Unless you have inside information, stock prices are indeed a random walk. They cannot be predicted by past behavior no matter what the technical analysts may try to tell you. It's like looking at clouds. One man sees a mother bear suckling her cub and another espies Ben Hur in a chariot.
The best clues to future stock prices, in my view, lie in macroeconomic data that set the stage for change -- monetary policy, expected government expenditures, interest rates, inflation expectations. The wildcards are geopolitical events, which no one can predict.
The backdrop of these data, not the dismal 2008, suggest an up year in 2009. Indeed, it has already started in 2008, I believe. After all, every day, not just January 1, marks another 12-month random walk around the sun.
I might have been head-faked by the data. Pessimism could be deep enough to prevent a rebound. I would argue, though, that job losses are already baked into the cake and that the grow or die premise of a dynamic society will prevail. The contemporaneous news, such as employment and home sales, could well be dire, but I think the market already expects that and will be looking beyond.
Buy oil, copper, real estate, heavy machinery (I haven't bought in this sector yet), given the stimulus in the background. Alternative energy names should also be a buy if fossil fuel prices rise.
Granted, it's a forecast no more valid than any other, and I know I've said this before, but I'm looking at it as an investor, not as an extrapolator of yesterday or a judge of sinners today. Please, people, get over Madoff, etc. Yeah, he's bad, but being superior about it doesn't feed the admiral's pussycat.
Which brings me to no tears for all the fired coaches in the NFL, or major college football for that matter. They don't do it for free. None will be missing any meals, and spare me all the "we didn't give them enough time" or "he's a proven winner" nonsense. Sure, they coach because they love the game and want to win, but the amount of dough thrown at them kind of insulates the check signer from giving them the benefit of the doubt.
The final game for the Jets revealed the lack of genius in defensive-oriented guys like Mangini. Offensive-oriented coaches who take advantage of the rules will be winners, I believe. The wildcat formation was the difference for the Dolphins, and that was with weak-sister Chad Pennington! Drop-back, pocket passers are passe, to coin a phrase.
A backfield of Thomas Jones, Leon Washington and, dare I mention him, Michael Vick would hang half a hundred on most NFL "defenses" given blocking rules as they now exist, which virtually permit holding on every play.
Just watch the bowl games this holiday season for a view of the world to come.
Best wishes everyone for a happy and prosperous new year each and every day the earth manages to turn on its axis and orbit the sun.
Update on Kev's portfolio. Don't sue me if you lose your shirt. I'll be shirtless as well.
Ford (F) Sold at $2.15 on 12/24/08, gain of 46.5% booked from purchase at $1.15 on 11/20/08.
Advanced Micro Devices (AMD), bought at $2.19 on 12/15/08, down 1.4% at $2.16 on 12/31/08.
Palm Inc. (PALM), bought at $2.04 on 12/15/08, up 50.5% at $3.07 on 12/31/08.
Developers Diversified Realty (DDR), bought at $4.86 on 12/31/08, up 0.004% at $4.88 on 12/31/08
PowerShares DB Crude Oil Double Long ETN (DXO), bought at $2.24 on 12/29/08, up 13.8% at $2.55 on 12/31/08.
Wednesday, December 31, 2008
Tuesday, December 30, 2008
All that glimmers
For all you "Caddyshack" fans, there is no god. But I do have a fleeting affinity for the one who enriches me, because it enables me to pay taxes and thus pay my share for civilization, enriching others. However, I will turn to Odin, Thor and Loki and the rest of Norse mythology, which, by the way, is my favorite explanation for the universe, before I bow to something buried in the ground. Yes, it's the gold bugs that bug me.
Gold investors, whether they admit it or not, denominate their investment in paper dollars. It is that conversion into something that can purchase goods and services that calibrates its worth. Until western society collapses and only a sliver of the metal, not a five-dollar bill, will buy a Big Mac and french fries, then gold is just a place to park dollars in the hope of making more dollars, the reason for all investments.
As George Bailey told Clarence, when the guardian angel remarked money wasn't needed in heaven: "Well, it comes in awfully handy down here."
