Saturday, December 24, 2005

Christmas along "party" lines .........

For Our Democrat Friends:

"Please accept with no obligation, implied or implicit, our best wishes for an environmentally conscious, socially responsible, low-stress, non-addictive, gender-neutral celebration of the winter solstice holiday, practiced within the most enjoyable traditions of the religious persuasion of your choice, or secular practices of your choice, with respect for the religious/secular persuasion and/or traditions of others, or their choice not to practice religious or secular traditions at all. We also wish you a fiscally successful, personally fulfilling and medically uncomplicated recognition of the onset of the generally accepted calendar year 2006, but not without due respect for the calendars of choice of other cultures whose contributions to society have helped make America great. Not to imply that America is necessarily greater than any other country nor the only America in the Western Hemisphere. And without regard to the race, creed, color, age, physical ability, religious faith or sexual preference of the wishee. By accepting these greetings you are accepting these terms. This greeting is subject to clarification or withdrawal. It is freely transferable with no alteration to the original greeting. It implies no promise by the wisher to actually implement any of the wishes for herself or himself or others, and is void where prohibited by law and is revocable at the sole discretion of the wisher. This wish is warranted to perform as expected within the usual application of good tidings for a period of one year or until the issuance of a subsequent holiday greeting, whichever comes first, and warranty is limited to replacement of this wish or issuance of a new wish at the sole discretion of the wisher."


For Our Republican Friends:

Here's wishing all of you a Merry Christmas and a Happy New Year!!!!

For Christmas we all need a tree like this..................

I hired a plumber to help me restore an old farmhouse, and after he had just finished a rough first day on the job: a flat tire made him lose an hour of work, his electric drill quit and his ancient one ton truck refused to start.
While I drove him home, he sat in stony silence. On arriving, he invited me in to meet his family. As we walked toward the front door, he paused briefly at a small tree, touching the tips of the branches with both hands.
When opening the door he underwent an amazing transformation. His tanned face was wreathed in smiles and he hugged his two small children and gave his wife a kiss.
Afterward he walked me to the car. We passed the tree and my curiosity got the better of me. I asked him about what I had seen him do earlier.
"Oh, that's my trouble tree," he replied. "I know I can't help having troubles on the job, but one thing's for sure, those troubles don't belong in the house with my wife and the children. So I just hang them up on the tree every night when I come home and ask God to take care of them. Then in the morning I pick them up again. Funny thing is," he smiled, "when I come out in the morning to pick 'em up, there aren't nearly as many as I remember hanging up the night before."

Friday, December 23, 2005

Indeed............

This one’s worth passing on.

"The reason most people fail instead of succeed, is that they trade what they want most for what they want at the moment." Author Unknown

Thursday, December 22, 2005

Mr. Broker..is your BOM getting bombed?

According to the "bible" for retail stockbrokers, Registered Rep magazine, this is the life of the "BOM", the Branch Office Manager.

"In 1998, the average non-producing (for you investors out there who hate paying huge fees and commissions to brokers, non producing means non-selling or non-commission producing) BOM earned $515,860, thanks in part to hefty bonuses of around $100,000, according to the Securities Industry Association.

In 2003, the figure dropped 24 percent to $391,618, then rose slightly to $410,560 in 2004. Producing managers are also feeling the pinch as they saw their average compensation fall from $318,433 in 1998 to $273,202 in 2003 -- and only rose to $293,808 in 2004.

Watch your money all ye clients of Wall Street brokerage firms.

And ask your stockbroker where your yacht is.

On turning 52.................

May it only get better. I am thankful to have had such a great run over these short 52 years. My birthday was spent with great friends, my beautiful family (and my Dad who turns 83 next week) and great food. Peppermint cheesecake was a wonderful dessert. Birthdays should be celebrations of life. I have always said that birthdays should be celebrations for ones Mother, the one who ultimately brought us life. I wish my own Mother could have been with us to share the day. In some ways I miss her more every year.

Another sick joke from Wall Street........

Perhaps 20,000 investors will be getting checks for the 1999-2001 Global Settlement that Wall Street firms were required to pay investors they scammed with their conflicted research analysis.

Can anyone say, "far too few, far too little and far too late"?
Over the past couple of months I have altered my stance on reported "insider" buying. Many investors put so much "faith" in the fact that those "insiders" who know so much about their companies ( am thinking of GM/Tracinda today and Kerkorians's age and how quickly he lost so much) are salting away stock for the long term.

Insider selling to me was always a non-event. Diversification of your companies assets is smart estate planning.

These days the Wall Street broker crowd knows well how to massage the numbers of insider buying, especially on an IPO. The brokers/bankers get the insiders to buy shares in the aftermarket so that the number will be reported. It is a farce. They sell the same shares soon after. It is all done to show how the insiders are grabbing shares and to let the public know how much confidence they have in the prospects for the company. More of the same. It is sham reporting. Believe it.

Hedge fund side-pockets have been "outed"

Finally. The mainstream media finally figured it out. How so many hedge fund players invest in private placements, private deals, illiquid warrants, etc and are not subject to daily valuation concerns should make every consultant worth his pay check shudder. The cat is out of the bag. Transparency is slowly coming to the trillion dollar universe............and the Wall Street Journal is again full of miscreant hedge fund nonsense today. Pick up a copy and scare yourself.

Sunday, December 18, 2005

No wonder they were sold off......................

An Open Letter to the CEO of Prudential Financial:

I read with great interest your effort to increase the commission run of every Prudential broker to the annualized mark of $600,000 or an average of $50,000 per month. What a laugh! Apparently Mr. Ryan you have a very short memory. A decade ago your firm pushed the sales force to dump the toxic waste of limited partnerships on your client base to increase revenues. Look what happened. Several billion in awards later you pulled out of the limited partnership business.

As CEO, your worry about losing a million dollars a day is justified. When we were losing money in the early years of our investment management firm, we didn’t push for more charges, fees and commissions. We tried to do a better job of taking care of our clients and making them more money. But that is the difference between the buy-side and sell-side is it not? Isn’t it true you would have dumped the brokerage arm years ago if you didn’t need those men and women to keep the assets on the books for your mutual fund division? Money would fly out the door if you didn’t have the handholding needed to keep the business on the books. I wonder if it would have anything to do with the performance of those funds?

I was a broker at Prudential more than a decade ago by default. I cringe when I recall the days of George Ball and friends. I doubt if a more worthless management team ever walked the streets of Newark. I became a broker at Prudential simply because they had purchased the bankrupt firm of Thomson McKinnon. One of my fond memories working there was the time the sales desk had come out with an accelerated pay-out, (read much higher commissions) to have brokers purchase for clients shares in some company. What did I do? I looked at the chart of the company, grabbed a sales ticket and immediately shorted hundreds of shares in my personal account. No, I didn’t get the accelerated pay-out on my commission run but what I did get was thousands of dollars in profits in my personal account. Funny how that works isn’t it Mr. Ryan? Coincidence or standard modus operandi? I think the latter.

This has been a tough market. The largest hedge funds in the world shut down last year. I am sorry for the legions of Prudential clients who will bear the brunt of the efforts of your sales force to keep their seats. Down the road, the arbitration’s will come and the cycle will repeat itself long after you are retired. For now, your stock options dangle like gold in front of you. Maybe you should lay off your sales force and concentrate on your brokers clients. In the long run, it just might make you more money.

Best regards,


Dean T. Parisian

Saturday, December 17, 2005

Time's "PERSON of the YEAR" Award

Should probably be given to thousands of selfless individuals who gave so much to help so many in the aftermath of Hurricane Katrina. Or our men and women serving freedom around the world and especially those in the hotspots who can't "see" the enemy but put themselves in harms way every day.

The world is a better place for all your efforts.

Thursday, December 15, 2005

Wednesday, December 14, 2005

XING today...............

