No, not that one. I have little use for the pithy phrases of the do as I say not as I do folksly little guru(anyone else find it interesting that the man who prweaches against speculation, against leverage and leaving your circle of competence, ignoring economies because they are unpredictable..is now one of the largest dollar shorts?) The last 3 or 4 weeks around here have been very frustrating as I continue to load up on very cheap stocks to watch them become incredibly cheap stocks…I have little doubt that over time, as has always been so in the past the vadsy majority of my positons will turn out positvel..Im reasonably certain that the basic tenets of valuation and business that I ve used for 15 years did not disappear but none the less, negative marks can be frustrating …..one turns to the OTHER Buffet, the south florida troubadour of the lifestyle I wished I lived on days like this..the clown prince of beach rock and roll has much wisdom on life and markets slipped into his rum laden ditties and I share such discoveriesIt's a strange situation,a wild occupation,Living my life like a song.I have to sit still and remember sometimes that it very much has been like a song..theres been adventure, love stories,heartbreaks,tears in my beer and neon moon nights..but there been plenty of good old boys,barefooting,Navajo rugs and unchained melodies. There have been nights of quietly making noise,searching for a honkey tonk angel..Ive have whiled away many an hour sittin on the dock of the bay contemplating the secrets of the universe and staring at the change of the tide…have cried the tears of a clown on an occasion or two, but spent many more nights dancing in the streets at the midnight hour…got lots of friends in low places and I have traveled an interesting path in the company of good friends and there is much to be said and sung for that( of course it is best that I don’t sing in public..with my voice it would be a great way to make sure it’s a lonely highway).
The chair has often pointed out the connection between music life and markets..they share a rythym..the fade, the crescendo…not only with each other but with life itself. One entire chapter of education of a speculator is devoted to the subject. I venture I guess most of us have music playing in our offices throughout the day, rather it be Vics show tunes or the guns and roses tunes I heard a fellow spec play while trading heavily..music is more than just a backdrop.. it provides the pace, the rhythm, the toe of our actions at times…when doing heavy research I load up the cd player with classical.vivaldi, handle, Mozart..when its time to play I go with buffett, jerry jeff walker,david allan coe or some house rocking blues like stevie ray vaughn or susan tedeschi…for the softer moments we have the collection of sinatra, nora jones and I ve found that miles davis’ kind of blue, some candles and champagne does have a magical sort of effect……music is one of the truly elemental natures of the life well lived..it defines and enhances the lives we live….With all of our running and all of our cunning,If we couldn't laugh, we would all go insane.\Laughter makes it all better..this has been said by philosophers, poets, clowns, drunks and pontificators over the years..(one of my favorites being the old irish proverb…A good laugh and a long sleep are the best cures in the doctor's book. Of course this brings up another favorite cure for a bad day..the sacred afternoon nap..with cnbc or cnn droning n the background..or best of all an absolutely meaningless Saturday afternoon baseball game on a rainy day…one of life’s better cures)this does not however make it any less true.A good joke well told, a carl hiassan,Lawrence shames or christopher moore novel, a phone call from Hillman or crossman wirth their latest cockeyed adventure…chases away any monetary bad feelings or self pity jamborees…a half hour of jeff foxworthy or robin Williams works better upon the psyche than years of therapy and mountains of prozac….as it has been pointed out there no point taking life too seriously..no one gets out of here alive….
Read dozens of books about heroes and crooks,
And I've learned much from both of their styles
.My sister and I have developed the habit of late of getting together with some mutual friends on Thursday evenings for dinner and drinks at some of the local dock joints….an evening of friends, food, music a few beers and just staying in touch with each other…last night I was the last to arrive and a s I grabbed my frosty adult malted beverage I told mary not to let me forget that I had a bag o books in the car for her…the gathering was a little taken aback by the concept of a bag of books changing hands and mary made the comment that if she couldn’t read, she didn’t think she want to live…the tv generation assembled with us was in a state of disbelief but I ll take the liberty of seconding that remark. Books are a ,if not the , central part of my life. Whatever else my mom did or didn’t do for me, she instilled a love of reading in us early. It has, I am convinced, get me alive and reasonably prosperous all my life.I was too big a screw up for college and am pretty much self taught in the ways of life and markets.Books have taught me, inspired me, consoled me,provoked me and given me access to worlds and dreams I never thought possible. To be able to share the thoughts and minds of the worlds greatest thinkers, to wrap my mind around the writings of a feynman, an Einstein and gain some limited knowledge of the world, to learn markets from niederhoffer,graham(sorry vic) Whitman, altman, and other giants of the industry..to experience the soaring words of Shakespeare, the melancholy sensuality of yeats, the depraved, satirical writings of wilde, the life affirming macho of hemingway…learn seduction from casanova, adventuring from l’amour, to say nothing of the escapism writings of john d macdonald, Robert Parker,carl hiaasen, charles bukowski’s alcohol and testosterone soaked tales of depravity and redemption..or lack thereof. Without books I would be nothing..another never was full of dusty dreams and empty of heart and
mind.Take my TV, my dvd player, take the videos and move theatres. Leave me the books, my mind and my imagination and I will take the words beyond anything Technicolor could have ever produced..I shudder to think of a life without books
I ate the last mango in Paris
Took the last plane out of Saigon
Took the first fast boat to China
And Jimmy there's still so much to be done
Okay I ve never been to Paris and not really a big fan of china or slow boats. But there have already been many adventures and there are still many more to look forward to experiencing. There is much left to do, to see, to experience, whether Im 43 or 84, there will be friends to meet, wine to drink, hills to climb, sunsets to watch, places I haven’t been and places I want to go to again.Sometimes after a bad day at the trading desk we tend to forget that most of the world would love to live like we do. The poorest among us earns more than 95% of the population. We can but the books, the music we want, take trips to visit fellow specs, exchange thoughts and ideas with one of the greatest collection of minds I ve ever come across. No matter how bad the day, or nerve grinding the draw down, there still going to be checkers games with vic(if I can handle the embarrassment..he kills me quickly every time),beers with fred at some little Chicago dive( as well as the memories of somehow ending up in a skin head bar at midnight in louisville when we were supposed to be meeting the voodoo prof),horse racing with Depew,chasing bbq dreams with the prof…theres beaches I haven’t lied on,oceans I have not swum in and at the same time there are memories of all the places Ive been and things I ve already done…there has been much adventure and there will be more…in the meantime there have been bad days before..I ve had worse drawdowns and as long as I ve tested it, counted it and trust my research and instincts, the market will rally again at some point, the sun will shine again..until then it behooves one to keep in mind that there is , in fact, still so much to be done.
I'm looking for a smart woman in a real short skirt
Oops…the tricky one.for me anyway. WOMEN.Very much a love hate relationship here..I hate to love them but as yet have not figured out a way too stop. As my goof friend mike ott is fond of quoting me as saying, if I could take my mind of them for more than a minute or two I d be rich as god and bored as hell.Man, I ve got ex wives, ex girlfriends, current girlfriend and contenders for next…its enough to drive a man crazy.A pretty girl walking by can stop conversations and drive all rational thought out of my mind. I don’t understand them at all, and they don’t seem to understand me. Forget mars and venus, some days I don’t think we re even playing in the same galaxy.It bothers me no end that my beautiful, wonderful daughter has grown up to be one of THEM. Women and romance will drive you to the highest highs and the lowest lows.They can make the stars brighter in the heavens and the pillow wet with tears. I ve foresworn the romantic side of life..at least once a week in fact .But showed me well turned ankle and a shy little smile and I’m right back in the game. Infuriating unreasonable creatures, bane of my very existence but Oh god what a dreary world without them. The explosion of love and passion between a man and a woman is perhaps the greatest gift heaven has given us(Goethe described it a poem thus: When the calm enfolds the love nights/a feeling from the unknown steals over you/while the tranquil candle burns/you remain no longer caught/in the prenumbral gloom/you are stirred and new, you desire/to soar to heights creativity) and I would like to find all of that at some point in this lifetime…until then of course, the search, the frustration and the alimony payments continue
In one ear and out the other
Don't you get criss-crossed
I recommend you try a little
Mental floss
Necessary part of life that, as wrapped up in researching,counting trading we all get from time to time, we forget about. In times of stress and duress it is even more critical that our brains are given a chance to relax, to clear, to chase away the clutter and n one has accumulated. Play tennis as the chair is so fond of doing when the markets get too noisy and fitful. Go to a baseball game and lose yourself in the green grass blue skies and poetic precision of the game( unless you re a mets fan and then hopefully you suffer teeth gnashing agony as you game is rained out by a violent thunderstorm with your team trailing by 1 and the bases loaded with no outs…hopes dashed as cruelly as you dashed those of we good,honest and pure Baltimorons in 1969),go to a blues bar and listen to the crashing guitars and gravelly voices chase yours away, read a few travis mcgee books and get lost in south florida ,Plymouth gin,well built broads and a life speculator of the finest kind.Take your kids fishing and delight in the sounds of their laughter.Sit in on a symphony performance and let the music roll over you. Whatever you particular relaxation and escape vice..a walk on the beach, a glass of wine with your partner/spouse as the sunsets, a great book, a trashy novel, a good game of tennis or an afternoon in the stadium, indulge in it from time to time. Clear the mind, relax the spirit and the ideas flow anew, with renewed concentration and resolve.Maybe it's all too simpleFor our brains to figure it outWhat if the hokey pokeyIs all it really is aboutI don’t know what its all about. Neither I suspect do any of us. It’s a question that can only be answered at the very end and you re not allowed enough time in the brief flash to share the answer. So be it. That’s part of the joy of living for each of us, to discover the meaning of it al as we go along. Perhaps there is no meaning and there is just now, just us, our friends, our families, our books, our music, our passions and desires,…that’s not really so bad if that’s how it turns
out.
I don’t have all the answers but I know a few things
1. next to our children and our spouses(okay..your spouses..mine don’t exactly fit the friend mold), our friends are the source of much that is right about life.Shared knowledge. Experiences, companionship. Adventures enjoyed with great friends are all the more meaningful, I have been blessed with more than my fair share and I guard them jealously..interstingly many of my closest friends come from this list.
2. markets fluctuate. I trade from a different perspective than most here, with a much longer time horizon.There will be drawdowns, bad days, bad beats, busted flushes, broken deals and assorted heartaches in this business. However, the ownership of stocks at low prices relative to valuation has always worked out over time in the past..time , while an ally, can be frustrating..Im pretty sure time is female.
3. Its an adventure. There is great music, great books and great trades still to come for all of us..especially I think the majority of those on the spec list who by their presence are engaged in the chase for profits, books music and of course great bbq.On our worst of days we need to keep in mind that we live better than most in the world will ever be able to, and even if we should by some unfortunate occurrence tap out, we can get up, go to work and have a good shot at getting it all back.
4. Life was just a tire swing.
Jambalaya's still the best song that I can sing.
Blackberry pickin', eatin' fried chicken,
And I finally learned a lot about pain,
'cause life is just a tire swing
Wednesday, June 15, 2005
Tuesday, June 14, 2005
fun with value line
In addition to my life long obsession with the 3 b’s(books, broads and booze),I am also hopelessly addicted to the value line research service and am constantly looking for ways to use the vast amounts of information provided to improve my investing and even trading results. Take away my quote machine and computer but hands off the value line. I t is, hands down, the finest research service available to investors.
Whilst wiling away the hours on the beach last week, enjoying the sun, surf, sand and bevy of barely dressed shapely adorables parading at lands edge, I spent a lot of time reviewing approaches and methods of investing, always looking for the edge that provides superior returns. I developed several ideas that were scribbled on post its and bought home to test out. As I am always surprised when my tiny brain produces something that works, I was gratified to find that several methods appear to over results superior to the mkt as a whole. I share them now in hopes of ideas, comments and criticism.
First is a classic value+yield approach that has been talked up by authors such as O Higgins, shaugnessy and even our own senator. Looking from 1986 though the end of 2004, I screened for stocks that have a return on total capital of at least 8%, A dividend yield of at least 3% and a price to book value of less than two.In addition to avoid deeply troubled companies we only selected stocks ranked 1,2 or 3 from the VL service in hopes of avoiding the dividend slashing book writing off disasters frequently found among 4 and 5 ranked stocks. It finds solid stocks, earning decent returns and paying out cash to shareholders that have not made huge runs in price. Simple conservative stuff, and it delivers simple conservative returns that do in fact beat the market handily..an average of 16% a year over the 18-year period versus the markets 12. More importantly it only has 2 losing years in 18, with the max year over year loss being just 8% along with fairly shallow drawdowns intra-year. By the way, I rebalanced once a quarter in all the tests.
In the second test I look at a classic value screen stocks selling below book value. One of the biggest problems with stocks that sell below book is that many of them are deeply flawed, unprofitable companies with no hope of recovery. To try and eliminate some of this, I added the criteria of selecting only those companies who earned at least 8% on net worth. Again we find market beating returns of 17% a year over 18 years to the markets 12.Deeper draw downs and more overall losing years here, so dropping the dividend requirement and buying deeper asset discounts hardly seems worth the extra percentage point.
Next, for comparative purpose I wanted to look at “growth” stocks, a bit far afield from my usual value bent. But first to decide on a true definition of growth. I wanted to avoid the pure momentum stocks that are so often confused with growth stocks.I also felt that stocks with managed earning ala the west Virginians company or the enron types. I looked for companies where not only were reported earnings growing rapidly..At least 20% annually over the past 5 years, but the earnings were reinvested in the enterprise successfully producing book value growth of at least the same over the time frame. To my mind this showed that not only was the business growing but also profits were being used to improve the corporation and were “real”, not just accounting mirages or temporary. To further insure that these were true growth stocks, only those ranked 1 or better by the value line service were included. And the results are..Drum roll please…it smokes almost everything else I ve ever looked at. 21% compounded over 18 years versus the markets 12. For comparison the entire list of 1 ranked stocks averaged 17..Not bad but 20% less than those who grew their company as fast as their earnings? This strategy beats the market in 15 of the last 18 years. As a value guy I checked to see if screening further by pe ratio helped improve returns, In fact, it degraded them horrible if you put an upper pe limit on the list.
There it is. MELVIN SAYS GROWTH BEATS VALUE. This akin to Darwin cavorting with adam and eve, abelson being bullish, taleb selling premium,buffet finally confesses to being a short term trader.
Uh..not quite. Performing even better than that were stocks that met multiple criteria. Less than 1.5 times book, pe less than 12,debt less than 50% of capital, earnings over past 5 years of at least 5% and projected earnings growth of at least 5%. What we are looking for here are sound companies, good solid balance sheets, growing at some rate equal to or better than the underlying economy. We pick up two types of companies for the most part. Sound business hit by what the chair calls a one-off event, earning miss etc that have plunged, or super cyclicals entering the rapid growth phase that causes pes to contract. This year for instance it would have had you long homebuilders and energy companies for the most part.
REWRITE: MELVIN SAY THERE IS NO DIFFERENCE BETWEEN GROWTH AND VALUE. In the end there is only growth, growth bought at a low right price and momentum.
The only better performing screen was one I have talked about at length in years past. Value Line 1 and 2 ranked stocks priced below 10. This thing rocks. It is the rocket ship of investing strategies producing an eye popping 25% annualized. HOWEVER, it has draw downs and loss years that might make the baseball maven or the late lamented mr e have sleepless nights.40 and 50% drawdowns are not only not unusual..They are the norm. This screen catches small cap stocks that value line has affirmed are starting to turn the corner. They are mostly unprofitable and are considered turnarounds. Removing loss companies from the list reduces returns to market level without decreasing risk in any measurable manner. If one forms a strong opinion that small cap growth is about to rebound however, this list of stocks explodes into the stratosphere and has several 80% plus years in the past 18.
I view screens such as this as a starting point and have never been able to just buy the list blindly, preferring as chris browne of tweedy browne once said, act like an insurance company..underwrite by the numbers(run the screen) and then investigate(look for insider activity,read the reports).However, if one could develop reasonably reliable market entry and exit strategies for,growth,yield and small cap, they can be a powerful starting place.
Whilst wiling away the hours on the beach last week, enjoying the sun, surf, sand and bevy of barely dressed shapely adorables parading at lands edge, I spent a lot of time reviewing approaches and methods of investing, always looking for the edge that provides superior returns. I developed several ideas that were scribbled on post its and bought home to test out. As I am always surprised when my tiny brain produces something that works, I was gratified to find that several methods appear to over results superior to the mkt as a whole. I share them now in hopes of ideas, comments and criticism.