All the gold in the world would not buy a Big Mac in such an outcome because the hamburger flippers and all the rest of us would be brigands bent on medieval-style looting and freebooting anyway. A kind of "we don't need no stinking badges" world.
To buy and hold it as the only true store of value seems irrational when the only way to realize the benefits is conversion into dollars. Should the fanciful apocalypse come and paper currency lose its power to persuade our republic to cohere, which some paranoid holders of gold expect and indeed appear to wish, then we are all in the soup.
A cellarful of it will hardly keep one warm and safe in a world lit only by the fire of torches and ruled by the mobs with pitchforks and machine guns.
I guess I've buried the lead, as we used to say in the newspaper trade, because it brings me to my latest "Manginius" point (more on the Jets and professional football culture in a future post).
I've taken the plunge and put my money where my mouth is. Recovery and inflation are coming and oil prices have bottomed. Yesterday, bought PowerShares DB Crude Oil Double Long ETN (DXO) at $2.24. This is a double-down (for all you blackjack players) on the price of oil. This exchange traded note is designed to go up or down twice as much as crude oil futures. I think it's going up. When (if) it does, I'll be looking to add alternative energy names.
I'm not buying oil because I think it's a superior god but because I expect its price in dollars to increase beyond the rate of inflation, enabling me to buy more goods and services and pay more taxes than otherwise would be the case. If you think the price of gold will increase, by all means buy and reap the benefits of more dollars. But genuflecting before a commodity (precious as it may be) is bad form. Just ask Moses.
Gold investors, whether they admit it or not, denominate their investment in paper dollars. It is that conversion into something that can purchase goods and services that calibrates its worth. Until western society collapses and only a sliver of the metal, not a five-dollar bill, will buy a Big Mac and french fries, then gold is just a place to park dollars in the hope of making more dollars, the reason for all investments.
As George Bailey told Clarence, when the guardian angel remarked money wasn't needed in heaven: "Well, it comes in awfully handy down here."
All the gold in the world would not buy a Big Mac in such an outcome because the hamburger flippers and all the rest of us would be brigands bent on medieval-style looting and freebooting anyway. A kind of "we don't need no stinking badges" world.
To buy and hold it as the only true store of value seems irrational when the only way to realize the benefits is conversion into dollars. Should the fanciful apocalypse come and paper currency lose its power to persuade our republic to cohere, which some paranoid holders of gold expect and indeed appear to wish, then we are all in the soup.
A cellarful of it will hardly keep one warm and safe in a world lit only by the fire of torches and ruled by the mobs with pitchforks and machine guns.
I guess I've buried the lead, as we used to say in the newspaper trade, because it brings me to my latest "Manginius" point (more on the Jets and professional football culture in a future post).
I've taken the plunge and put my money where my mouth is. Recovery and inflation are coming and oil prices have bottomed. Yesterday, bought PowerShares DB Crude Oil Double Long ETN (DXO) at $2.24. This is a double-down (for all you blackjack players) on the price of oil. This exchange traded note is designed to go up or down twice as much as crude oil futures. I think it's going up. When (if) it does, I'll be looking to add alternative energy names.
I'm not buying oil because I think it's a superior god but because I expect its price in dollars to increase beyond the rate of inflation, enabling me to buy more goods and services and pay more taxes than otherwise would be the case. If you think the price of gold will increase, by all means buy and reap the benefits of more dollars. But genuflecting before a commodity (precious as it may be) is bad form. Just ask Moses.
Friday, December 26, 2008
Good King Wenceslaus
This Bohemian nobleman looked out on the Feast of St. Stephen, Dec. 26, and spied a poor man "gathering winter fuel" as the song goes.
Though we are far from royal in these democratic United States, we will take my Great Aunt Mary at her word that the Donovans were once kings of Munster and use the royal we in identifying with the poor fuel hunter. Will a beneficent king take us in for a cup of wassail and a spell by a warm yule log?
All the signs point to a recovery sometime in the second half of 2009. Money supply is growing rapidly, massive government stimulus is all but assured, interest rates are minuscule, oil is cheap. The stage seems set for a rebound. The missing piece is job creation. Once that is visible, the aforementioned stage-setters could spark a take-off like a string of firecrackers.
