The Market, She's a Bitch

Submitted by LoS reader "Charles"

In many roles that have been traditionally dominated by men, the underlying structure of a given profession is often personified as a woman. The best example I can think of is that of a sea captain: both the ship and the ocean are almost always described as a woman. Mother Earth yields crops to farmers; look to Greek mythology to find the goddesses of Spring and the Harvest. A rejoinder to this observation is the stock market. I have never heard a trader or an equity analyst (during my employment at a sell-side firm) refer to the market as a woman. Indeed the stock market is almost always given the genderless pronoun "it" in both common and academic conversation.

I, however, firmly believe that the market is a woman, and I believe the most recent sell-off gives support to my argument. On February 27th, the market behaved exactly as a woman would in a similar situation. In bed.

Over the trailing trading sessions, the market was getting nailed – in a good way – and she was really enjoying it. Point by point, rising closer and closer to double digit returns. Coherent thought was miles away as she slipped deeper into a state of upward momentum. Rising. Higher. Higher. It seemed like the pure joy would never end. But was there risk? Globalization and transparent markets had mitigated all need for protection, so on she went. Closer and closer to the peak of 52-week highs.

Then, as if fate itself called down to her, she realized she had forgotten to take her birth control and she was not "this kind of girl". She was overexposed to sub-prime debt. The market went from legs-wide-open to frigidity in less time than it takes a fixed income trader to eat his Atkins lunch. And when the market closed, investors had to go to bed pissed off and feeling like they got kicked in the nuts.

Don’t worry, though. She'll be back.

Crazy Person or Bluetooth Headset? The Home Game

During my commute, I am frequently left to wonder about why it is that fellow travelers are talking to themselves. Are they crazy, maybe burdened with schizophrenia or with the tourettes? Or are they simply business professionals affecting the trappings of insanity by talking to the open air in front of them with the vehemence, volume and animation reserved for discussions with the voices within their head?

Hence Crazy Person or Bluetooth Headset.

This morning I was treated to two such travelers, allowing for two rounds of CPBH.

Round 1:

Man in his early 30's, nattily dressed but in a casual fashion. Dark curly hair a little bit unkempt but not overly so. He sat on the train having this conversation with open space: "Father, you are up. It's good to hear that [laughing a little crazily]." He continued but was cut-off by a cloud of people and background noise. Was he crazy or just bluetooth equipped?

Crazy person!

Round 2:

Asian man on the street, in a normal looking coat, mid-40's gesticulating wildly while screaming things in Chinese or whatever. But his hair gave him away. Too well-coiffed to be a crazy person.

Bluetooth Headset!

In business flight terminals, you can play the sister game Bluetooth Headset and/or Total D-Bag.

Jacob, Son of Isaac, the First Value Investor

Ben Graham usually gets credit for being the inventor of value investing. Recently, we sat down with Jacob who says he perfected the art about 4,000 years before Mr. Graham came along:

LoS: Hi Jacob

Jacob: Shalom

LoS: How did you get into value investing?

Jacob: Well I have to say it started at birth. Actually that's wrong, it started at my twin brother Esau's birth. You see he was born first and by his birthright had claim to my father's estate. He was stronger than I was so I knew even in my mother's womb that he would probably push his way out before me. Right from the start I realized I wouldn't be handed anything in life and would have to make my own way. I saw value investing as the best way to do that. I think recognizing my value bias while still in the womb has been key to my success.

LoS: Tell us about your first deep value pick

Jacob: My early career was unique in that I really only monitored one asset: my brother's inheritence (NYSE: MBI). Having watched it my whole career I was well prepared when MBI fell out of favor with the street, at the time I thought the market in general was over-valued so I was holding a large portion of my assets in the "cash" of the day which was actually just soup. The largest holder of MBI, my brother Esau, always had a Food-At-a-Reasonable-Price bias (FARP). He was tired of waiting for the intrinsic value of MBI to be realized by the market, and he was hungry and wanted some soup. I saw an opportunity to buy MBI at 0.003% of intrinsic value so I sold my soup "and the rest is Old Testament" as they say.

LoS: That's impressive, what are your best ideas now?

Jacob: Sorry but I never discuss my current portfolio, you never know when someone might dress up in wool and trick you into bequeathing your fortune to him. Or dress his ugly daughter up to look like his hot daughter and have you end up marrying the wrong one. I do have some advice for young investors though: Don't live until you're 180. It's much easier to have lifetime 20% returns if you die at 75.

LoS: Great point Jacob - thanks for your time. Next week Noah tells us how one contrarian bet on weather futures changed his life forever.

Adjusted GPA on a Pro Forma Basis

Recently, recruiters at top universities and college administrators alike have recognized a growing trend in the student job market, namely the adoption of "adjusted" GPA figures. It appears that students have realized what investment bankers have known for years: if you don't like a number, you can change it.

Say you are an investment banker at a large Wall Street Firm, like Silverman Sachs or Layman Brothers, and you are trying to syndicate Theoretical FCF Corp's bonds. The problem is that Theoretical FCF Corp seems to lack any actual cash flow and will almost certainly never actually pay down any debt. What do you do? Just pro forma their EBITDA to what their cash flow would be if they actually generated cash flow, as you kinda expect they may sometime in the future. And if that doesn't get your bond customers to a number that makes them want to write big tickets, adjust that number for "one-time" expenses like "bad debt", "restructuring charges" or the vague but powerful "fees". This is how you get it done when syndicating debt or selling IPOs.

Now for a student, their GPA is basically the equivalent of a firm's 4 year trailing cash flows. The number itself carries huge weight in job interviews, yet for decades students have reported GPA exactly as it appears on their transcript. While entirely accurate, this is a huge mistake. Job applicants are now realizing that adjusting their GPAs can give a more accurate misrepresentation of their performance and expected future production.

Why should an employer hire an average of you over the last four years, when what they should be interested is a real misrepresentation of what you could be now if not for certain events? Here are some ways students are making themselves look better on paper:

1. Add-Backs for non-recurring GPA deductions, such as getting drunk at a final, or anything that happened freshman year


2. Pro forma GPA for dating someone smart or at least someone who wears glasses in the morning.


3. Projected GPA levels for future years using the same class load. Surely a student would be more efficient in those classes if the student took them again. Thus the student should adjust their GPA to better match their future production.


4. And the most common move, arbitrarily making their GPA a 3.6 - good enough to get by, but not good enough to raise suspicion.

Recommendation: If you are serious about a job in finance, it's important to signal that "you get it" before you even arrive. We heartily endorse the use of adjusted and PF GPAs for this reason. Remember, it's not what you did or will do, but what you can convince people you did or will do.

Pomegranate Capital Thinks Women Can Run Money Better, Is Wrong

Susan Solovay, a woman by trade, has started a fund of funds whose mandate will be to invest only in hedge funds run by women. Solovay is marketing this FoF on the claim that women manage investments better than men. (quotes from Business):

Solovay commissioned extensive academic research into the performance of hedge funds run by women and claims that it showed that women fund managers performed consistently better than those run by men.

Other examples of commissioned "academic research" show that:

• Cigarettes taste great and are healthy
• Lead is perfectly safe for the lining of our water pipes
• Corn based ethanol makes any sense whatsoever for reasons other than padding the pockets of Archer-Daniels-Midland (NYSE: ADM) and making idiots feel better (wrongly) about the environment

More from the article:

She claims that the research showed that male-run hedge funds managers tended to shoot from the hip making big returns one year and poor ones the next.

So what Susan Solovay is saying is that the men she has been with have not had consistently "big enough" returns. In this case size does matter and obviously Solovay has not invested in Long or Short Capital. Along with our investment strategy of "not losing money", we use the tactic of "making returns so big that the next year we can lose as much as we want, whenever we want".

For non-abstract financial advisors and managers, performance problems are understandable and not infrequent. But these problems are not due to male analysts and portfolio managers alone. Women are involved in these funds too. If not where would the coffee come from? Who would do some of the back office functions and the bulk of secretarial work? And who would provide massages to male analysts and male PMs? And how would any large investment manager be able to adequately staff their investor relations department? Women are part of the performance of these funds and it is sexist to abdicate them from responsibility just because they are never put in positions to drive actual investment decisions or because nobody takes them seriously.