9:40AM Qiao Xing expected increase in net sales, gross profit and income from operations of 23%, 66.7% and 243.9%, respectively, from those for 2004: Co expects 2005 rev to be over $300.0 mln vs $323.6 mln single analyst estimate. This would represent a growth of 23.0% from last year's $244.0 mln. The last quarter of a year is usually better than the other quarters. From Jan to Sept 2005, XING have achieved rev of $210.8 mln, with a quarterly average of $70.3 mln. They expect to make about $90 mln for the final quarter (Q4 single analyst estimate of $100 mln), which means an increase of about 27% from the quarterly average of the first nine months. They anticipate gross profit margin of 15.0% for the whole year of 2005, compared with 11.1% for 2004. This would mean a forecast gross profit of $45.0 mln for 2005 compared with $27.0 mln for last year. They expect income from operations (before other income/expenses, interest, tax, minority interests and extraordinary items) to reach over $28.2 mln for 2005.

Honest question.......

For all of the Leonard Peltier lovers out there as well as the "Tookie" Williams crowd I have a question.

When you hold candlelight vigils, why don't you ever hold them at the homes of the victims who were murdered?

Why do you honor only those who murder?

I am heartened that Arnold really is a "terminator".

NYSE Regulation.....

Whether it is Spitzer, the SEC, the NASD or the, god-forbid, the NYSE there has to be the lead or CHIEF COP out there to regulate the existing rule of law in the financial markets. There is none now.

With new competion, global reach and now the ultimate perveyor of greed, a publicly run company, the NYSE needs to get their house in order. Rid the Exchange of their regulatory function. You can't have it both ways boys.

The regulatory/enforcement function is flawed with a self-regulatory organization. Mr. Cox you better fix it now.

Scandal is not far away. And trust is all you really have.

Tuesday, December 13, 2005

ANWR

Artic National Wildlife Refuge.

19,000,000 acres.

Drilling will be done on 2,000 acres.

Pristine will remain pristine. Pump prices will push lower.

Just do it.

Filth..............

Let me see if I have this figured out.

Howard Stern contracts for a $500,000,000 pay-off over 5 years to espouse his brand of obscenity on satellite radio?

Mel Karmazin could make it work. Maybe.

But not without the filth.

The best................

In my life's journey I happen on many people who inquire what I do.

My standard answer is, "We manage money for friends across the globe".

They then relate to me on their big losses in the 2000-2000 bear market or tell me about the next Google or Microsoft or why the stock market can never make them money or how their C.D.'s are the highest in the land.

Once in a while they ask what web sites I explore to further my modest level of intellectual capital.

There is only one to feed the mind for a lifetime.

www.dailyspeculations.com

Monday, December 12, 2005

ADVEST and Merrill Lynch

This merger may go down as one of the biggest busts in history.

Talk about rats fleeing a ship!!

It must be time for consolidation.

Who will own A.G. Edwards?

on DELTA pilots............

Taking a 14% pay cut two weeks prior to Christmas is not my idea of holiday cheer.

I thank them every time I fly on a DELTA jet.

Almost like nurses for the responsibility they have. My life.

And almost the same pay scale.

Who would have thought...............

The DOW JONES averages would be negative year-to-date on this December day?

Thursday, December 08, 2005

Ann Coulter and U of Conn...............

Even when dealing with the likes of terrorists, convicted murderers, lobbyists, interns and cigars, the liberal philosophy is to preach "we need too understand their problem and plight in life, they are victims of society and need help".

Yet put a conservative speaker in a College of Liberals and it's, "die, die, get out, commie", such compassion and concern for open minded and understanding liberal students. Their teachers are doing a fine job. One would expect nothing less. That is some expensive tuition for such easy lessons.

Their actual philosophy is "do as I say, not as I do!.

Liberals are famous for flip flopping on a dime.

And never with a remedy, vision, future plan, or even hope for America.

Wednesday, December 07, 2005

New York Stock Exchange

The media frenzy surrounding the merger of the Archipelago Exchange and the NYSE is rather humorous. Where is Elliot Spitzer these days? The move in seat prices over the last 11 months from around the $970,000 mark to $4,000,000 is one of the best moves in the stock market this year. Has anyone figured out the "self-dealing" to run prices higher. There are entities who own 5, 10, 25, over 40 seats who have been buying more to run the price up going into the merger. Anyone figure out who was doing the selling?

Uninformed seat-holders maybe? Nawwwwww. Not a chance

Inside the Beltway............

There will be no Nativity Scene in Washington DC this year! The Supreme Court has ruled there cannot be a Nativity Scene in Washington DC this Christmas season.

This isn't for any religious reason, they simply have not been able to find three wise men and a virgin in the Nation's capitol.

There was no problem however, finding enough asses to fill the stable.

Friday, November 18, 2005

Thanksgiving.................

Hope everyone has their sleigh and reindeer ready for some Holiday presents .........Santa may come after all. Not much has changed as of late except the bullish stance of the players behind the curve this year. Bonds flickering to invert, oil and gas doing it's thing, the metals bright and shiny, no shortage of scams (Refco, option mispricings, scam-de-jours) and NYSE seats at record highs.

And I for the life of me can't figure out why they aren't making a stink about taking the NYSE public. Oh, I forgot, it is about THE MONEY!!!

The Nasdaq at a year high yet Cisco, Microsoft and Intel aren't getting it done.

I want to wish you and yours plenty of great cheer on Thanksgivng Day.

Living in America we have much to be thankful for.

Monday, November 14, 2005

Take heed, another commandment from Victor Neiderhoffer..........

Prices are artifacts of prevailing systems' intent.

Give-away programs...........

A Somali arrives in Minneapolis as a new immigrant to the United States. He stops the first person he sees walking down the street and says, "Thank you Mr. American for letting me in this country, and giving me housing, food stamps, free medical care and free education!" But the passer-by says, "You are mistaken, I am Mexican". The man goes on and encounters another passer-by. "Thank you for having such a beautiful country here in America!" The person says "I no American, I Vietnamese. "The new arrival walks further, and the next person he sees he stops, shakes his hand and says "Thank you for the wonderful America!"

That person puts up his hand and says "I am from Middle East, I am not an American!" He finally sees a nice lady and asks suspiciously, "Are you an American?" She says, "No, I am from Russia!" So he is puzzled, and asks her, "Where are all the Americans?"

The Russian lady looks at her watch, shrugs, and says..."Probably at work!"

Friday, November 11, 2005

Sent to me from Edward A. Bondy...........

Teddy Roosevelt on Immigrants

"In the first place we should insist that if the immigrant who comes here in good faith becomes an American and assimilates himself to us, he shall be treated on an exact equality with everyone else, for it is an outrage to discriminate against any such man because of creed, or birthplace, or origin. But this is predicated upon the man's becoming in very fact an American, and nothing but an American...There can be no divided allegiance here. Any man who says he is an American, but something else also, isn't an American at all. We have room for but one flag, the American flag, and this excludes the red flag, which symbolizes all wars against liberty and civilization, just as much as it excludes any foreign flag of a nation to which we are hostile...We have room for but one language here, and that is the English language...and we have room for but one sole loyalty and that is a loyalty to the American people."

Theodore Roosevelt 1907

The Congressional Budget Impasse'

What lunatics we have elected. Truly stunning that the Republic can still function.

For sure, the give-away programs won't go away. Apparently there is no need for Alaskan oil.

The most dangerous place for a taxpayer is inside the Beltway........they will rob you one way or another.

And they have no desire to shutter our borders.

Thursday, November 10, 2005

Allstate says...............

8 out of th 10 largest U.S. catastrophes have happened in the last four years.

Is this random or a trend we can trade?

Wednesday, November 09, 2005

Lighten up..........

A man and his friend were enjoying Deer Hunting Season in rural Arkansas near a blacktop highway. A huge buck walked by and the hunter carefully drew his bow and took careful aim. Before he could release his arrow, his friend pointed at a funeral procession passing on the road below their stand. The hunter slowly let off the pressure on his bow, took off his hat,bowed his head and closed his eyes in prayer. His friend was amazed. "Wow, that is the most thoughtful and touching thing I have ever seen. You are the kindest man I have ever known." The hunter shrugged. "Yeah, well, we were married for 35 years."

Prayers for my Sister................

From an email last night from my Sister in Minnesota. Please be thinking of her and prayers her way.

"just thought I would share with you what has came up in my world, looks like I have some breast cancer, awaiting the scheduling of the neeedle biopsy to confirm am kind of in a daze but things are ok it is good that I have great faith cause otherwise I would be falling apart. the biopsy won't be soon enough for me seems like the dr's aren't in that big of a hurry but I am they probably know that I am a very poor patient!!!!!!!!!! anyway not to worry because I am not truly I am not"

Tuesday, November 08, 2005

CNN and Wolf Blitzer

How can this CIA/Libby/White House "who said what, when" so-called newsworthy nonsense make top billing with all the real problems in our great nation? The problem is in the media. The liberal media.