If the boom doesn't come, it will be as big a surprise as the Yankees not getting to the World Series after setting their own table with Sabbathia, Burnett and Texeira this winter.
Though we are far from royal in these democratic United States, we will take my Great Aunt Mary at her word that the Donovans were once kings of Munster and use the royal we in identifying with the poor fuel hunter. Will a beneficent king take us in for a cup of wassail and a spell by a warm yule log?
All the signs point to a recovery sometime in the second half of 2009. Money supply is growing rapidly, massive government stimulus is all but assured, interest rates are minuscule, oil is cheap. The stage seems set for a rebound. The missing piece is job creation. Once that is visible, the aforementioned stage-setters could spark a take-off like a string of firecrackers.
If the boom doesn't come, it will be as big a surprise as the Yankees not getting to the World Series after setting their own table with Sabbathia, Burnett and Texeira this winter.
Wednesday, December 24, 2008
I bring you tidings of...
I know it's the season for Pollyanna drivel and I'm as sentimental as the next guy, but soon the Christmas trees will be piled up for shredding and the realization comes that every day marks another 12-month revolution around the sun.
But, as I said, I'm a sentimental soul, and until that joyous moment when I throw the tree on the curb, I'm going to reflect on my blessings. In no particular order: I can read and write, get a haircut, pick up the dry cleaning and, oh yeah, try to get rich (sold Ford this morning at $2.15, locking in a profit of $1.00 after watching it melt down the last two days. Pressure from the Toyota news was too much it turns out and I got scared. Maybe we'll get back in later. I will let you know.).
I'm headed for the South Street Seaport in downtown Manhattan now with my children to last-minute shop for their mother and have lunch at Wendy's. This date and the destinations have been in my Palm for years since we started doing it some 10 years ago (at first with the older one and now with both). It's more fun than it sounds.
Dinner tomorrow? Same as years past: Prime rib (with horseradish on the side), twice-backed potatoes topped with cheddar and green bean casserole. I'm the chef.
Peace on earth, good will toward men. I read that somewhere. It's also in my Palm. Merry Christmas.
Now I've gotta find that Santa Claus tie I bought from a street vendor.
But, as I said, I'm a sentimental soul, and until that joyous moment when I throw the tree on the curb, I'm going to reflect on my blessings. In no particular order: I can read and write, get a haircut, pick up the dry cleaning and, oh yeah, try to get rich (sold Ford this morning at $2.15, locking in a profit of $1.00 after watching it melt down the last two days. Pressure from the Toyota news was too much it turns out and I got scared. Maybe we'll get back in later. I will let you know.).
I'm headed for the South Street Seaport in downtown Manhattan now with my children to last-minute shop for their mother and have lunch at Wendy's. This date and the destinations have been in my Palm for years since we started doing it some 10 years ago (at first with the older one and now with both). It's more fun than it sounds.
Dinner tomorrow? Same as years past: Prime rib (with horseradish on the side), twice-backed potatoes topped with cheddar and green bean casserole. I'm the chef.
Peace on earth, good will toward men. I read that somewhere. It's also in my Palm. Merry Christmas.
Now I've gotta find that Santa Claus tie I bought from a street vendor.
Monday, December 22, 2008
Saints and Sinners
Before there was a Joe Pa at Penn State there was a St. Bud at the University of Oklahoma.
Bud Wilkinson, the blond, debonair Minnesotan, father of the split-T offense and holder of a master's degree in English, reigned with gentlemanly grace as the Sooner coach 1947-1963. I watched his teams on Owen Field as a boy from a 40-yard line perch with my father, who had two season tickets as a graduate student from 1957-60.
Like Proust's bite of the madeleine cake, recalling the aroma of hot dog mustard and cigar smoke as we entered the stadium, shafts of light shooting through the ramps that led to the seats above, summons a whole world, as alive as if it were yesterday. We would buy a program and two cardboard visors to keep the powerful early autumn sunshine at bay. Hey, I still see the lonesome end offense of Army's Red Blaik in 1959.