Recommendation: Setting aside my qualms about Ms. Solovay's rampant sexism, Pomegranate Capital seems to be a dubious gimmick. As an investor, you have two layers of fees and you have a restricted pool of PM talent.

LoS has witnessed the success of our Satan's Portfolio thesis against opposite minded strategies such as those embodied by PAX Fund and we see Pomegranate Capital as a similar opportunity. Although different in composition, we think a great play would be to go long the all-in return of the Vice Fund and short the all-in return of Pomengranate Capital, effectively creating a "PC spread" of sorts.

Four Simple Steps to Becoming a Thousandaire

Our Four Simple Steps to Becoming a Billionaire guide was met with great enthusiasm. For those who wish to start with smaller goals and then build from there, we now offer our Four Simple Steps to Becoming a Thousandaire.

1. Go to college. Or not.


2. Work a max of 40 hrs per week. Do not break this rule under any circumstances.


3. Have kids with many women. Paying child support is fun.


4. Treat yourself to a car you can't afford. Gas inefficiency is a plus.


5. Remember that money which you save will probably be stolen by those crooks at the bank. Spend all your money now to avoid future losses.

Joe Theismann Presents Monday Morning Investing

With the NFL postseason in full-swing, we invited Monday Night Football announcer Joe Theismann to come by and share investing color commentary.

Joe Theismann:
"I'm gonna tell you something. Warren Buffett knows that value investing wins championships; no team can succeed in post-season investing without having a strong 'going long' strategy. We had the opportunity to talk to Buffett yesterday before the market opened, and he told us how important he thinks the long game is to investing and he told us how he built his entire empire on it. Establishing the long keeps the market guessing, and allows investors to win big returns. Once an investor has established the long game against the market, the experienced investor can call for play-action shorts leaving the market expecting the long up until the transaction is complete, then running a short trade. So the key to Buffett investing is always going long except when you're going short.

We also had the chance to catch up with Bill Miller last week during training camp. He told us that he has always focused on investing in stocks that go up and avoiding stocks that go down. Whenever he looks at a company, he tries to figure out whether that company is going to make money, even before he makes an investment. That type of hard work, strategy, and dedication explains why he's a star. But the thing about Bill Miller that really seperates him apart is that he is also a tremendous person."

Theismann referred us to his former Sunday Night Football boothmate, Paul Maguire, for technical commentary.

Paul Maguire: [Ed: Maguire used a Bloomberg machine to perform his trademark telestrator analysis.]
"Now I'm gonna show you something, LOOK AT THIS CHART RIGHT HERE, see that line, watch that line, see how it traces up, now look at this, the shape it's forming, look at that line, here, and there, look at it...BAAMMM! That's a nice formation. Now I'm gonna show you how that line connects at this point HERE, look at that and forms with those lines over there, watch this, look at this, watch this, LOOK, now what that means is that you watch this, right here is where you are going to want to short. And that's how investing is played."

My Refrigerator Accounting

11/11/06: It was recently announced that Sir Equity Go (Me) will be switching form a LIFO to FIFO refrigerator accounting system. This news comes quickly on the heels of a $10 write-off of inventory for "Raw chicken cutlets in a ziplock" that had been sitting in inventory for two months, hidden under the bacon. The chicken's market value was reassessed at market value which is substantially lower due to salmonella allegations. The benefits of this change will clearly outweigh the negative tax implications.

11/12/06: Sir Equity Go (Me), in a bold reorganization of his food production and consumption process, has announced plans to initiate a Just-in-Time inventory system. The practical application of this shift will require Sir Equity to eat only take-out Chinese food for every meal. While this will streamline his inventory system, it will also likely increase his W/H ratio (Weight/Height) substantially.

2x2 Matrix: Less & More

I am pleased to introduce a new series in which I simplify complex analysis into 2x2 matrices. Why am I doing this? I was trained at a management consultancy and 2x2 matrices are now in my DNA as well as being a stipulation in the contract I signed with the devil to get the job.

It turns out that any media business can be described by two variables: the amount of product, information, or entertainment being produced [referred to hereafter as Strategy] and the resulting value creation. The key question for each company is to look at each of these two critical valuables and ask: Less or More?

Google: More is More
Strategy: MORE. Google (NASDAQ: GOOG) is producing more of everything. After originally launching in search only, Google now provides email, maps, IM, photo management, and online videos of trivialities (via the YouTube acquisition).
Value: MORE. Google now has a gazillion dollar market cap.

Yahoo: More is Less
Strategy: MORE. Yahoo (NASDAQ: YHOO) has the #1 portal, #1 email service, #1 prescence in the key Asia market, and leading positions in pretty much every other vertical. They are also -- like Google -- investing tons of money in servers to make their services speedier and have recently acquired many interesting companies.
Value: LESS. Despite the great assets involved, Yahoo is run by a man who has a hard time speaking the English language, whose daughter has starred in a reality show about spoiled kids, and who doesn't know how to use email. As a result, MORE becomes LESS.





Clear Channel: Less is More
Strategy: LESS. In late 2004, Clear Channel (NYSE: CCU) embarked on a bold plan (incredibly) titled Less is More. The stated goal of this plan was to reduce the amount of "clutter" (i.e., ad units) per hour on its radio stations in order to boost listening. The super secret goal was to push advertisers from 60 second commercials to the more expensive 30 and 15 second ad formats. This program appears to have been at least modestly successful due to a significant year over year decline in sucktitude at Clear Channel radio stations.
Value: MORE. Clear Channel's stock has recently rallied and management has accepted a buyout offer from private equity firms. Including the 2005 spin-outs of Live Nation (NYSE: LYV) and Clear Channel Outdoor (NYSE: CCO), Clear Channel shareholders have done pretty well for themselves since the Less is More strategy was implemented.

Newspapers: Less is Less
Strategy: LESS. Newspapers are reducing everything in sight including: employees, subscribers, revenues, reporting staff, and even the physical size of the newspapers. In fact, they have cut everything except their margins...a fact which has prevented them from reinvesting in growth areas like they should be. In short, they are screwed.
Value: LESS. Newspaper stocks go down every day.

Critical Mass Supplier

I have an idea with a huge market, a totally underpenetrated if not virginal market, which would control the most important component of most business models.

MySpace was bought by Fox (NYSE: NWS) last year for $580mm. Youtube was recently bought by Google (NASD: GOOG) for $1.6bn. Plenty of Fish is pulling $5-10mm per year in topline with a guy, his gf and a couple of servers in their basement. eBay (NASD: EBAY) plods along without having done anything new in half a dozen years, basically living off it, while Friendster had it, and then failed to detonate it at the right time. None of these entities offer anything that can't be or hasn't been replicated by dozens of pretenders and assorted Indians in Bangalore.

What is the key ingredient these successes have which the failures strewn on the road behind them lack? Critical mass.



The best way to make money in today's world bar none would be to become a supplier of critical mass. Companies thrive on reaching the point at which they have such a base of customers that use their services that their services become an order of magnitude more valuable to every marginal customer than their competitors' services which lack critical mass. So why not supply this input which is so crucial to success?

• Fact: Most ideas hinge upon "getting critical mass." For most business models this is achieved in the 18th month of projections, or the Null Set month of reality. This ensures that demand would be high.


• Fact: Critical mass is cheap to manufacture, requiring only one critical mass machine based on a shifting flywheel design, no associated ongoing capex, no labor, no operating costs. This insures that the cost would be low.


• Fact: Critical mass is an intangible if not entirely asbtract concept. This ensures that achievable supply may be infinite (or non-existent).

Recommendation: Supplying critical mass is an extremely attractive business due to the high demand (no substitutes, mission critical input), low fixed costs, and marginal costs of zero. The key to becoming an effective supplier of critical mass is getting large enough that everyone will go to you as a supplier of critical mass. We expect that after building your own critical mass machine or using the design we depict above, this would happen roughly 18 months into the life of your startup firm.

Molybdenum, the Sasquatch Metal

Molybdenum has been making the rounds as an alleged additive for making steel alloys and as a catalyst in the production of certain petrochemical products. As a metal with consumable uses, limited substitutes and a limited supply, it tends to have inelastic demand....allegedly.