The shooting in Tennessee.............

Sick, angry, pained children can and will do great damage with guns. It is the price we pay for the 2nd Amendment. Imagine if every second citizen in France was packing heat the last 12 nights when the Muslim crowd came calling.

on Citizenship................

With a measly market today and a lack of citizenry in France I thought I should put down afew words and brag on my oldest son. The breakfast was at 8:30 this morning. He showed up as a member of the brass ensemble that was asked to play at the Citizenship Awards breakfast at Hopewell Middle School. When the principal excused the band, the guidance counselor said, "Hunter, please take a seat, you are part of this".

He was one of only a couple of 8th grade boys to get the award. The award was decided by 8th grade teachers.

He's on the right track. His mother is extremely proud of him. My mother would have been very proud of him. He's on the right track. He makes his Dad proud.

Monday, November 07, 2005

Parisian betting..........

After 11 long nights in Paris of looting, burning and hooliganism would anyone care to bet they will make it a "Dirty Dozen" nights of despicable crime? 1,400 cars torched last night, 750 the night before.

What's next France?

Professional Football and Basketball..........

Is anyone else as tired and sickened by these ignorant thugs as I am? The diss'in, the beating of chests after a tackle, the tats, the hype, the instant replay's, (when will basketball get the instant replay?), the jewelry, the lax drug policy, the exorbitant salaries per down played, per minute played, etc, the "you-knows" multiplied exponentially per interview and the general lack of cohesive team spirit.

Anyone for a walk on a gorgeous Sunday afternoon?

Sunday, November 06, 2005

An Interview.........................

Investment News
October 31, 2005
By Charles Paikert - New York City


Native American Advisors Helps Tribes Manage Money

Some are flush with cash from gaming operations – Dean Parisian is on a mission to help Native American tribes do a better job of managing money. Thanks to lucrative casino and gaming operations, some Native American tribes are flush with cash. But the tribal councils overseeing those operations are short on financial know-how, said Mr. Parisian, chairman and founder of Alpharetta, Ga.-based Native American Advisors Inc.

“There’s a lack of financial sophistication and a lack of knowledge about the availability of investment services,” said Mr. Parisian, a member of the White Earth Chippewa nation. For the past 20 years, Mr. Parisian, whose firm does business as Chippewa Partners, has been working as an investment advisor for Indian tribes.

Relationship Problems - Many tribes, he said, are swayed too easily by their relationships with local bankers and high-pressure lobbying from Wall Street firms. Local banks, Mr. Parisian said, should be doing a better job of managing short-term money for the tribes. And large Wall Street firms, he maintains, burden tribes with excessive fees. One of the biggest investment challenges that many tribes face is “the need to understand the roles and responsibilities of the money managers that they hire and be able to evaluate their effectiveness and their overall performance,” said Mike Roberts, president of First Nations Development Institute, a Denver-and Fredericksburg, Va.-based policy, research and philanthropic organization for Native Americans. For years, Mr. Parisian has provided pro-bono advice and management to a variety of Native American Tribes, foundations, retirement plans and scholarship funds.

He has advised the Chippewa on their retirement and 401-k plans and managed fixed-income securities for First Nations. He also sits on its advisory board and is preparing an educational curriculum for understanding investments. Mr. Parisian also is featured in an investment guide for Native Americans that is being put out by Washington-based NASD. “I’m trying to effect positive change,” said Mr. Parisian, who often donates 10% of his fee back to a tribe he is working with, so it can set up a scholarship fund.

Some Frustration – But as a businessman, he admits to sometimes getting frustrated. “You’re dealing with sovereign nations, and some tribal councils are not that well-versed in financial matters,” Mr. Parisian said. Many tribes also insist on a number of face-to-face meetings, which can be difficult for an advisory firm with less than $25 million under management. “You can’t fax a handshake,” he said.

But Mr. Parisian is heartened by the younger generation, which is starting to assume tribal leadership. “They’re better educated and more sophisticated,” he said. “And there are more people willing to do business on the phone.”

R. C. Gorman............

At age 74 the Navajo painter and sculpter has gone on ahead.

He left the world a better place.

May the Creator bless the soul of R.C. Gorman.

Saturday, November 05, 2005

The 2005 Edition of the Red Eagles.............

The Red Eagle team of the Alpharetta Youth Football Association lost in the playoffs on a beautiful fall afternoon today. I had never helped coach a football team until this year. Being a player for afew years is far different than being a coach. These kids not only got bigger, faster and stronger since the disgusting heat and humidity of July but they became a team. They became friends. The parents became friends. I am proud of these little men and how they played. Every day. Every game. They showed up. They tried so hard. They played with heart. I learned as much from them as I hope they learned from me on how to play the game.

It is sad to see it end. Coaching my son was special. He has the attitude and the physical skills to make a good football player some day.

He played so hard. He practiced courage. He never quit. Every second was worth it.

Priceless.

Postal SERVICE.........

A couple of days ago a letter showed up containing a check for $100.

It was sent from Crown Point, Indiana on April 28,2005. I could have walked it here in half the time.

And they want to raise rates?

They should shutter the USPS and turn it over to private enterprise. We have lost enough trees to junk mail. Thank the Creator for email.

The Angry Beaver

If you are ever in the vicinity of Oakes, ND I strongly suggest you stop in the above-named restaurant and give their Angry Beaver burger a try. I have never had a "10" rated burger yet, but this one rates a "9".

You'll be glad you did.

Tennessee................

Our new horse farm in TN has deer trails all over.........nice buck rubs...........deer watering in the pond, lots of slab-sized bluegills and catfish..........beautiful hard woods...good cedar tree pocket in the middle for deer bedding .......a little stream through the middle............will be the headquarters of Chippewa Outfitters.........frankly, they aren't making any more land...........no dilution by management.........no stock option/compensation programs to dilute ownership by employees..........and it adjoins the in-laws , I guess the acorn fell from the tree and is returning...............nice country home, great rustic cabin, a hay field and 3-stall horse barn........will be a nice legacy for my sons to enjoy.............

North Dakota...........

North Dakota has the lowest per capita credit card balances in the nation. An interesting stat given there isn't that many people and few places to spend their money other than on $250,000 tractors. The duck hunting is priceless though. Especially with a son, great friends, nice weather and accomodating landowners.

Nice to go, great to be back.

Georgia...........

The wonderful salesmen at State Farm say Georgia ranks 5th in the country in collisions with deer with 8,451 claims submitted in the last year. Maybe all drivers should slow down when they see deer in the headlights.

It might make it safer for Georgia drivers and less costly to me as a State Farm policyholder.

Wesley Patterson Henderson

The world lost a beautiful, loving, intelligent woman this week.

My prayers go out to her husband, children and parents.

May the Creator bless the soul of such a wonderful person.

on George W. Brush

Our Presidents image and approval ratings may increase, especially with me if he would do three simple things.

One, shut down the borders.
Two, revamp Social Security.
Three, reform the tax code per fairtax.org.

I hope he handles the bird flu much better than Iraq.

And you still believe you need a flu shot?

Interesting number.......

1.5 million babies were born last year out of wedlock.

An amazing number.

America will need more schools and more prisons.

Where is the responsiblitly to "self"?

Santa Claus............

Looks like the annual Wall Street Christmas Fund Drive for battered and abused investors has started early.

Wednesday, October 26, 2005

10/26/2005 Briefly Speaking, by Victor Niederhoffer

It is with great respect and admiration that I relay some thoughts on yesterdays market action penned by Victor Niederhoffer. When my schedule permits, I expect 2006 will find me visiting the offices of Manchester Trading and the Matador Fund and many thanks to Mr. Steve Wisdom for the gracious offer to send a car from the City. Here is some fodder for the minions that don't believe. They don't get it. Ask yourself, and no BS here, have you ever met a successful pessimist? This is from Victor........


