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Tuesday, April 01, 2008

latest thoughts

I confess this new career thing is even better than I expected. Writing for a living and managing money for a few select clients is working better than even I ever imagined. On the money front I can hold cash without it affecting my income, I can short stocks without 16 different legal approvals; and trade options withut a decree from on high cosigned by six separate archangels. The writing thing has been wonderful. To write each day and get paid for it is a dream come true, something I never expected and enjoy more than I have words to express. The morning commute to the living room is relatively quick, the coffee is much better than the office and sweat pants are considered appropriate attire. The only thing I have missed is writing just for the hell of it with no assigned topic or deadline. I have not been able to write about island life, sports, or the markets in my own unrestrained voice just for the hell of it for time reasons so I am going to do so now. I find myself with a modicum of spare time (provided I ignore my children’s impassioned pleas to finish their tax returns anyway).

First, the stock market. To this market I can only say “Ipse Cummingo mingere minxi mictum vos”. Loosely translated from the Latin, “I piss on you”. This market is a joke. The rally of late is predicated on things not being any worse than they have been. Sweet freaking Jesus, if they were any worse the financial system may have collapsed. Subprime related losses are going to total almost half a trillion dollars! The fed has sold out Main Street for the benefit of Wall Street, debasing the currency and ignoring potential inflationary pressures to prop up the balance sheets of major financial institutions. They have created new ways to allow banks and brokerages to dump assets onto the public balance sheet and access taxpayer cash to offset bad investments and stupid loans. The economy is just horrible. Orders are falling, backlogs are down and inventories are rising. The consumer is in debt up to his and her eyeballs and for the first time in years they cannot refinance the family castle to pay down their credit cards. There is currently more mortgage debt than home equity in the United States and the number of houses in foreclosures is growing at a rapid rate. Business is off at UPS and Federal Express as both consumers and corporations cut back orders. Retail sales are vapid at best. Consumers are broke and as they account for 70% of our economy I can’t see any reason for a sustained rally. Today’s 3% rally on moderate volume smacks of a short covering inspired bear market rally. Even if I am dead wrong here I think the risk of being fully committed to stocks carries too many risks for the idea of a margin of safety to exist. I am willing to miss this run up to protect capital. There appears to be very little common sense being used on Wall Street these days when it comes to the overall economic and financial matters, as well as a total lack of fear. Bottoms are accompanied by fear and loathing not cheerleading and bottom predictions. The bullish arguments are laughable. Anyone who does not clearly see that the recent pullback in gold and other commodities is deleveraging by hedge funds in light of recent volatility is not looking close enough. Anyone who thinks that the bank write offs are at an end has just simply lost their mind. Yes, eventually they will write all this crap down too far and it will create an opportunity. I particularly look forward to moves like that of UBS to separate the bad assets into separate vehicles as this will create huge pools of underpriced and unloved mortgage assets that no one wants to own, reminiscent of the Texas bad Banks of the late 80s and early 90s. But that time is not now. Small community banks will thrive and benefit from the tighter credit conditions and steeper yield curve. But not yet. Patient investors will see one of the best buying opportunities of their lifetimes. But it is too soon.

I went to opening day yesterday for the first time in years. Along with Mr. and Mrs. Tire Guy I headed up to the yard to watch the birds take on Tampa. The team was as bad as I thought it would be but we had a blast at Pickles and after an extended tour of Baltimore parking garages the NGF (new girlfriend) joined me. Any day at the ballpark is a good time. A day at the park with a beautiful woman is a great time. The team is a s bad as I had feared. However, for the first time since Davey Johnson was fired there are signs of hope around the yards. Instead of just signing whatever over the hill high priced free agents were available, Peter Angelos handed the reigns over to Andy McPhail to start a real rebuilding process. It was hard to see Eric Bedard leave. It will be even harder when he pitches against us this weekend. It will be hard to see Brian Roberts get traded before mid year. But he will, hopefully to the Cubs since they are one of the two teams I am hoping to see in the World Series. A rebuilding year is hard to take from a wins and losses perspective. However, it makes going to the ballpark more fun than going to watch a team that is bad with no prospects. Now instead of watching overpriced over aged talent screw up the game, we can watch for the improvements that have positive implications for next year. Can Adam Jones learn and get better at a major league level? Can Nick Markakis add the 10-12 home runs and 20+ RBIs that take him from good to great? Can Daniel Cabrera throw strikes two games in a row? Does Hernandez’s glove make up for the offense we give up? Can Melvin Mora get hot enough at the plate so we can trade him for a young third baseman who can play defense as well as hit? Does Adam Lowen live up to his seemingly limitless potential? How long before Luke Scott takes his bible and his pistol back to the minor leagues? The wins and losses will be awful but at least there are reasons to watch the games. I am going to cheer for the Orioles to get better, the Twins to outlast Detroit and sweep the goddamn miserable shit eating red Sox in the ALCS and face the Cubs who will have crushed the damn you for 1969 you miserable bastards New York Mets in the NLCS.

