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Saturday, January 16, 2010

New ramblings

So here we are a few week into the New Year. So far so good as the old adage puts it. I thought several times of doing a year in review piece similar to years past. Then one night as I sat sipping a delightful 18 year old bottle of the grouse it I had a (no doubt scotch induced) epiphany. Why the pure fuck would I want to that? For many 2009 was a nasty brutal year. Professionally it was a good year for me but otherwise not so much. Add a 98 loss season for the orioles and the decarnation of the last incarnation of the one true love of my life and it was not much of a year. So lets just wish 2009 a fond goodbye and fuck you then move on.

So here we sit in Mid January. The cold spell is over and the Ravens are still in the playoffs. In a few hours we will find out if the defense is up to the task of stopping Peyton from turning the game intoa track meet. Its almost impossible to confuse Manning so we are going to have to knock him around all day. Our guys got to Brady so they can get to Manning. We will know in a few hours. Whatever happens that was a pretty good late season push to get in the playoffs.

Island life is slowing down to the winter pace after the holidays. Ah, who the hell am I kidding? The only thing the season change means around here is that we do our drinking and gathering indoors instead of on the docks and boats. Instead of boat rides and outdoor bars we fill the time with poker games and bar trivia, to say nothing of football. This is a great place to live and is populated with some of the best people I have ever met in my life. It is an eclectic group with a wide range of ages and occupations, I also have to say that it is one of the few places I have ever lived where no one gives two and a half shits what you do or what you have. You either fit or you don’t. Hell, we even have Redskins fans in the group.

Looking at the economy I wish I could say something real positive and that it was going to get better soon. Sadly I just do not see it. If you live inside the beltway or between the rivers you might try to twist up some of the pure bullshit flowing out of the economists and politicians mouths into a green shoot. Out here in the real world I hear tales of layoffs, foreclosures and furloughs. Business is slow for most and I am not hearing much chatter about any up turn just yet.

The stock and bond markets are priced for stone cold perfection. With real unemployment nearing the 20% level and real estate prices still falling I do not see much on the level of perfect going on. I know cost cutting is holding margins up for many companies but it is not really possible to shrink your way into growth. Sales for many key industries are still dropping and my ever reliable mall Spies tell me not much new is changing with the advent of a new year. Add in carbon taxes and health care surcharges and the profit picture gets even dimmer in my opinion.

I am quite confident in the ability of those shitheads on both sides of aisle in the mental cesspool of the Potomac to blow up the markets. None of these goddamn idiots should be entrusted with a fucking popsicle stand much less a nation. Our children grandchildren will be paying for this mess. We can’t have the type of bullshit bailouts and handouts we have been doing. If you and I fuck up and make bad decisions and stupid bets we go broke. The sheriff takes our shit and they auction it to pay what we owe. When Wall Street and Congress do it we just print more and send them away with a pat on the ass and a promise to do better.

We have a government that starts wars and doesn’t finish them. What a dishonor to the men and women who serve to send them in harms way with ridiculous restrictions. Further how we can continually do it with such blatant disregard for the constitution. This nation has not declared war since December 1941 yet every day we have casualties from armed conflict. We send them out with ridiculous rules of engagement. Collateral casualties cannot be a consideration if we are going to fight a war. Train them, arm the, then turn the m loose to fucking WIN the damn thing. Where the hell is Georgie Patton when you need him?

An economy in disarray and a unstable geopolitical situation is not perfection. There is just so much that can go wrong on so many levels and none of this is reflected in the markets. We have seen a massive forced asset allocation trade put on by the government. Keeping rates low and flooding the economy with cash has literally forced money into stocks bonds and commodities. This will end badly. It has to. There is not some super fucking genius kept in a closet in DC that knows how to unwind this trade. The same dipshits that created the mess will be the ones at the helm. I am sure they will drive the ship right up on the goddamned rocks and am investing in anticipation of this. I am short bonds again this year and intend to remain so throughout 2010.

Thank God for cheap stocks. I don’t think I ever got over 40% invested last year and in spite of that had one of my best years ever in absolute percentage terms. I enter the year with positions in several of my near or below cash book value beauties and am quite content to limit my activities to these stocks. I also just bought the first bank stock I have owned in several years, adding shares of a local bank to my holdings. I just stuck my toe in the water picking up a few shares of Shore Bancshares but I expect to add to the position throughout the year. The local bank trades below book value and has a solid loan portfolio and balance sheet.