First is a classic value+yield approach that has been talked up by authors such as O Higgins, shaugnessy and even our own senator. Looking from 1986 though the end of 2004, I screened for stocks that have a return on total capital of at least 8%, A dividend yield of at least 3% and a price to book value of less than two.In addition to avoid deeply troubled companies we only selected stocks ranked 1,2 or 3 from the VL service in hopes of avoiding the dividend slashing book writing off disasters frequently found among 4 and 5 ranked stocks. It finds solid stocks, earning decent returns and paying out cash to shareholders that have not made huge runs in price. Simple conservative stuff, and it delivers simple conservative returns that do in fact beat the market handily..an average of 16% a year over the 18-year period versus the markets 12. More importantly it only has 2 losing years in 18, with the max year over year loss being just 8% along with fairly shallow drawdowns intra-year. By the way, I rebalanced once a quarter in all the tests.
In the second test I look at a classic value screen stocks selling below book value. One of the biggest problems with stocks that sell below book is that many of them are deeply flawed, unprofitable companies with no hope of recovery. To try and eliminate some of this, I added the criteria of selecting only those companies who earned at least 8% on net worth. Again we find market beating returns of 17% a year over 18 years to the markets 12.Deeper draw downs and more overall losing years here, so dropping the dividend requirement and buying deeper asset discounts hardly seems worth the extra percentage point.
Next, for comparative purpose I wanted to look at “growth” stocks, a bit far afield from my usual value bent. But first to decide on a true definition of growth. I wanted to avoid the pure momentum stocks that are so often confused with growth stocks.I also felt that stocks with managed earning ala the west Virginians company or the enron types. I looked for companies where not only were reported earnings growing rapidly..At least 20% annually over the past 5 years, but the earnings were reinvested in the enterprise successfully producing book value growth of at least the same over the time frame. To my mind this showed that not only was the business growing but also profits were being used to improve the corporation and were “real”, not just accounting mirages or temporary. To further insure that these were true growth stocks, only those ranked 1 or better by the value line service were included. And the results are..Drum roll please…it smokes almost everything else I ve ever looked at. 21% compounded over 18 years versus the markets 12. For comparison the entire list of 1 ranked stocks averaged 17..Not bad but 20% less than those who grew their company as fast as their earnings? This strategy beats the market in 15 of the last 18 years. As a value guy I checked to see if screening further by pe ratio helped improve returns, In fact, it degraded them horrible if you put an upper pe limit on the list.
There it is. MELVIN SAYS GROWTH BEATS VALUE. This akin to Darwin cavorting with adam and eve, abelson being bullish, taleb selling premium,buffet finally confesses to being a short term trader.
Uh..not quite. Performing even better than that were stocks that met multiple criteria. Less than 1.5 times book, pe less than 12,debt less than 50% of capital, earnings over past 5 years of at least 5% and projected earnings growth of at least 5%. What we are looking for here are sound companies, good solid balance sheets, growing at some rate equal to or better than the underlying economy. We pick up two types of companies for the most part. Sound business hit by what the chair calls a one-off event, earning miss etc that have plunged, or super cyclicals entering the rapid growth phase that causes pes to contract. This year for instance it would have had you long homebuilders and energy companies for the most part.
REWRITE: MELVIN SAY THERE IS NO DIFFERENCE BETWEEN GROWTH AND VALUE. In the end there is only growth, growth bought at a low right price and momentum.
The only better performing screen was one I have talked about at length in years past. Value Line 1 and 2 ranked stocks priced below 10. This thing rocks. It is the rocket ship of investing strategies producing an eye popping 25% annualized. HOWEVER, it has draw downs and loss years that might make the baseball maven or the late lamented mr e have sleepless nights.40 and 50% drawdowns are not only not unusual..They are the norm. This screen catches small cap stocks that value line has affirmed are starting to turn the corner. They are mostly unprofitable and are considered turnarounds. Removing loss companies from the list reduces returns to market level without decreasing risk in any measurable manner. If one forms a strong opinion that small cap growth is about to rebound however, this list of stocks explodes into the stratosphere and has several 80% plus years in the past 18.
I view screens such as this as a starting point and have never been able to just buy the list blindly, preferring as chris browne of tweedy browne once said, act like an insurance company..underwrite by the numbers(run the screen) and then investigate(look for insider activity,read the reports).However, if one could develop reasonably reliable market entry and exit strategies for,growth,yield and small cap, they can be a powerful starting place.
Wednesday, May 25, 2005
ace-king
I have lost more money to ace-king and blonde hair than anything else in this life.
As soon as the words slipped out of my mouth while indulging in a gin and tonic with a splash of roses discussion of markets and life with a poker playing options guru from the west coast I knew I d uttered a line for the ages, a worthwhile epitaph perhaps for one who has lived the speculative life. Ace-King, the big slick in poker parlance, considered one of the most powerful starting hands. After all, you have a 32% chance of pairing one of the top cards. All the poker books encourage you to bet and bet big when holding big slick…but examine for a minute that there is a 68% chance you wont pair up either card, a 5% chance that someone else at the table has been dealt a pair and has a 10% chance of flopping a third for a set, beating either of your big pairs. Anyone with an over card suited, connected opening hand is in a horse race with you for the pot. If you find yourself heads up against a pair or connectors the pot could be enormous. You have a 29% chance of winning an enormous stack of chips..and a 70%chance of losing one. Know when to hold em, know when to fold em is one of the truest poker maxims ever, and it holds even truer for markets. We have all seen trading systems that have 60,even 70% winners. Excellent odds, and over time should generate enough profits to truly afford all your bad habits and raise your vices to art forms. But bear in mind that the 30% losers can occur in ruinous streaks, that close attention must be made to the $ amount of winners versus losers as a shift here can eliminate your edge and of course the ever changing cycles of the market. Ace-King. A high probability trade in the nazz. Bet it all? What’s the other guy holding? What earnings reports are due from a nazz 100 stocks that can turn your statistical theory into mush?
As for the blonde? Family and friends have told me that from now on I must date, chase and romance only redheads and brunettes for down that path there be monsters. The seductive lure of the long legged girl with flowing golden tresses, the one decision growth stock, the breakout to new highs, the ensuing breathless moments of hope overriding common sense, the wallet emptying crash to earth. We've all been there. To continue to chase momentum or buy 9 dollar cosmos for the Barbie in the bar (you know why the Divorced Barbie is the most expensive of all dolls? She comes with all Kens stuff) is like standing in the alley where you were mugged last night waiting for the guy to show up again. But we’ve all done it. Paid up for stocks that looked to be immortal to watch them do an Icarus. Bought stocks trading at half of book value ignoring the massive leverage on the balance sheet. Shorted bubbles just to watch them reach double-bubble status. Fluttering eyelashes, long blonde hair and moving average breakouts have ruined more poor boys than the house of the rising sun.
So how then to approach these markets so fraught with temptation and frustration? The vast amounts of capital injected in the system have taken the steam out of such sure fire money makers as risk arb,convert arb and distressed trading. I confess to not be smart enough to indulge in global macro against the Willowbridges and Soros’ of the world. Right now I continue to find success with traditional valuation measures and adding some twists. I continue to be enamored of the 3 way approach of valuation, technical (a catch phrase here to include all statistical and math oriented ways of measuring the market) and proper uses of options. Buying or selling of options when the underlying is mispriced at times judged favorable for marker movement in the direction of our trade seems to be the ultimate way to trade these markets of ours. Why doesn’t anyone do it? The only one even close to using this approach right now is Ahmet Okumus of Okumus Capital and he has generated impressive returns over the past 10 years. This remains my favorite area of research and anyone interested in joining the project is more than welcome to the party.
For longer term, less aggressive investors, I think that the time honored corner stones of investing…good returns on equity, price to cash flows and dividend yields along with some good old fashioned dividends to be the best approach Some interesting research from the folks at FirstTrust shows that companies with high dividends compared to the over all market, low price to book value and good returns on assets crushes the market since 1990. My own work looking at low price to book and high return on equity beats by a handy percentage since 1986.Incorporating dividends seems to smooth the overall returns and will perhaps provide a better sleep factor.
So, where are we now? In a nutshell, the Fed is worried about inflation, the bond market is worried about a slowing economy and the options market don’t seem to be worried about anything at all. Volatility has slipped right back down into the low end of the range after giving anther great signal by exceeding two standard deviations (also known as exceeded the top bollinger band) on may 13th. Many of the people I hear discussing volatility keep saying we are right back to the mid 90s levels and all is well. I do not buy it. The world geo political situation is much worse now than then, with more opportunities for the black swan to be born .On going difficulties with nuclear implications in both North Korea and Iran, difficulties with Syria,and other potential worldwide hot spots, combined with valuations on the Dow and sp500 being some 50% higher now than then all seem to give me the impression that there is much greater risk. But I didn’t go to the University of Really Smart math guys so perhaps I’m wrong and the world is a safer, more peaceful place and earnings will grow forever and peace and profits will reign forever and ever amen therefore making the continuing selling of volatility an eternal cash machine. Or just maybe the calculators aren’t adjusting for the fact that the enormous amounts of covered call programs and funds have created a pricing aberration and the risk is much greater than it appears.
As for market levels, the stock market as measured by the sp500 appears to be fairly priced in this general area. As long as economic activity picks up and we hit the earnings estimates AND interest rates do not go higher. But wait..The proverbial fly crash lands in the ointment of valuation. It is rare for economic activity to pick up and interest rates to stay the same or go lower.Lookinmg at my charts and funny little math activity book I see a range here of about 1140 to 1210.At 1190 I think we re close to putting in a short term top than bottom. No, I’m not a perma bear but after calling for a short term rally in April, I ll say now that the likely path of least resistance is down. The combination of bond market rally, decent earnings and falling oil prices failed to push the market past the March highs, generating about a 5% gain since the April lows. Im usually early (when of course I’m not just flat out wrong) but I think we go down from here. Not straight down, but down. I am heartened by the fact that everyone with even the slightest counting knowledge has happily pointed out that when the NASDAQ goes up 8 days in a row it is usually higher. Some 68% of the time a week, one month and 3 months later. Suddenly I’m at a poker table, sitting next to a blonde staring at me from under a veronica lake hairdo urging me "go for it, big boy”. I look in my hand and find…..Ace- King, the big slick of my dreams..or possibly nightmares.
In my personal portfolio, I like sebl, hele, bac, atml, cmos, dtv, tmas on the long side while remaining short erts, fisv, yhoo, hot. Im looking to add shorts on rallies and may even join the Chicago wunderkind and bet against the homebuilders. I mean just who the hell is buying all these houses? As we price the low end, first time buy out of the market, the opportunity for the move-up ponzi scheme we ve been seeing will falter. We saw this exact scenario play out in the 80s. I t takes action on the low end to sustain the rally but the rally itself takes the low end out of the game. Forget people buying rental real estate. It is no longer possible to take in enough rental income to cover even half the mortgage in most urban areas. Again,Im probably early but when it unravels, it will happen quickly.
Random thoughts:
Carl Icahn, who so kindly bbqed so many of us with the bait and switch on KMG has taken a good size position, is sebl. The software company is under priced and may well be takeover bait.
The economy cannot recover without a substantial rally in semiconductors. It’s the only area of the market I consider ultra-cheap. The pricing therein seems to support the argument from the bond traders that the economy is not all its cracked up to be.
.They have to buy the dollar. The Asians need our trade. Without it they collapse. They WILL continue to buy treasuries. This time however they seem to have learned their lesson about buying US assets when the dollar weakens. They learned from Rockefeller center after all.
The damage isn’t over for convert arb. It might make sense to take the opposite side here..ie long shares of companies that have converts and high short interest.
The Tiki bar is Open.
As soon as the words slipped out of my mouth while indulging in a gin and tonic with a splash of roses discussion of markets and life with a poker playing options guru from the west coast I knew I d uttered a line for the ages, a worthwhile epitaph perhaps for one who has lived the speculative life. Ace-King, the big slick in poker parlance, considered one of the most powerful starting hands. After all, you have a 32% chance of pairing one of the top cards. All the poker books encourage you to bet and bet big when holding big slick…but examine for a minute that there is a 68% chance you wont pair up either card, a 5% chance that someone else at the table has been dealt a pair and has a 10% chance of flopping a third for a set, beating either of your big pairs. Anyone with an over card suited, connected opening hand is in a horse race with you for the pot. If you find yourself heads up against a pair or connectors the pot could be enormous. You have a 29% chance of winning an enormous stack of chips..and a 70%chance of losing one. Know when to hold em, know when to fold em is one of the truest poker maxims ever, and it holds even truer for markets. We have all seen trading systems that have 60,even 70% winners. Excellent odds, and over time should generate enough profits to truly afford all your bad habits and raise your vices to art forms. But bear in mind that the 30% losers can occur in ruinous streaks, that close attention must be made to the $ amount of winners versus losers as a shift here can eliminate your edge and of course the ever changing cycles of the market. Ace-King. A high probability trade in the nazz. Bet it all? What’s the other guy holding? What earnings reports are due from a nazz 100 stocks that can turn your statistical theory into mush?
As for the blonde? Family and friends have told me that from now on I must date, chase and romance only redheads and brunettes for down that path there be monsters. The seductive lure of the long legged girl with flowing golden tresses, the one decision growth stock, the breakout to new highs, the ensuing breathless moments of hope overriding common sense, the wallet emptying crash to earth. We've all been there. To continue to chase momentum or buy 9 dollar cosmos for the Barbie in the bar (you know why the Divorced Barbie is the most expensive of all dolls? She comes with all Kens stuff) is like standing in the alley where you were mugged last night waiting for the guy to show up again. But we’ve all done it. Paid up for stocks that looked to be immortal to watch them do an Icarus. Bought stocks trading at half of book value ignoring the massive leverage on the balance sheet. Shorted bubbles just to watch them reach double-bubble status. Fluttering eyelashes, long blonde hair and moving average breakouts have ruined more poor boys than the house of the rising sun.
So how then to approach these markets so fraught with temptation and frustration? The vast amounts of capital injected in the system have taken the steam out of such sure fire money makers as risk arb,convert arb and distressed trading. I confess to not be smart enough to indulge in global macro against the Willowbridges and Soros’ of the world. Right now I continue to find success with traditional valuation measures and adding some twists. I continue to be enamored of the 3 way approach of valuation, technical (a catch phrase here to include all statistical and math oriented ways of measuring the market) and proper uses of options. Buying or selling of options when the underlying is mispriced at times judged favorable for marker movement in the direction of our trade seems to be the ultimate way to trade these markets of ours. Why doesn’t anyone do it? The only one even close to using this approach right now is Ahmet Okumus of Okumus Capital and he has generated impressive returns over the past 10 years. This remains my favorite area of research and anyone interested in joining the project is more than welcome to the party.
For longer term, less aggressive investors, I think that the time honored corner stones of investing…good returns on equity, price to cash flows and dividend yields along with some good old fashioned dividends to be the best approach Some interesting research from the folks at FirstTrust shows that companies with high dividends compared to the over all market, low price to book value and good returns on assets crushes the market since 1990. My own work looking at low price to book and high return on equity beats by a handy percentage since 1986.Incorporating dividends seems to smooth the overall returns and will perhaps provide a better sleep factor.
So, where are we now? In a nutshell, the Fed is worried about inflation, the bond market is worried about a slowing economy and the options market don’t seem to be worried about anything at all. Volatility has slipped right back down into the low end of the range after giving anther great signal by exceeding two standard deviations (also known as exceeded the top bollinger band) on may 13th. Many of the people I hear discussing volatility keep saying we are right back to the mid 90s levels and all is well. I do not buy it. The world geo political situation is much worse now than then, with more opportunities for the black swan to be born .On going difficulties with nuclear implications in both North Korea and Iran, difficulties with Syria,and other potential worldwide hot spots, combined with valuations on the Dow and sp500 being some 50% higher now than then all seem to give me the impression that there is much greater risk. But I didn’t go to the University of Really Smart math guys so perhaps I’m wrong and the world is a safer, more peaceful place and earnings will grow forever and peace and profits will reign forever and ever amen therefore making the continuing selling of volatility an eternal cash machine. Or just maybe the calculators aren’t adjusting for the fact that the enormous amounts of covered call programs and funds have created a pricing aberration and the risk is much greater than it appears.
As for market levels, the stock market as measured by the sp500 appears to be fairly priced in this general area. As long as economic activity picks up and we hit the earnings estimates AND interest rates do not go higher. But wait..The proverbial fly crash lands in the ointment of valuation. It is rare for economic activity to pick up and interest rates to stay the same or go lower.Lookinmg at my charts and funny little math activity book I see a range here of about 1140 to 1210.At 1190 I think we re close to putting in a short term top than bottom. No, I’m not a perma bear but after calling for a short term rally in April, I ll say now that the likely path of least resistance is down. The combination of bond market rally, decent earnings and falling oil prices failed to push the market past the March highs, generating about a 5% gain since the April lows. Im usually early (when of course I’m not just flat out wrong) but I think we go down from here. Not straight down, but down. I am heartened by the fact that everyone with even the slightest counting knowledge has happily pointed out that when the NASDAQ goes up 8 days in a row it is usually higher. Some 68% of the time a week, one month and 3 months later. Suddenly I’m at a poker table, sitting next to a blonde staring at me from under a veronica lake hairdo urging me "go for it, big boy”. I look in my hand and find…..Ace- King, the big slick of my dreams..or possibly nightmares.
