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Friday, August 26, 2005

rock on

When the schedule for wolf Trap Park for the performing arts came out back in the spring, my live music junkie buddy called and we reviewed the list of offerings as always..not much this year I wanted to see as opposed to years past when I would find myself there once or twice a month. As we went down the list, one unusual offering struck my eye and I agreed to go in on a block of tickets..Cheap trick and Alice Cooper two of the hardest rocking bands of my misspent youth. Seemed like a good idea at the time. As I sat on the beltway last evening,tired,a little grouchy in the stop and go traffic, trying to peer around the endless line if 7 story SUV’s to get some idea of when traffic would break. I silently ..Okay not so silently ,cursed myself for buying tickets to an aging rock star show. Over the past few years I ve been to several of these dinosaur reunions only to discover they just don’t have it anymore..cant hit the notes..beach boys,meatloaf,crosby stills and nash, or the only member of the original band is some dna from a hair caught in a guitar string..Ala skynard or little feat. I was stuck in traffic, out 200 bucks for tickets and had entirely too much blood in my alcohol system for the whole thing. Arrived at wolf trap( a world class summer venue offering a great variety of summer shows..everything from a cole prter review to ..well..Alice Cooper), secured a location in the super double top secret quick escape parking lot, popped a becks out of the cooler and begin to correct the chemical imbalance that had me snarling at the leather clad grandmas heading for the show with face painted grandkids, sniveling little brats done in coopers mascara and tears get up when they should be home listening to barney sing I love you. I waited for my fellow aging rocker buddy…one of the most musically aware guys I ve ever known, a walking rock and roll encyclopedia but at 46, fresh from a stent implant, overweight and starting to be follicly challenged he looked the part of a ex rocker trying to recapture the 70’s.The beer was helping but I cant say I was looking forward to the rest of the evening. Sometimes, I m just wrong. Cheap trick came out. They may be 50 but this is still the band you want playing your kegger. Rick Neilson no longer wears the beanie propeller hat and his trademark jumps are now only 6 inches instead of the two feet he used to leap while playing..But he can still play. In his familair suit and tennis shoes, he bantered with the crowd, flirted with women in the front row and hit some of the hottest guitar licks in rock and roll. Pederson on his patented 12 string bass still lays down a thundering back beat, bun e carlos still has licks and robin zanders voice hasn’t changed in 30 years. They were always one of the best live bands and they haven’t lost it at all. Surrender, want you to want me,flame..they hit them all and if I closed my eyes it could be the late 70s at the old Baltimore Civic Center..absent of curse the old familiar hemp scented cloud that was a trademark of live shows in the less regulated days of my yute. Okay, not bad as we filed up for the mandatory intermission beer refill, that was worth it. We ll suffer through whatever weak effort cooper puts up and the night will still be worth it. Sometimes Im wrong twice in one day. This cooper show was far better than the ones I saw 30 years ago. Although seeing a 57 yr old open the show with department of youth Aah ah we're the department of youth just me and youth We talk about this whole stupid world and still come out laughing ha ha Was a little disconcerting but his road band was young, played very tight licks and coopers voice is if anything stronger than ever grinding out his dark vocals.. This show was classic Alice Cooper..Wears a straight jacket during the ballad of Dwight fryer, is whipped and slashed during go to hell, hits the youth anthems of 18 and stuck between high school and old school I`m stuck somewhere between high school and old school I can`t decide between my rules and your rules Nails the raw powerfully dirty sexuality of feed my Frankenstein and lace and whiskey (something of a Chesapeake slim anthem and them song So I yell out for some kind of angel To come down and rescue me Be as soft as you can Put a drink in my hand I'm as scared as I ever could be Gimme lace and whiskey Mamas home remedy Double indemnity Fills me with ecstasy La-aa-aace and whiskey ) It was all there. Well played loud rock and roll. Themes of sex,violence and the dark side incarnate. He is guillotined to death at the end and emerges reincarnated in silks and top hat for the encore. The only sure way to tell he had aged was during band intros when he introduced the demon nymph that prowled the stage with whips and knives and very little clothing(god, I love rock and roll), at one point slashing alices throat with a disdainful sneering smile, we discovered it was his 20 something year old daughter. The us tour is just kicking off and all dates thought sept include both acts..the best tour schedule is on cheap trick .com. If you ve got a little rock and roll left in you.. Catch this one

Thursday, August 25, 2005


rnt @ 23.19
cce @ 22.14
wfr@ 16.52

sell the cce sep 22.5 for .6
buy 2 20 puts for .05

call spread for nov also the 22.50 for 1.10
sell the 25 for .3

stock above 25 .80 goes to 2.50...not that high for year however is 23.92...

rnt no options

dont see any great way to put on wfr using options.options lok pricey and spreads are high..stock just had a huge secondary with private equity firms cashing out so that should take the pressure off but I d be jumpy with this one.