Bud was many things -- a Pericles of the Athens of the Plains, innovative offensive football mind (the split-T presaged today's spread formations with its wider than normal splits on the offensive line), a scratch golfer and an astute appraiser of young men. Bud stood up against the Jim Crow pressure of the 1950s' South to recruit the first black schoolboy to play for OU -- the bruising academic All-American halfback Prentice Gautt.
The point of this stroll back to childhood is that Bud was convinced that free substitution had made the game less noble. He felt a crucial criterion in recruiting in the era of two-way players was character, found in fellows like Darrell Royal (OU quarterback and defensive back before he settled under the eyes of Texas as legendary coach) who had the discipline and steel to play 60 minutes on both sides of the ball with equal determination.
Yes, I think Bud would probably contend that two-platoon football has led directly to me-firsters like Terrell Owens (could you imagine his pout as a cornerback getting burned?) and hangers-on like Bret Favre (a hard-hitting safety in Wrangler jeans?). I think he would be right.
But enough of the churlish curmudgeon I've become. Happy days lie ahead for bulls, I believe. Miss Market is winking at us.
Given the coming stimulus plan and the Fed printing press, reflation, the gift that keeps on giving to debtors and commodity investors, is around the corner.
When times are beyond tough, as they are now, there seems to be a silly glee among the survivalist set. They think they'll finally get to eat all those cans of pork 'n beans in their basements, but they're going to be truly irked when they get through the first course and realize all those above are digging into filet mignon. Reflation is coming. If you're long pork 'n beans futures, liquidate and buy oil, copper and real estate if you have the dough.
Christmas message to come.
Bud Wilkinson, the blond, debonair Minnesotan, father of the split-T offense and holder of a master's degree in English, reigned with gentlemanly grace as the Sooner coach 1947-1963. I watched his teams on Owen Field as a boy from a 40-yard line perch with my father, who had two season tickets as a graduate student from 1957-60.
Like Proust's bite of the madeleine cake, recalling the aroma of hot dog mustard and cigar smoke as we entered the stadium, shafts of light shooting through the ramps that led to the seats above, summons a whole world, as alive as if it were yesterday. We would buy a program and two cardboard visors to keep the powerful early autumn sunshine at bay. Hey, I still see the lonesome end offense of Army's Red Blaik in 1959.
Bud was many things -- a Pericles of the Athens of the Plains, innovative offensive football mind (the split-T presaged today's spread formations with its wider than normal splits on the offensive line), a scratch golfer and an astute appraiser of young men. Bud stood up against the Jim Crow pressure of the 1950s' South to recruit the first black schoolboy to play for OU -- the bruising academic All-American halfback Prentice Gautt.
The point of this stroll back to childhood is that Bud was convinced that free substitution had made the game less noble. He felt a crucial criterion in recruiting in the era of two-way players was character, found in fellows like Darrell Royal (OU quarterback and defensive back before he settled under the eyes of Texas as legendary coach) who had the discipline and steel to play 60 minutes on both sides of the ball with equal determination.
Yes, I think Bud would probably contend that two-platoon football has led directly to me-firsters like Terrell Owens (could you imagine his pout as a cornerback getting burned?) and hangers-on like Bret Favre (a hard-hitting safety in Wrangler jeans?). I think he would be right.
But enough of the churlish curmudgeon I've become. Happy days lie ahead for bulls, I believe. Miss Market is winking at us.
Given the coming stimulus plan and the Fed printing press, reflation, the gift that keeps on giving to debtors and commodity investors, is around the corner.
When times are beyond tough, as they are now, there seems to be a silly glee among the survivalist set. They think they'll finally get to eat all those cans of pork 'n beans in their basements, but they're going to be truly irked when they get through the first course and realize all those above are digging into filet mignon. Reflation is coming. If you're long pork 'n beans futures, liquidate and buy oil, copper and real estate if you have the dough.
Christmas message to come.
Sunday, December 21, 2008
Globalize me, baby
The blame game is always fun to play, regardless of your political bent, station in life or field of interest. So let's indulge.