The final four is upon us as well. For the first time the four number one seeds will face each other. This promises to be weekend of incredible college basketball. Look at the matchups. UCLA –Memphis is the first game. UCLA’s young star Kevin Love is having an incredible tournament. He is averaging 21.8 points a game and 11 rebounds. Can Joey Dorsey shut him down, or at least slow him down? Freshman derrick Rose of Memphis shredded the much vaunted pair of Texas guards. Can he do as well as the UCLA tandem that already play at an NBA level? Can Memphis make free throws? Will Coach Ben Howlands defense shut down the free wheeling Memphis offense? The edge here is UCLA but Memphis has been shutting up critics for the entire tournament. North Carolina was my preseason pick to win it all and they are in position to do exactly that this weekend. How will the saga of Roy Williams coaching against his old team play out? Can Kansas find a way to stop Tyler Hansborough, who is averaging 21 points and 9.5 rebounds a game? Can Brandon rush step up and have the huge game he need sot for Kansas to have a chance? Wll ty Lawson play to early season form? The edge here is Carolina who has scored an average of 93 points and beaten opponents by an average of 25 points so for in the big dance. The dream matchup here is North Carolina and Memphis in the final. Not coincidentally, it is also the one that saves my bracket!

Spring is upon the island. It may be just me but the Narrows seems to have an air of anticipation about it these days. Although the nights remain somewhat chilled, the days are warming and you can feel the hint of summer on the way. There is talk about who is putting their boat in the water when and what changes they are making. I confess to some concern that the Tic Tac kid is lightening his boat after some of the airborne adventures we experienced last year. Boating is not supposed to include passengers in the fetal position praying for mercy while we are looking down on the bald spots of guys in another boat! Tic Tac is the only guy I know who needs FAA clearance to leave his slip! Coming out of Annies Steak House the other night I could see the construction of Red Eyes new stage in preparation for another summer of bands and bikinis parading across the docks. There was just a hint of high performance gas and roiling BBQ smoke from the food stand in the air. There are steamed crabs and fresh rockfish in the near future, long nights of dock bars and music, the multiple colored summer sunsets on the narrows and all the things that make the island one of the best places on the planet to be in the summertime.

Another sure sign of spring is the fast approaching Keeneland expedition for the Blue Grass Stakes. The annual gathering fo friends and assorted degenerate gamblers and desperate drinkers is one of the best trips of the year and it is now less than two weeks away. We will suffer from the absence of the Kentucky Colonel who is apparently inconsiderate enough to schedule childbirth during racing season. The group will be a little smaller as Texas Tim bough his now wife, then fiancĂ©, last year, and is not allowed to associate with us anymore .The Iowan is suffering from dementia bought on by excessive consumption and promotion of ethanol and other corn based biofuels and is unable to attend. However, as always Crossman and I will be there to provide entertainment and the Bet the Pink Mets fan will be there. The voodoo prof is putting in an appearance and the listmaster, with his iron Curtain contingent are scheduled to show up. So is “fuck it just sell more” Thompson from Chicago. For the first time ever in the multi years of the event (without checking bail slips and bar tabs I cannot recall exactly how many years this trip has continued) I will be bringing a girlfriend. Naturally, the degenerates have started a pool on how long before she flees in terror. I have the over on this one. She’s already seen me with a snoot full of Irish on St Patrick’s Day! We will have a great day at one of the more scenic and historic racetracks in the country, have great food at deShays and drink too much at McCarthy’s and put yet another memorable After Dark trip into the memory books.

Life could not be better right now. In a lot of respects I am living my dream and fully aware how lucky that makes me. Both kids are doing great, working and doing well in school and I have resisted the urge to dispose of my son’s menagerie while he was at work. For the first time in recent memory there is actually someone I like and care about enough to call a girlfriend. Spring is here and summer is coming. Baseball is back and it looks to be the best final four in memory. Life is an adventure and right now I seem to be on the sunny part of the trip.

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