are segregated. Registered accounts for example are held in trust, so if your broker goes under, the assets in those accounts are yours. They can’t be touched. It’s margin, short, and option accounts where you have the risk — because the assets are commingled with the firm’s. I believed cash accounts are also segregated.

But if your boutique broker does go bust, it may take a while to sort out the mess and be able to access your segregated accounts, so it’s still a good idea to either steer clear or diversify brokers, as Dr. McDonnell recommends.

J.T. Holley writes:

With FDIC the thing no one realizes is that you are only getting your principle back!  They don't care that you bought a 5 yr CD in 2005 that was yielding 5.5%!  Now get to the back of the line and wait for your $100k!

I had a wonderful lady who happened to be my client back in '01-'03 who passed at the age of 98.  She was risky as heck w/ her "discretionary" money, but her fixed income side of the portfolio was rock-solid.  I once was assisting her with her 1099s for the tax season and noticed that she had 15 $100k CDs at 15 different banks in the area.  I asked her why.  She said that was the limit at each and she didn't want to go through "it again". I asked her to explain and she said she had her money taken in the Great Depression before FDIC at the age of 22. According to her, the only way to properly have your money diversified is as Dr. McDonnell explained! 



I have been looking to acquire a new bag in which to lug my laptop to and from the office. I liked the Timbuk2 brand because it seems to have adequate padding and space, and was comfortable on the shoulder. I saw the bag in a local retailer at just over $100. Found the same bag on Dell this afternoon for $38 including tax and shipping! Not only is Dell laying off workers but they are clearing out unwanted inventory! The Govies must use this type of transaction in their iCPI reporting.

David Higgs adds:

Two really nice leather makers are Wild Rose and Chisholm Trail. But you might look kind of silly carrying your laptop in a hunting pouch!



I lived on the border of Texas and Mexico for a couple of years. We were invited to eat over at a neighbor's house the first week were were there. They served us dishes I had never seen before, although it sounded exotic when they told me what it was in Spanish (I didn't know the language then). The food tasted very different from anything I had ever eaten. It wasn't as palatable as I had hoped. Two of the other members of my party who came with me decided not to eat the dinner. They just ate homemade tortillas and drank their cokes. I ate the dinner and when I lapped that up the matriarch quickly replenished my plate with another large helping. I ate all that, too, just to be polite. I got rather sick, perhaps just from overeating. The next day the patriarch of the family called us and said that I was welcome any time — but not the others.



MikeHad a Karaoke session last Saturday that included two other DailySpec contributors, whose names I shall graciously not disclose.

The singular fact of karaoke that all will acknowledge is that a song's suitability for karaoke has no relationship to the song's merit in general. So in karaoke, the names that rise to the top include Bon Jovi, Wham, Bread, Bolton, Manilow…

Duran Duran is one of the best. Not only is the pitch usually a little too high for card carrying males, but the lyrics also pose a challenge. Consider these:

"The Reflex is an only child he's waiting in the park."

"Two of a billion stars, it means so much to me–like a birthday or a pretty view."

"I sold the Renoir and the T.V. set–don't want to be around when this gets out"

"Telegram force and ready–I knew this was a big mistake."

The Bee Gees are another fine choice, whether one goes with the Beatles-era Bee Gees, something like "How Can You Mend a Broken Heart", or with the disco Bee Gees. For the latter, "Tragedy" is the default choice, but also consider "Fanny be Tender" if you really want to test your falsetto. For early Bee Gees, the emotions brought out on the karaoke stage can be overwhelming. Consider this:

"I started a joke, which started the whole world crying. Oh but I didn't see that the joke was on me."

Or to really liven the evening, you might try their "I've Got to Get a Message to You", apparently about a murderer awaiting the Chair.

I also recommend the early 70s stadium bands, Three Dog Night, Blood Sweat and Tears, and Grand Funk Railroad. For Three Dog Night, go with "Eli's Coming", or perhaps "Liar". I would never think to recommend "And When I Die" by Blood Sweat and Tears, which has way too many key changes and syncopations, but on Saturday one of my anonymous associates pulled it off very credibly.