In my personal portfolio, I like sebl, hele, bac, atml, cmos, dtv, tmas on the long side while remaining short erts, fisv, yhoo, hot. Im looking to add shorts on rallies and may even join the Chicago wunderkind and bet against the homebuilders. I mean just who the hell is buying all these houses? As we price the low end, first time buy out of the market, the opportunity for the move-up ponzi scheme we ve been seeing will falter. We saw this exact scenario play out in the 80s. I t takes action on the low end to sustain the rally but the rally itself takes the low end out of the game. Forget people buying rental real estate. It is no longer possible to take in enough rental income to cover even half the mortgage in most urban areas. Again,Im probably early but when it unravels, it will happen quickly.
Random thoughts:
Carl Icahn, who so kindly bbqed so many of us with the bait and switch on KMG has taken a good size position, is sebl. The software company is under priced and may well be takeover bait.
The economy cannot recover without a substantial rally in semiconductors. It’s the only area of the market I consider ultra-cheap. The pricing therein seems to support the argument from the bond traders that the economy is not all its cracked up to be.
.They have to buy the dollar. The Asians need our trade. Without it they collapse. They WILL continue to buy treasuries. This time however they seem to have learned their lesson about buying US assets when the dollar weakens. They learned from Rockefeller center after all.
The damage isn’t over for convert arb. It might make sense to take the opposite side here..ie long shares of companies that have converts and high short interest.
The Tiki bar is Open.
Friday, April 15, 2005
Too bullish too soon.Especially with ibm..big blue has left me blue this week as the may 90 calls have gone from dep out of the money to impossibly deep out of the money.Fortunately this weeks decline in starbucks allowed me to close that position at more than enough profit to compensate for dancing with dinosaurs .closed the pfizer clalls for a decent gain this morning as well.SBux is one I wouldn't moind shorting again in the mid 50's if bear sterns upgrade can push the shares that high.A 40 multiple for a 5% grower is just too tempting a target.
Earnings hopes seem to be turning to earnings fears this week. The miss by harley davidson sent a clear message to the market that the days of counting on the so called consistent growers at premium valuations are coming to an end. The numbers just don't massage the way they did in the good ol days. Harley was always seen as somewhat insulated from economic swings by the consistent demand for the throaty roar of the open road. Now, it seems that they have shipped many more bikes to dealers than were ever registered by new owners and the only throaty roar is from growth funds puking upthe shares.Citicorp and Ge both exceeded estimates but the list of misses to the downside is getting longer by the hour.SUNW,RFMD,MAT,AVY and GWW are all off bif today on earnings misses. You thought march madness was interesting. Trying to build a bracket of earnings winners is getting more difficult all the time as the traditional 1 and 2 seed growth stocks fail to advance.
In spite of this, for the short term I m still bullish. The twin declines in oil and interest rates should give us a little upwards push.The SP500 is 2 standard devaitions below its average, and the vix and vxo are both above their 2 std-dev range. Past occurences of this have been infrequent and very bullish over the next trading month.I dont think it wll be a spectacular rally but we should recover some of the ground lost since early march.I think that 1195-1200 on the sp500 and 2020-30 on the NAZZ composite will be the top of any short term rally in here and would have to revaluate the picture if we reach those levels. Volatilty has been climbing as earnings disappointments build and I think there is finally enough fear to launch a decent little rally. The longer term path of least resitance is still down, and I ll probably be looking to restablish some more shorts as we near the top of my ranges.
Semiconductors, drugs and media remain my hunting growund for new long ideas.The continued decline in shares of ATML has increased my appetite for the shares and I have been aggressively adding to positions. Their smart card business is growing at a 40%+ clip annualy and with the mastercard paypass ramping upthis quarter, this will continue if not acclerate.In the microcontroller business the book to bill is finally over 1. There is revenue growth across all areas of the comopany and margins improved by over 5% last year. On there 4th quarter conference call in feb they anticipated further margin improvement starting in the second half of the year. Wells Fargo has a 12 month target price of 5.25 and I think Im right there with them. The long term trends in hand held consumer electronics and smart cards are very much in ATML's favor.ATMl sels for 70% of sales,right around book and only two times net current assets.Its a buy it and forget it stock that should provide outsize gains when the semi conductor sector picks up.In media and entertainment DTV remains a favorite...rather than walk you through the whole analysis, I ll just reference the barrons article last week as outling the valuation and prospects for the satelllite tv leader. Drugs have moved up in recent days and I would hold longs but not add..as I mention I exited the more leveraged pfe calls this morning. I also like the HELE JAN 25-30 call spread for the more aggressive types.HELE earns a 22% ROE and trades at 12 times.Street estimates are 2.35 this year and 2.90 in fiscal 06 with a price target of 20.With the stock at almost 28, the debit of 2.0 is all intinsic value with a discount of time premium for a good chance to double by January 06.
Since coming back from a fuddruckers lunch I find that the market has taken an enormous dump again, volatility has jumped 3% measured by the vix.Semiconductors are getting crushed with all the tech etfs down another 2-4% on the day.The NASDAQ new low list bears an eerie resemblance to my portfolios. should have had a beer or 12 with that burger.Close eyes,buy puke..just another day in the stock market.
Earnings hopes seem to be turning to earnings fears this week. The miss by harley davidson sent a clear message to the market that the days of counting on the so called consistent growers at premium valuations are coming to an end. The numbers just don't massage the way they did in the good ol days. Harley was always seen as somewhat insulated from economic swings by the consistent demand for the throaty roar of the open road. Now, it seems that they have shipped many more bikes to dealers than were ever registered by new owners and the only throaty roar is from growth funds puking upthe shares.Citicorp and Ge both exceeded estimates but the list of misses to the downside is getting longer by the hour.SUNW,RFMD,MAT,AVY and GWW are all off bif today on earnings misses. You thought march madness was interesting. Trying to build a bracket of earnings winners is getting more difficult all the time as the traditional 1 and 2 seed growth stocks fail to advance.
In spite of this, for the short term I m still bullish. The twin declines in oil and interest rates should give us a little upwards push.The SP500 is 2 standard devaitions below its average, and the vix and vxo are both above their 2 std-dev range. Past occurences of this have been infrequent and very bullish over the next trading month.I dont think it wll be a spectacular rally but we should recover some of the ground lost since early march.I think that 1195-1200 on the sp500 and 2020-30 on the NAZZ composite will be the top of any short term rally in here and would have to revaluate the picture if we reach those levels. Volatilty has been climbing as earnings disappointments build and I think there is finally enough fear to launch a decent little rally. The longer term path of least resitance is still down, and I ll probably be looking to restablish some more shorts as we near the top of my ranges.
Semiconductors, drugs and media remain my hunting growund for new long ideas.The continued decline in shares of ATML has increased my appetite for the shares and I have been aggressively adding to positions. Their smart card business is growing at a 40%+ clip annualy and with the mastercard paypass ramping upthis quarter, this will continue if not acclerate.In the microcontroller business the book to bill is finally over 1. There is revenue growth across all areas of the comopany and margins improved by over 5% last year. On there 4th quarter conference call in feb they anticipated further margin improvement starting in the second half of the year. Wells Fargo has a 12 month target price of 5.25 and I think Im right there with them. The long term trends in hand held consumer electronics and smart cards are very much in ATML's favor.ATMl sels for 70% of sales,right around book and only two times net current assets.Its a buy it and forget it stock that should provide outsize gains when the semi conductor sector picks up.In media and entertainment DTV remains a favorite...rather than walk you through the whole analysis, I ll just reference the barrons article last week as outling the valuation and prospects for the satelllite tv leader. Drugs have moved up in recent days and I would hold longs but not add..as I mention I exited the more leveraged pfe calls this morning. I also like the HELE JAN 25-30 call spread for the more aggressive types.HELE earns a 22% ROE and trades at 12 times.Street estimates are 2.35 this year and 2.90 in fiscal 06 with a price target of 20.With the stock at almost 28, the debit of 2.0 is all intinsic value with a discount of time premium for a good chance to double by January 06.
Since coming back from a fuddruckers lunch I find that the market has taken an enormous dump again, volatility has jumped 3% measured by the vix.Semiconductors are getting crushed with all the tech etfs down another 2-4% on the day.The NASDAQ new low list bears an eerie resemblance to my portfolios. should have had a beer or 12 with that burger.Close eyes,buy puke..just another day in the stock market.
Wednesday, April 13, 2005
trip report
Its spring in Lexington and the town braces for the annual invasion of horse racing aficionados, the gamblers and socialites alike descending on the town as once again the harbinger of brighter times ahead comes around on the annual calendar. Keeneland is open for business and the best horses; trainers and jockeys bring some of the worlds finest horse racing to this bucolic setting in the rolling horse lands of Kentucky. And from Chicago,new york,Maryland,ohio and other fine locations across the nation, the spec list after dark crew joins the throngs headed for northern Kentucky to partake in the spectacle.
It’s a quiet morning on the deck at the woodford reserve distillery. The air carries the scent of newly emerged spring fauna and sour mash. Those who have taken the tour mingle with new arrivals and all head for the picnic on the deck, a fine lunch amid the spectacular setting of this beautiful place tucked in a valley of rolling Kentucky bluegrass. One by one the men and women of the spec list after-dark crew arrive.oh,lets be honest, the men of the spec list after dark crew. With the exception of the effervescent editor form Chicago the women come along to make sure that the excessive amounts of testosterone and whiskey fueled ninnies don’t do anything too terribly stupid….the voodoo prof form Deltaville by way of Cincinnati, accompanied as always by the enigmatic and vibrantly delightful E; the king of patterns from queens, along with his sister the fashion princess of bloomies; Chesapeake Slim,sporting his usual half a hangover and subdued opinions; the cynical grail seeker from chi-town(as long as the grail is a copy of barrons and financial times every Saturday no matter how remote a locale we find ourselves in) with a new addition the delightful and oh so lovely charitable derivative, the tent owning trader also from Chicago with the stunningly beautiful and gracious new wife; the listmaster and the tsarina with their court including the queen mom and head page, and of course the handicapping horsemaster of Richmond Virginia and his bride the market mistress(market in question being of the farmers variety in Richmond).Most had arrived just this morning. The handicapper and slim had of course arrived the night before and had wide Guinness fueled discussion on matters vital to the world as we know it whilst listening to a surprisingly good Beatles cover band in one of Lexington’s finest little spots along main street.The handicapper, of course had the sense to go home. Slim, possessing no vehicle was waiting for the cynic and his consort to arrive to town and carry him back to the palace of la Quinta. Alone, in an unfamiliar town, there was of course only one course of action available..Switch from Guinness to bushmills (Lexington at is core is very Irish) and begin striking up conversations with all the shapely adorables in attendance. It was during such an encounter with a beautiful and buxom yet amazingly foul-mouthed coed ( little surprise our slim was in love and had already begun to think of her as his next ex-wife) when the charitable derivative arrived to the rescue. Whose rescue exactly, we will never know.
The new day dawn arrived brining with a day at the track. The band of erstwhile specs arrived at keenelands grandstands on a beautiful spring day, temperatures in the 70s, the sun shone brightly and the track ran fast. Conversations ran from sector rotation in sp 500 groups, volatility trades horse racing systems(in this the second year of keeneland adventures, remains the pattern kings “Bet the Pink Horse”, far outpacing all other attempts to game the ponies).Keeneland is a social event and the women wore birhgt dresses and amzingly stylish headgear, the flowers were starting to bloom in the infield, the crowd was excited and in the highest of spirits on this the seconf day of racing.We talked mingled,enjoyed cold beers and small bets and caught up on the past several months.Several of us came out ahead on the day, no one was foolish enough to bet too much with no edge and the one with an edge was smart enough to bet only the race where the edge was clear and walked outas always) a big winner on the day,enough Im sure to keep in pints of guiness and snappy ties for some small time to come.Now, if he had just answered our desperate calls to the clubhouse before the race……
Now the mad dash across Lexington to what we thought was the voodoo profs newest culinary find. Little did we know he and e had simply asked a track employee where a good place to eat was located in their fair town. Naturally they sent us 45 minutes across town to a beer and burger joint someone in their family doubtlessly owned.The Shamrock was a fine example of the genre however and while it was not up to the very high standards the prof has set in the past..It was food and the beer was cold. While not selected by zagats, we do give a three on the suggested by overweight toothless racetrack trash sweeper scale.
Then back to that shrine of horseracing, gamblers and Irishmen, McCarthy’s in downtown Lexington .A table in the back, a gorgeous spring evening, adult libations to spare and long conversations.Perfect. Someone really needs to start taping the first couple of hours of these gatherings as much brilliance is shared. Listening to Kevin Depew talk about the similarities between horse betting and trading is worth the cost of the trip in and of itself. Add the years of experience of a crossman,the sharp insight of mcnabb, the in-depth technology and trading genius of a goldcamp along with other combined great minds gathered there and much can be learned. Markets,racing,books,history,math,the list of subjects covered is vast.After the first couple of hours, theory gives way to war stories,lost loves and bad adventures and these bits of conversation are perhaps best never written anywhere for the sake of all concerned. It as at the turning point in the evening that I feel most sorry for the wives and girlfriends. They had believed they were in the company of poets and philosophers and to their horror find that they are, in fact, in the midst of a gathering of drunken degenerate gamblers. But they are good sports and allow us our fun, conversation and companionship with the bemused expressions of mothers riding herd on naughty little boys.
These gatherings have gone on since the second spec party when the afterdarkers were founded quite accidentally over a bottle of scotch and market talk in a hotel room late on Friday night in Weston Connecticut. The original group was small… ott, melvin, crossman,van giessen and a few select others who are no longer around. The gatherings have produced numerous modern legends, tales of skin head karaoke bars, purple pt cruisers,5th avenue Irish bars, out of the way bbq shacks, confused detours through the Bronx, sawdust dock bars,rush street snowstorms,poker games in the back of bars and more that we ve probably forgotten. We have feasted on seafood in md,backyard bbq in Chicago,bourbon and steaks in Kentucky.Much has been learned by all, fast and long-term friendships have been formed, trades found, opportunities shared and stories enjoyed. There is no doubt in my mind that the chair, while giving a slight frown of disapproval at the gambling and gamboling that goes on at these gatherings has to take some level in delight that his single idea of the spec list, an almost random thought at that, has taken a diverse group and created a tight circle of friends who have come to not only enjoy each others companies but to rely on each other as only the best of friends can do.As Mr Crossman soeloquently puts it, nights we ll never remember with friends we ll never forget. At each such gathering the chair must be and is toasted as the unknowing and unintended creator of the after dark group.
There are no criteria for membership other than declaring yourself to be a member. A fondness for good scotch, cold beer, and fine food coupled with a deep interest in financial markets does help however. I cannot imagine that to be found totally sober or unable to talk markets would be much fun at our get togethers. It is a diverse group both in geographics and interest. We have stock guys ,bond girls,options traders, futures speculators, quants(,looks around three times) chartists growth guys, value guys, traders, writers, editors, jocks, chain smokers. It grew out of and of course, is a part of the spec list. We all met through the list and are still on it. Some of us for many years now. There are more gatherings in the future, with blues sounding across the bay,angels flying in Chicago,baseball stadiums to be visited, and of course the annual grad gathering of specs in NYC. Bring your best off color stories, a bottle of your best booze and your knowledge along to the next one and join a great circle of friends.
Some observations from the weekend
Flying from Maryland, I had a layover in cinnci. I flew a regional jet out which flies lower than larger airplanes and was below the cloud cover most of the way. From this unique viewpoint I observed several interesting facts. First, in spite of claims to the contrary baseball is still the national pastime. Virtually every small town, village, larger city or suburban gathering of homes has at least one baseball diamond, clearly identifiable from 20,000 feet. Americans love their little league,legion ball and rec league softball. In contrast there not anywhere near as many football fields or soccer pitches outside the larger towns.
Second, the American economic spirit is in fine shape. The trucks are still rolling from the farms to the towns and cities, factories are manufacturing and commerce is occurring throughout the heartland.farmers are plowing and planting, railroads are running and people are working. It cannot be measured by fed stats but the heart of American enterprise is the desire of its people to better their lives and the lives of those they love. From 20,000 feet on a clear day, this is very visible. The second leg into Lexington spotlighted the fact that northern Kentucky, particularly Lexington as one of the most beautiful in the country.
To gain a better understanding of emotions and markets,spend a day at the racetracks. Enjoy the races if you wish, but concentrate on watching the people.Its all there. Hopes, dreams, charts, tips,touts,deceptions,the small winner who gets overconfident and becomes a big loser, the big loser who swings for the fences to try to get even, the over leveraged and undercapitalized,rthe pros, the amateurs, the big scores and big blowups all playing out in real time along the rail. In EdSpec Vic talked off taking trainees to the track to observe their behavior. I would suggest that this is good advice and a great place to study human nature and emotions as applied to finance.