I allege that much like the sasquatch, molybdenum does not, in fact, even exist.

Points Which Point to the Non-Existence of Molybdenum:

• Has anyone ever touched molybdenum? Or seen it? I've seen or touched platinum, silver, gold and most metals, except uranium which I am willing to take on faith. I've never met anyone who had a molybdenum cufflink or a a ring with a molybdenum setting.


• Molyjhkldjaslkdjaslkd. Not a name you would give to a real substance, much less a metal. It seems like an inside joke about Molly B's Denim. Who is this Molly B? And where are her denim dungarees?


• The price has gone up from $2 per pound up to over $40 in just a few years (currently in the mid-20's). It is clear as to why the market hasn't corrected itself -- it is difficult to bring on formerly uneconomic molybdenum mines or copper mining trailing operations (where molybdenum can allegedly be found) when molybdenum does not actually exist.

Recommendation: Per Mr. Juggles Investing Commandment 5b you must verify that that which you think exists in an investment, actually exists. The non-existence of molybdenum could prove a crushing blow to stocks of firms who allegedly mine the possibly fictional metal.

Diversification, a Euphemism for Crappy Investment Option

I have read two articles today, which is my daily limit.

Linked from Going Private was this article on hedge fund and private equity shops investing in big budget movies. The second article I found while Googling a rationale for the existence of the catastophe bond .

The articles contained these excerpts respectively. 1st excerpt:

For its part, companies such as Virtual see Hollywood as a potentially lucrative place to diversify investment portfolios. And Virtual is pursing that strategy in a significant way, investing in Leonardo DiCaprio's "Blood Diamond," Brad Pitt's "The Assassination of Jesse James," and George Clooney's "The Good German."

......

As a result, Virtual covered about $125 million, or half of the $250 million it should cost to make and market "Poseidon" around the world. At the current rate of ticket sales, Virtual could end up with $75 million or so from "Poseidon" — meaning it could lose more than $50 million on the movie, said two people familiar with the film's finances. A Stark executive disputed that worst-case scenario and also said its Hollywood investments should not be judged on the domestic box office of one movie.

2nd excerpt:

Advantages of [catastrophe] bonds are that they are not closely linked with the stock market or economic conditions and offer significant attractions to investors. For example, for the same level of risk, investors can usually obtain a higher yield with CAT bonds relative to alternative investments. Another benefit is that the insurance risk securitization of CATs shows no correlation with equities or corporate bonds, meaning they'd provide a good diversification of risks.

I can provide some other investments that would provide attractive diversification for these companies -- the roulette wheel. Some secondary thoughts: If you have a proprietary algoritm that picks Poseidon as a likely hit, it's time to get a a new algoritm. Libor+230 is an insanely low risk premium for the chance of losing all your money if Mexico has an Earthquake in the next three years; to compare the market pricing for secured near investment grade debt is L+220. If a Mexican offered me that deal, I'd build a fence around him on the spot.

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Quotes Entirely Relevant to Investing

The upshot is that the points where defensive or aggressive investment positions are most effective are also typically the points where one will, at least briefly, look like an idiot for taking them.
-Hostile Trends, John P. Hussman, Ph.D.

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Long Beer Diplomacy

Crack reporting from the WSJ undercovers an industry previously unknown to me: Beer Diplomacy. The increasingly multinational nature of business will only increase the demand for beer diplomats and consumer products diplomats in general. We are actively seeking ways to increase our exposure to this sector and will advise readers appropriately.

From the WSJ.
Anheuser-Busch has been a sponsor of the World Cup since 1986. And it didn't expect to find itself in this bind when it paid an estimated $80 million in 1998 for exclusive alcohol rights to the 2002 and 2006 World Cup tournaments...German newspapers were reporting that beer fans were furious about the prospect of drinking the American brew at the tournament...If Anheuser-Busch insisted on enforcing its exclusivity, it was clear it would annoy some Germans who wanted to drink German beer and generate bad publicity for the company.
So Anheuser officials undertook an unprecedented act of beer diplomacy. Tony Ponturo, Anheuser-Busch vice president of global media and sports marketing and the executive who signed the World Cup sponsorship deal...He proposed letting Bitburger [a chief competitor] sell its beer along with Bud at the stadiums and at some promotional events. In return, the American company would gain the right to use the name Bud, instead of just Anheuser-Busch, on billboards along the fields -- and visible to viewers watching on TV at home.

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Long: Death Squad Start-ups

Dedicated to providing our readers with the bloody edge of globally diverse venture opportunities, our recent research has revealed that multiple opportunities in the "Death Squad Start Up" business exist. This research supersedes our recent recommendations in the armed piracy sector.

Start up costs are extraordinarily small, given the strength of the U.S. Dollar in the region and the low cost of critical hardware (RPGs, AK-47 models, etc.) many of which are...

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Rotten Tomatoes in Movie Theaters for RGC and CKEC

Movie theater chain AMC has talked a lot about the potential causes of box office decline. This slide, filed with the SEC, shows that box office receipts have decline in tandem with the number of rotten tomatoes per movie. Quite frankly, I do not understand why movie audiences enjoy watching movies in theaters with rancid fruit but it begs the question: Why haven't the movie theaters increased their tomatoes per theater allocation?



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Smurfiest Smurf Investment Vacation Homes in Turkey

What would you say if I said that you could live like a smurf? Would you say was I acting a little smurfy? Or that I was positively smurftastic? If the latter, then we have a great investment opportunity which will allow you to take advantage of the Turkish real estate boom.

Smurf Village located in Akbuk Bay, Turkey, within 500 meters of the Aegean Sea.




There are five discreet reasons to invest in a vacation home within Smurf village:

...

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If Excel was a Drug, I'd Sell it by the Gram

Our research has uncovered conclusive video evidence that Glenn Hubbard's impersonator and business school hanger-ons look incredibly silly when dancing in suits. I eagerely await Dance 360: Business School Edition, which I'm sure will air right after The Apprentice: Dance 360 Edition on the CW.

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If Race Car Drives Have Corporate Sponsorships Why Don't Bankers?

In the past, we have talked about the huge underunderstood markets for Financial Mudpies and Emerging Market Pillows. We believe a similar contagion could break out in the underundertsood Advertising in Finance market.

It's all about eyeballs and disposable income, so why not place your advert in the areas where both are most concentrated?

The financial profession and its customers have more money than they know to do with, which is leading to private equity firms throwing billions to...

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Why does Google Talk Make the letters "BP" Blue When You Type It?

This now confounds us and we need it solved. Mail an email to misterjuggles@gmail.com and tell us why Google Talk makes the text "BP" blue in messages. We will paypal $50 to the best* answer as of a week from now. The criteria are both subjective and objective as determined by our advanced DCF Correctness Model. We reserve the right to republish the theories which are especially awesome, with attribution of course.

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The Big V, the Big C and the Big WTF

The UK is a land of fear. Everything is geared to frightening the populace into a frenzied state. The free daily papers consist almost entirely of fear mongering journalism about violence in schools, poisons in foods, death by cellphone radiation, minicab rape, murders of Britons on Holiday, genetically altered crops. All of this is complemented by a steady torrent of T&A, usually on the same page. Mind the gap, mind the taxi, mind the man with the gun, mind the man about to violently rape you, mind the totty, mind the CCTV, mind the et cetera. Big Brother will never stop reminding you to mind while you are in the UK. Even the escalators have stop buttons positioned every few feet, as if escalator rides are a high risk endeavour.

This context will not help you when faced with the Creepy V.



No, this is not an educational ad warning about the dangers of "vagina" to young men (which are plentiful) nor is it an ad for outsourcing child molestation to letters of the alphabet. The Creepy V is the avatar used to market Virgin's new Cancer Cover product which "can give you a cash lump sum to help you financially if you’re diagnosed with cancer in the future." I'm not a big believer in insurance...


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Quotes Entirely Relevant to Investing

Martins: Have you ever seen any of your victims?