You should test yourself with a 70s soul number, like an Al Wilson "Show and Tell", or relatedly, a beach music number like "Give Me Just a Little More Time" by the Chairmen of the Board. The latter is at the very top of my range, and the struggle to stay up there adds to the drama of the moment.

Finally, my other anonymous associate tested the low end of the range with "Ol' Man River". Whenever I hear it, I can't help but want to correct him in the fashion of "Elderly Man River", who "must know something, but he doesn't say anything".



In 2010 census workers will go back to using a pencil and pad for their census-taking! The hand-held information taking units failed to collect information accurately. This weekend I will record my checker games with a spiral steno pad and pen. Vic and Laurel recommend stock traders keep a handwritten manuscript for later reference. Some of the older ways seem to work OK in today's fast moving world of technology!



I leave tomorrow for Marion, IL and a yearly Checker Tournament I attend there each year. Gasoline in Belpre yesterday was $3.16 for regular. Word must have leaked that I will travel 500 miles tomorrow to Marion as I just now noted that regular around town jumped to $3.25! Note oil at $105 as I type and gold up $11 to $911 (bad number!) Gold and panic are 'hand in hand' partners.



BearsHedgefund monitoring service Greenwich Alternative Investments reports 58% bears on the S&P, 58% bears on the dollar and 67% bears on the 10 yr T-Notes. Sentiment is overwhelmingly negative.

Nigel Davies replies:

Seems odd that these learned gentlemen would be so bearish on both the dollar and the S&P. I would have thought there'd come a point at which a weak dollar would start to get good for exports.

Jim Joyce writes:

Sentiment stats must be tested. One can't just glibly assume they are contrarian indicators.

Victor Niederhoffer remarks:

The key to this market was when Abbey Cohen refrained from making any more bullish forecasts and it was accepted that we were in bear market by Goldman itself.

Stefan Jovanovich explains:

Measures of the current cycle need to include adjustments for the change in the value of the dollar. If those changes are included, the S&P 500 at 1374.9 is still down roughly 25% from its 12-month high on May 29th of last year and down 7% from its 3-month high at year-end. One could argue that the "bear" market is still intact — given that the S&P 500 adjusted from the value of the dollar is down 60% from its high on August 30, 2000 and up only 17.3% from its low on March 3, 2003. Comparisons with 1938 seem appropriate when looked at with this particular historical lens.

Nigel Davies agrees:

It is helpful to consider the value of assets relative to other assets rather than just the dollar. The dollar is by no means a fixed entity, though when one talks about 'bottoms' or 'tops' in assets like stocks or gold, there's an implicit assumption that it is.

J.T. Holley replies:

The dark clouds cover only the Big Apple. The dark and dirty forecasts are associated with NYC. My assumption is cutbacks, losses, write-offs, and a slowing beat of the heart of the financial world. Outside NYC, in beautiful Brentwood, TN where the buds are blooming, daffodils sprinkle the green fields, and opportunity is much appreciated, I'm as bullish as ever. It seems that far and few are remembering the drift, that bear markets exist only by looking at the rearview mirror, while one is driving forward utilizing the windshield to block the bugs and grit. 

Kim Zussman reports:

Yesterday was third highest first day of month in 14 years (SPY c-c). Those >3% gain were, on average, followed by gains the rest of that month:FDOM



RainbowWhy it is some look for more out of themselves than is there is one of those human psychological mysteries that will never be solved, I guess. Maybe its too much hype from gurus who cover the media with propaganda that stimulates monetary responses from suckers.

I fall into this trap, expecting more of myself. For instance, expecting myself to profit like a professional when I totally lack predictive skills.  I know, intellectually, I am gambling when I hit the trade button; yet an irrational hope lingers on that my analytic competence has correctly foreseen the outcome.

So there it is, in black and white. Prudently I ought to adjust my life to this reality. I won't, though.  The next time that hope manifests itself I will again go through the same process, mentally, emotionally, behaviorally.

Nigel Davies explains:

One of the problems with trading is that outcomes are not directly linked to performance, especially over a short period of time. This alignment is much closer in games with a smaller random element, which is what makes them a good training ground for the ego.