Racetrack hotdogs are ALMOST as good as ballpark dogs.
An irish bar and a group of good friends is one of the most delightful ways to spend an evening.
The best books you ll ever read are those suggested by friends.
The orioles can stil beat the Yankees. The Devil Rays and Tigers are another story.There is a powerful motivational lesson in this.
Finding a fellow hunter thompson fan, one who actually read his works before he blew the back of his head into a chivas regal glass is a rare and interestinf experience. Finding one who is also a spec is a three standard deviation event.
Ideas shared multiply.A group of specs sitting around sharing thoughts,philosophies and market approaches is a powerful event and all can learn much from each other.
It’s a quiet morning on the deck at the woodford reserve distillery. The air carries the scent of newly emerged spring fauna and sour mash. Those who have taken the tour mingle with new arrivals and all head for the picnic on the deck, a fine lunch amid the spectacular setting of this beautiful place tucked in a valley of rolling Kentucky bluegrass. One by one the men and women of the spec list after-dark crew arrive.oh,lets be honest, the men of the spec list after dark crew. With the exception of the effervescent editor form Chicago the women come along to make sure that the excessive amounts of testosterone and whiskey fueled ninnies don’t do anything too terribly stupid….the voodoo prof form Deltaville by way of Cincinnati, accompanied as always by the enigmatic and vibrantly delightful E; the king of patterns from queens, along with his sister the fashion princess of bloomies; Chesapeake Slim,sporting his usual half a hangover and subdued opinions; the cynical grail seeker from chi-town(as long as the grail is a copy of barrons and financial times every Saturday no matter how remote a locale we find ourselves in) with a new addition the delightful and oh so lovely charitable derivative, the tent owning trader also from Chicago with the stunningly beautiful and gracious new wife; the listmaster and the tsarina with their court including the queen mom and head page, and of course the handicapping horsemaster of Richmond Virginia and his bride the market mistress(market in question being of the farmers variety in Richmond).Most had arrived just this morning. The handicapper and slim had of course arrived the night before and had wide Guinness fueled discussion on matters vital to the world as we know it whilst listening to a surprisingly good Beatles cover band in one of Lexington’s finest little spots along main street.The handicapper, of course had the sense to go home. Slim, possessing no vehicle was waiting for the cynic and his consort to arrive to town and carry him back to the palace of la Quinta. Alone, in an unfamiliar town, there was of course only one course of action available..Switch from Guinness to bushmills (Lexington at is core is very Irish) and begin striking up conversations with all the shapely adorables in attendance. It was during such an encounter with a beautiful and buxom yet amazingly foul-mouthed coed ( little surprise our slim was in love and had already begun to think of her as his next ex-wife) when the charitable derivative arrived to the rescue. Whose rescue exactly, we will never know.
The new day dawn arrived brining with a day at the track. The band of erstwhile specs arrived at keenelands grandstands on a beautiful spring day, temperatures in the 70s, the sun shone brightly and the track ran fast. Conversations ran from sector rotation in sp 500 groups, volatility trades horse racing systems(in this the second year of keeneland adventures, remains the pattern kings “Bet the Pink Horse”, far outpacing all other attempts to game the ponies).Keeneland is a social event and the women wore birhgt dresses and amzingly stylish headgear, the flowers were starting to bloom in the infield, the crowd was excited and in the highest of spirits on this the seconf day of racing.We talked mingled,enjoyed cold beers and small bets and caught up on the past several months.Several of us came out ahead on the day, no one was foolish enough to bet too much with no edge and the one with an edge was smart enough to bet only the race where the edge was clear and walked outas always) a big winner on the day,enough Im sure to keep in pints of guiness and snappy ties for some small time to come.Now, if he had just answered our desperate calls to the clubhouse before the race……
Now the mad dash across Lexington to what we thought was the voodoo profs newest culinary find. Little did we know he and e had simply asked a track employee where a good place to eat was located in their fair town. Naturally they sent us 45 minutes across town to a beer and burger joint someone in their family doubtlessly owned.The Shamrock was a fine example of the genre however and while it was not up to the very high standards the prof has set in the past..It was food and the beer was cold. While not selected by zagats, we do give a three on the suggested by overweight toothless racetrack trash sweeper scale.
Then back to that shrine of horseracing, gamblers and Irishmen, McCarthy’s in downtown Lexington .A table in the back, a gorgeous spring evening, adult libations to spare and long conversations.Perfect. Someone really needs to start taping the first couple of hours of these gatherings as much brilliance is shared. Listening to Kevin Depew talk about the similarities between horse betting and trading is worth the cost of the trip in and of itself. Add the years of experience of a crossman,the sharp insight of mcnabb, the in-depth technology and trading genius of a goldcamp along with other combined great minds gathered there and much can be learned. Markets,racing,books,history,math,the list of subjects covered is vast.After the first couple of hours, theory gives way to war stories,lost loves and bad adventures and these bits of conversation are perhaps best never written anywhere for the sake of all concerned. It as at the turning point in the evening that I feel most sorry for the wives and girlfriends. They had believed they were in the company of poets and philosophers and to their horror find that they are, in fact, in the midst of a gathering of drunken degenerate gamblers. But they are good sports and allow us our fun, conversation and companionship with the bemused expressions of mothers riding herd on naughty little boys.
These gatherings have gone on since the second spec party when the afterdarkers were founded quite accidentally over a bottle of scotch and market talk in a hotel room late on Friday night in Weston Connecticut. The original group was small… ott, melvin, crossman,van giessen and a few select others who are no longer around. The gatherings have produced numerous modern legends, tales of skin head karaoke bars, purple pt cruisers,5th avenue Irish bars, out of the way bbq shacks, confused detours through the Bronx, sawdust dock bars,rush street snowstorms,poker games in the back of bars and more that we ve probably forgotten. We have feasted on seafood in md,backyard bbq in Chicago,bourbon and steaks in Kentucky.Much has been learned by all, fast and long-term friendships have been formed, trades found, opportunities shared and stories enjoyed. There is no doubt in my mind that the chair, while giving a slight frown of disapproval at the gambling and gamboling that goes on at these gatherings has to take some level in delight that his single idea of the spec list, an almost random thought at that, has taken a diverse group and created a tight circle of friends who have come to not only enjoy each others companies but to rely on each other as only the best of friends can do.As Mr Crossman soeloquently puts it, nights we ll never remember with friends we ll never forget. At each such gathering the chair must be and is toasted as the unknowing and unintended creator of the after dark group.
There are no criteria for membership other than declaring yourself to be a member. A fondness for good scotch, cold beer, and fine food coupled with a deep interest in financial markets does help however. I cannot imagine that to be found totally sober or unable to talk markets would be much fun at our get togethers. It is a diverse group both in geographics and interest. We have stock guys ,bond girls,options traders, futures speculators, quants(,looks around three times) chartists growth guys, value guys, traders, writers, editors, jocks, chain smokers. It grew out of and of course, is a part of the spec list. We all met through the list and are still on it. Some of us for many years now. There are more gatherings in the future, with blues sounding across the bay,angels flying in Chicago,baseball stadiums to be visited, and of course the annual grad gathering of specs in NYC. Bring your best off color stories, a bottle of your best booze and your knowledge along to the next one and join a great circle of friends.
Some observations from the weekend
Flying from Maryland, I had a layover in cinnci. I flew a regional jet out which flies lower than larger airplanes and was below the cloud cover most of the way. From this unique viewpoint I observed several interesting facts. First, in spite of claims to the contrary baseball is still the national pastime. Virtually every small town, village, larger city or suburban gathering of homes has at least one baseball diamond, clearly identifiable from 20,000 feet. Americans love their little league,legion ball and rec league softball. In contrast there not anywhere near as many football fields or soccer pitches outside the larger towns.
Second, the American economic spirit is in fine shape. The trucks are still rolling from the farms to the towns and cities, factories are manufacturing and commerce is occurring throughout the heartland.farmers are plowing and planting, railroads are running and people are working. It cannot be measured by fed stats but the heart of American enterprise is the desire of its people to better their lives and the lives of those they love. From 20,000 feet on a clear day, this is very visible. The second leg into Lexington spotlighted the fact that northern Kentucky, particularly Lexington as one of the most beautiful in the country.
To gain a better understanding of emotions and markets,spend a day at the racetracks. Enjoy the races if you wish, but concentrate on watching the people.Its all there. Hopes, dreams, charts, tips,touts,deceptions,the small winner who gets overconfident and becomes a big loser, the big loser who swings for the fences to try to get even, the over leveraged and undercapitalized,rthe pros, the amateurs, the big scores and big blowups all playing out in real time along the rail. In EdSpec Vic talked off taking trainees to the track to observe their behavior. I would suggest that this is good advice and a great place to study human nature and emotions as applied to finance.
Racetrack hotdogs are ALMOST as good as ballpark dogs.
An irish bar and a group of good friends is one of the most delightful ways to spend an evening.
The best books you ll ever read are those suggested by friends.
The orioles can stil beat the Yankees. The Devil Rays and Tigers are another story.There is a powerful motivational lesson in this.
Finding a fellow hunter thompson fan, one who actually read his works before he blew the back of his head into a chivas regal glass is a rare and interestinf experience. Finding one who is also a spec is a three standard deviation event.
Ideas shared multiply.A group of specs sitting around sharing thoughts,philosophies and market approaches is a powerful event and all can learn much from each other.
wednesday
just bought ibm may 90 calls..just looking for a quick bounce here,nothing huge but vol is picking up nicely....a little bounce up withincreased vol could net a quick 50% return in these...also..keep positions fairly small in this one, its much,much shorterthan I usually trade.most of my otm option positions are july, augustand sepright now, thanks ,mostly to my short positions, Im up 23% ytd tradingthis way. as of todays close....the tmas started moving today jumping as high as .17...another move in vix like we saw today will be a timeto look to get long for the short term.....
Monday, April 11, 2005
recent stuff I forgot to save
Having spent much of the weekend either in a car doing the turnpike shuffle..There is something about the barren wasteland of the New Jersey turnpike that is good for contemplative thinking..or waiting in Penn station Newark observing the by product of humanity whilst waiting for the listmaster to figure out the intricacies of the train schedule from Manhattan, I got a lot thinking and observing accomplished..for no particular reason I shares those thoughts…. There is something about a wedding that instills hope for humanity even in a cynical multiple divorced(but Im Not bitter) individual like myself. To see two people willing to risk the commitment to each other in what is an obvious celebration of hope over statistics causes on to realize exactly how optimistic a species we are… Speaking of weddings, what the spec list has put together let no man put asunder.For the wedding of a young man from Ohio to a girl from new jersey, there were no specs in attendance from Chicago,new york, Cincinnati and Maryland.There were as many specs making the trip to the wonderland of jersey as there were old college friends of the groom.The 4 of us would never have met had the chair not decide to create a franklonian forum for the exchange of idea and bbq recipes.Parts of the weekend felt like a small spec gathering..if,of course, it wasn't for the ceremony with all the flowers and blushing bridesmaids inserted in the middle……an options trader, a spread trader,pattern trader,trading software guy, and of course the token value guy, friendships born out of one mans desire to share his knowledge and experience…hats off to victor for creating a platform that has led to so many fast and long lasting friendships…. Upon arriving home, I witnessed the terps of Maryland rising above once again to almost knock off #2 North Carolina..this after beating their feared and dreaded nemesis duke twice this year.IN spite of these accomplishments for most of the year the team has played below expectations,losing to teams they should have beaten by 20 points or more.Why is that teams..or even traders..can rise above for the biggest challenges,Beat or scare the best teams in the country,,,trade though a market meltdown(or up),racking up gains and protecting capitol, but lose to the little sister of the poor, dropping large numbers on range bound days,selling bottoms and buying tops during calmer times?.What is the motivational force that causes us to rise above and how do we harness it for every day use? How does one gain the same focus and intensity that allows us to perform at our highest and best levels and bring it bear every game and every day? I have yet to find a problem that a good car, some open road, two packs of smokes and a big cup of 7-11 coffee(although the esteemed mr crossman insists that dunkin donuts is the better brand) and some stevie ray Vaughn cranked on the stereo cannot take the edge off the condition. It seems that there is cleansing about blasting down the road that makes the problems less serious that they seemed while ruminating behind a desk or in a sleep deprived apartment setting…loud music, open road seem to be the essence of affirming that life is still good.problems can always be overcome and there is something bright around the next bend..or if you re on the turnpike,at the next exit….rains end,markets turn, love returns, friends endure and the road truly does go on forever.At such times, smoking along, stevie ray cranking it out as only he could, the radar detector showing clear and no traffic around, it doesn't matter if value beats growth, if options should be bought or sold,how many ex-wives one is dragging about in albatross fashion through life,what matters is that the world is full of possibilities and opportunities, there's a solution for every problem, that the style that's suits you is the one that works,theres still music and open roads ahead in all areas of life….pass the keys,gas it up.Life goes on..and that's a good thing….. If one ever gets a chance to sit between james goldcamp and ryan Carlson while they discuss their travels around the globe..drop whatever you are doing and go.they sights and adventures of these two gentleman make for fascinating listening..kind of a natural geographic over cocktails In closing congratulations to the newly hitched Mr and Mrs Jason Thompson.Jason is a spec lister for some time now and it was great to see the obvious joy and pleasure they shared for each other…They were married Saturday in a stunningly beautiful ceremony.It was pleasure and honor to share the moment with them and wish them all happiness
feb 18
ah..come on..you knew I was going to.... .driving into work this morning, a hawkish wind blowing off the bay, Im surprised to see swirling, a brief nasty flurry of the sodden shitty white stuff to remind me that its still winter.... as I light a cigarette, cracking the window slightly, I feel the wet, cold damp slap against my slightly hungover self and shudder in my over coat, cranking both the heat and eric claptons cover of judgement day to fight off the frosty blast....I drive on contemplating the mysteries that have plagued mankind since the very dawn of time itself..important crap like whether mercks announcement will make my pfizer calls rise this am, how the stunning girl I saw last night..and I do mean stunning even with my scotch aided vision(which has been known to lead to some most unfortunate conclusions in times past, creating the need for an important personal axiom..you can drink em pretty but you cant drink em thin) could be seen in public with yo-boy imitator with the scruffy goatee, steelers jersey(in a md sports/redneck joint no less..ahh the humanity!!!!!!!!) and more earring's in one ear than my two wives owned between them..yes,driving along thinking deep thoughts about critical issues, earth shattering, life changing considerations like how soon after the market closes should I leave for happy hour,what a certain chicago lady lawyers eyes might look like by candlelight,what type of wedding gift might make jasons intended forget that crossman and I kept him out all night...when the most momentous words,4 words that cause my soul to soar, renewing all hope for mankind.... PITCHERS AND CATCHERS REPORT I go in an instant from a smoky car, transported from a mildly hungover adult male with a huge options position and no immediate prospects for an emotionally satisfactory personal life to an 8 year old boy...in moms back yard on a hot summers ever,my suit and tie is replaced by the dirtiest pair of dungarees(yeah I know they call em blue jeans know but trust me on my moms clothing budget in those days, these were dungarees), torn at the knee, a little blood stained because when I slide into second..and I always slide into second whether its a home game and second base is the corner stake of moms tomato patch or an away game and its a garbage can lid billy madisons mom is going to yell at us for stealing out of the kitchen again....it tends to remove the scab from yesterdays game...I can smell the sweaty leather of that old glove, a spalding brooks robinson..the ONLY acceptable version in the maryland of my youth unless it was the boog powell firsties mitt but if you wore that you better be able to clear the center field fence..also knowns as mrs greens shit pile producing beagles dog house.otherwise it was brooks.the glove is well worn,broken in by months of constant use..used to field those razor hot grounders, track down the soaring flyballs up against the wall,or even sometimes over the hood of the car to prevent not only a run scoring double but a true broken windshield, some bodies going to have a very sore ass if I dont catch this catastrophe....and the bat, the same bat, now a 40 yr old piece of hickory hardened to the consistency of iron , that sits in the corner of my room used only on occasion to beat myself senseless when the thought that I might like to be married again some day crosses my mind, but then, then it was the home run swatting, seeing eye single producing fear of boucher avenue.and later after a good dinner of moms chicken, or perhaps a night of trying to slip my eveil vile liver on my sisters plate so I can slip down to my basement bedroom and hear on my little transistor radio the orioles, bufor,blair,robinson(f),powell,robinson(b),johnson,belnager,etchebarran and hendricks platooning tear up opposing pitchers while mcnally cuellar and dobson rendering visiting batsmen powerless... yeah,yeah I know,overpaid athletes,steroids, corked bats, yadiid,yaddi, yaddi..its not the game of my youth,free agency has ruined the game, moral decay of america etc,etc,etc..screw it, its baseball...bright lights illuminating soft green cathedrals streaked with pure lines of the whitest white outlining the field of dreams,exploding fastballs, plunging curveballs, towering home runs, ninth inning rallies and line drive doubles,,and yes I am acutely aware that many frozen nights lie ahead before summer returns to the northeast, and no doubt there is more snow and even the ACC tournament still to come,pfizers only up .15 and at the moment I am without a current incantation of the one great and true love of my life..but PITCHERS AND CATCHERS REPORT and while all is not quite right with the world, there is hope and baseball ahead.