Harry Lime: You know, I never feel comfortable on these sort of things. Victims? Don't be melodramatic. Tell me. Would you really feel any pity if one of those dots stopped moving forever? If I offered you £20,000 for every dot that stopped, would you really, old man, tell me to keep my money, or would you calculate how many dots you could afford to spare? Free of income tax, old man. Free of income tax - the only way you can save money nowadays.
-From the movie version of Graham Greene's The Third Man:

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When You Know You've Been Shorted

My GF: How do I make it so I'm invisible on Google messenger?
Me: But I'm the only person on your Google Talk buddy list...
My GF: So how do I do that?

Recommendation: Market underweight me.


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"Smith Barney, Why do you hate your customers?" A Play by JD

A tale of dinosaurs in the age of robots.

"For the customer, who doesn't enjoy high levels of service and has no respect for their money, Financial Management Account, by Smith Barney"



JD: I have a brokerage account with you. A relative used to work there and having a live broker helps for things like buying producers of Japanese toilets or Russian Petroleum on their native exchanges rather than illiquid domestic ADR's.

Smith Barney: Yes, I am a well-known, venerable brokerage house, built upon the philosophy that customers should be rich, have low expectations and a deep self-hatred...

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Quotes Entirely Relevant to Investing

Patience is waiting. Not passively waiting. That is laziness. But to keep going when the going is hard and slow - that is patience.
-Leo Tolstoy

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McDonald's Gets It

McDonald's (MCD) is known for supplying products so good that they're dangerous, whether they be steaming hot coffee or obesity causing french fries. But they should be known more for getting it. Yesterday, McD's announced that they will be selling exercise DVD's along with their fast food. They get 'em coming and going...

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Short Coca-Cola Blak

My position is so short, it may actually go negative short, which would be a long and would be terrible for all. Just like this horrendous disgusting concoction from Hades. Coke with double the caffeine, half the carbs and infinitely more "rich coffee essence."

Just as a service to the Coca-Cola Company (KO) here are some other combinations which, if you care about your shareholders even a little, we recommend you should never combine.

• Mayonnaise, beer and walnuts.
• Corriander and Bette Middler...

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Long Japanese Bathroom Technology

Returning from a recent trip to Tokyo and enamored with Japanese technology in general -- and bathroom-related technology in particular -- I recommended that an acquaintaince of mine pick up a few shares of Toto. Two weeks later, I find out that he has invested in a comeback attempt by Toto, the multi-platinum, Grammy-winning band responsible for the hit, Africa.

I suppose I should have been more specific, especially since US investors are typically skeptical that a toilet maker can sustain a $3.6bn market cap and a 37x P/E. To clarify and rectify my mistake, I hereby formally recommend a long position in...

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I Will Teach You to Be Rich: Clean Tech Pure Play

Readers are always emailing me, asking me to explain exactly how I maintain such an enviable track record. So here's a step-by-step case example of how to make money on a startup.

Step 1: Find a hot sector
Investors often talk about the "rising tide" law of investing: better to own a mediocre company in a great sector than a great company in a terrible industry. When a sector gets hot, the crap often rises as fast (or faster) than the cream.
No sector is hotter right now than "CleanTech." How hot? Big name venture capitalists are now raising cleantech-only funds. Bush discusses clean energy in every address he makes. And solar power -- solar! have I gone back to the future? -- stocks like Evergreen Solar (ESLR) and SunPower (SPWR) are doubles coming out of their IPOs.


Step 2: Create a pure play
Investors love pure plays. When a sector is hot, they want as much exposure as possible. Take online advertising. Sure, News Corp (NWS-A) owns MySpace -- the fastest growing web site and community -- but you have to buy a whole bunch of newspaper, cable, and satellite TV assets too. The performance of those assets will drown out any positive developments at MySpace. Instead, investors clamor for stocks like Yahoo (YHOO) and Google (GOOG) ...they're pure plays.

So for cleantech, I will start a company from scratch to ensure it's a pure play.

Step 3...

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It's Direktanlage Wednesday!

Everyone post your insider information in the comments section of this post. There is no way the SEC will find out about us this time! Make sure your comments follow our specific Direktanlage Trader checklist as outlined below.

Comments must:

• Contain insider information that will let us reap fraudulent (and likely abstract) profits.
• Be highly illegal.
• Be sourced from a Croatian, German, Russian or someone of evil descent.
• Give guidance on alleged inside-trader Monika Vujovic...

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Disruptive Jobs of the Past

The new X-Men comes out this summer and on scanning the cast list, I noticed that Psylocke will be played by Mei Melancon, who has done little other work of merit, except for an appearance on Deadwood. Her exact role:

"Deadwood" - Childish Games (2005) TV Episode (as Meiling Melancon) .... Chinese Slavewhore

If ever there was a disruptive industry, slavewhoring would have to be it. Back in the good old days, being a land (capital) owner meant you would have your labor done by your slaves and your sexual needs satisfied at the local whorehouse. This was just how it was done, and...

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Quotes Entirely Relevant to Investing

From Ruminations on Russia

"The job of a Russian man is to plant:
His house in the ground (sic).
His seed in a woman.
His neighbour in jail."

More Investing Quotes

Short Dick Grasso

Today, a recurring Dealbreaker feature involving Dick Grasso has spurred our analysts to break another aspect of the scandal involving David Delainey and Mark Davison, first exposed by Long or Short and threatening to engulf Wall Street: Star Trek Celebrity Imposters on Wall Street.

The Dick Grasso article clued in one of our staff who, on further investigation, has revealed that Mr. Grasso is also involved in the imposter scandal. Mr. Grasso has reportedly been taking fees for appearances at various Star Trek functions as "Arturus," a guest character on Star Trek Voyager played by Ray Wise...



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Awkward Moments in Marketing

From a very earnest, deep-voiced P&G (PG) advertising executive on a recent conference call:

"When a girl starts menstruating, we want to be there...on the radio, in print, and on the web sites with relevant advertising."

From a very earnest, eager McKinsey consultant:

"Now we're focused on figuring out what it is about Metamucil that makes it so attractive."

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Satan's Portfolio: MO, RMBS, DLM

Here is an explanation of Johnny's Satan's Portfolio Investing Thesis.

Altria (ticker: MO)

Why would a $145bn market cap company change its name? If it's business was selling products to slowly kill its customers through addictive fire-lit tobacco. Satan knows that even that kind of mortal churn is capable of generating a stream of free cash flow to reward its stockholders. He also relates personally to the business strategy implicit behind the name change:

“They are trying to bury themselves. This is a name and brand the objective of which is to make themselves invisible.”

Invisible merchant of death. Play to the Dark One's ego, Altria, while selling your murderous and addictive maccaroni & cheese......

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Biopiracy Downgraded to "Not At All Pirate Like"

The recent Captain Hook Awards for Biopiracy do not play into the piratery investing series, because they are not truly piracy. If so-called "Bio-Pirates" were using frigates, sloops and galleons to plunder the likes of Genetech (DNA) off the Barbary coast, then aye, we could approve on the basis of demonstrated piratery...

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Short Cocaine, Heroin, Microsoft

Recent research by Long or Short questions the purchasing power of the Family of Four ("FoF"). During the process of investigating pricing changes relevant to the decline of FoF purchasing power, Long or Short also identified several trends in the wholesale and retail drug trade.

Increasing prices in Cocaine and other "A-List" narcotics have jump-started online disintermediation of street dealers and spawned...

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Quotes Entirely Relevant to Investing Abraham Lincoln

That some should be rich shows that others may become rich, and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another; but let him labor diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built.
-Abraham Lincoln

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A Letter to Our Shareholders: On Being Taken Over

Recently, Carl Icon, a noted corporate raider and greenmailer and Chairman of Liquid Icon Capital, LLC ("LIC"), announced his acquisition of a significant block of Long or Short Capital, LLC stock along with his intention to compel changes in management here at Long or Short.

Because we are happy in our cushy offices and enjoy our substantially over-inflated salaries and bonus plans ripe with inexorable options in a fictious stock...

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Piratery on the Catwalk

It was only a few weeks ago, that we outlined that providers of pirate patches and clothing would benefit from the rising piratery tide. Now witness piratery on the catwalk...


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Tales from My Internecine Struggle with the IT Department

I begin my descent to the 23rd floor. As I exit the elevator bay at my destination level, a colony of cubicles are laid out in front of me, perfectly aligned as if created by African honey bees. I scan the area and alight East, turning around a corner.