 There have been six quarters with a return worse than -10% on the S&P index (not counting dividends) over the last  20 years (i.e. 80 quarters).  My counting shows the following:

Five of the following quarters have been positive (i.e. five positive out of six)

Average 5.0%  

Best 19% for quarter starting 10/1/1998

Worst -19% for quarter starting 7/1/2002

This compares to 53 positive out of all 80 quarters and 2% average return for all 80.Quarters



 Durychka our yellow parakeet (Durychka is Russian for "stupid little girl") is remarkably insightful for a small beast. She uses a 3-note song I taught her as my name; when I come home and she hears my my keys, she calls me. This bird is very attached to me, and when the Mrs hugs me she jealousy hurls herself against the bars of the cage like a desperate woman in prison.

She must know I am too big for her, but that doesn't matter because her utility is to own my intentions. It is amazing how the entire female emotional phenotype lives in a brain the size of a lentil.

Recently Durychka learned about money and friendship. Months ago I noticed she calls back to birds she hears outside, so when the weather is nice I hang her cage in the apricot tree near the patio. One day the shrub across from her happened to be loaded with berries, so there were dozens of hungry robins jumping all over the yard. Many of the wild birds came to check out the yellow girl in a cage, and she was very enthusiastic about all the attention. But the next day the bush had been picked clean, and gone were all her fat fair weather friends. Now she sat lonely in the tree, wondering how she had offended them.

Durychka has lots of toys in her cage, many with mirrors. She spends hours looking at herself - frequently pecking and licking her image. Parakeets are social birds from Australia, where they live in trees by the hundreds in close quarters. When they are solo in captivity, they appear to be executing a futile program of socialization - recognizing another bird in the mirror. Even though the feedback from the reflection must fall short of the real thing, she can't fight the hard-wired attraction.

In many ways, gambling and markets, especially volatile ones, flush out our deepest dispositions and serve as reflections of ourselves. Perhaps a hard-wired need for self-reflection explains why, if we have a medium or long-term opinion, we invite irrational solace/punishment from short-term moves which are irrelevant to the big picture. And why we come back to the mirror, again and again, as if this time something will be different.



Oil RigsIf the New York T!mes tripled its subscription price, how many would immediately call-up to cancel? Most would probably wait until their subscription ran out and not renew. And many would start looking around for alternate sources of business, political, and entertainment news. The NYT itself would probably publish stories claiming economists' price "theories" don't apply to "needs" like reading the NYT, so the price change should have no impact.

So it has been with oil and gas prices. Prices jumped dramatically, and NYT reporters repeatedly claim consumers are not driving less and not switching to sanctified high-mileage cars. Sitting in their NYC offices and traveling on expense accounts tends to shield reporters from much of everyday life. In the real world, large-scale shifts are taking place on both the demand side and supply side, just as they did when oil prices jumped in the 1970s. Rental car lots quickly filled up with unrented SUVs and mini-vans, and after some months, car dealers have large unsold inventories SUVs and mini-vans. Real-estate prices have crashed the hardest in communities with long commutes to jobs, for example. As usual, the NYT didn't retract, correct, revise, or even comment on their earlier "high prices aren't reducing demand" stories.

Market-failure stories in the New York T!mes come in various flavors. There are the "high prices don't change consumer behavior" stories run whenever politicians and environmentalists are pushing for new taxes and regulations to make people "do what's right." And then there are the equally popular markets "overreacting" stories about corporate lust for profits leading to "over-investment" chaos that somehow hurts "the little guy."

Reporters regularly blame markets for overreacting (though often the culprit is an earlier intervention or regulation). Still, much can be accomplished by overreacting in life. Men propose marriage (an obvious overreaction). Others, temporarily frustrated at work, quit their jobs and regret it at first, but are later thankful. Are oil companies overreacting to high prices, throwing money at a dizzying array of energy projects? Shell claims to have fifty new projects in the works. Gas exploration firms are investing large amounts in British Colombia (after Alberta arbitrarily raised energy taxes). Brazilians are investing in new deep-sea projects. Of the thousands of energy exploration projects that looked promising at $50 a barrel, each now looks like a slam-dunk, and tens of thousands of new energy projects look promising at $75 a barrel.