"It is hard to measure negative sentiment and to figure out what levels or changes in level are predictive. However, if articles that I have read attributing yesterday's 0.2% decline in the S&P and 0.1% decline in the Dow are typical, then there is gloom and doom all over. Consumer confidence is at an all-time low; Texas Instruments and Amazon both reported disappointing profits; the S&P 500's earnings growth is expected to drop to 6% from 11% next year; higher energy prices are putting consumers under a lot of pressure going into the holiday season. There's a heavy overload of negative sentiment overhanging the market, the bears say; yesterday's rise was just a reflex rally that will be stalled by the same. It has been a month since the market has managed to rise for two consecutive days. The market's terrible state is shown by the fact that we are on target, according to the doomsdayists, for the worst October in recent times and the worst monthly performance since July 2004. Such were just some of the bearish factors cited by my favorite wire service (the Collab's former employer). This was on a 7-point drop in the Dow; just imagine what would have been said if the average had declined its normal 50 points. Such is the chronic pessimism from which the phoenix soars."

Tuesday, October 25, 2005

Think about this........now it's 2005 !

June 11,1999

To the Editor,

Louis Bad Wound and Larry Red Shirt would surely cry. Both Lakota freedom fighters have gone on ahead with the Creator. Both were part of the original group who worked so hard for the return of the Black Hills to eight Sioux Tribes.

As an enrolled member of the White Earth Chippewa Nation and the President of the oldest Native American-owned growth equity investment management firm, having registered with the US Securities & Exchange Commission in 1995, I thought I would show cause as to why Native American Tribes need to invest prudently in the equity markets and why Tribes should question the role of the BIA in managing their assets.

In June of 1980, a decade after I attended high school in Pine Ridge, South Dakota the Supreme Court of the United States upheld an award of $105.9 million to the Sioux for the value of land taken by the US Government plus accrued interest. Those assets have been held “in trust” by the BIA ever since. The money has been invested in bonds guaranteed by the US Government, the same Government that has violated almost every treaty agreement signed with Tribal leaders. That original investment, in bond investments “managed” by the BIA has grown to around the $500 million mark; not a small amount for any investment management firm today.

But, had the BIA been directed, asked, or instructed by Tribal or Federal authorities to invest that monetary award, in June of 1980, into the US stock market, into an unmanaged, passive index of United States stocks comprised of the largest 500 stocks in America (the S & P 500 index), that original $105.9 million would have grown to an absolutely staggering amount of $2,313,915,000 (2.3 billion) in April of 1999.

Think seriously about these numbers. The time it would take today to invest $105.9 million into the S & P 500 Index would be only minutes. Imagine the power these eight tribes would have with over $2 billion in assets in securing the 1.3 million acres of US Forest land they wanted returned. As a former Trust Officer for one of the largest US banks, I don’t call that a trust relationship. I call that a rip-off.

Stop asking what the BIA can do with your money, that answer seems obvious. Start asking what professional investment management firms can do for Native American money. How long can Native people wait, for if not today, when? The time is now to break the cycle of dependency on BIA financial mismanagement. For all the wonderful Sioux people who could be benefiting from these funds, think very seriously. I know Louis Bad Wound and Larry Red Shirt would.

Megwitch,

Dean T. Parisian

Oklahoma Senator Tom Coburn

What a refreshing politician. Oklahoma should be dam proud of this man.

The boys in the "CLUB" called the Senate don't like to rock the boat when it comes to their "pork".

Coburn is fresh air in a cesspool of government waste. Thank you Senator Coburn.

$8.96

This amount represents the final adjustment we had to pay the IRS for 2005. Outside FEMA, the Dept. of Interior (BIA for you Native Americans) and the Dept. of Agriculture there can't be a more inept governmental agency. Amazing what they do to get the last $8.96 from a taxpayer.

And the AMT is government theft.

Is anybody in Washington looking out for the little guy?

Monday, October 24, 2005

My son, Hunter................

On Hunters 10th birthday it made for a great present. A Browning BAR .243 rifle. A gun I dreamed about in my early years. I put a Leopold Vari-X scope on it, ordered an Uncle Mikes sling and it was good to go. I took the gun out a few of times after we sighted it in. I think the first 5 or 6 shots while hunting with it I downed deer and coyotes when Hunter couldn't accompany me. I loved the way it handled and the light recoil. As well, a real present for me was when Hunter scored a 98 on his test to get his gun safety certificate that year. The past couple of years Hunter, now 13 and little brother, Jordan, 9 have practiced diligently in their climbing stands. We go out in the summer heat and practice. We practice getting into our safety harnesses. We go out at night and practice getting up a tree in the dark with a safety harness on. We practice pulling up rifles with ropes. We practice lowering rifles with ropes. We practice moving the stands 360 degrees around the tree to move with the sun and get in a better position. Yet, the last couple of years have been difficult for Hunter to get some actual shooting in. We have seen plenty of deer. We have had tremendous fun and great excitement. He's had deer wind him from behind and scare him with their "blow". Hunter just hadn't had the right opportunity to connect on one of the Creators most magnificent creatures. We even hunted TN with his cousins and were covered up with does in a buck-only season. It just wasn't his time to score. His time would come. Last Saturday morning found us searching for a tree stand in south Georgia about 45 minutes before any light. My great pal and a top notch deer hunter himself, Ron Branch, had locked on Hunters tree stand last week in some very thick planted pine trees with three fairly decent shooting lanes to cover. I had taken several deer in this area myself and knew it was a great travel corridor. When I called Ron last week late one afternoon and he was huffing and grunting I asked him what he was doing and he replied, "I am cutting tree limbs and have got Hunters tree stand on a great tree". As a matter of fact, it was about 60 yards from a scrape that a poacher/trespasser shot a buck in last year while Hunter and I were on stand together about a quarter of a mile away. Sometimes things aren't fair. In hunting or in life. We didn't think we were going to make the opening day of deer gun season this year as we are leaving in 48 hours to hunt geese in North Dakota but with the cooler weather coming in and a lot of deer on our property in Turner County I knew we just had to go. Jordan, playing fullback and linebacker on his football team wasn't able to accompany us and was sad but his days are ahead. He will be getting his hunter (gun) safety certificate this year and unbeknownst to him his new Browning BAR .243 is in the gun safe now and will be wrapped for his birthday next October. The price was right and Dad just had to do it early. My LED-light picked up the tree stand and we went to work getting Hunter up the tree. It was like clock work. Smooth, quiet and comfortable. No straining, no hassle, nothing out of place. The years of practice were in play moving in the dark. He settled in, secure, chambered a round and gave me the thumbs up. All was right with the world. An owl gave a big hoot and I moved silently back out the trail we came in on. My LED-light picked up the shining eyes of a fox coming down the trail and he bolted like a rabbit into the thick undercover. As sunlight came up I was about a half mile away covering a scrape line Probably doing more thinking than hunting. The morning wore on. We had not talked to each other for a couple of hours and I was beginning to wonder. There were a lot of guys in the woods across I-75 and I hadn't heard any shots being fired. A lot of those "hunters", (I call them shooters) were shooting over corn (bait). Maybe it was too warm and though the scrapes had been hit that night the big rut is still to come. I knew there were plenty of deer in the area because we hadn't taken but a few all last year out of there. And plenty of sign was evident.I was moving slow down to an area I had taken a big doe last year on opening morning right at daylight. Jordan was walking behind me then when she "blew" and with her "white flag" up made a mortal mistake and stopped after a few jumps. I went to a knee and with Jordan looking right down my gun barrel over my shoulder he watched the muzzle blast and the deer crumple. Pretty exciting for an 8 year old. Dad too. As I was moving slow I heard a shot. Then the cell phone rang. I quickly pulled it out of my pocket and heard a voice whisper, "Got one". I said "Who is this, Ron or Hunter?" The quiet voice said, "Hunter". My glee was hard to mask. I told him to sit tight, don't get out of the tree, watch for more deer and to be safe. As I was moving to him, about 5 minutes after that phone call I heard another shot. It was Hunter's rifle. Deer # 2 was down. I have always preached about remaining quiet after a kill. He listened. It worked. He had made two terrific shots, one buck, one doe were down. He had plenty of excitement to share. I am a very blessed man. Healthy sons, a great family, wonderful friends. As hunters, we never forget deer number one and Hunter will never forget number two. Things are good and they are going to get better.The best is yet to come. Later that evening, Ron scored on two nice whitetails while still hunting some fairly thick cover. His patience paid off on the second one as well. As for the "baiting" crowd, they were shut out. Zero deer. Shooting doesn't pay real dividends, hunting does. Just ask Hunter.