feb 18
ah..come on..you knew I was going to.... .driving into work this morning, a hawkish wind blowing off the bay, Im surprised to see swirling, a brief nasty flurry of the sodden shitty white stuff to remind me that its still winter.... as I light a cigarette, cracking the window slightly, I feel the wet, cold damp slap against my slightly hungover self and shudder in my over coat, cranking both the heat and eric claptons cover of judgement day to fight off the frosty blast....I drive on contemplating the mysteries that have plagued mankind since the very dawn of time itself..important crap like whether mercks announcement will make my pfizer calls rise this am, how the stunning girl I saw last night..and I do mean stunning even with my scotch aided vision(which has been known to lead to some most unfortunate conclusions in times past, creating the need for an important personal axiom..you can drink em pretty but you cant drink em thin) could be seen in public with yo-boy imitator with the scruffy goatee, steelers jersey(in a md sports/redneck joint no less..ahh the humanity!!!!!!!!) and more earring's in one ear than my two wives owned between them..yes,driving along thinking deep thoughts about critical issues, earth shattering, life changing considerations like how soon after the market closes should I leave for happy hour,what a certain chicago lady lawyers eyes might look like by candlelight,what type of wedding gift might make jasons intended forget that crossman and I kept him out all night...when the most momentous words,4 words that cause my soul to soar, renewing all hope for mankind.... PITCHERS AND CATCHERS REPORT I go in an instant from a smoky car, transported from a mildly hungover adult male with a huge options position and no immediate prospects for an emotionally satisfactory personal life to an 8 year old boy...in moms back yard on a hot summers ever,my suit and tie is replaced by the dirtiest pair of dungarees(yeah I know they call em blue jeans know but trust me on my moms clothing budget in those days, these were dungarees), torn at the knee, a little blood stained because when I slide into second..and I always slide into second whether its a home game and second base is the corner stake of moms tomato patch or an away game and its a garbage can lid billy madisons mom is going to yell at us for stealing out of the kitchen again....it tends to remove the scab from yesterdays game...I can smell the sweaty leather of that old glove, a spalding brooks robinson..the ONLY acceptable version in the maryland of my youth unless it was the boog powell firsties mitt but if you wore that you better be able to clear the center field fence..also knowns as mrs greens shit pile producing beagles dog house.otherwise it was brooks.the glove is well worn,broken in by months of constant use..used to field those razor hot grounders, track down the soaring flyballs up against the wall,or even sometimes over the hood of the car to prevent not only a run scoring double but a true broken windshield, some bodies going to have a very sore ass if I dont catch this catastrophe....and the bat, the same bat, now a 40 yr old piece of hickory hardened to the consistency of iron , that sits in the corner of my room used only on occasion to beat myself senseless when the thought that I might like to be married again some day crosses my mind, but then, then it was the home run swatting, seeing eye single producing fear of boucher avenue.and later after a good dinner of moms chicken, or perhaps a night of trying to slip my eveil vile liver on my sisters plate so I can slip down to my basement bedroom and hear on my little transistor radio the orioles, bufor,blair,robinson(f),powell,robinson(b),johnson,belnager,etchebarran and hendricks platooning tear up opposing pitchers while mcnally cuellar and dobson rendering visiting batsmen powerless... yeah,yeah I know,overpaid athletes,steroids, corked bats, yadiid,yaddi, yaddi..its not the game of my youth,free agency has ruined the game, moral decay of america etc,etc,etc..screw it, its baseball...bright lights illuminating soft green cathedrals streaked with pure lines of the whitest white outlining the field of dreams,exploding fastballs, plunging curveballs, towering home runs, ninth inning rallies and line drive doubles,,and yes I am acutely aware that many frozen nights lie ahead before summer returns to the northeast, and no doubt there is more snow and even the ACC tournament still to come,pfizers only up .15 and at the moment I am without a current incantation of the one great and true love of my life..but PITCHERS AND CATCHERS REPORT and while all is not quite right with the world, there is hope and baseball ahead.
thoughts of the day
As goeth oil,so goeth stocks, at least for now oil is down,stocks are up and vicey versi. For the past several weks the direction of oil determined the days market action. Today, however we see a breaking of the linkage as the continued bad news out of the us automakers overshadows the drop in crude.Ford shares are down almost 6% on the day as the reduce guidance and their bonds are downgraded yet again.As approach midday we find the mkt off down slightly and well of the highs of the day. Which factor determiners the afternoon trading..Bad corporate news or falling oil will make an interesting statement about the markets frame of mind.
At 20 times earnings, the market still feels "heavy" to me with the past of least resistance being down.Indeed since the high put in back in early march the market is off by 4% in the spooz and about 4.5 in the nazz. For the year, the nazz id down a gut dropping 9% or so and continues to lead on the downside.Looking at the backdrop we find that for the short term, sentiment is developing a slightly bullish undertone, suggesting a short bounce in here after recent declines. The NASDAQ in particular is showing very bullish readings in short interest and available cash in margin accounts. Bulls bears is a little more mixed with aaii very bullish and ii neutral but off the very bearish readings seen earlier this year.Price action is hanging on the low side of midrange right now with the sp range being 1160 to 1210, with current reading of 1179.The NASDAQ composite is a little closer to oversold, with my bottom range being 1950-1960 and top being 2040-50,against a current 1994. The 1160 number comes up in several different studies across different time frames and could be a critical point as as i suspect pure technicians will be selling heavily below this price
Volatility remains low..in spite of the general downward trend in prices since early march.It is worth noting however that the vix exceeded the top of its 20 day deviation bands. This was accompanied by 4 down closes and would have put us long at the close of 1172 on march 22.Also worth noting is that if you look at a spread chart of vix relative to sp 500 price levels we are seeing the relationship near the very high levels that spurred longer term corrections. A bounce off the march buy signal could well take us to serious long term overbought conditions in this indicator. The only other time in the last 15 years this spread was this far above its one year average was in 2000.
In my personal account,I remain long volatility with a valuation bias. I am long otm puts on sbux,erts,hot and yhoo while being long otm calls in twtr,dtc,issi and pfe.Both erts and sbux have gone from deeply out of the money to in the money since the positions were established on Feb 2. The original erts position was closed on 3/28 for a 200% gain and I rolled down to a deeper otm strike. The calls are all generally under water to about even at this point. I am also long atml as a play on the long term recovery os semiconductor and tmas as a deep,deep turnaround candidate.
03/30 8:37A (DJ) PRESS RELEASE: TIMCO Aviation Services, Inc. Announces 2004 Results Story 3092 (TMAS, I/TRA, I/TRS, I/XDJGI, N/DJIN, N/DJN, N/DJWB, N/CAC...) GREENSBORO, N.C., March 30 /PRNewswire-FirstCall/ -- TIMCO Aviation Services, Inc. (OTC Bulletin Board: TMAS) today announced its 2004 results of operations. Revenue for year ended December 31, 2004 was $323.5 million, a 33% increase over the 2003 revenue of $242.5 million. Net income for 2004 was $0.9 million ($0.03 per basic and diluted share), compared to a net loss of $0.3 million ($0.01 per basic and diluted share) for 2003. Net loss from continuing operations in 2004 was $0.7 million compared to $4.3 million in 2003. Net loss from continuing operations during 2004 benefited from a gain on the settlement of a warrant obligation of $0.2 million. Net loss from continuing operations during 2003 benefited from the elimination and reduction in accruals of $2.7 million based on settlements and revised estimates, from the collection of a $0.9 million account receivable that had previously been written off as uncollectible and from tax benefits of $1.0 million resulting from the conclusion of an IRS audit and receipt of federal and state tax refunds. Without these benefits, the net loss from continuing operations for 2004 and 2003 would have been $0.9 million and $8.9 million, respectively. Roy T. Rimmer, Jr., the Company's Chairman and Chief Executive Officer, stated: "The ongoing improvement in our operating results, at both the revenue level and at the bottom line, demonstrates that we are on the right course. This strengthening of our operations combined with the enhancement of our capital structure as a result of our recently completed tender offer, will enable TIMCO to be a better business partner with our customers in meeting their aircraft maintenance and modification needs." Gil West, the Company's President and Chief Operating Officer, stated: "Our customers are continuing to look to TIMCO for a larger portion of their MR&O requirements, as evidenced by our 33% year-over-year increase in revenue. Our focus on improving the quality, efficiency and scope of services offered to our customers has been critical in securing this increased business." TIMCO Aviation Services, Inc. is among the world's largest providers of fully integrated aviation maintenance, repair and overhaul (MR&O) services for major commercial airlines, regional air carriers, aircraft leasing companies, government and military units and air cargo carriers. The Company currently operates four MR&O businesses: Triad International Maintenance Corporation (known as TIMCO), which, with its four active locations (Greensboro, NC; Macon, GA; Lake City, FL and Goodyear, AZ), is one of the largest independent providers of heavy aircraft maintenance services in the world and also provides aircraft storage and line maintenance services; Brice Manufacturing and Aircraft Interior Design, which specialize in the manufacture and sale of new aircraft seats and aftermarket parts and in the refurbishment of aircraft interior components; TIMCO Engineered Systems, which provides engineering services both to our MR&O operations and our customers; and TIMCO Engine Center, which refurbishes JT8D engines and performs on-wing repairs for both JT8D and CFM-56 series engines
.Voltility remains too low and we need a rise in vols together with a drop in prices to return to some level of normality inthe relationship of volatility to prices.Valuation does seem to matter as its the high flyers that are getting slapped by incoming black swans and swelling option prices.
Just one knuckleheads opinion.
At 20 times earnings, the market still feels "heavy" to me with the past of least resistance being down.Indeed since the high put in back in early march the market is off by 4% in the spooz and about 4.5 in the nazz. For the year, the nazz id down a gut dropping 9% or so and continues to lead on the downside.Looking at the backdrop we find that for the short term, sentiment is developing a slightly bullish undertone, suggesting a short bounce in here after recent declines. The NASDAQ in particular is showing very bullish readings in short interest and available cash in margin accounts. Bulls bears is a little more mixed with aaii very bullish and ii neutral but off the very bearish readings seen earlier this year.Price action is hanging on the low side of midrange right now with the sp range being 1160 to 1210, with current reading of 1179.The NASDAQ composite is a little closer to oversold, with my bottom range being 1950-1960 and top being 2040-50,against a current 1994. The 1160 number comes up in several different studies across different time frames and could be a critical point as as i suspect pure technicians will be selling heavily below this price
Volatility remains low..in spite of the general downward trend in prices since early march.It is worth noting however that the vix exceeded the top of its 20 day deviation bands. This was accompanied by 4 down closes and would have put us long at the close of 1172 on march 22.Also worth noting is that if you look at a spread chart of vix relative to sp 500 price levels we are seeing the relationship near the very high levels that spurred longer term corrections. A bounce off the march buy signal could well take us to serious long term overbought conditions in this indicator. The only other time in the last 15 years this spread was this far above its one year average was in 2000.
In my personal account,I remain long volatility with a valuation bias. I am long otm puts on sbux,erts,hot and yhoo while being long otm calls in twtr,dtc,issi and pfe.Both erts and sbux have gone from deeply out of the money to in the money since the positions were established on Feb 2. The original erts position was closed on 3/28 for a 200% gain and I rolled down to a deeper otm strike. The calls are all generally under water to about even at this point. I am also long atml as a play on the long term recovery os semiconductor and tmas as a deep,deep turnaround candidate.
03/30 8:37A (DJ) PRESS RELEASE: TIMCO Aviation Services, Inc. Announces 2004 Results Story 3092 (TMAS, I/TRA, I/TRS, I/XDJGI, N/DJIN, N/DJN, N/DJWB, N/CAC...) GREENSBORO, N.C., March 30 /PRNewswire-FirstCall/ -- TIMCO Aviation Services, Inc. (OTC Bulletin Board: TMAS) today announced its 2004 results of operations. Revenue for year ended December 31, 2004 was $323.5 million, a 33% increase over the 2003 revenue of $242.5 million. Net income for 2004 was $0.9 million ($0.03 per basic and diluted share), compared to a net loss of $0.3 million ($0.01 per basic and diluted share) for 2003. Net loss from continuing operations in 2004 was $0.7 million compared to $4.3 million in 2003. Net loss from continuing operations during 2004 benefited from a gain on the settlement of a warrant obligation of $0.2 million. Net loss from continuing operations during 2003 benefited from the elimination and reduction in accruals of $2.7 million based on settlements and revised estimates, from the collection of a $0.9 million account receivable that had previously been written off as uncollectible and from tax benefits of $1.0 million resulting from the conclusion of an IRS audit and receipt of federal and state tax refunds. Without these benefits, the net loss from continuing operations for 2004 and 2003 would have been $0.9 million and $8.9 million, respectively. Roy T. Rimmer, Jr., the Company's Chairman and Chief Executive Officer, stated: "The ongoing improvement in our operating results, at both the revenue level and at the bottom line, demonstrates that we are on the right course. This strengthening of our operations combined with the enhancement of our capital structure as a result of our recently completed tender offer, will enable TIMCO to be a better business partner with our customers in meeting their aircraft maintenance and modification needs." Gil West, the Company's President and Chief Operating Officer, stated: "Our customers are continuing to look to TIMCO for a larger portion of their MR&O requirements, as evidenced by our 33% year-over-year increase in revenue. Our focus on improving the quality, efficiency and scope of services offered to our customers has been critical in securing this increased business." TIMCO Aviation Services, Inc. is among the world's largest providers of fully integrated aviation maintenance, repair and overhaul (MR&O) services for major commercial airlines, regional air carriers, aircraft leasing companies, government and military units and air cargo carriers. The Company currently operates four MR&O businesses: Triad International Maintenance Corporation (known as TIMCO), which, with its four active locations (Greensboro, NC; Macon, GA; Lake City, FL and Goodyear, AZ), is one of the largest independent providers of heavy aircraft maintenance services in the world and also provides aircraft storage and line maintenance services; Brice Manufacturing and Aircraft Interior Design, which specialize in the manufacture and sale of new aircraft seats and aftermarket parts and in the refurbishment of aircraft interior components; TIMCO Engineered Systems, which provides engineering services both to our MR&O operations and our customers; and TIMCO Engine Center, which refurbishes JT8D engines and performs on-wing repairs for both JT8D and CFM-56 series engines
.Voltility remains too low and we need a rise in vols together with a drop in prices to return to some level of normality inthe relationship of volatility to prices.Valuation does seem to matter as its the high flyers that are getting slapped by incoming black swans and swelling option prices.
Just one knuckleheads opinion.
Tuesday, October 26, 2004
Monday, October 18, 2004
scer mars and venus
Screw mars and venus. As usual the psuedo pundits have the game all wrong. The planets have little or nothing to do with eternal situation.The truth of it is simple..men are stocks. Women are bonds. A simple look at the evidence will prove the correctness of this statement. Stocks represent a claim on the current earnings power of a corporation and the possibility of future earnings as well, but for the most part a stocks price reflects its current situation. What determines a bonds value…sort of depends on what hour of what day of what week during which phase of the lunar cycle doesn’t it?
When we talk about stocks, we talk about earnings, cash flow, assets, book value, current ratios…all fairly straightforward stuff. We have blue chip stocks, like your grandfather, a little stodgy, smelling of old pipe tobacco and mildew, driving safe cars, old fashioned but damned good to have around in a crisis…we have the sold middle class guy, REIT stocks, construction stocks, the countless solid companies that do not ever achieve the spectacular but deliver results over time, we have the flash in the pain guys, the dotcomers with nothing to offer but a song and a flash, the kind you spend 18 years trying to teach your daughter not to date and your clients not to buy…the aggressive merger companies looking to acquire their way to success, the real lounge lizards of the equities world. There are of course, many types of stocks as there are many types of men..domestic stocks, international stocks, growth stocks and value stocks…but one measures the underlying value by the same metrics…independent of outside variables, stock prices care about earnings, assets and future potential of each with the relative importance of the criteria shifting in importance relative to the current operating environment….as men, absent of outside variables care about food, beer and sex with the relative importance of each shifting based on the current operating environment.