The monstrous IT guy remains motionless just ten feet away. Emotions give way to cognitive thought and I train my glare on him. Almost on cue, he begins his approach.



With blinding acceleration, he lurches onto me with a powerful "thud crackle". He slams into my chest. The impact is incredibly powerful, knocking the wind out of me. His huge arms envelope my complete upper body and I can feel my chest plate move as his beak grinds against it...

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Carl Icahn is Blogging?

It would be remiss of us to fail to note the arrival of Carl Icahn on the blogging scene via his new entity Liquid Icon Capital.

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The Purchasing Powerless

A macro trend that has concerned us greatly is the ability of the "family of four" unit to afford the modern American life. In previous generations, the FoF could afford any leisure they saw fit from sporting events to theaters to mega yachting; they could use the remainder of their moneys to run family farms which were crucial to soaking taxpayers for billlions in subsidies and ensuring that sugar was replaced with corn syrup in soft drinks...

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Quotes Entirely Relevant to Investing Powerpoint

An Ode to Powerpoint:

While you were making your [Power­Point] slides, we would be killing you.
-Russian officer commenting to a US offier on who would have won if we had ever actually fought WWIII in Western Europe.

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Short: Mark Davison

Continuing investigation by Long or Short Capital into the widening "Star Trek Imposter" scandal has revealed that Pitt-Fox, Kelton's Head of Corporate Finance Mr. Mark Davison has also been embroiled in the controversy.



Prosecutors allege that Mr. Davison has been supplementing his income (and failing to report it) via similar Star Trek convention gambits as recently uncovered by Long and Short with respect to Enron bad-guy/Star Trek android David Delainey...

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Ask Julia About Your Length

Julia Mezzanine Tranche is an analyst at Long and Short, as well as a member of the Non-Certified Advice Columnists of America, the International Society of Bad Advice Columnists and Chairwoman of the Prestigious European Association for Paperclip Entrepeneurs and Analysts (PEAPEA).

Note: some letters may be "enhanced" for self-glorification.


Dear Julia:

Recently, Long or Short Capital's Johnny Debacle wrote an [interesting and dynamic piece on Phantom Bonds totally characteristic of the brilliant analysis that typifies Long or Short Capital]. He indicates:

If you have a 20 year plus horizon, then you probably want an allocation that is heavily weighted towards equity, say 90-100%. But you could supplement a 100% equity allocation with an incremental 20-30% of phantom bonds, without disrupting your asset allocation.

As I am 102 years old, my own horizon is somewhat shorter. Can you recommend some Phantom Bond allocations that might be better for my needs?

Signed,
I'm Dreadfully Hearing Impaired in Tiny Ithica, Texas.

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JD's Lending No-No's #2 and #3

Read JD's Lending No-No's #1a and #1b. The focus today is on what can be gleaned from a lender presentation.

Lending No-No #2a: Don't loan to companies who will need to control costs, if they have no connection to actual real world cost controlling.

Examples:

I was recently in an Italian city for a meeting. The company I was there to see indicated that the best way from the Aeroporto to the meeting was by taxi, so I trusted them and took a taxi. It was €80. I later found out that there was a €5 shuttle express that would have taken me with half a km of the meeting and would have taken about 10 minutes more. These are the people charged with cutting costs in a large industrial company that operates in a cyclical sector that saw several competitors file for bankruptcy only a few years ago.

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How Not to Name Your Company

In my unending search to uncover undervalued and badly named stocks I came across: "CAPEX SA" (CAPX.BA). CAPEX is an Argentinian electric utility serving the completely deserted but somehow still under-penetrated Patagonia region of South Ameria. We are initiating coverage of CAPEX with a SELL rating. CAPEX has a strong track record of raising and spending capital but that seems to be where the story ends.

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Appropriately Named Executives

I haven't seen such appropriate names since Michael Stonebreaker played football at Notre Dame.

• Lakshmi Mittal, CEO of Mittal Steel Company, a redundantly-titled corporation.


• Cedric Burgher, former CFO of Burger King (he never should have left!).


• Rick Wagoner, CEO of GM

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Quotes Entirely Relevant to Investing Jesse Livermore

A loss never bothers me after I take it. I forget it overnight. But being wrong –not taking the loss—that is what does damage to the pocketbook and the soul.
-Jesse Livermore

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Short Boy-on-Boy

Long or Short Capital has initiated prophylactic coverage of "Boy-on-Boy" in conjunction with recently picking up "Girl-on-Girl."

The Boy-on-Boy space is saturated by multiple market actors and opportunities for price discrimination are muddled by a highly fragmented marketplace. Increasing commoditization in the space limits opportunities for upside absent domination by a stronger alpha player. In addition, low or no barriers to entry mean that the stiff foreign competition (Dutch in particular) has deeply penetrated the nearly frictionless space from the bottom up...

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Are Phantom Bonds Right for My Portfolio?

A lot of questions have been coming in about so-called Phantom Bonds and where they fit in the asset allocation of a personal investment portfolio.

The answer is that it depends.

If you have a 20 year plus horizon, then you probably want an allocation that is heavily weighted towards equity, say 90-100%. But you could supplement a 100% equity allocation with an incremental 20-30% of phantom bonds, without disrupting your asset allocation. How is that possible? Well one of the unique features about phantom bonds is they don't actually exist. So in addition to the existing equity level rate of return, phantom bonds would be adding both non-existant diversification AND non-existant fixed income payments.



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Revising Snoop Dogg Down

Like a company that has expanded outside its core business, Snoop Dogg has overextended himself. He has peaked and is ripe to be shorted.

Snoop Dogg has rebranded himself repeatedly, going as:

• C. Broadus
  
• Calvin Broadus
  
• Snoop
  
• Bigg Snoop Dogg
  
• Snoop Doggy Dogg

He lacks focus and recently has gone even further afield. He has appeared in advertisements for Chrysler, promoted hot dogs, and performed cameos in multiple movies. He even went so far as to produce his own porno film.



All this means that Snoop Dogg's returns on incremental capital have been...

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GOOG No Means Yes Baby Part 3

(Read GOOG, No Means Yes Baby Part 1 and GOOG, No Means Yes Baby Part 2 )

Intrigued by the reaction of Mr. Moncrief, in Part 1 and the general inability of these analysts to take "No" for an answer, this analyst arranged for an interview at Mr. Moncrief's midtown offices. We were particularly interested in the impact personalities might have on sell-side professionals. What was the model for their attitude about these stocks that seemed to defy all caution? Ignore all negative news? The transcript is attached below.

Prescott R. Moncrief III (on phone): "...c'mon Bateman. We'll kamikaze over to Nell's, chase some cotton underwear. Charlie Cushing knows this 18-year-old bimbette that's gor-geous. Hold on. WOAH! This skirt who looks just like Ailcia Witt back when she was still hot, like in that Sopranos ep, just walked in, let me call you back, Patrick. Hello. What have we here? I'm Prescott R. Moncrief III, the administrator of this facility. And who might you be?"

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Piratery and Warren Buffett

In connection with recent recommendations on piracy, Long or Short Capital's managers have been closely tracking developments in the privateer market. So too has one famous Nebraskan investing guru.

We have uncovered renewed interest by Berkshire Hathaway in piratery and, in fact, the adoption of piracy directly by Berkshire's Warren Buffett, and therefore we are boosting our recommendation.

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A Guide to Boring Conversations with Financial Professionals

You: So did I tell you about my portfolio? It's totally kicking ass, and that Oil Conglomerate Search Engine company is going to be the name of my new boat. Also that Commodity Producer Consumer Electronics company has been generating stellar returns over the last 6 months. It's green every day. I should just start my own fund. I AM THE MAN.

You: So I read in the Journal today, [insert anything].

You: [Any story involving golf or fish or boating where someone does not die or at least get maimed by sonar]

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Quotes Entirely Relevant to Investing Solzhenitsyn

If one is forever cautious, can one remain a human being?
-Aleksander Solzhenitsyn

More Investing Quotes

Sell Out Saturday: Q3'06 Mid-Quarter Earnings Update

We are revising our guidance down for our Q3 revenue projections. Current contextual CPC advertising is down 60% sequentially period over period. Although our spirits are buffetted by our Infinite% improvement in YOY Q3TD growth, this is probably due to a slight misunderstanding of basic principles of logic and arithmetic. Static text ads are performing as expected, while Blogads is only slightly below plan at $Pretty Good in attributable operating cash flow.