And on the alternative energy side, we see a similar story. As coal prices and political threats against coal burning have risen, solar, hydro, wind, geo-thermal and other alternative energy projects become more attractive. New millions (or billions?) are being invested in improving solar cell technology, and deploying current technologies. And when better car batteries enable new electric and hybrid cars to recharge at home from the grid, or to "fill-up" with pre-charged batteries at gas/battery stations, demand for expensive gasoline will begin the big slide.

So how far will oil prices fall as these demand-side and supply side investments come on-stream? A lot depends upon the Saudis, as usual. Those who remember the 1970s, remember the abuse heaped upon Milton Friedman and other free-market economists who claimed that cartels always fall apart. The OPEC cartel of major oil producers, let by America's "friend," the Shah of Iran, seemed to hold together, restricting oil sales and keeping prices high. (The joke was that Milton Friedman had proven OPEC wasn't a cartel… because it hadn't fallen apart.)

But before long OPEC did fall apart for just the reasons economists predicted: the urge to cheat and reap outsized rewards is just too strong. Saudi expenditures rose quickly to absorb oil income, as the Saudis wasted billions growing wheat and building new cities in the desert. OPEC would meet and members would promise to keep to their quotas in the interest of all cartel members. Then they would return home and push to secretly expand production and sales as much as possible. If everyone else held back, each member would reason, they could boost output and make a killing at the higher prices.

Oil profits were a magnet that drew vast capital into oil exploration, and new discoveries in North Sea and other non-OPEC developments soon pumped new oil supplies into the market. Higher prices allowed the Saudis to expand their exploration and upgrade their equipment. Before long new non-OPEC supplies, combined with widespread OPEC cheating, flooded world markets and drove oil prices way, way down.

As many analysts have emphasized, it was these years of low prices that are at the root of today's high prices. Conflicts in Iraq and Nigeria, along with government confiscations in the USSR and Venezuela, have played a role, but the low prices that essentially bankrupted the Saudis in the late 1990s also stopped development and even maintenance in Saudi Arabia and around the world. The majors laid off tens of thousands and most merged and downsized into the Chevron-Texaco, Exxon-Mobil, Conoco-Phillips two-name firms we know today.

So now the Saudis have all the billions to expand supply that they could ever wish for. And so does Shell, Exxon, Chevron, Total, Petrobras, along with hundreds of private-sector exploration and development firms large and small. It is true that more major oil reserves are owned and mismanaged by corrupt governments now than in the 1970s. But the earth is a big and mostly unexplored place. High oil prices paired with high-tech exploration and development innovations will bring new supplies to market, maybe just as alternative energy innovations take hold to lower energy use.

If so, the New York T!mes will have yet another opportunity to complain of markets "overreacting" to lower oil demand and boost oil supplies "too fast." Only government taxes and regulations, the NYT will argue (again), will be able to save billions of dollars invested in nifty green energy.



African DancersAfrica will start playing a role in global strategic relationships and in the global economy in the next decade. Addressing poverty, terrorism, failing or weak states, and health issues is important for global security. The need to diversify sources of energy and materials in the competition for natural resources and secure access to the global market make Africa an important actor.

Assets move globally in search of low costs of labor and production. Emerging markets in African countries will become with time more and more representative.

In Africa we will see the US, China and the EU compete. Security, stability, respect of human rights are the basis for economic and social development within the respect of the local culture. The way is quite long and difficult but with ups and downs, at times and in some countries even dramatic, the conditions exist for a path of improvement and development.

Clive Burlin adds:

If a country like Mozambique can start making a comeback, the future for Zimbabwe looks ultra bright.



I love when they cite John Wooden comebacks, or Babe Ruth's many strike-outs, or Einstein's poor school performance, as examples of perseverance after setbacks. Having used these and other irrelevant excuses, here are some for tonight's dinner with the Mrs:

Market up big (because 4/5 last similar circumstances resulted in ruin)
Market up big (but at least I'm not short)
Market up big (I knew it would, but return/risk was unfavorable)
Market up big (which is common during down-drift)
Market up big (But I saved a fortune staying out recently)
Market up big (To fete my stupidity I got you these roses)
Market up big (For your feet I got you these Jimmy Chooz)



Came across a long (18 min) podcast with Jeremy Siegel. Towards the end he talks about his proprietary sentiment indicator, bottoms, newsletters and sounds much like any other technical market timer.


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