Friday, October 21, 2005

American Terror...............

120,000 members, 1,500 gangs in 45 cities using firearms 84% of the time when committing crimes. And that's not counting all the gangs and violence in Indian country these days. The terror is within. Immigration laws and homeland border security are only lip service. You are far more at risk for having a thug car-jack you than a foreign "terrorist" take you out. It all starts with a chance for getting an education within a family unit. Parental supervision with lots of love. It's not happening.

Thursday, October 20, 2005

Waste.............

NASA's waste of taxpayer (OUR) money to put us back on the moon is easily summed up. Pointless.

Should we care that the Hubble Space Telescope has turned its attention to our moon and found mineral concentrations that might be sources of oxygen. Nope. Pointless. Lets do other things with the money. Drive public transportation, fight drug addiction, cure cancer, curtail gangs or lower obesity.

Yesterday..............October 19th

In reflecting on yesterday's 18th anniversary I remember vividly sitting in the LaJolla offices of Drexel Burnham Lambert with my great friend, Maurice Altshuler. Talking about the future, the NYSE system collapse, our futures, the future of the market. We weren't worried at the time I didn't think. We would be okay. We had our health. Maurice never let on that he had an unsecured debit in a new account for about a million dollars from an overseas account. That alone is a tribute to my friend thru the years I have known him since 1984. Steady, solid and true to his core. The orders we placed that day for clients were in "cyber"space. We had no clue at what price, how much, or even if, orders had been executed. It is an anniversary I will never forget.

Native American Gambling.............

When I speak to tribal leaders, one of the things I always mention is the simple fact that tribal employees should be barred from gambling in their own casino's. They seldom listen to me. Yet, the numbers and problems speak for themselves. Negative expectation games are by definition losing the money for those who should not be playing. They can't afford it. They lose, their children lose, the tribes lose. Who are these mythical people who routinely gamble with money they can afford to lose? I sometimes lie in bed awake at night dreaming of crowded Native American casino's filled to overflowing with Native American afford-to-lose people. There is no dumb money quite as dumb as carefree loser money. It must be stated clearly: if you can afford to lose, you will, never win. Winning is the antithesis of losing. You can't have one without the other. There are more and more gaming enterprises in Indian Country. The number that are profitable remains to be seen. The hidden "costs" of gaming are not being talked about.

Wednesday, October 19, 2005

A Dad's Double .....

Watching my 9 year old son rip off a run for 60 yards from his fullback position on Saturday was a treat. Not only did we win the game but today i was graced with a perfect 100 on his math test. The math will carry the ball much further than my coaching. The desire, work ethic and love are there.

REFCO and Derivatives

The derivatives market has been wide open for 30 years. Refco was treading on thin ice and was hammered, sliced and diced like a chain saw to butter. Yet, the icebergs are looming. Where is the cure for the cool-aid? It isn't Congress, Sarbanes-Oxley hasn't done much has it? The SEC? They put a few mighty canary's to singing but are in remission. Bird flu seems to have center stage. And Bush's bumbling bunch of bureaucrats who want nothing more than to INCREASE taxes to pay for the massive increases in spending that this Administration has fostered on America won't even give FAIRTAX.ORG a cursory glance. Almost galling. Go ahead. Do some work on fairtax.org. Tell me what you think at thechippewafund@aol.com

Todays youth need parents to................

shut off the playstations and x-boxes..............and for those parents in carpool who play DVD's for their kids on the way to school..............give it a break. Is life that boring and pathetic you can't just TALK to your children a few minutes on the way to school?

My great uncle, Fred, in Florida..........

may have a difficult time with WILMA. These behemoth storms are true terror. Batten it down. Fred and Wilma. It may be "Flintstone-like" but everyone should ride away from this dinosaur-like storm.

Jonathan Clements

Could probably help more Americans than 1,000 Suze Ormans. When will he jettison his stage at the WSJ and start up his own show? The guy is good. For everyone. For America.

Chevron so eloquently states............

It took us 125 years to use the first trillion barrels of oil. We'll use the next trillion in 30.

Think about it.........

Preventing a bird migration is like preventing ice from forming at the North Pole.

Friday, October 14, 2005

Refco's Death, Victor Style..........

10/13/2005Detritivores and Other Destroyers, by Victor Niederhoffer
There's something unholy about the market's reaction to every twist and turn in the Refco death dance. With every bit of news that made the company's death seem more likely, the market dropped 1% in a minute. Yes, they might go under, as did Enron. And Delphi, with $1 billion in market cap, also went under amid the change in bankruptcy laws. But how does that compare in significance to the many companies that reported 15% earnings growth this week, the three-quarters of the total that reported positive surprises, the decline in energy prices to three-month price lows, the great news from McDonalds and Alcoa, the technology breakthroughs at Apple, the paltry 0.1% rise in the core inflation rate for a fifth straight month, the differential between earnings yield and bond yields of a few percent in stocks' favor, and the fantastic performance of every other market relative to ours so far this year? Are we that bad?
It's a major, terrible tendency of market players to feast on the dead. Those who have been around recall how the market went down a fast 10% as the vultures circled around the Long-Term Capital Management collapse. Whenever the firm went in to find a buyer, the prospect couldn't wait to kick them out, to sell in front of them. That's the tradition. The same thing happened with Baring's collapse, and I well remember how the U.S. market stopped dead in its tracks the week of Oct.. 19, 1987, and how it dropped 5% whenever there seemed any likelihood that the British government would hold the U.S. underwriters to their pre-crash commitments on British Petroleum.
History abounds with these paralyses caused by death. In Henry Clews's classic books on Wall Street, he describes how Governor Flowers was the leader of the bull claque, and when the homely rustic died, the market ''dropped to zero.'' The reaction to all the rumors planted about ''Doctor'' Greenspan's death or, it is hoped, retirement are another horse from the same shed. And this must be quantified.
Detritivores and reducers play a key role in the ecosystem by recycling nutrients and minerals that couldn't otherwise be used by organisms. About 90% of the organic material in the forest is recycled only when it is dead and the bacteria and worms take over. Vultures and crabs are specialized to ingest decaying matter. It's disgusting to see them on the road or shore, the same way it is to have your counterparts watch over you like a hawk or vulture to see if you're near death, try to precipitate it, and then with no risk of their own, eat your fixed remains. Such is so common in markets.
The general principle here is that the inflexible and the slow-moving are easy prey for those who are flexible. The principle reaches its ultimate expression and a terrible realization in the case of market death.
One of the rumors that constantly swept the floor this week was that a certain firm was intimately involved in some way in the Refco debacle. The surfacing of this rumor was usually good for a quick quarter-percent decline in the market. Thank goodness the rumor was squelched -- and yes, it was false, and the presumed dead will rise, and it's ill waiting for dead man's shoes.

Taking hits hasn't kept he nor I down.....................

One of the reasons i admire and respect Victor Niederhoffer, besides his gracious offer for me to join the Old Speculators List at his junta in NYC is the fact that he never, ever gives up. In 1997 a perfect storm engulfed his trading enterprise. Beyond anyone's wildest thoughts and against all odds, his clearing firm shut him down. He fought back to trade again. Likewise, in the fall of 1998 I took a hit in my trading partnership just as Jim Cramer was hammered and backed into a corner. A Russian crisis had everything to do with U.S. growth stocks it seemed. Here is again another self-analysis on how he handled his adversity. And the futures driven, Matador Fund, by the way, is taking the cover off the ball again this year.