This is the type of trade I am hoping begins to develop in earnest in the first half of 2010. As commercial and real estate woes continue to fall I am looking for the market to wake up to the problems facing the small banks. When it starts the stock market, being the bastion of irrational insanity that it is ,the baby will go out with the bathwater. This type of activity created a situation back in the early 1990s that allowed many [people to literally get rich over the next decade. When the god get sold with the bad I am looking to buy up a portfolio of small banks below tangible book value that have low loan losses and adequate reserves. As real estate improves-and it will someday- we will start to see a wave of mergers and acquisitions in the banking community. These transactions will occur at multiples of book, not at a discount. Those solid bank stock bought in this next sell off will show tremendous gains for those bold enough to step up.

Sam Zell, the grave dancer of the real estate industry, recently said that hotels would be the first commercial real estate he will start buying in 2010. I think he is right and am watching the hotel REITs carefully. I am spending time digging though the numbers at looking at every piece of the capitalization structure to find opportunities in the common and preferred equity as well as debt securities of these companies. It is still early on the CRE game but I want to have a buy list and a deep understanding of the industry when the time to buy arrives. It may be closer than we all think for this segment of the market.

Back here in the real world life may not be perfect but its still so damn good I cannot stand it at times. Both kids are living with me now and although I should be encouraging them to move out and on I am selfish. I like having the little shits around. They are both smart hard working people with a great outlook on life and I like having them around. It is not uncommon for the two of them to be my first choice for dining and drinking companions. For some strange ass reason they like hanging around with my friends and me and I love every damn minute of it.

As always I am blessed with that wonderful excess of friends that has made life so interesting and just flat out fucking fun at times. Things shift around as people marry, get married, move in a different direction with their lives but at the core both on the island and in the after dark spec group a core remains. The cheesehead may be in Wisconsin freezing his ass off but we still drunk dial from time to time and catch up on the latest adventure. Tic-Tac may have found a new career as a nanny but we still find time to meet for drinks and an episode or two of pure stupidity. The Porsche driver has become a fast friend and is just hysterical to be around. He is one of the very few people that has as fucked up a personal life as I do. Add a sense of humor and sense of adventure and he becomes a dangerous companion of the finest kind. The tire guy still plays keno as a battle to the death and bleeds purple and black as always. His wife just opened a new hair salon so I may actually have to start getting a haircut on a regular basis. The curmudgeon is splitting time between Chicago, Tahoe and the state of contusion but we still talk markets, sports and life several times a week. A good friend os one who bails you at 2 am. A great friend is one sitting in the cell next year saying, “Holy shit that was fun.” I am blessed with many of both.

So what does the year ahead hold? Hell if I know. I know there will be laughter and there will probably be a tear or two along the way. If you live full out and head on as I try to do it is pretty much inevitable. I have always held that he who dies with the most scars, in or outside, wins. Life is a contact sport nad I will play until the game ends. I win some I lose some and so far I have been able to win the important ones. I love what I do, I have incredible children who I count among my best friends, and friends in evry walk and phase of life. Doesn’t sound too bad to me.

Yeah okay so finding someone to share I with is not a game we put into the winners category just yet. Doesn’t mean I will quit playing. Yeah I have take a few good sharp shots over the years of the relationship variety but there have been more than enough moments of great romance and deep passion to make any tears or heartbreaks worth the price paid. Either that or I am just too stupid to quit. Whatever the reason the search continues. Hopefully this is my year. Probably won’t be because apparently I am a difficult man! But as with Mr. Edison and the light bulb I can fail in my endeavors to find a permanent incarnation of the one true love of my life many times and get right just once to win.

So let life roll on. Pour the wine, deal the cards, start the engines. To the best of my knowledge we get one shot at this thing sol endeavor to make it a good one. There are books to read, music to hear and adventures to be had.It is not always going to be perfect, nor it will always be fun. But there will be many moments that are both.I doubt that any of us will lie on our deathbed recalling the times when we struggled to pay the bills or drowned a broken relationship in cheap gin and tears. We will instead be recalling those wild nights with great friends or as I once heard it put nights we will never remember with friends we will never forget. We will think of the first cry of a child. We will recall a first kiss on a frozen winter’s night or perhaps dancing into the early hours on a dock with a new love. Perhaps it will be a little boy at his first big league game or a cherished friends wedding. It will be those memories we embrace at the end and they will bring a smile to our weary faces. It is those memories that make life worth living. It’s a new year. lets go make some.

1 comment:

wickets said...

Awesome post, Tim. Thank you