Many streams feed the raging river engulfing the hamlets and hilltops of our American landscape of getting and spending. Subprime mortgages, derivative securities, volatile oil prices, fast-buck investment bankers, criminal lenders, mortgagees who never learned their multiplication tables, falling house prices, foreclosures, disinterested regulators, to name a few. Heck, let's throw in poor little lambs who have lost their way and gentleman rankers out on the spree. Baa, baa baa.
But I'd like to focus on one pernicious species of futurist and smarter-than-thou thinkers who extolled the blessings of globalization. Now, this breed may indeed be right that the earth is flat and we're all better off for the opportunities created by the employment of cheap labor offshore and unleashing of free markets without regard to national borders. In any event, it doesn't matter if they're right or not because it is here to stay. No Smoot-Hawley bills are in the hopper.
My quibble is with the argument that the dislocations would be just an irritating rash, a minor matter that would soon be overwhelmed by the application of entrepreneurial cortisone. These superior brains (many of whom who also drank the Iraq War kool-aid) assured the benighted masses that workers' concerns were small beer compared to the blessings that would follow.
The obvious, glaring example of this miscalculation is the plight of U.S.-domiciled auto manufacturers and their employees.
I can hear the ideologues now: It's all the unions' fault for their out-of-touch demands. And that's fair up to a point ("job banks" that keep paying laid-off workers for years and benefits for retirees will have to go, for example).
But the truth, in my view, is that the clock began ticking when foreign manufacturers set up shop in the U.S. with non-union labor. To overcome that built-in disadvantage, the Big 3, locked into contracts with organized labor, turned to light trucks for the North American market and built fuel-efficient, costly but profitable machines for overseas markets. Should the unions be blamed for forging a deal that Toyota, etc., would undermine in time with the steady drip of good, cheaply produced cars? Are the unions to blame for the price of gasoline dictating the manufacturing whims of management?
The idea spun by the flat-earthers that the pain inflicted by markets without borders would be negligible is now proven risible. Do Jets fans now feel they were better off getting rid of the reliable Chad Pennington for the go-for-broke Brett Favre? For the record, I thought the Jets would be better off, too. And they may yet be.
Globalization, as real and irreversible as it may be, has finally overwhelmed GM and Chrysler and threatens a standard of living once thought a birthright. So be it. It is neither to be rejected nor embraced, damned nor praised. It's only the way the world works, not a religion, so spare me the best-of-all-possible outcomes palaver from the deep thinkers.
Back to Miss Market tomorrow, as well as thoughts on the curse of free substitution in football, Bud Wilkinson, Bernie Madoff's golf scores and the sweet, athletic joy of kids' swim meets.
Many streams feed the raging river engulfing the hamlets and hilltops of our American landscape of getting and spending. Subprime mortgages, derivative securities, volatile oil prices, fast-buck investment bankers, criminal lenders, mortgagees who never learned their multiplication tables, falling house prices, foreclosures, disinterested regulators, to name a few. Heck, let's throw in poor little lambs who have lost their way and gentleman rankers out on the spree. Baa, baa baa.
But I'd like to focus on one pernicious species of futurist and smarter-than-thou thinkers who extolled the blessings of globalization. Now, this breed may indeed be right that the earth is flat and we're all better off for the opportunities created by the employment of cheap labor offshore and unleashing of free markets without regard to national borders. In any event, it doesn't matter if they're right or not because it is here to stay. No Smoot-Hawley bills are in the hopper.
My quibble is with the argument that the dislocations would be just an irritating rash, a minor matter that would soon be overwhelmed by the application of entrepreneurial cortisone. These superior brains (many of whom who also drank the Iraq War kool-aid) assured the benighted masses that workers' concerns were small beer compared to the blessings that would follow.
The obvious, glaring example of this miscalculation is the plight of U.S.-domiciled auto manufacturers and their employees.
I can hear the ideologues now: It's all the unions' fault for their out-of-touch demands. And that's fair up to a point ("job banks" that keep paying laid-off workers for years and benefits for retirees will have to go, for example).
But the truth, in my view, is that the clock began ticking when foreign manufacturers set up shop in the U.S. with non-union labor. To overcome that built-in disadvantage, the Big 3, locked into contracts with organized labor, turned to light trucks for the North American market and built fuel-efficient, costly but profitable machines for overseas markets. Should the unions be blamed for forging a deal that Toyota, etc., would undermine in time with the steady drip of good, cheaply produced cars? Are the unions to blame for the price of gasoline dictating the manufacturing whims of management?