10/13/2005Victor Niederhoffer: A Note on Refco
Many people have told me that they heard my name mentioned in this or that medium in conjunction with the Refco debacle. I have not spoken to any media nor have I been called, except that our Treasurer was asked to comment by the Financial Times. Apparently the way it works is that reporters use Google or remember Refco and trouble and find me mentioned in 1997 along with receivables. They mention my name as a stray fact in their story. Once it hits one newspaper or Web site, all the others pick up on the connection and embellish it. My adversaries expand it, and the rumor mill starts working, constantly expanding it, until the innuendo is that I have some proximate or intimate relation with the main story.
I have found that whenever there is a big squeeze in the market -- e.g., squeezes in gold, squeezes in oil, squeezes in bonds -- our name is mentioned along with others. I haven't traded any of those markets except in lots of five or 10 once or twice in eight years. Ordinarily I like it that whenever there's a big loss someone associates it with me; it keeps my adversaries hopeful and extended. That's why I always mention at least once a week my difficulties in 1997 when my fund went under in connection with the Thailand meltdown and the closing of the US market.
That event happened eight years ago, on Oct. 27, 1997. Two days after it happened, Refco and my firm mutually resolved all claims present, past and future in a fair, straightforward manner. We received a full release from Refco on that date, and gave them a full release also. We were represented by a major law firm, Rosenman & Colin. The releases between Refco and me were scrutinized by several regulatory authorities at the time and thereafter. There were no loose ends, accommodations or outstanding receivables or debts of any kind between us, except as described below:
Refco, in the heat of the moment, liquidated my personal options positions on Oct. 28, 1997, at highly unfavorable prices. It caused a loss of some $2 million above my equity there. I agreed to pay that back to them, as part of our mutual releases, in installments over the next year as I sold off assets, and I did pay them back in full within a year.
I paid all my debts in full, and I was given no accommodations by anyone. In fact, I spent a few millions of my own to get money back for my clients, which I turned entirely over to them. (No one has ever done anything like that for me when I lost money with them.) I had a substantial net worth at the time the fund closed, and was never close to insolvency or bankruptcy as my adversaries like to imply.
I notice on Refco's balance sheet that the firm has $77 billion in assets and $66 billion in debt. I have no idea whatsoever how they have treated their transactions or errors in transactions with me or any other person or entity or hedge fund in the eight years subsequent to 1997, but I know that they negotiated a very stern and businesslike deal with us at that time., with no accommodations or loose ends of any kind.
I have had no contact with Refco for approximately seven years, except that about six years ago I phoned Phil Bennett, who always behaved very responsibly and in a most straightforward fashion in all his dealings with me, to ask how he was doing. He wasn't in and he didn't return my call.
In addition, in 1998 we had a few meetings with Refco in connection with a lawsuit we jointly brought as plaintiffs against certain parties we felt had damaged us in connection with the closing of the CME that day, which was amicably settled a few years later without further contact with them.
Neither my firm nor I have any accounts with Refco. I have not spoken with Phil Bennett for seven years. Neither I, nor my firm, nor anyone associated with me has had any loans or financial dealings of any kind with Refco in seven years.
PS. Always part of rumors about me is the hope that some dead or decaying flesh will be left exposed to eat. My firm, Manchester Trading, has served as trading adviser to the well-regarded Matador Fund for the last four years. That fund's performance is available through all the rating services, including TASS, MAR, HFN, HFR and Bloomberg.
PPS. I have not shown this letter to counsel before publishing it, nor do I intend to as I would like without equivocation to set the record straight. It's bad enough that I can't respond when my critics say that nothing I say in my blog or in my books makes sense because I don't know how to trade, as it's not cricket to refer to my performance without a full disclosure statement to qualified investors only. I have received much abuse for the performance and selection of trades of my fund during 1997. Indeed, before a firm associated with my more illustrious and much larger colleague from the University of Chicago, suffered a similar fate to mine, but did receive accommodations and assistance, I was a poster boy. But these latest rumors and innuendoes are too much to just ignore as if there is any element of truth to them.
PPPS. It's possible that I may have inadvertently been off here by a day or two on dates, or a percent or two in amount. That is counterbalanced by the very tight, fair and limited transaction that Refco negotiated with us, and that we paid in full.

Thursday, October 13, 2005

Polls..................

A survey carried out by NBC-TV and the Wall Street Journal shows:
Support President Bush? Yes 38%, No 58%.Country is heading for the right direction? Yes 28%, No 66%.
General sentiment is the most negative in the past few years for President Bush.
Having said that, I have never seen low polls for the President at a market high. Generally, when business is good, poll numbers go up. Can I conclude: the low poll is near a market low?

Well said from my friend John Carson...........

The second kick of the mule should not be educational.

A derivative relationship.....can Georgia hedge it?

In Georgia, 4 out of 10 babies are born out of wedlock. In Georgia, 40% of students who begin High School do not graduate. It takes more than one parent. Siring is not parenting.

Wednesday, October 12, 2005

Never ending saga.............

Since the 1988 Cabazon decision, the BIA (Bureau of Indian Affairs) has been up to their "ABRAMOFFS" in applications for federal recognition of Indian tribes. From Bill Clinton on down, the beat goes on, much to the detriment of many tribes currently running gambling enterprises. Cannibalism is the threat. Can't they all just get along? Isn't there enough money being sucked out of society's coffers to share amongst those who have and those who have not? Wait until the Lumbee's recognition and casino puts the hurt on the Cherokee's in North Carolina to hear the "wolfpack" howl.

Members of the Tribe?

There's an adage among floor traders about "Selling Rosh Hashanah" and "Buying Yom Kippur." So far, if you sold on October 4 (Rosh Hashanah), you've been sitting pretty the last 6 sessions. If the saying holds true, then this Thursday, October 13, should finally start to see some buyers enter into this market.

Tuesday, October 11, 2005

from the Speculator himself.................

10/11/2005Briefly Speaking: Market Moves, by Victor Niederhoffer
The market during the last 10 months has gone from a daily close below 1200 to a daily close above 1200 on six separate occasions. It is hard to test whether this is random or not.
Of the 220 European stock market indexes listed on my screen, all are up. Of the 85 North American and South American markets on my screen, all except Jamaica and the U.S. are up. Of the 85 Asian markets, 75 of 85 are up, the only ones down being China and Taiwan and Malaysia. There is some double-counting here because many indexes are for the same country. Ten of the 20 U.S. markets are up.
The market has gone down open to close six days in a row, and is now below the open for the seventh day.
It is common to think that high oil prices are associated with low stock prices. However, the move up to $70 oil was in conjunction with a S&P well above 1200 and the recent move to five-month lows in oil circa $60 is in conjunction with the current S&P low. More microscopic testing confirms the relation.
Thomson projects third-quarter earnings comparisons for the S&P to be up 15%. The yearly estimated earnings, according to a Zacks survey based on eight estimates is $73.50 a share for 2005 and $78.40 for year-end 2006, based on diluted EPS from continuing operations.

Word of the Day...............

Erythrism: a morbid fondness for the color red (Funk and Wagnalls Int'l Edition)
Example: Since the start of October the market has seemingly developed a severe case of erythrism on my quote screen.

Thursday, October 06, 2005

Perfect for Clients of Big Brokerage Firms.........

Oct. 3 (Bloomberg) -- Suppose you wanted to invest in hedge funds and your principal was guaranteed by the Federal Deposit Insurance Corp.? At first blush, this sounds like an easy way to anchor a risky investment within a safe vehicle. Two federally insured certificates of deposit (CDs) are being sold that are linked to the return of a hedge fund index maintained by Hedge Fund Research, Inc. of Chicago. One is offered by HSBC Securities USA, a unit of Europe's largest bank. The other is sold by Bear Stearns Cos., the New York-based securities firm. (..) There are a few catches with the principal guarantees on both CDs. Although Bear Stearns says it intends to maintain a secondary market for the CD, early redeemers would receive the lower amount in a bid-ask spread. The guarantee is only good up to $100,000 and only if you hold seven years to maturity. There's no minimum interest with either product. Both certificates only pay if the return of the underlying index --the HFR U.S. Global Hedge Fund Index (HFRXGL) -- is above an ``initial index level equal to the closing price of the index on the month the CD is issued,'' according to the Bear Stearns CD's terms. Then there are the expenses. Unlike a standard CD sold by a bank, Bear Stearns investors are charged a monthly fee called an ``adjustment factor'' that reduces the return of the index by 1.8 percent annually. (..) Mike Dubis, a certified financial planner with Touchstone Financial in Madison, Wisconsin, said he was troubled by the fact that neither certificate pays interest or dividends annually. ``I do not like what I'm seeing,'' he said. ``It's expensive, confusing, illiquid, no dividend inclusion, tied to a poorly managed index and psychologically confusing to investors. I would not allow any of my clients to buy this product.'' (.. )
Expensive, confusing, illiquid, no dividend inclusion, tied to a poorly managed index and psychologically confusing...Sounds like they've created the perfect product for clients of big Wall Street Brokerage firms! The sheep don't know what they buy, they just want to believe they have a shot at making half a buck. Layers of fees abound to the delight of the marketing guru's who put these products together. Wall Street once again going to the bank with slick advertising. The beat goes on.