Now bonds and women…harken back to older, less interesting days…bonds were the easier safer investments that prudent men held to provide safe, stable returns. Women were objects that prudent men held to bear ones children and keep ones house. Safe, stable objects that were held peaceably for long periods of time. Now, add a free-floating currency and a sexual revolution and the picture begins to cloud a bit. Once can calculate a stocks intrinsic value with a handheld calculator of the simplest variety. With bonds however we must think about things like convexity and duration, things calculated only with a deep understanding of algebra and perhaps even a little physics wouldn’t hurt. There are of course many types of bonds as well..The seemingly safety of a government obligation with its guaranteed payouts…complicated by maddening almost impossible price swings. As Henry Kaufman once pointed out no one can determine the direction of interest rates over a long period of time. Any male walking who claims to understand the thoughts of even this steadiest of types is simply a liar. There’s the girl next door bond, high grade corporates,as with govies usually steady but subject to wild swings based on the movements of rates and rising or falling credit ratings. There’s junk bonds, the wild dance all night in the local bar redneck chick, a type of bond that either delivers beyond your wildest dreams or leaves you hung over in the gutter with the worst hangover of your life, and of course the siren allure of the femme fatale of the bond world, defaulted bonds…all types of bonds and each needing its own special form of higher math to calculate risks ,rewards and values, each with payoffs altered and diluted by a maddening range of possibilities….
The moods, motivation and mental condition of your average man can be learned in less than 10 minutes over a drink. The mood, motivations and mental condition of a woman may never be properly learned as they change constantly on an ever-widening range of conditions. There are two major determinates in valuing a stock. Their current condition vis a vis earnings and assets multiplied by the appropriate multiple. This multiple of course is determined entirely by the behavior of the bond market. There are those who say that men are the captain of their own souls, that more matters in the course of a mans life than a woman. Like wise there are those who claim that stock prices are determined by economic growth. Lovely thoughts both but entirely incorrect over the long run. Growth in GDP has a negative correlation over long periods of time with stock prices. Interest rates however have almost perfect correlation. If rates fall, prices rise.(thanks to the always astute Mr. Crossman for first pointing out the fallacy of gdp,rates and stock prices).It is not a perfect correlation on a day-to-day basis but does hold true over the longer term. Equity markets will occasionally decouple from bond prices and go on a wild ride regardless of rate direction. A man may go to Vegas with his buddies for a month long blow out and never once think of what a woman thinks of his actions…but at the end of a cycle, rising rates will kill a rally, falling rates will stop a decline and when the plane has landed and our hung over hero is home, he will again begin to care about the presence or absence of a woman in his life. The converse however is not true. It is a very rare event that stock prices determine any long term movement in interest rates…Bonds measure a myriad of influences and the buying patterns of a remote Chinese industrialist may well be a bigger factor in the movement than any action of the stock market. Many times we don’t have a clue what drove the bond markets movement until well after the fact. A chance comment by a co-worker may well have a lot more to do with a woman’s mood than the rose you did or didn’t buy her. Extreme movements over the short term in the market..ie crashes..may influence the bond market as appallingly bad behavior may change how a woman’s reaction to you over the course of a few days. In the aftermath however they both go back to measuring innumerable variables before deciding whether to aid or annihilate the equities market. When the bond market changes direction, the direction is changed until new variables enter the equation. When bond prices plunge, they stay plunged. Equity markets plunge and will almost always attempt to rally time and time again before falling further. Many of us making a living trading this almost inevitable attempt to return to glory. A man is never truly over an ex..we carry some trace of each of them with us for all times and there is not a man alive who has not made some variation of the you mean miserable**** you ruined my life, please take me back” 2 am phone call. When a woman decides she is done, after ingesting all the variables and global conditions…the man for all intents and purposes ceases to exist( of course if we had engaged in any spin off activity there will be continual margin calls).
Of course derivative have been introduced to try and measure and lessen the volatility of both markets. This works until it doesn’t. It stops working because stocks are stocks, bonds are bonds. Interestingly the formulas for deriving stock derivative prices include a bond component. Bond derivative models have no equity component. As always, the mood, direction and tone of the equity markets, including all derivatives must include a bond function. It doesn’t work without. Whatever influence equity prices have on economic conditions is but one of many variables on bond derivative structures. Most of complete and total wipeouts in the hedge fund world have been the result of bond derivatives. Many of the colossal mistakes of human history have been the result of a woman’s influence over a man. As of course have many of the achievements. It is not mistake the spectacular equity market records of lynch, Robertson, the lamentable sage, have been recorded during a period of generally declining interest rates.
Mars and Venus? I don’t think so. Stocks and bonds. We complement each other when all is done correctly and it is difficult for one to exist without the other, although there could be a bond market without a stock market but I doubt the reverse is true. Bonds have more influence over stocks than stocks ever will over bonds. Don’t like it? Neither does I. take it up with god. But one has to admit, that having the interest payments hit the ledger help an awful lot when stock prices are falling and don’t hurt even when they re rising…much as good woman can carry man through the worst of times and add in the best…. whereas when bond prices are falling, so are stocks and are little helped and when bond prices are rising, so are stocks. I all assume you can draw your own correlations from the preceding system and excuse me as I have to go buy some bonds…. maybe a nice junk bond with long blonde hair and dancing green eyes this time……
When we talk about stocks, we talk about earnings, cash flow, assets, book value, current ratios…all fairly straightforward stuff. We have blue chip stocks, like your grandfather, a little stodgy, smelling of old pipe tobacco and mildew, driving safe cars, old fashioned but damned good to have around in a crisis…we have the sold middle class guy, REIT stocks, construction stocks, the countless solid companies that do not ever achieve the spectacular but deliver results over time, we have the flash in the pain guys, the dotcomers with nothing to offer but a song and a flash, the kind you spend 18 years trying to teach your daughter not to date and your clients not to buy…the aggressive merger companies looking to acquire their way to success, the real lounge lizards of the equities world. There are of course, many types of stocks as there are many types of men..domestic stocks, international stocks, growth stocks and value stocks…but one measures the underlying value by the same metrics…independent of outside variables, stock prices care about earnings, assets and future potential of each with the relative importance of the criteria shifting in importance relative to the current operating environment….as men, absent of outside variables care about food, beer and sex with the relative importance of each shifting based on the current operating environment.
Now bonds and women…harken back to older, less interesting days…bonds were the easier safer investments that prudent men held to provide safe, stable returns. Women were objects that prudent men held to bear ones children and keep ones house. Safe, stable objects that were held peaceably for long periods of time. Now, add a free-floating currency and a sexual revolution and the picture begins to cloud a bit. Once can calculate a stocks intrinsic value with a handheld calculator of the simplest variety. With bonds however we must think about things like convexity and duration, things calculated only with a deep understanding of algebra and perhaps even a little physics wouldn’t hurt. There are of course many types of bonds as well..The seemingly safety of a government obligation with its guaranteed payouts…complicated by maddening almost impossible price swings. As Henry Kaufman once pointed out no one can determine the direction of interest rates over a long period of time. Any male walking who claims to understand the thoughts of even this steadiest of types is simply a liar. There’s the girl next door bond, high grade corporates,as with govies usually steady but subject to wild swings based on the movements of rates and rising or falling credit ratings. There’s junk bonds, the wild dance all night in the local bar redneck chick, a type of bond that either delivers beyond your wildest dreams or leaves you hung over in the gutter with the worst hangover of your life, and of course the siren allure of the femme fatale of the bond world, defaulted bonds…all types of bonds and each needing its own special form of higher math to calculate risks ,rewards and values, each with payoffs altered and diluted by a maddening range of possibilities….
The moods, motivation and mental condition of your average man can be learned in less than 10 minutes over a drink. The mood, motivations and mental condition of a woman may never be properly learned as they change constantly on an ever-widening range of conditions. There are two major determinates in valuing a stock. Their current condition vis a vis earnings and assets multiplied by the appropriate multiple. This multiple of course is determined entirely by the behavior of the bond market. There are those who say that men are the captain of their own souls, that more matters in the course of a mans life than a woman. Like wise there are those who claim that stock prices are determined by economic growth. Lovely thoughts both but entirely incorrect over the long run. Growth in GDP has a negative correlation over long periods of time with stock prices. Interest rates however have almost perfect correlation. If rates fall, prices rise.(thanks to the always astute Mr. Crossman for first pointing out the fallacy of gdp,rates and stock prices).It is not a perfect correlation on a day-to-day basis but does hold true over the longer term. Equity markets will occasionally decouple from bond prices and go on a wild ride regardless of rate direction. A man may go to Vegas with his buddies for a month long blow out and never once think of what a woman thinks of his actions…but at the end of a cycle, rising rates will kill a rally, falling rates will stop a decline and when the plane has landed and our hung over hero is home, he will again begin to care about the presence or absence of a woman in his life. The converse however is not true. It is a very rare event that stock prices determine any long term movement in interest rates…Bonds measure a myriad of influences and the buying patterns of a remote Chinese industrialist may well be a bigger factor in the movement than any action of the stock market. Many times we don’t have a clue what drove the bond markets movement until well after the fact. A chance comment by a co-worker may well have a lot more to do with a woman’s mood than the rose you did or didn’t buy her. Extreme movements over the short term in the market..ie crashes..may influence the bond market as appallingly bad behavior may change how a woman’s reaction to you over the course of a few days. In the aftermath however they both go back to measuring innumerable variables before deciding whether to aid or annihilate the equities market. When the bond market changes direction, the direction is changed until new variables enter the equation. When bond prices plunge, they stay plunged. Equity markets plunge and will almost always attempt to rally time and time again before falling further. Many of us making a living trading this almost inevitable attempt to return to glory. A man is never truly over an ex..we carry some trace of each of them with us for all times and there is not a man alive who has not made some variation of the you mean miserable**** you ruined my life, please take me back” 2 am phone call. When a woman decides she is done, after ingesting all the variables and global conditions…the man for all intents and purposes ceases to exist( of course if we had engaged in any spin off activity there will be continual margin calls).
Of course derivative have been introduced to try and measure and lessen the volatility of both markets. This works until it doesn’t. It stops working because stocks are stocks, bonds are bonds. Interestingly the formulas for deriving stock derivative prices include a bond component. Bond derivative models have no equity component. As always, the mood, direction and tone of the equity markets, including all derivatives must include a bond function. It doesn’t work without. Whatever influence equity prices have on economic conditions is but one of many variables on bond derivative structures. Most of complete and total wipeouts in the hedge fund world have been the result of bond derivatives. Many of the colossal mistakes of human history have been the result of a woman’s influence over a man. As of course have many of the achievements. It is not mistake the spectacular equity market records of lynch, Robertson, the lamentable sage, have been recorded during a period of generally declining interest rates.
Mars and Venus? I don’t think so. Stocks and bonds. We complement each other when all is done correctly and it is difficult for one to exist without the other, although there could be a bond market without a stock market but I doubt the reverse is true. Bonds have more influence over stocks than stocks ever will over bonds. Don’t like it? Neither does I. take it up with god. But one has to admit, that having the interest payments hit the ledger help an awful lot when stock prices are falling and don’t hurt even when they re rising…much as good woman can carry man through the worst of times and add in the best…. whereas when bond prices are falling, so are stocks and are little helped and when bond prices are rising, so are stocks. I all assume you can draw your own correlations from the preceding system and excuse me as I have to go buy some bonds…. maybe a nice junk bond with long blonde hair and dancing green eyes this time……
Monday, September 27, 2004
from sunday morning
we saw the end of an era of sorts last night, carried live into our living rooms. Roy Jones Jr, the best fighter of his generation was knocked senseless in the 9th round by Glen Johnson...a decent fighter but surely not a giant kiler capable of ending the career of one of the greats. Jones was literally knocked senseless, taking over 4 minutes to get up off the canvas.Jones had held belts in the middleweight,super middle, light heavy and even for a brief period the heavyweight division..just a year ago there was talk of a fight with lennox lewis. He had incredible hand speed,was a ferocious finisher and in the regular pound for pound rankings he had headed the list for 10 years....what happened to turn from a lightening fast, hard hitting champion to a fighter who looked almost sluggish last night?
simple..he finally lost a fight. last may, antonio tarver hit jones a solid shot last may and knocked him out. Jones had beaten tarver in a close fight previously but everyone expected him to come back in typical jones fashion and dominate the rematch. Instead he lost a big fight for the first time in his career. Now instead of looking fior way to dominate his opponent he looked for ways to avoid another blow like the tremendous left tarver knocked him out with in may....the left never came but a right did and jones night and career are likely over.....the fear of loss kept him from being the great fighter he once was...he had outpunched and out fought 40+ men, never knowing the crush of a defeat or the pain of thunderous knockout punches he gave his opponents..now he knows the pain and the fear keeps him from fighting the way he knows how. Its almost a cliche in boxing..very few fighters come back from the first knockout loss to regain greatness....ali did, joe louis did it but they are the only ones who come to mind...tyson may be a horrible human but he was a GREAT fighter until buster douglass showed him the feeeling of the canvas....duran walked out of the ring when leonard began to beat him,,,hagler left the sport for good... it takes something very special to come back and fight to win after realizing how much a knockout loss hurts physically and mentally.....
\ \the market correlation here is simple...those that play to lose, the fear of a blow up dominating the day are destined to lose....like boxing very few have ever gotten up from a devastating loss instead leaving the field for good, never to be heard from again.....it is interesting that several on the list have suffered the knockout and got back up and still play to win.their advice and experience is valuable because they are unique...trading is a difficult way to earn your living....being a winning trader dominated by fear is impossible..if you dwell all day on the possibility of loss, you will find that the market will indeed deliver an overhand right and the left you were scared of never shows up...but you re still on the canvas in the corner waiting for the smelling salts the market correlation here is simple...those that play to lose, the fear of a blow up dominating the day are destined to lose....like boxing very few have ever gotten up from a devastating loss instead leaving the field for good, never to be heard from again.....it is interesting that several on the list have suffered the knockout and got back up and still play to win.their advice and experience is valuable because they are unique...trading is a difficult way to earn your living....being a winning trader dominated by fear is impossible..if you dwell all day on the possibility of loss, you will find that the market will indeed deliver an overhand right and the left you were scared of never shows up...but you re still on the canvas in the corner waiting for the smelling salts .....
simple..he finally lost a fight. last may, antonio tarver hit jones a solid shot last may and knocked him out. Jones had beaten tarver in a close fight previously but everyone expected him to come back in typical jones fashion and dominate the rematch. Instead he lost a big fight for the first time in his career. Now instead of looking fior way to dominate his opponent he looked for ways to avoid another blow like the tremendous left tarver knocked him out with in may....the left never came but a right did and jones night and career are likely over.....the fear of loss kept him from being the great fighter he once was...he had outpunched and out fought 40+ men, never knowing the crush of a defeat or the pain of thunderous knockout punches he gave his opponents..now he knows the pain and the fear keeps him from fighting the way he knows how. Its almost a cliche in boxing..very few fighters come back from the first knockout loss to regain greatness....ali did, joe louis did it but they are the only ones who come to mind...tyson may be a horrible human but he was a GREAT fighter until buster douglass showed him the feeeling of the canvas....duran walked out of the ring when leonard began to beat him,,,hagler left the sport for good... it takes something very special to come back and fight to win after realizing how much a knockout loss hurts physically and mentally.....
\ \the market correlation here is simple...those that play to lose, the fear of a blow up dominating the day are destined to lose....like boxing very few have ever gotten up from a devastating loss instead leaving the field for good, never to be heard from again.....it is interesting that several on the list have suffered the knockout and got back up and still play to win.their advice and experience is valuable because they are unique...trading is a difficult way to earn your living....being a winning trader dominated by fear is impossible..if you dwell all day on the possibility of loss, you will find that the market will indeed deliver an overhand right and the left you were scared of never shows up...but you re still on the canvas in the corner waiting for the smelling salts the market correlation here is simple...those that play to lose, the fear of a blow up dominating the day are destined to lose....like boxing very few have ever gotten up from a devastating loss instead leaving the field for good, never to be heard from again.....it is interesting that several on the list have suffered the knockout and got back up and still play to win.their advice and experience is valuable because they are unique...trading is a difficult way to earn your living....being a winning trader dominated by fear is impossible..if you dwell all day on the possibility of loss, you will find that the market will indeed deliver an overhand right and the left you were scared of never shows up...but you re still on the canvas in the corner waiting for the smelling salts .....