Tuesday, August 23, 2005

add dg good option plays here at all but stock is at buy level

Monday, August 22, 2005

assorted ramblings

As I have had frequent houseguests over the past two weeks, I finally got around to cleaning the joint. The primary activity in this endeavor: clearing the stacks and piles of books around the apartment. During the course of the project I found a copy of EdSpec and put it aside to put back on the bookcase. Naturally it remained on the table for the duration. Last night, after a typical mid Atlantic August weekend of fast boats, loud music, cold beer and hot women, I found myself sitting on the couch, a nightcap in hand, perusing the pages of this classic once again. As always, it triggered many thoughts, especially the section on market ecology.
Many talk of how closely the market follows nature, with predators (hedge funds, large traders) and prey (the public, mutual funds), the inevitable cycle of boom and destruction, those who feed off the destruction (short sellers once a decade and distressed funds), those whose existence depends on their ability to nimbly dance around the large dangerous beasts (sharks and pilot fish, the oxpeckers that flit around rhinos) that remind one of arbitrage traders. Perhaps not perfectly but to a large degree, nature is replicated in the stock market.
So here we are now, in the sweet spot. The grass grows lush upon the plains, the forests verdant and full of life. The grazers are well fed and the herd grows with plenty of food and positive 410k statements. The predators feed with ease picking off the weak (dollar shorts and bond shorts). We've been here before many times. The careful observer and participant knows that at some point, the fire (geopolitical event), the flood (sudden spike in interest rates) or sandstorm (oil prices) could come along and wreak the traditional havoc needed to sustain markets and ecologies alike for the long term. The undergrowth must be burned off lest it choke out the forest, the herd thinned lest they eat themselves into drought. It is the way of nature.
I examined market selloffs and storms over the past 30 years. In every case, there was an event, a warning that allowed one to seek higher ground. The April '87 interest rate spike, the US Air takeover in '89, H#llary's healthcare and the Fed in '93, falling earnings in '00 are a few examples. The browning of the grass portends a fire (slipping earnings), the darkening sky (Fed tightening) a possible storm. In virtually every major selloff, the market was in fact high by traditional measures (price to earnings, price to book, dividend yield etc). However (and this is where a lot of the current "market too high" crowd is off base) they had been that way for sustained period of time. Just reaching overvalued is not enough. Something has to happen to upset the balance. I originally thought prices would tell us, that the first 5% down month in the market preceded further sell offs. As Primal Scream would say: wrong. With the exception of the 2001, the market has been higher six months after a 5% decline in every case since 1980). The grass grows too high, the predators too fat; nature will correct but not until there is fodder for a fire, or sufficient moisture buildup for storm-causing flood. The fact that it's going to happen does not mean we should take all our money out and start starving today. Today, we continue to feast, we watch the skies. We map out the trail to higher ground for a fast exit, we guard our stockpiled reserves. But we feast while we can. We observe the Fed, the supply of IPOs, and may other factors, but we stay long until the storm approaches. The feast most often continues long after the gloomy boys slipped a few dinner rolls in their pockets and left the party.