The idea spun by the flat-earthers that the pain inflicted by markets without borders would be negligible is now proven risible. Do Jets fans now feel they were better off getting rid of the reliable Chad Pennington for the go-for-broke Brett Favre? For the record, I thought the Jets would be better off, too. And they may yet be.
Globalization, as real and irreversible as it may be, has finally overwhelmed GM and Chrysler and threatens a standard of living once thought a birthright. So be it. It is neither to be rejected nor embraced, damned nor praised. It's only the way the world works, not a religion, so spare me the best-of-all-possible outcomes palaver from the deep thinkers.
Back to Miss Market tomorrow, as well as thoughts on the curse of free substitution in football, Bud Wilkinson, Bernie Madoff's golf scores and the sweet, athletic joy of kids' swim meets.
Friday, December 19, 2008
The T-Bone Formation
Taking a break from Miss Market's wiles today. I've been thinking about the evolution or devolution of football.
Is the wildcat formation a throwback or a leap into the future? The direct snap to a multi-talented back who can run the option, throw on the rollout or dash on a keeper before the defense can adjust is employed more and more by colleges and the NFL since Arkansas dreamed it up for Darren McFadden. I'm awaiting the return of the classic single wing and its running game of beautiful fakes and spinning backfields.
Another thought on football. In the years to come I believe more and more teams will attempt the two-point conversion after every touchdown regardless of the score and time left to put maximum pressure on the opponent. If you succeed just 50% of the time you're no worse off than having converted every place kick. Odds are you're successful more than half the time.
The death of Slingin' Sammy Baugh of TCU and Washington Redskins' fame brought to mind a game called the Oil Bowl, a summertime affair played each year in Wichita Falls, Texas, between high school all-stars from Oklahoma and Texas. I covered one such tilt in the early '80s when the Texas coach was Baugh's son, a lean, rawboned ranchhand, the kind of ex-football player rarely seen anymore in the day of 300-pound offensive linemen and 230-pound quarterbacks.
I don't remember the game too well, but I do remember a succulent 16 0z. T-bone, iceberg lettuce salad with French dressing, baked potato wrapped in foil and smothered in butter and sweet iced tea I had at the diner next to my motel for under 10 bucks. It still beats any meal I've spent a paycheck on at a Manhattan hot spot in the years since. I suppose the taste buds vanish with other appetites as the years roll by.
Well, to mangle Rick's line to Ilsa, "We'll always have Wichita Falls."
Is the wildcat formation a throwback or a leap into the future? The direct snap to a multi-talented back who can run the option, throw on the rollout or dash on a keeper before the defense can adjust is employed more and more by colleges and the NFL since Arkansas dreamed it up for Darren McFadden. I'm awaiting the return of the classic single wing and its running game of beautiful fakes and spinning backfields.
Another thought on football. In the years to come I believe more and more teams will attempt the two-point conversion after every touchdown regardless of the score and time left to put maximum pressure on the opponent. If you succeed just 50% of the time you're no worse off than having converted every place kick. Odds are you're successful more than half the time.
The death of Slingin' Sammy Baugh of TCU and Washington Redskins' fame brought to mind a game called the Oil Bowl, a summertime affair played each year in Wichita Falls, Texas, between high school all-stars from Oklahoma and Texas. I covered one such tilt in the early '80s when the Texas coach was Baugh's son, a lean, rawboned ranchhand, the kind of ex-football player rarely seen anymore in the day of 300-pound offensive linemen and 230-pound quarterbacks.
I don't remember the game too well, but I do remember a succulent 16 0z. T-bone, iceberg lettuce salad with French dressing, baked potato wrapped in foil and smothered in butter and sweet iced tea I had at the diner next to my motel for under 10 bucks. It still beats any meal I've spent a paycheck on at a Manhattan hot spot in the years since. I suppose the taste buds vanish with other appetites as the years roll by.
Well, to mangle Rick's line to Ilsa, "We'll always have Wichita Falls."
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