Saturday, September 25, 2004
book reviews
a quick look at two investment books....first the new andy kessler, running money..I was fully prepared to not like the book,the title page and blurbs made it seem lightwieght, but it was on sale at the outlets so i picked up a copy..surprise, in spite of plugs form cramer and michael lewis(who I would vote off the island except for moneyball...I hate the guys other stuff but that is a must read) I liked running money..a good look at the tech run of the late 90s the vc deals, ipos, bad ideas and ridiculous valuations..he does a nice job with the concept of price elasticity ion technology..the counter intuitive idea that falling prices actually leads to higher profits...the comparsonn of the development of the intellectual property economy to the industrial revolution is well though out and well presented....the ideas on margin surplus,IP exporting and trade deficiets is thought provoking.....some interesting theores and views on tech investing with some hilarious stories of the boom days thrown in..an easy fun read that still challenges.....its not going to change your life but it might brighten up an evening or two.......
also rather than reproduce the world I ll just reprint the review of the new book on julina robertson, tiger in the land of bulls and bears
when one thinks of the big three investment superstars of the 80's and 90's, there are three names that come to mind..soros, steinhardt and robertson. you can't turn around in a book store with hitting something by or about soros, steinhardt wrote a book detailing his years on the street but little information was available about the man who captained the tiger funds to such an incredible run.Until now I thought the author did a good job of giving a balanced view of robertson, showing the investment success but also the mistakes that led to the funds closing. Robertson has been a very private man and we get a look at him from the viewpoint of past employees and associates that wasnt really available before now. the trasition form pure stock picker to global macro investor and the problems associated with the transition are fascinating reading.I give it 4 stars, an easy read that gives new information on one the greates investors of his time.the fact that robertsons style and viewpoints, so out of favor when toger closed in 2000, have been thoroughly and completely vindicated in the last 5 years makes this a very timely release
also rather than reproduce the world I ll just reprint the review of the new book on julina robertson, tiger in the land of bulls and bears
when one thinks of the big three investment superstars of the 80's and 90's, there are three names that come to mind..soros, steinhardt and robertson. you can't turn around in a book store with hitting something by or about soros, steinhardt wrote a book detailing his years on the street but little information was available about the man who captained the tiger funds to such an incredible run.Until now I thought the author did a good job of giving a balanced view of robertson, showing the investment success but also the mistakes that led to the funds closing. Robertson has been a very private man and we get a look at him from the viewpoint of past employees and associates that wasnt really available before now. the trasition form pure stock picker to global macro investor and the problems associated with the transition are fascinating reading.I give it 4 stars, an easy read that gives new information on one the greates investors of his time.the fact that robertsons style and viewpoints, so out of favor when toger closed in 2000, have been thoroughly and completely vindicated in the last 5 years makes this a very timely release
Friday, September 24, 2004
week in review
market was down about 1% on the sp for the week,running out of steam at the 1130 area..a long way from the 1140-50 area I thought we would get to before topping out..interest rates and oil continue to be the twin fears keeping a lid on prices along with the break below the much fabled and feared 200 day moving average that has the chart boys all atwitter.......as oil continues to become more volatile its worth exploring oil and gas trusts as trading vehicles ...(right now they are pretty elevated levels and i would not be a buyer.)... thats on the agenda for the weekend, along with restoring the apartment to a normalized condition.Nothing really new to add this week ISSI hit the buy point but I am already choking on semiconductors(and donuts)..for income oriented accounts pja and cei hit buying levels and both yielding in the 10% area are decent buys.....selling puts on deep value stocks was just about breakeven for the week with the overall value declining in our favor about 2%....it has been correctly pointed out to me that we should be long calls on some of these as well so as to profit from any increase in volatility in addition to upward price moves.....on the large cap side pfe and aig look like interesting trades at these levels...pfe has now closed down 8 days in a row,sliding 10% over that period..aig is down 4 days in a row,slipping a little over 5%...
looking at next week I think we hold near the round of 1100 (oh hell lets just join the merrill, mr e chorus and call it 1104) and have topping in the 1135 neighborhod...1140-45 looks to be a serious level to watch on the upside from a longer perspective with 1080 on the downside being what I would think would be the stopping point for any serious selloff.this is all with the usual dont know crap about timing cavaet but making (un)educated guess only
favorites are capa..quickly becoming one of my man i really like this stock favorites, matrix on any kind of sell off,lens and mosy
portfolio news this week
pep boys got trimmed by goldie today
4:10 (Dow Jones) Goldman Sachs analyst Matthew Fassler lowers his 3Q estimate for Pep Boys - Manny, Moe & Jack (PBY) to 22c from 27c and his 4Q forecast to 12c from 13c. Fassler keeps his 2005 estimate at $1.20 and maintains his in-line rating. Pep Boys is working to stabilize its service business, but it's a challenge given the tough environment and the recent shift in its cost structure toward hourly installers - a fixed cost - versus commissioned technicians - a variable cost, Fassler says. (DJH)
they presnt at the weisel conference on monday and that may light a little fire to reverse todays goldie induce 8% sell off
a decent business week piece on the dreaded damn donut stock that shall haunt us endlessly:
BusinessWeek OnlineWhy Krispy Kreme Is Worth A BiteFriday September 17, 3:57 pm ET Are doughnuts poison? You might think so, from a look at Krispy Kreme Doughnuts' (NYSE:KKD - News) stock chart. Under $12, the stock's off 77% in 13 months. Yet few on Wall Street see an opportunity. Indeed, the stock is nearly inedible to investors, who fret over the low-carb craze, not to say Krispy Kreme's own many blunders.
Although you might call me the Will Rogers of doughnuts (never met one I didn't like), Krispy Kreme's shares never tempted me. Way too rich. Yet now I'm wondering: Is all the bad news already reflected in the stock? Investors are giving Krispy Kreme a market value of $750 million, putting it 24th on the list of restaurant stocks, well below even such careworn names as Panera Bread (PNBA.). Are they overreacting? INDISPUTABLY, THE STOCK presents some glaring risks, starting with the Securities & Exchange Commission's probe into how Krispy Kreme bought back franchise rights in such markets as Dallas. Whether the SEC ultimately will force Krispy Kreme to account for these deals differently is a question mark. Another is future profit growth. Krispy Kreme first said it expected earnings this fiscal year, ending January, of about $1.17 a share, a 29% gain. In May, it revised that to $1.05 or so. In July, when Krispy Kreme disclosed the SEC's inquiry, it noted that the agency also was questioning the lower estimate. On Aug. 26, it quit forecasting earnings. Hardly an alluring outlook. Just the same, these worries may pose less danger to investors than to management's credibility. Take the SEC. Although the agency does not discuss its probes, Krispy Kreme described the inquiry as informal. Let's say, though, that it turns more serious, and Krispy Kreme ends up restating its books. That might prove humiliating for Chief Executive Scott Livengood. He is not talking now, but in July he declared: "We are confident in our practices." For investors, however, it would hardly spell fresh financial trouble. If Krispy Kreme had to take the extreme step of writing off all of the $124 million in reacquired franchise rights that it booked as intangible assets in fiscal 2004, it would post a huge special loss and slash shareholders' equity, to $4.98 a share from $6.94. But even in this drastic -- and highly unlikely -- event, cash flow would be untouched: The dough Krispy Kreme spent to buy those franchise rights is long gone. It's history. A bigger imponderable to me is Krispy Kreme's future profits. In August, the company told analysts it would slow its expansion, which took it to 427 stores now from 218 in February, 2002. One aim of the more tepid growth plan is to focus on widening margins at newer stores. Another is to use capital more sparingly via more modest stores, which rely on smaller machines to produce fresh, hot doughnuts. What might these moves produce? Better cash returns. In this year's first half, Krispy Kreme posted operating cash flow of $50 million, up from $38 million the previous year. Suppose the company can match fiscal 2004's full-year cash flow of $95.6 million. Then, because Krispy Kreme now is spending less on expansion, it could wind up with substantial free cash flow -- that is, cash after capital spending and acquisitions -- for the first time since going public. Don't expect Krispy Kreme to regain its status as a cult stock. Yet the shares have room to rise. The Street's bearish consensus on earnings is 69 cents a share this fiscal year and 81 cents in 2006. That means the stock's price-earnings ratio is less than 0.9 times its expected growth rate. The average comparable figure for other restaurant stocks is 1.3 times. With apologies to Will Rogers, who once quipped that if a stock "don't go up, don't buy it," Krispy Kreme is a buy.
mylan and ichan continue to mix it up over king....
speaking of ichan he increased his stake in westpoint last week:
Icahn ups WestPoint stakeBy StaffHome Textiles Today -- 9/24/2004NEW YORK — Clearly seeing value in a company, and an industry, that others have walked away from, high-profile financial engineer Carl Icahn has reportedly increased his stake in WestPoint Stevens as the textiles titan gets ready to emerge from bankruptcy, possibly by early next year. Icahn bought a chunk of WestPoint's second-lien bank debt in May, and is now said to have taken an even larger position in the company, buying about a third of its first-lien bank debt from Q Investments, a private investment firm based in Fort Worth, Texas. The move would put Icahn in a position to engineer an outright takeover of the company as it emerges from Chapter 11, swapping his debt for shares in the reorganized company. Holders of secured bank debt, as opposed to bond holders, are first in line when it comes to getting something in a bankruptcy restructuring, usually exchanging their bank debt for common stock. Mary Gilbert, managing director of Imperial Capital, a Beverly Hills, Calif., investment firm which tracks the company, said WestPoint's first-lien bank debt totals about $456.7 million, which would value a one-third stake at about $162.2 million.
looking at next week I think we hold near the round of 1100 (oh hell lets just join the merrill, mr e chorus and call it 1104) and have topping in the 1135 neighborhod...1140-45 looks to be a serious level to watch on the upside from a longer perspective with 1080 on the downside being what I would think would be the stopping point for any serious selloff.this is all with the usual dont know crap about timing cavaet but making (un)educated guess only
favorites are capa..quickly becoming one of my man i really like this stock favorites, matrix on any kind of sell off,lens and mosy
portfolio news this week
pep boys got trimmed by goldie today
4:10 (Dow Jones) Goldman Sachs analyst Matthew Fassler lowers his 3Q estimate for Pep Boys - Manny, Moe & Jack (PBY) to 22c from 27c and his 4Q forecast to 12c from 13c. Fassler keeps his 2005 estimate at $1.20 and maintains his in-line rating. Pep Boys is working to stabilize its service business, but it's a challenge given the tough environment and the recent shift in its cost structure toward hourly installers - a fixed cost - versus commissioned technicians - a variable cost, Fassler says. (DJH)
they presnt at the weisel conference on monday and that may light a little fire to reverse todays goldie induce 8% sell off
a decent business week piece on the dreaded damn donut stock that shall haunt us endlessly:
BusinessWeek OnlineWhy Krispy Kreme Is Worth A BiteFriday September 17, 3:57 pm ET Are doughnuts poison? You might think so, from a look at Krispy Kreme Doughnuts' (NYSE:KKD - News) stock chart. Under $12, the stock's off 77% in 13 months. Yet few on Wall Street see an opportunity. Indeed, the stock is nearly inedible to investors, who fret over the low-carb craze, not to say Krispy Kreme's own many blunders.
Although you might call me the Will Rogers of doughnuts (never met one I didn't like), Krispy Kreme's shares never tempted me. Way too rich. Yet now I'm wondering: Is all the bad news already reflected in the stock? Investors are giving Krispy Kreme a market value of $750 million, putting it 24th on the list of restaurant stocks, well below even such careworn names as Panera Bread (PNBA.). Are they overreacting? INDISPUTABLY, THE STOCK presents some glaring risks, starting with the Securities & Exchange Commission's probe into how Krispy Kreme bought back franchise rights in such markets as Dallas. Whether the SEC ultimately will force Krispy Kreme to account for these deals differently is a question mark. Another is future profit growth. Krispy Kreme first said it expected earnings this fiscal year, ending January, of about $1.17 a share, a 29% gain. In May, it revised that to $1.05 or so. In July, when Krispy Kreme disclosed the SEC's inquiry, it noted that the agency also was questioning the lower estimate. On Aug. 26, it quit forecasting earnings. Hardly an alluring outlook. Just the same, these worries may pose less danger to investors than to management's credibility. Take the SEC. Although the agency does not discuss its probes, Krispy Kreme described the inquiry as informal. Let's say, though, that it turns more serious, and Krispy Kreme ends up restating its books. That might prove humiliating for Chief Executive Scott Livengood. He is not talking now, but in July he declared: "We are confident in our practices." For investors, however, it would hardly spell fresh financial trouble. If Krispy Kreme had to take the extreme step of writing off all of the $124 million in reacquired franchise rights that it booked as intangible assets in fiscal 2004, it would post a huge special loss and slash shareholders' equity, to $4.98 a share from $6.94. But even in this drastic -- and highly unlikely -- event, cash flow would be untouched: The dough Krispy Kreme spent to buy those franchise rights is long gone. It's history. A bigger imponderable to me is Krispy Kreme's future profits. In August, the company told analysts it would slow its expansion, which took it to 427 stores now from 218 in February, 2002. One aim of the more tepid growth plan is to focus on widening margins at newer stores. Another is to use capital more sparingly via more modest stores, which rely on smaller machines to produce fresh, hot doughnuts. What might these moves produce? Better cash returns. In this year's first half, Krispy Kreme posted operating cash flow of $50 million, up from $38 million the previous year. Suppose the company can match fiscal 2004's full-year cash flow of $95.6 million. Then, because Krispy Kreme now is spending less on expansion, it could wind up with substantial free cash flow -- that is, cash after capital spending and acquisitions -- for the first time since going public. Don't expect Krispy Kreme to regain its status as a cult stock. Yet the shares have room to rise. The Street's bearish consensus on earnings is 69 cents a share this fiscal year and 81 cents in 2006. That means the stock's price-earnings ratio is less than 0.9 times its expected growth rate. The average comparable figure for other restaurant stocks is 1.3 times. With apologies to Will Rogers, who once quipped that if a stock "don't go up, don't buy it," Krispy Kreme is a buy.
mylan and ichan continue to mix it up over king....
speaking of ichan he increased his stake in westpoint last week:
Icahn ups WestPoint stakeBy StaffHome Textiles Today -- 9/24/2004NEW YORK — Clearly seeing value in a company, and an industry, that others have walked away from, high-profile financial engineer Carl Icahn has reportedly increased his stake in WestPoint Stevens as the textiles titan gets ready to emerge from bankruptcy, possibly by early next year. Icahn bought a chunk of WestPoint's second-lien bank debt in May, and is now said to have taken an even larger position in the company, buying about a third of its first-lien bank debt from Q Investments, a private investment firm based in Fort Worth, Texas. The move would put Icahn in a position to engineer an outright takeover of the company as it emerges from Chapter 11, swapping his debt for shares in the reorganized company. Holders of secured bank debt, as opposed to bond holders, are first in line when it comes to getting something in a bankruptcy restructuring, usually exchanging their bank debt for common stock. Mary Gilbert, managing director of Imperial Capital, a Beverly Hills, Calif., investment firm which tracks the company, said WestPoint's first-lien bank debt totals about $456.7 million, which would value a one-third stake at about $162.2 million.
Monday, September 20, 2004
value options
sell
matrix jan 5 puts.... $.70
mosy jan 5 puts....1
pby jan 12.5 puts.....$.55
atml jan 5 puts......1.30
dhm mb jan 10....1.50
kg jan 12.5 puts....$.65
cnxt jan 2.5 puts...$.80
matrix jan 5 puts.... $.70
mosy jan 5 puts....1
pby jan 12.5 puts.....$.55
atml jan 5 puts......1.30
dhm mb jan 10....1.50
kg jan 12.5 puts....$.65
cnxt jan 2.5 puts...$.80
Friday, September 17, 2004
friday
not much movement in the market at all this week..10 point range in the sp500 for the week,22 in the nazz.....I added postions in matix servies, monolithic systems and concord camera on weakness during the week.the much vaunted Ivan didnt wreck the refineries but did bring many off line, perhaps allowing matrix to accelerate their earnings turnaround as long delayed maintenance is contracted,,,also in line for wok on lng's natural gas plant..trading below book the shares seem to offer outstanding value and the potential to work back towards 10 during the year..the stock jumped some 21% on monday but has drifted back about 40 cents since.gets back down to 5 and I ll buy more... MOSY a broken deal from earlier this year...in the wake of the failed takeover they collected a 10mm breakup fee and are refocusing on the basic semconductor cap equipment business...watching capa very closely,,,showed up in the tiget tech fund as a large postion..primarily in document delivery for mid sized comapnies, a sparkling balance sheet and some very smart folks in the stock..trades slightly above book and almost half the share price in cash..free cash flow positive....they also have 11 million left on their buyback after buying in 3. 9 million last qtr...some insider buying as well.... semiconductors very choppy on the week,closing down slightly versus last friday but their were strong day to day moves all week..atml is even on the week but cnxt was up almost 5%..kkd was up on the week for the first time since august..just 1.2% but we ll take what we can get in this one...its turned out to the dog of the year and a lesson in not violating basic principles..theres no way I should have been in this stock until it got into low teens...having said that the recovery potential is strong enough to hold for now..the stock could get back into the high teens by year end giving as nice return from the current level...mea culpa, mea dumbass for reversing the short so soon..pby,ttn and kg continue to jus muddle along at current price levels with no real action either side....pcr. and fcfco continue to creep higher....the market has run about 5% since mid august and looks a little tired here...the 1140-1150 area looks like it may present a challenge..of course this comes with the cavaet that I dont know shit about market timing....
rain is forecast for much of the wekend here but a full schedule of football and of course the first of the final 10 race for the chase shall occupy my time , along with a huge stack of books rescued from the librarys discard sale table and a couple of interesting research projects...
rain is forecast for much of the wekend here but a full schedule of football and of course the first of the final 10 race for the chase shall occupy my time , along with a huge stack of books rescued from the librarys discard sale table and a couple of interesting research projects...