Of late on the list we have discussed eBay practices, the usual mix of reports and ratios and even a smattering of bbq (although with some of the froo-frroo things you guys do on a grill I surprised the voo-doo prof has pulled up on his Ducati and confiscated your charcoal..remember...dip it, paint it, burn it, eat it) but very little of two subjects that were an integral part of the original charter and mandate of the list…books and music. Last year when I put out a call for book talk we got a great response and all added to our reading list to our mutual benefit so I thought I d try it again...with a twist. We all read non fiction and finance all the time. History, biology, markets, economics…we have it coming out of our ears. So lets try something different, again hopefully to the enjoyment and benefit of all. I suggest we all take the time to list the 3 authors we read STRICTLY FOR FUN. I'm talking lazy day in a hammock or rainy Sunday at home and the cable is out, Relaxation and escape type stuff...guilty pleasure reading. In addition, to bring music back into the fold lets each list two recordings we consider classic, must own recordings...any genre. I suggest we omit Atlas Shrugged, Fountainhead and Don Quixote. We all already know those are the best fiction reads for specs. Naturally I'll go first.The undisputed all time favorite read is the John D MacDonald Travis McGee series. Taking early retirement aboard the busted flush ( a houseboat won in a poker game at the Bahia Mar Marina) next to his economist friend Meyer, McGee finances his life of leisure by recovering valuable items lost for a percentage. Soaked in Plymouth gin, bikini clad women with the morally casual attitude I do so adore, Travis goes through life his own way picking up a few bruises and a deep water tan along the way. Amazingly for what could well be considered trashy mystery novels by some there are life lessons contained herein. Travis McGee is the embodiment of independence and using ones brains and skills to earn his own way, asking nothing of on one ..and check out these gems.You can be at ease only with those people to whom you can say any damn fool thing that comes into your head, knowing they will respond in kind, and knowing that any misunderstandings will be thrashed out right now, rather than buried deep and given a chance to festerI do not function too well on emotional motivations. I am wary of them. And I am wary of a lot of other things, such as plastic credit cards, payroll deductions, insurance programs, retirement benefits, savings accounts, Green Stamps, time clocks, newspapers, mortgages, sermons, miracle fabrics, deodorants, check lists, time payments, political parties, lending libraries, television, actresses, junior chambers of commerce, pageants, progress, and manifest destiny.Education is something which should be apart from the necessities of earning a living, not a tool therefore. It needs contemplation, fallow periods, the measured and guided study of the history of man's reiteration of the most agonizing question of all: Why? Today the good ones, the ones who want to ask why, find no one around with any interest in answering the question, so they drop out, because theirs is the type of mind which becomes monstrously bored at the trade-school concept.There are 21 Mcgee books in all. Lots of open water, cold gin, beautiful willing women adventure and even a few meals for a lifetime.Second. In keeping with my generous nature I'll leave the Robert Parker books for Crossman to select so I'll go with the Randy Wayne white doc ford series... Doc Ford is a quiet man, wishing only to be left alone collecting samples for his Sanibel marine biology company, selling to labs and schools, conducting experiments with tarpon and sharks, living in the Dinkins bay marina with the eccentric collection of fishing guides and live aboards such as Tomlinson the new age guru and perpetually stoned genius who is docs unlikely sidekick…a peaceful existence until someone Doc cares about is threatened... then he reverts to the Marion Ford trained by the government as a covert operator and assassin. Full of roustabouts, boat bums, high adventure with some science and romance thrown in they are probably the modern day equivalent of the Mcgee series... with a bonus factor... white is a damn good writer and uses his skills to weave brilliant stories that are a pleasure to read.My last selection is the guiltiest of literary vices. All of The WEB Griffin books. Griffin is not a writer. He is a storyteller and a masterful one. He writes primarily war stories and he is a master. Clancy may know the technology but Griffin knows the stories. I've read every thing he's ever written(33 books so far) and always buy the new ones on release day. To date my favorite series are the corps, a serial novel over 10 books so far of WWII, not the Korean conflict. The characters are the manliest of men capable of killing the enemy, advising the president and winning the dame without spilling a drop of famous grouse over ice( and yes his writing is where I discovered this now household staple... maybe not a lesson for a lifetime but damned good scotch). The Badge of honor series set in the Philadelphia is probably the series I d choose second but all the books are good stories. Griffin keep his histories and timelines accurate and weaves such luminaries as Roosevelt. McArthur and Wild Bill Donovan easily into the plot. The men are brave and determined, the women are beautiful and saucy, the stories, while not great writing, are great reading.Now music... first the album I consider the greatest rock and roll album ever recorded. Bob Dylan's Blood on the tracks. Its poetry, poetry written during a time of self introspection and failed romance. The music here is primarily acoustic and the lyrics poetic geniusShe lit a burner on the stove and offered me a pipe"I thought you'd never say hello," she said"You look like the silent type."Then she opened up a book of poemsAnd handed it to meWritten by an Italian poetFrom the thirteenth century.And every one of them words rang trueAnd glowed like burnin' coalPourin' off of every pageLike it was written in my soul from me to you,Tangled up in blueMy last musical choice... Miles Davis, Kind Of Blue. This record defines jazz as far as I'm concerned and strikes me as a painting with musical instruments. The band with Cannonball Adderly and John Coltrane on sax and Bill Evans on piano is a who’s who of the 1950’s and 60’s American jazz science... tough call between this and birth of the cool but kind of blue gets the final nod.

testing bands+range expansion


using option spreads
short 1 oct 20 @.90
long 2 oct 17.50 @ 20
.50 net credit

short 1 sep 27.50 @1.40
long 3 sep 25 @.20
1 net credit

short 1 oct 35 @.95
long 2 oct 30 @ .20

net credit .55


short one sep 17.5 @ 1.55
long 2 sep 15 @ .4

net credit .75

all the stocks have positive expectations when previously hitting the same std deviation points, expanding range on the down move and decent fundamentals and liquidity

used mostly in the money options to short as the stocks are beaten and look poised to advance, which would cause a contraction in premium if they rally back aove the strike. the worst case in all of these is that the stock stays between strikes and we get put stock slightly above market

in intc we would own stock at 26.50 if it stays between 25 and 27.50

in gps we own stock at 19.50, the bottom of the 8 month range.

in bks we own stock at 34.50, the support point

in jakk, we own stock at 16.75..about 7 times reaffirmed earnings

should any of the stocks crack,we re long 100 shares and short 200,giving us a back up the truck trade.