Odds n Ends...........

With the Braves losing yesterday it started to rain in Atlanta. Is that a correlation we can trade? As of late the Wall Street Journal is so full of stories on accounting firm indiscretion that it defies being ordinary news. Hundreds of millions of dollars of fines are levied and the beat goes on. KPMG being a real scoundrel. Scum is more like it. And no one goes to jail. Today we have a Marine being fingered as a spy in the White House. Interesting. Guess he was trying to get out the information to his Filipino's pals. Good thing somebody was doing something in the White House to catch him. George W. Bush won't do anything on social security, tax reform or shutting down our borders. Of course, neither party will shut down the borders lest they offend the all-important Hispanic vote in 2008. Does anyone really care about OUR country anymore? We need this correction in the market. It is healthy. A wall of worry is healthy. Believe it. COSTCO today announced a share buy-back program. More of the same. Publicity stunts. Corporate America wants you to believe the best use of corporate assets is to buy back stock in the open market, decrease the number of shares outstanding and drive the earnings-per-share number higher. Oh, if it were that easy. There is no way that shareholders can STOP the massive dilution of earnings by the insiders themselves in issuing and exercising their stock options. Which is why real estate is such a beauty. No dilution. Believe it.

Wednesday, October 05, 2005

On the Sage from the Baltimore Sun...........

Warren Buffett's digestion is threatened these days by more than T-bone steaks and Dairy Queen ice cream. Often as not recently, the world's foremost dollar doubter has been waking up to find the greenback gaining in value, shaming its critics and costing him and his shareholders millions... Not long after boss Buffett decided he was not just a stock-picker but an applied macroeconomist, competent to bet on global fund flows, Berkshire began lagging behind the stock market... If the greenback continues to rise or at least maintains most of its recent gains ... many scary stories you've heard about the future U.S. economy won't come true.

Worlds shortest fairy tale.......from Ron Branch

Once upon a time, a guy asked a girl "Will you marry me?" The girl said, "NO!" And the guy lived happily ever after and went golfing and hunting and fishing a lot and drank beer whenever he wanted. THE END

Tuesday, October 04, 2005

Carnage.............

The Gulf Coast casino's were put out of business temporarily. They were stopped from destructing the assets of those who enter their premises. Amazing how the politicians think that a gambling casino is actually necessary for a healthy, vibrant local economy.

Thursday, September 29, 2005

Briefly Speaking, by Victor Niederhoffer

1. Bonds during the last four months have moved gradually back and forth from a low of 114.00 to 118.00 in a gentle ascent, descent, ascent and now descent, that covers the same ground in 5 months that it liked to cover in 1 good volatile day in the 1980's when the bond vigilantes were masters of the universe. Such a reduction in volatility has many unforeseen consequences including such things as the heightened volatility in energy, thru the law of conservation of volatility.
2. Stocks have had 5 up days in a row, since Sept. 21, covering in total less than 1/2 a %. This has to be the smallest such positive run of 5 in history. It gives one the feeling that one had when he had the pleasure of escorting a most elegant and attractive other to five refined and noble cultural events, without being invited in for a night cap after the festivities. But such must be tested as to its impact on the market, not on romance, and similarities for expected moves after long runs of consecutive paint drying on a Arizona wall are surprisingly unrewarding to the chronics.
3. The concept of diminishing marginal utility in economics explains the bulk of the conundrum that affected the subject for so many years, including why diamonds sell for so much more than water. It also explains why risky stocks sell for less than stable ones. The marginal utility of buying a product is affected always by the availability of substitutes. Bonds are the main substitute for stocks, and their relative lack of attractiveness increases the marginal utility and derived demand that the public has for stocks. Such changes in the attractiveness of substitutes and their affects must be tested in a predictive fashion so as not to descend into the labyrinth of promiscuity that surrounds all of behavioral finance.
4. Convection currents explain most of the weather patterns we observe in our day to day forays with the wind and water. The essence of the phenomenon is how a source of energy like the sun causes the replacement and lifting of hot liquids by the more buoyant cold liquids that fall to the bottom. The movement of hot stocks to the top of the best performer list in a period, only to be replaced by the laggards in the ensemble of companies in the presence of constantly increasing income, wealth and changes in tastes has always reminded me of the changing winds and temperature from day to night in the Brighton Beach, upon the Atlantic Ocean that I grew up in. Such regularities mite well be applied to market phenomena ranging from sector rotation, to the changing composition of the most active, best performers, and new highs and lows in a year. One predicts it won't be long before the esteemable Mr. Soji reveals to us how similar phenemona explain the prowess of the surfing champions and can be used to day trade stocks with great aplomb.
The European stocks continue to outperform their US counterparts by a wide margin with the normal indexes there such as Eurotop 300 up by 18% year to date against a measly 0.5% for the US. Part of the differential is explained by the universal law of one return for all assets that the master investor, perhaps best typified by Prince Alweed of Saudi Arabia ( the subject of a hagiographic interview previously reserved only for the sage of Nebraska, and their biggest advertisers, in Fortune's pages), who sits on a portfolio that must directly or indirectly thru his intimates approach the trillion mark. And part of the differential must be explained by the Vic 1997 affect, ( "Thanks for asking. Things are much better than they were in 1997 but then again they couldn't have fallen any lower than the nadir") Yes, things were so bad there that they couldn't have got any worse, as exemplified by the great desire of the Sage and other old lions to hold European assets rather than US assets since the European trade balances were so much more green than ours. But ultimately one would predict a greater harmony and equalization of the returns of Europe versus the US, possibly caused by the equal conduction of return theorem

Tuesday, September 27, 2005

Obviously..........

With so many of the top tier hedge funds opening up to new investors the writing is on the wall. The guys I talk to every day, day in and day out, all are in agreement. Equity returns are poised to slow down. The massive performance fees (20% to 50% of profits in some cases) on billions and billions of dollars are not in the cards so a 2% management fee is better than a stick in the mud. That is not to say the derivatives traders, the futures players, the arb guys, the bond daddy's all will have their day. Just not this year.

Monday, September 26, 2005

Last week it happened............

Equinox means equal night. The first official day of autumn, the autumnal equinox, occurs on Sept. 22 or 23 in the Northern Hemisphere. This year it was Thursday at 5:23 when the sun reached the celestial equator, an imaginary line through the sky above the Earth's equator. As the sun's center crossed the line, the season officially changed to autumn. So for the next three months, nights in the Northern Hemisphere will continue to grow longer than 12 hours and days to grow shorter.

Thursday, September 22, 2005

NASA's "MOON"DOGGLE = TEXAS PORK

If Hurricane Rita was in danger of killing off jobs in Texas, President Bush and NASA stepped up and tried to game more tax dollars to put a man on the moon. We went to the moon 40 years ago. There was nothing there. I doubt much has changed.

NASD Arbitrations..............

The process is broken. As the Secretary of State of the Commonwealth of Massachusetts said, "it is industry-sponsored damage containment and control masquerading as a judicial proceeding." As an arbitrator for a decade for both the New York Stock Exchange and the NASD the system is so poorly run it could destroy investor confidence. The beat goes on...........

Wednesday, September 21, 2005

Yesterday.............live and let live..............

My wife wanted to see Paul McCartney perform last night. Phillips Arena was sold out. More grey hair than i expected and lots of "no hair" types. His act is old but apparently not out of style. How those songs "imprinted" on the baby boomers is a story in itself. Why he had a teleprompter going was beyond me.

Monday, September 19, 2005

football...................

It was wonderful to be on the winning end of the 8 year-old Alpharetta Red Eagles football team this weekend. My son, Jordan, plays fullback and cornerback and was awarded the Offensive Player of the Game award. Seeing these young guys get stronger physically, build mentally, focus, concentrate and learn what "firing out" is all about is a treat. It is great to see the support of the parents as well. We will win again.

The weekend....................