Friday, September 10, 2004
its back
Its back. Football. As much as we all hate to see summer with its glorious sunny days,we now in the air mixing with the banana tropic suntan lotion and shrimp on the barbie is the odor of fall….fresh pigskin and brats roasting on open fires.I love football. Growing where I did , in the house I did it was inevitable. Sunday morning mass, a morning of visiting with the divine deity, then rushing home in time to see the Immortal Beloveds, Led by St John of Unitas stride forth to rid the world of the evil caused by the packers of Green bay and Bay Starr or the Cleveland Browns Of Jim “holy s** cant anybody tackle that guy?” Brown.. We needed a new TV after Super bowl 3, the old one being rendered useless by the careful and timely insertion of my stepfathers foot mid screen when Johnny U’s last pass fluttered on broken wings to the ground with less than a minute to go…..Time stood still when the Baltimore Colts took the field and I have many memories of brisk fall and winter days watching the mighty horseshoes while Mom burnt that weekends roast into some form of barely edible leather( I love her but the woman simply cannot cook)./And really..whats not to love about football. I like all versions of the game. The carefully orchestrated operatic orgy of violence, sex and point spreads put on by the NFL each week is like crack cocaine to a self professed would be member of the decadent depraved set( I d love to be a full time member but true depravity would seem to take more time and money that I can devote to the cause).Where else can one watch a fellow human being knock the living dog snot of another followed by a close up camera shot of 22 belly button flashing in synchronized harmony? And get free whiskey for six months from friends who are seemingly clues to the machinations of the point spread? Is this a great country or what? The game itself with the basic 3 yards in a cloud of blood and spit filled dust, followed by moments of deep threat exhilaration, bad bounces,shanks,lucky tips and seemingly impossible plays is not a bad metaphor for trading and the market, but I wrote that piece last year….
I like college ball even more. To have OUR band of genetic misfits, impossible large,faster than nature intended,capable of hurling a piece of inflated pork hide sixty yards on a perfect spiral and trajectory march onto the field on Saturday afternoon to pummel YOUR bunch of equally mutated youngsters for the honor of the school, the state and God his own self if Notre Dame is playing? I know all the things wrong with college athletics and that it has become very much a big money sport..but the vast majority of the kids you see on the field will never make it beyond the NFL scouting combines and are playing for a love of the game, and for a dream. No hot dogs getting 77 bazillion dollars to miss a tackle here. For the most part they play with heart and effort..at the higher level of the college game every snap, every play is an audition for the riches of being drafted. The fans are deeply loyal (to say nothing of completely blotto on the cheapest beer available), enthusiastic to a fault ,the bands are usually awful and the only boobs in the half time show are on the fat guy from delta house who stripped when it started snowing……
Now, I usually watch the games from home. The concept of sitting outside, in the cold later in the season in the midst of 50000 stone drunks, wearing a good portion of the guy behind mess 18 dollar beer, taking out a mortgage for a hot dog and standing in ankle deep puddles to avail oneself of the facilities is just not that high on my overall list of really fun stuff to do. I could not afford at a stadium my usual course of football fare, large hunks of flame roasted cow, oysters on the grill until they steam in their own salty juices, chili with my super double top secret sneak up and kick you in the @@@ blend of death peppers…. and a glass of dancing bull zinfandel (hereby recommended for red wine drinkers. not only is it a very good reasonably priced red, the bottle and name are perfect for us speculative types) or slight tipple of famous grouse sprinkled softly over ice cubes would cost more than my car at one of the modern corporate edifices in which our gladiators ply their trade…to say nothing of puddle free restrooms, instant replay and the ability to change the climate on a whim…Football, food and the couch go together well in my mind…For this reason alone Thanksgiving remains my favorite Holiday.No presnts to buy, ungodly amounts of food and non stop football. I always cook, not because I wanted my relatives to come by. I get no familial satisfaction out watching people I am associated with by the accident of birth gobbling all my food and drinking themselves into a coma on expensive booze they are too cheap to have ever purchased themselves…No, its so I and I alone control the leftover supply.3 days of frenetic pigskin bacchanalia, leaving the couch only to prepare the holy of holies for post turkey day football. the Kentucky hot brown There are fancier ways to make it but the recipe I learned was pretty simple,,,slice of bread,turkey,gravy, topped with a mixture of parmesan and mozzarella cheese into an bubbling pile of ooey gooey gastronomic delight. I have long forgotten the women who taught me this dish..although I seem to recall a very sexy little gap in her smile and long legs that climbed up to..but I digress.Her name has long escaped me but the memory of the soft southern drawl and the recipe for football feast nirvana has long stayed with me.Football,couch,Tim. They go together like mickey and Minnie,beans and rice, scotch and..well scotch.
Once in awhile, early in the season I, when the weather is still warm and the possibility of frostbite doesn’t enter the equation, will go to a college game. There is something special about attending a college game and you get to experience the carnival atmosphere of big time college football. Where else can you witness that amazing almost eerie perfect coordination of tens of thousands of Maryland fans chanting obscenities in perfect unison grown men In NC State red and white doing wolf howls on public streets with no fear of imminent arrest? Or a Notre Dame game where bright students, steely haired alumni and somber men of the cloth all spending the afternoon praying to touchdown Jesus and the evening to the porcelain god?So, when the touchdown club here in Annapolis had a tailgate party at the navy home opener last Saturday, given the glorious mid 70’s temperature I rousted myself from other activities and attended.
College football is great. Navy football is special to me and always has been. When I was younger we lived near the stadium. The local newspaper ran a contest every week giving a way tickets to deserving students. My mothers then second husband worked for the paper and saw it a s a perfect way to get a couple of kids out of his house every Saturday. ergo my older sister and I always won without ever filling out an entry. I sent a lot of afternoons watching the mids of the late 60s and early 70s get pummeled by the likes of penn state ( the team of lydell Mitchell and franco harris beat them 70-6..both backs had over 100 yards..at the half, Notre Dame, Michigan et al. They almost never won but that didn’t stop us from cheering for them.Theres pomp and circumstance all served up in military fashion.The march on of the brigade, f-15 flyovers, more brass and braid than a san diego consignment shop,the drum and bugle corp. The football is special as well. These are true student athletes. No special courses for athletes, no exemption for mandatory intramural sports, not break from PT..they take the same rigorous engineering, physics, econ and military classes the rest of the brigade takes..and they have to pass them. To flunk out after the start of junior year means your service requirement if fulfilled as an enlisted rank.Same military discipline,same curfews and regulations as every other mid. No genetic mutants here either. The academy has upper limits on height and weight. Watching the mismatch of one of navys 250 guards try to block another schools 350 behemoth is a sight to see…it took years for Navy to find a coach who could design a game plan to take advantage of Navys better physical condition overall and use speed and complexity to allow the team to win..The current coach Paul Johnson seems to have done that and navy football now has a bonus…they can actually win a few games.
As I sat in the touchdown club tent last Saturday munching on a burger cooked to post nuclear holocaust consistency (no chez tim level cuisine here) the brigade marched right by us. As I watched this flow of approximately 4500 young men and women come up the road towards the stadium entrance I was struck by one overwhelming thought. They seemed so young, so carefree, tossing the traditional candy to youngsters along the street, laughing joking, looking forward to an afternoon of football and fun…this years graduating class were all plebes on sept 11, 2001. They passed the mid point of last day of sophomore year, the drop dead point to leave with no service obligation, and stayed knowing they would be joining a war time military when they finally pinned on the bars of a navy ensign or marine corp 2nd lt. The other three classes?..They entered the academy post 9/11. These kids are the best of the best academically; you have to be to get into a service academy. They could have gone anywhere..Harvard, Stanford,4 years of partying at florida or Miami. They entered Annapolis knowing that their 34 years would be followed by 5 years minimum serving in the armed services of a nation at war. True, it’s a great education and no cost in terms of dollars. But their tuition is 4 years of military discipline, rigorous demanding schedules, a severe limit on typical university parties and hijinks followed by 5 years of their lives, and possibly their life itself in the service of their country.They knew it going in, from the minute their hair disappeared into the enormous pile of horn locks on plebe day. I have nothing but the utmost respect for the young men and women who make up our service academies and was somewhat in awe of the sacrifice they made upon choosing to attend.On this last weekend of august I watched them as they passed, forming into tight orchestrated brigades to enter the stadium knowing that the next wave of marine officers, navy pilots and military leaders who would be sent into harms way t defend our nation passed before enjoying the afternoon of football but aware of the duty that loomed. I was impressed to say the least.
As a topper to the day, my tickets ended up being dead center in a section full of the class of 1954 celebrating their 50th reunion. I looked around at a group of men , all retired now but most with the bearing still of lifelong naval officers. Up in the stands they had served..Korea, Vietnam, the cold war, many of the battles that are emblazoned on the stadium walls. They , along with serving officers on ships around the world, military bases in god forsaken places, stood at kickoff to cheer those who would serve soon. Soon the torch would pass..for now they play football, they cheer on the blue and gold, the plebes do push-ups in the end zone for every navy point scored..its game day and time for football.
I love football. Go Navy
I like college ball even more. To have OUR band of genetic misfits, impossible large,faster than nature intended,capable of hurling a piece of inflated pork hide sixty yards on a perfect spiral and trajectory march onto the field on Saturday afternoon to pummel YOUR bunch of equally mutated youngsters for the honor of the school, the state and God his own self if Notre Dame is playing? I know all the things wrong with college athletics and that it has become very much a big money sport..but the vast majority of the kids you see on the field will never make it beyond the NFL scouting combines and are playing for a love of the game, and for a dream. No hot dogs getting 77 bazillion dollars to miss a tackle here. For the most part they play with heart and effort..at the higher level of the college game every snap, every play is an audition for the riches of being drafted. The fans are deeply loyal (to say nothing of completely blotto on the cheapest beer available), enthusiastic to a fault ,the bands are usually awful and the only boobs in the half time show are on the fat guy from delta house who stripped when it started snowing……
Now, I usually watch the games from home. The concept of sitting outside, in the cold later in the season in the midst of 50000 stone drunks, wearing a good portion of the guy behind mess 18 dollar beer, taking out a mortgage for a hot dog and standing in ankle deep puddles to avail oneself of the facilities is just not that high on my overall list of really fun stuff to do. I could not afford at a stadium my usual course of football fare, large hunks of flame roasted cow, oysters on the grill until they steam in their own salty juices, chili with my super double top secret sneak up and kick you in the @@@ blend of death peppers…. and a glass of dancing bull zinfandel (hereby recommended for red wine drinkers. not only is it a very good reasonably priced red, the bottle and name are perfect for us speculative types) or slight tipple of famous grouse sprinkled softly over ice cubes would cost more than my car at one of the modern corporate edifices in which our gladiators ply their trade…to say nothing of puddle free restrooms, instant replay and the ability to change the climate on a whim…Football, food and the couch go together well in my mind…For this reason alone Thanksgiving remains my favorite Holiday.No presnts to buy, ungodly amounts of food and non stop football. I always cook, not because I wanted my relatives to come by. I get no familial satisfaction out watching people I am associated with by the accident of birth gobbling all my food and drinking themselves into a coma on expensive booze they are too cheap to have ever purchased themselves…No, its so I and I alone control the leftover supply.3 days of frenetic pigskin bacchanalia, leaving the couch only to prepare the holy of holies for post turkey day football. the Kentucky hot brown There are fancier ways to make it but the recipe I learned was pretty simple,,,slice of bread,turkey,gravy, topped with a mixture of parmesan and mozzarella cheese into an bubbling pile of ooey gooey gastronomic delight. I have long forgotten the women who taught me this dish..although I seem to recall a very sexy little gap in her smile and long legs that climbed up to..but I digress.Her name has long escaped me but the memory of the soft southern drawl and the recipe for football feast nirvana has long stayed with me.Football,couch,Tim. They go together like mickey and Minnie,beans and rice, scotch and..well scotch.
Once in awhile, early in the season I, when the weather is still warm and the possibility of frostbite doesn’t enter the equation, will go to a college game. There is something special about attending a college game and you get to experience the carnival atmosphere of big time college football. Where else can you witness that amazing almost eerie perfect coordination of tens of thousands of Maryland fans chanting obscenities in perfect unison grown men In NC State red and white doing wolf howls on public streets with no fear of imminent arrest? Or a Notre Dame game where bright students, steely haired alumni and somber men of the cloth all spending the afternoon praying to touchdown Jesus and the evening to the porcelain god?So, when the touchdown club here in Annapolis had a tailgate party at the navy home opener last Saturday, given the glorious mid 70’s temperature I rousted myself from other activities and attended.
College football is great. Navy football is special to me and always has been. When I was younger we lived near the stadium. The local newspaper ran a contest every week giving a way tickets to deserving students. My mothers then second husband worked for the paper and saw it a s a perfect way to get a couple of kids out of his house every Saturday. ergo my older sister and I always won without ever filling out an entry. I sent a lot of afternoons watching the mids of the late 60s and early 70s get pummeled by the likes of penn state ( the team of lydell Mitchell and franco harris beat them 70-6..both backs had over 100 yards..at the half, Notre Dame, Michigan et al. They almost never won but that didn’t stop us from cheering for them.Theres pomp and circumstance all served up in military fashion.The march on of the brigade, f-15 flyovers, more brass and braid than a san diego consignment shop,the drum and bugle corp. The football is special as well. These are true student athletes. No special courses for athletes, no exemption for mandatory intramural sports, not break from PT..they take the same rigorous engineering, physics, econ and military classes the rest of the brigade takes..and they have to pass them. To flunk out after the start of junior year means your service requirement if fulfilled as an enlisted rank.Same military discipline,same curfews and regulations as every other mid. No genetic mutants here either. The academy has upper limits on height and weight. Watching the mismatch of one of navys 250 guards try to block another schools 350 behemoth is a sight to see…it took years for Navy to find a coach who could design a game plan to take advantage of Navys better physical condition overall and use speed and complexity to allow the team to win..The current coach Paul Johnson seems to have done that and navy football now has a bonus…they can actually win a few games.
As I sat in the touchdown club tent last Saturday munching on a burger cooked to post nuclear holocaust consistency (no chez tim level cuisine here) the brigade marched right by us. As I watched this flow of approximately 4500 young men and women come up the road towards the stadium entrance I was struck by one overwhelming thought. They seemed so young, so carefree, tossing the traditional candy to youngsters along the street, laughing joking, looking forward to an afternoon of football and fun…this years graduating class were all plebes on sept 11, 2001. They passed the mid point of last day of sophomore year, the drop dead point to leave with no service obligation, and stayed knowing they would be joining a war time military when they finally pinned on the bars of a navy ensign or marine corp 2nd lt. The other three classes?..They entered the academy post 9/11. These kids are the best of the best academically; you have to be to get into a service academy. They could have gone anywhere..Harvard, Stanford,4 years of partying at florida or Miami. They entered Annapolis knowing that their 34 years would be followed by 5 years minimum serving in the armed services of a nation at war. True, it’s a great education and no cost in terms of dollars. But their tuition is 4 years of military discipline, rigorous demanding schedules, a severe limit on typical university parties and hijinks followed by 5 years of their lives, and possibly their life itself in the service of their country.They knew it going in, from the minute their hair disappeared into the enormous pile of horn locks on plebe day. I have nothing but the utmost respect for the young men and women who make up our service academies and was somewhat in awe of the sacrifice they made upon choosing to attend.On this last weekend of august I watched them as they passed, forming into tight orchestrated brigades to enter the stadium knowing that the next wave of marine officers, navy pilots and military leaders who would be sent into harms way t defend our nation passed before enjoying the afternoon of football but aware of the duty that loomed. I was impressed to say the least.
As a topper to the day, my tickets ended up being dead center in a section full of the class of 1954 celebrating their 50th reunion. I looked around at a group of men , all retired now but most with the bearing still of lifelong naval officers. Up in the stands they had served..Korea, Vietnam, the cold war, many of the battles that are emblazoned on the stadium walls. They , along with serving officers on ships around the world, military bases in god forsaken places, stood at kickoff to cheer those who would serve soon. Soon the torch would pass..for now they play football, they cheer on the blue and gold, the plebes do push-ups in the end zone for every navy point scored..its game day and time for football.
I love football. Go Navy
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