After an unstensive SWOT analysis...

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Short Novartis

The Wall Street Journal is reporting "Novartis to Pay Infinity to Develop Cancer Treatments"

While we are all for cancer research, it will be really hard to get attractive returns for shareholders on an initial investment of infinity dollars...

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I bet you've at least seen the MOVI

Our previous pieces on Moviegallery (MOVI), are looking pretty damn good (see our earlier reports Corporate Tarpit and Translating Corporate Speak: MOVI & BBI) given MOVI's performance since we released our market moving analyst reports. Same thing happened with..

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GOOG No Means Yes Baby Part 2

Read GOOG, No Means Yes Baby Part 1)

Quiz: Place the two statements in chronological order.

Statement 1: Google (Related Reports) Letter to shareholders-

We will make decisions on the business fundamentals, not accounting considerations, and always with the long term welfare of our company and shareholders in mind. Although we may discuss long term trends in our business, we do not plan to give earnings guidance in the traditional sense. We are not able to predict our business within a narrow range for each quarter. We recognize that our duty is to advance our shareholders' interests, and we believe that artificially creating short term target numbers serves our shareholders poorly. We would prefer not to be asked to make such predictions, and if asked we will respectfully decline. A management team distracted by a series of short term targets is as pointless as a dieter stepping on a scale every half hour.

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Mr Juggles Investing Commandments (#3 & #4)

In this installment (Read Mr Juggles Investing Commandments #1 and #2), the focus is what you can discern from a company's investor relations team.

Rule #3: Stocks with attractive IR women are no more likely to appreciate than average, but they are more fun to cover.

Stocks are, in the end, a good that is subject to the normal laws of supply and demand. A CEO who hires an attractive IR woman understands marketing and is stimulating demand; after all, his target demographic -- financial analysts at large investment firms -- is almost exclusively male and geeky. Unfortunately, these same CEOs have a propensity to overspend and have questionable judgement (tending to, say, sleep with members of the IR department). Thus, on balance, these stocks are not any more likely to perform better than stocks with unattractive IR women or men but, if you are in the aforementioned demographic, you are more likely to enjoy your time with the company. That's a net win for you. Half of investing is picking the right asset class.

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GOOG No Means Yes Baby Part 1

Analysts are apparently panting down the trail for some "hot Google action." Our attention was piqued by reactions of leading sell-side analysts to Google (GOOG) CFO, George Reyes, at a recent Merrill Lynch investor conference.

Reyes initially commented that, Google is "getting to a point where the law of large numbers starts to take root..." He continued to say that "At the end of the day, growth will slow..." and that "We're going to have to find other ways to monetize the business."

The sell side responded with comments including...

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Chinese Military TV Announcers

Pickup any newspaper and you'll see stories about the rapidly growing Chinese economy. Most observers also know that the Chinese advertising sector has particularly strong prospects since advertising tends to comprise a much smaller part of developing economies relative to developed countries and this gap closes over time. But pundits have overlooked another key driver for the Chinese media and advertising sectors: the military host. These military hosts were a secret until Long or Short ventured onto the mainland in order to obtain shots directly from the CCTV feed...

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Improving Our Diversity Metrics

Long or Short Capital continues to diversify ethnically which we think is crucial to any investing strategy. We have renamed Equity Private to Julio Mezzanine Tranche, but you can refer to Julio as "the Mezz," or alternatively, Senor Tranche. The last title may be a little too formal for Julio given his status in the capital structure and the extent of his legal rights, but we'll see, as the possibility always remains that he will be a real bitch in a workout...

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Shorting David Delainey

Former Head of Enron Energy Services, David Delainey has problems stemming from his admission to acts of perjury including lying to the FBI. But those are peanuts compared to the trouble he is in for spending years posing as Star Trek's "Commander Data," and pocketing thousands of dollars in appearance fees at various "Star Trek" conferences and events.

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Quotes Entirely Relevant to Investing CPA Accounting

This one goes out to all our hard-suffering CPA-studying accountant readers:

"Accountancy was my life until I discovered Smirnoff."
-Vodka advertisement from 70's

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Sellout Saturday: For Charity

So I was clicking on our banner for the Grameen Foundation, because it’s a great cause and I like to check it out every couple weeks, and when I clicked through, I saw a woman, probably a very poor one, holding up a phone right at me and I couldn’t figure out why. I looked closer at her phone and realized it was NICER than my phone...

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Overheard in Our (Fictious) Office

I overheard JD discussing his Long or Short Capital marketing optimization strategy with Dr. Gupta, who had asked about our transition from our old Blogger home:

"Overall, this strategy has led to a runrate of Google hits which has doubled for [LongorShortCapital.com] vs [LongorShort.blogspot.com]. We have lost the SE query flows from "Short Mexican Joke" and "Sexy Chinese," but I think we'll survive, especially because "Scone"...

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Long on going Long Shareholder Lawsuit Lawsuits

According to the 10b-5 Daily, according to the Economist, according an article in the Stanford Law Review, according to a study by James Cox, according to data collected from 118 securities class-action suits between 1995 and 2002, 72% of institutions never claim their full share of the lawsuit proceeds.

The always interesting 10b-5 Daily notes that the article notes that institutional investors may be "violating their fiduciary responsibilities when they do not try to get their money" from firms violating their fiduciary responsibilities and could be the subject of "class-action suits" over the improper handling of class-action suits...

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Spam at Its Best

Dear ラブステーション-

I write kindly in response to the email you sent me yesterday, which was as followed (translated from Japanese by Google's "Human Translator Trapped in a Box" Service):

From: ラブステーション
Date: 22 Feb 2006 22:22:50 +0900
Subject: 　お待ちしております
To: misterjuggles@gmail.com

Is association with the Serret Bu woman whom it selects how? It gets wet to getting wet and the る woman who is sown anytime and being perfection free anywhere, it introduces...

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Quotes Entirely Relevant to Investing William Jennings Bryan

No one can earn a million dollars honestly.

-William Jennings Bryan

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Adding Google Site Search Module to Your Site

This is a secret sell-out. I struggled forever to get a small form factor site search module from either Yahoo or Google. At first, I opted for Yahoo as it seemed to be the more flexible code and hoped it would boost our Yahoo search ranking which seemed to blow. I settled on Google once I stripped out a bunch of different aspects of it and got into the smallest size possible. So if you want to add Google Site Search to your Site and in the slimmest fashion, use the code below. Be mindful that you need to replace the three bracketed portions ("yoursitehere.com") with your own url in the format as it is in the brackets. But remove the brackets. Works great in a sidebar, as you can see at the bottom of ours.

Here is the code: Link to Google Search Module Code

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If the Russian Can't Do It, It Can't Be Done

In the continuing spat over the investability of Russian equities, I offer the following picture which once again shows that Russian aircraft manufacturers (in this case Ilyushin) and Russian airlines (in this case Vaso Air) have everything under control.
>

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Short Expectations

The following was contributed last week by our new writer, Equity Private, who has an excellent blog about being an private equity insider. Both He/She/It ("Hsit"), along with Female to Be Named Later (links to her blog), will be contributing at will.

Meta data surrounding "investor relations" has the potential to become a derivative vehicle itself. Investor Relations ("IR") is a field which has developed into an art and a science due to the importance of earnings announcements and the triumph of the short-term (12 week) focused analyst over the long-term (12.5 week) focused analyst. Below, we outline a system to guide equity strategies in this realm...

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More Anti-Web 2.0 Wiki

Added some of the comments listed for the Anti-Web 2.0 wiki and also an image. We'll continue to update it as comments and trackback roll in. Check this anti-Web 2.0 Wiki out and add your own definitions...

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Satan’s Portfolio: RCII, Gazprom, and Verizon

Future additions will be in threes, as all bad things come in threes. Here is an explanation of Johnny's Satan's Portfolio Investing Thesis.

Rent-A-Center (ticker: RCII)

Rent-A-Center targets the least educated and poorest American demographics and sells them rapidly...

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Quotes Entirely Relevant to Investing

Advice is judged by results, not by intentions.

-Cicero

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Sell Out Saturday: Announcing Our Intention to IPO

On Blogshares.com. More details to follow but we will be marketing our IPO in due time. Prepare to have enough capital to be able to own a fictitious piece of us.

Follow Our Initial Public Offering

Short the Guy Next to the Guy

Months ago I got free business cards for longorshort.blogspot.com with the intention of some guerilla marketing. Never happened. So yesterday, I got around to doing something about it and and gave the guy who stands next to the guy who gives out free daily newspapers the stack of 200 business cards and offered to pay him $20 to...

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Longue ou court...en francais

Mes amis! Regardez cette page ici régulièrement si vous voulez lire des articles financiels en francais mauvais. Cette page = "super cool".

Read French

The Time Barron's Investing Thesis

Barron's

Fact: Barron's is the best mainstream financial publication, frequently making incredible calls. The question though is what is your catalyst for exiting your position? It's awesome to have a great reason (Barron's) to buy a stock, but it's decidely not awesome to not know when to sell it...

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How do you know if something is Web 2.0?

Web 2.0 is on the tips of fingers and lips of influentierati across the web. But how do you know if you, a product of yours, an investment of yours or a service you use is Web 2.0? This handy reference sheet will help guide you.

Is it a Web 1.0 idea repackaged, reinvested in, and resold as a new content delivery paradigm social calendar platform?

It is Web 2.0!

Does it talk about community or social networking without any natural way of accomplishing it?

It is Web 2.0!

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Quotes Entirely Relevant To Investing

There is a limit to the application of democratic methods. You can inquire of all the passengers as to what type of car they like to ride in, but it is impossible to question them as to whether to apply the brakes when the train is at full speed and accident threatens.
-Leon Trotsky

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Sell Out Saturday: Linking with No Shame

So our last true sell out effort, was changing this page to show candy ads. It yielded proof that our readers hate chocolate, since our finance ads got far more clicks. Today's effort won't be about direct revenue generation, but merely direct whoring.

We urge you, our readers, to post a link to longorshortcapital.com wherever you have the capacity to do it. Be it a forum you are a part of, an illegal underground file trading network which you rip for, or a website you run, post a link to our site. Any link posted will get a reciprocal link if you email misterjuggles@gmail.com. If you have any qualms about doing it or fear shame, just ask yourself "What would Genghis Khan do?"

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Long or Short Announces Q2′06 Dividend of $1.50

Creating value for our subscribers, that's what we are all about. If we don't get you with our content, we'll instead reel you in with our dividends. Long or Short Capital is happy to announce our Q2'06 dividend of $1.50 per subscriberholder per our dividend policy. A subscriberstake is now worth $75, assuming no growth and an 8% discount rate. Assuming just a measly 5% annual growth in our dividend gets you to a value of $200 for a subscriberstake. How much does a subscriberstake cost? $0. We bring the value to you. Given our float of 85 subscriberstakes and the no growth assumption, our current capitilization is...

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Fruit Drinks in Spain

In Saudi Arabia, they stone you for committing a crime. In Spain, they fruit you.



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The Cleavage Hypothesis

While subscribers to the Wall Street Journal don't usually read Vogue, the finance world does pay attention to at least one aspect of women's fashion: the length of their skirts. For the lay investor, I am not making a reference to stockbrokers starring at their secretaries' asses as they bend down to get more Form 144's. I'm referring to the Hemline Theory, which in its most general form, states that there is a relation between the "fashionable" length of skirts and...

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Article contributed by "Female to be Named Later"

Products So Good They’re Dangerous: AAPL

A recent lawsuit (see more details here) accuses Apple of making a product, the iPod, so compelling and feature-filled that it is dangerous to its user. In this case, the accuser claims the iPod's massive capacity for tasty tunes of tempting him...

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Long or Short Capital Reports Q2′06 Results

Long or Short Capital's fiscal quarter ended on 1/31/06, and the company reported their results in a press release on their site:

Mister Juggles: "We completed a watershed first Half to our 2006 Fiscal Year. Q2'06 was our best quarter ever, thanks to the genius of management and a compensation package which continues to be heavily weighted towards long dated options in the company's non-existent stock. We have an ever increasing amount of skin in the game so you should trust us, subscribe your friends to our site and find ways to generate more free cash flow for us which will turn into dividends for you...

Unaudited Financial Results for Q2'06 and additional commentary here

Quotes Entirely Relevant to Investing

"The Greatest Happiness is to scatter your enemy and drive him before you. To see his cities reduced to ashes. To see those who love him shrouded and in tears. And to gather to your bosom his wives and daughters."
-Genghis Khan

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Clear Buy Signal for ORCL

A clear buy signal for Oracle (ORCL) is provided in a SF Chronic Article on Larry Ellison's spending habits:

"In e-mails, which stem from a recent shareholder lawsuit against the technology titan, Ellison's accountant, Philip Simon, warns the billionaire about his habitual runaway spending...

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Incredibly True Quick Serve Restaurant Truths #2

Cedric Burgher, formerly the CFO of Burger King, is now the CFO of KBR, the division of Halliburton (HAL) that does contingency support and various government subcontracting in Iraq and hotspots around the world. Burgher moved from one about to IPO company....

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Revising Our Price Target for Google Down

Long or Short Capital Research LLC is revising its price target for GOOG down from "Infinity" to "Infinity-1"....

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The Cephalopod Index is Officially Out of Control; Long the Giant Pacific Octopus

We cannot get enough of Cephalopods (see our earlier analysis of Octopi investments and hand puppets) and we contiue to see this investment as one whose bull thesis will climb a (sea)wall of worry...

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Posting Halted: Excessive Volume

After almost two weeks of daily posting, Long or Short suffered an outage on Saturday that made people unable to sell their subscriberholderships and brought posting to a halt. Some of this has been attributed to poor internal controls, such as allowing Debacle to do whatever he wants on the backend or letting Kaiser alter accounting records to mask related party transactions which would reveal...

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Quotes Entirely Completely Relevant to Investing

"No matter how good our kung-fu is, it will never defeat guns."
-Iron Robe Yim

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Sellout Saturday: Fiscal Q2 Ends Within the Week

Subscriberholders are locked in; moneys to be distributed as well as a new "In Kind" non-monetary payment...

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Halliburton Loves that Dirty Water

This is why investing in evil is so profitable.

How else can you reconcile yesterday's Halliburton (HAL) news snippet(via the AP):

"The level of contamination was roughly 2x the normal contamination of untreated water from the Euphrates River."...

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Candy and Taxes

We are currently running a sophisticated multivariable marketing analysis of our readers. These three variables are what we think most embodies, you, our readership.

1) Investing
2) Taxes and Accounting
3) Candy

We have set out Yahoo Ads to default to Taxes & Accounting on Long or Short Capital (our new/future home). On our current/old home Long or Short @ Blogspot, we have...

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Short: Jack Bauer

Did you see the 2nd episode of 24? I've been a bit behind but I'm catching up on Tivo. When the show ended, Jack Bauer was in an airport with about 15 Russian terrorists. It looked like he had a handgun but they all had AK-47s. Also, his new girlfriend's son is in the same building and I get the feeling he's going to go overboard trying to protect that kid. No way Jack Bauer gets out of this jam. He's done for this time.

Long: Russian Terrorists
Short: Jack Bauer

Note: I haven't felt this good about an idea since I shorted Google at $87. That one didn't work out so I feel like I'm due.

Funniness vs Sketchiness

We have new, mature-themed analysis ready for consumption. But we debated internally the value of solid, humorous economic analysis versus the cost of sketchiness. On the one hand, Long or Short Capital cannot display this piece directly on our site; after all, 2/3 of our staff have children who may be able to read this site (if only we knew where they were). On the other hand, fiduciary responsibility demands that we satiate our subscriberholders desire for financial humor before all else, even decency. So in order to read the article you must answer an "adult" question. The correct answer will link you to the adult article. Good luck and no cheating please.

What is a laser disc?

A) A frisbee with a laser attached.

or

B) A video techonology similar to DVD's but the size of a record. (sub question, What is a record?).

Piratery Update: Short Indian Ocean Piratery

Our earlier pirate investing analysis stressed the importance of avoiding oil routes, places with heavy security presences and places with significant competition. The competition in the Indian Ocean is such that pirate entrepeneurs often have to settle for second rate targets which puts sigificant downward pressure on booty margins. See this CNN report titled "U.S. destroyer chases down suspected pirate ship." For those investors who did not heed our advice and thought it was wise to buy a few speedboats and rocket propelled grenades from Omar on the Bozaruto Islands, well, you just blew your children's college fund. Explain that one to little Timmy.

The U.S. Navy boarded an apparent pirate ship in the Indian Ocean and detained 26 men for questioning, the Navy said Sunday.

The 16 Indians and 10 Somali men were aboard a traditional dhow that was chased and seized Saturday by the guided missile destroyer USS Winston S. Churchill, said Lt. Leslie Hull-Ryde of U.S. Naval Forces Central Command in Bahrain.

Sailors aboard the dhow told Navy investigators that pirates hijacked the vessel six days ago near Mogadishu and thereafter used it to stage pirate attacks on merchant ships.

Recommendation: Increased pillaging of dhows is a classic indicator that the local pirate market off the Somalian coast is over-saturated. We recommend a Short position on those markets as they are likely to experience an increase in pirate captures and a decrease in local booty margins. This would be a great time to jump into Latin American Pirate Bonds which are currently yielding a juicy and robust 29%.

Quotes Entirely Completely Relevant to Investing

Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.
-George Washington

Sell Out Saturday: Subscribers Get Rich

It is a little over a week till the end of our Q2'06 and it is time for our subscribers to think about the impending riches which await them per our dividend policy.

But how can you get more rich? Email a link to the best Long or Short Article (see the list of Our Best Posts on the left sidebar) to a good friend of the other sex. In fact, to make it easier for you, I have written the email for you so that you can just copy and paste it.

Dear [Insert Recipient's Name],

This site is very great and I think you would love to read it and click all their ads. Here is an example of an article I really liked which compares investing to dating http://longorshortcapital.com/investing-in-public-equities-is-like-dating.htm.

But this is not the only reason I have contacted you. Recently I have found myself lost in thought thinking about you and our time together. I know, for a lot of reasons it doesn't make sense, but I long for your lips and the tender way your hands brush against me when we're around one another. I think we'd be great together and I'm ready to make hundreds of babies with you. Hopefully, I'm not coming on too strong and you feel the same.

I long for your reply and be sure to check out that incredible longorshortcapital.com while I'm waiting.

Oceans of Love,
[Insert Your Name Here]

We have tested this email with science, and it has proven to be the most successful at generating pageviews and ad revenue. Be sure to CC us on all emails (misterjuggles@gmail.com), and whoever sends out the most gets a digital kiss from our staff. We love you too.

The Sell Side: A Case in Point

So I'm doing my job, analyzing a company that doesn't make the widgets, but instead, supplies the engineered material which goes into making the products which protect the machines which make the widgets. They need millions of dollars to finance the widget-producing-protecting-producing procuess. The management and their bank presented the company to a meeting of potential investors with a combination of numbers, absurdist terms like "Syneries from A Vertical Roll-Up Strategy" and "Greenshoe MFN Language" and slides. They were trying to sell us on why we should invest tens or even hundreds of millions in their company. Then they whipped out this slide. Note that the original slide had an X axis which listed the company and its competitors and a Y axis which listed abritrary cherry picked categories; I have edited the slide to protect the parties involved:



Dots? That chart is the basis upon which I should direct our investors' money? By dots? AND HALF DOTS? Some poor 4.0gpa-Ivy league grad sold his/her soul to the I-Banking Gods to spend 90 hours per week creating crap like this?

That's the Sell Side, baby.

Is There a Bubble in Housing Bubble Blogs?

Given Johnny Debacle's large personal investment in the Denver housing market, all of us here at Long or Short try to keep an eye on the housing market. As a collective, we are skeptical that housing trends will hold up and are worried about having to bail Johnny out of his housing debacle.

Even more concerning, however, is the emerging bubble in housing bubble blogs. These blogs, devoted to detailing the demise of the housing and refi boom, have begun to proliferate more quickly than Freedom Loans or all those anacondas I let loose in the Everglades in the 80's.

Evidence: in just one query on Google's blog search, I turned up the blogs below. Undoubtedly, there are more out there. Is the public aware of this pernicious threat? What is being done by Greenspan/Bernanke & Co to ensure a "soft landing"? We need answers, the Fed, and we need answers now.

http://bubblemeter.blogspot.com/
http://housingpanic.blogspot.com/
http://thehousingbubble2.blogspot.com/
http://socalbubble.blogspot.com/
http://bighousingbubble.blogspot.com/
http://seattlebubble.blogspot.com/
http://www.nyhousingbubble.blogspot.com/
http://www.theburstingbubble.com/
http://www.piggington.com/
http://housebubble.com/
http://marinrealestatebubble.blogspot.com/
http://getforeclosures.blogspot.com/
http://bubblebobbleisthebestgameever.blogspot.com/


Please, raise the blogging interest rates or constrict the blog money supply now. The Irrational Blogbooberance must stop now.

Satan's Portfolio

Ethical and socially responsible investing has made a lot of buzz as a way of dollar voting for a better world. My instinct as an investor says that those fund flows are going the wrong way and their returns since inception back up my argument.

The more profitable questions to answer are: What does Satan invest in? How does he fund evil? Satan's Portfolio will track the perfomance of the stocks which Mephistocles is proud to put his money into, namely, companies who benefit from suffering, death, war, tobacco, nutrasweet and fraud.

Halliburton (ticker: HAL)

Satan's Investment Thesis: Chaos investment. Halliburton does best when the globe is at strife and their lucrative contingency support KBR subdivision can take advantage of the chaos and pad their high margins with fraud. Also benefits from a rise in oil prices which squeezes the poor into not being able to heat their homes (or something I don't really know as I heat my house with burned $20's). Yes, it's almost cliche to have this as the first entry into the portfolio, but within 5 minutes of my mentioning this idea to Juggles, our site's logs showed a visitor from Halliburton.com (Proof). Chilling.

Experian, a subsidiary of GUS Plc (ticker: GUS.L)

Owns credit services and affiliate marketing products which straddle the line between deceptive and fraud. Their division, lowermybills.com, is responsible for a significant portion of all pop-under ads. They target unsophisticated people who cannot discern the validity of their services -- their "customer" demographic is the poor, the in-debt, and the stupid. Experian is a pillar of the credit system of this country which is backwards, outdated and unfair. And I LOVE it. So does Satan.

Oracle (ticker: ORCL)

Satan's Words "I feel most comfortable putting my retirement money in a company whose CEO looks and acts like me."

Diageo (ticker: DEO)

Owns many of the world's leading liquor brands. I can personally thank Diageo for days of lost productivity, liver damage, and one pending divorce. Thanks Jose (Cuervo tequila) and Johnnie (Walker whiskey)! If Diageo can somehow acquire Jaegermeister, Satan will take out a 4th mortgage on Hell and ACCUMULATE. Diageo's only risk factor is its Responsible Marketing Plan. Hopefully, this is a smokescreen; in my opinion, they should consider taking some ads out on Nickelodeon. It is also not lost on Satan the fact that Diageo's ticker is the ablative and dative form of "Deus" in Latin.

Monsanto (ticker: MON)

A site called EthicalInvesting.com described Monsanto as the "World's Most Unethical and Harmful Investment." Satan's words, "back up the truck".

The Vice Fund (ticker: VICEX)

Satan is not afraid to say "I am a lazy bastard," so this fund which only buys assets of companies who profit off drinking, gambling, death, national defense and smoking is perfect for him. These are "recession proof" companies because people can't get enough Vice. It's 3 year performance is in the 1st Quintile of Lipper's Multicap Core Category.

We will continue to build the portfolio until we have added 666 securities. We have added a tracking portfolio on the sidebar of our new site, so that we can follow the performance of Satan'a Portfolio vs the socially responsible Pax World Balanced Fund (ticker: PAXWX, an investinng display of Evil vs Good. Check it out here (If anybody has better solutions for a free portfolio, or one that works with blogger email us). We know that Evil will win, because Good is stupid.