Lindsey Morgan had her Bat Mitzvah this weekend. My wife, Pam and I enjoyed her celebration so much. The world would be a better place if every 13 year old had the parental care, insight and love to see their children through a "mitzvah" experience. Congratulations to you Lindsey and to your parents, Lynn and Richard.

Victor on Warren........................

Berkshire Hathaway has been hobbling along near its lows in the 81,000 handle as is appropriate for a company whose chief honcho infuses with disguised hubris his mantras: "I am so much more honest than you or her," and "I cant find any good stocks to buy for the last 10 years" and, " I find dishonesty rife in the investment field as compared to myself and the companies I buy, which I can buy in a flash by just looking at their financials, and I just look for companies I understand like See's Candies and Brown Shoes." However, the Friday 9/17 close of 2720, a 21-month low, seems to me the manifestations of the "Morse effect" (see EdSpec) so common in markets and life where a former revered statesman finds that all his former hagiographers are the most vehement in their execration when he stumbles. I found the same effect directed at me when I "went under" in 1997 (have I mentioned it in the last week?), as is appropriate.

Thursday, September 15, 2005

Where are they?

The Feds are looking for 49,000 Native Americans. The Feds owe them $73,900,000. Where are they?

Wednesday, September 14, 2005

Delta Airlines......good luck employees, to hell with management.....

LUV is now the only major airline, as measured by market cap; larger than the other 30'ish airlines combined: Ticker Name -- Current Market Cap
LUV SOUTHWEST AIRLINE 10,848,590,000
AMR AMR CORP 2,047,903,000
JBLU JETBLUE AIRWAYS C 1,995,651,000
SKYW SKYWEST INC 1,412,564,000
CAL CONTINENTAL AIRLI 833,334,800
AAI AIRTRAN HOLDINGS 916,682,200
ALK ALASKA AIR GROUP 870,329,100
XJT EXPRESSJET HOLDIN 513,181,790
NWAC NORTHWEST AIRLINE 289,069,100
FRNT FRONTIER AIRLINES 375,468,900
AWA AMERICA WEST HOLD 259,179,890
DAL DELTA AIR LINES I 142,331,100
WLDA WORLD AIR HOLDING 234,292,100
MESA MESA AIR GROUP IN 248,421,300
HA HAWAIIAN HOLDINGS 157,062,900
MAIR MAIR HOLDINGS INC 186,403,500
UALAQ UAL CORP 41,839,550
MEH MIDWEST AIR GROUP 41,056,430
UAIRQ US AIRWAYS GROUP 32,904,700
FLYI FLYI INC 15,222,490
ATAHQ ATA HOLDINGS CORP 6,503,350
GLUX GREAT LAKES AVIAT 9,850,370
VIVI VIVA INTERNATIONA 6,932,660
BLTA BALTIA AIR LINES 5,137,600
ACHT AIRCHARTER EXPRES 2,000,000
EFLT ELITE FLIGHT SOLU 151,610
LAIR L AIR HOLDING INC 66,910
MDWYQ MIDWAY AIRLINES C 1,510

Wall Street and Politicians...........

cause the public to lose so much more money than they have any right to lose.

Saturday, September 10, 2005

Only slowing the cancer not addressing cause.......

Nebraska's governor signed an agreement last week that will allow Pine Ridge tribal police to patrol the border town of Whiteclay. The agreement can only improve the situation at the tiny town that exists only to sell alcohol to residents of the reservation where alcohol sales are illegal.
Pine Ridge has one of the highest alcoholism rates in the nation despite being a dry county. Each year, the stores in Whiteclay sell millions of cans of beer to residents of Pine Ridge.
Under the agreement, tribal officers will be deputized to enforce Nebraska state laws, including open container, selling to intoxicated people, bootlegging, selling alcohol on credit, selling to minors, public intoxication, assault and theft.

Change...............

The market has changed. That it will continue to change is the only sure thing we can expect from the beast. One aspect I have had to deal with in the last year is in how individual stocks trade that are high-momentum, high jet-fuel in nature as well as those that are not. The vast number of hedge funds controlling some say a trillion, some say a few hundred billion in hot money throw increased volatility into the equation. It has made my job more difficult and frankly i have found it harder, meaning simply the stress and effort in position trading has increased in this low-return environment. With record short interest on the exchanges and more managers doing "true" hedging with ETF's versus individual baskets both long and short it seems the simple explanation is that hedgies are reporting monthly numbers and making for month-end window dressing all the more common. Volatility is here to stay. It has made the art of trading and my ability to manage a portfolio a more difficult. I relish the task.

more Katrina aftermath............

After a gorgeous morning of exercise with fall in the air and geese overhead i thought it pertinent to comment on one of the simple problems facing victims on the Gulf Coast. As i have heard, roughly one-third of the lawyers in the state of Louisiana may have lost their offices, their libraries and the computers storing much of the information on clients and cases. If evidence and case documentation have been destroyed, what will happen to the people whose fate is in the hands of the justice system. As I learned long ago on my first day in law school, justice has a price and it can be bought.

Thursday, September 08, 2005

CMCO

This name came out of my portfolio yesterday a hair above 21. In review of my purchases i bot the stock in the 9's and then again in the 15's......I usually have a number of reasons for why I sell a stock. This reason was because it was time to take a profit. I continually fight the urge to take profits and wear the badge of the "I top ticked Mr. Market and look how much money I made" syndrome. Those feelings usually wind up costing me alot of money as stocks can carry themselves to extremes with me or without me aboard. Yes, the stock opened up strong again this morning on a weak tape and i was kicking myself. When I bail I generally bail with the entire position, not hanging around to follow a partial holding and not hedging the position/profits with options, the energy required just too much when I can use that focus and concentration on positions in which I am fully engaged. Hythiam (HYTM) is trading well today. Am feeling a bit more cautious today unlike the last week. Just feel something larger than wind and water ahead. I hope you are portfolio is doing well and you are looking more at using ETF's in your portfolio both on the long and short side of the market. They have made my job alot easier this year.

Monday, September 05, 2005

The Evening of Labor Day...........

I returned this afternoon from a couple hundred of miles and a family reunion. It is good to be home and good to see faces who share a common bloodline if not much else. I always relished reunions because the food is so good. It seems the cooks and chefs in the crowd never bring a subpar dish to be devoured readily by all. In looking at Mr. Market last week, what better evidence could there be of the stock market's unpredictability than that it rose while New Orleans was sinking? My position is that no one, even after the fact, can tell us reliably why the market does what it does, let alone predict its future. Both Nasdaq and the S & P were up 1% last week in a week that will be written about for the next century for the devastation caused. FEMA and the mayor of New Orleans are a tad overboard from media reports and the looters remind me of the idea espoused that perhaps we are only one generation away from barbarism. I just got in from a short run. One mile. In the evening cool with my wife I was at a loss for words. One of my best friends had returned home to the eastern seaboard and fired off an email to me that his father has been diagnosed with both lung and liver cancer. He has labored a good life. In many ways the labor of this fight has just begun. I look forward to a party next weekend that we are attending to raise money for breast cancer. I pray that in my lifetime we will have more answers to fight cancer and to find the cures just as Dr. William W. Shingleton dedicated his life to find the answers that affect so many. Cherish and relish the labors of life. Every day.

Friday, September 02, 2005

President Bush

Whatever he does or doesn't do will be campaign fodder in 2008. What he should do is shut the borders down and straighten out our tax code to pay for Katrina far sooner, more equitably. The minority politicians will be more than prepared to serve up a plate of "W" to their masses who dont get enough aid doled out. That aid, by the way, is my money and yours. Tax dollars. Given away.

Burn Baby Burn............

The burning and looting is a blight on the great citizens of Louisiana.

Water H2O Water...............

If I owned a business selling any kind of water removal/restoration/replacement products or services anywhere in the country, I would be headed to New Orleans right now. There is huge opportunity to be Johnny on the Spot. Contracts will be awarded based on how many able bodied workers you can bring.

Communication and Immunization

The stock market seems to to be just fine. The real threat from Katrina may be a week or two away. The real danger we can't see. Bacteria. Immunizations (big pharma anyone? ) for everyone. Communication will be more important in getting law and order restored. Some type of power will be needed to get cell phone batteries charged. Gasoline will be a huge commodity with afew transport trucks having been commandeered already. The Corps of Engineers will have more than barge traffic to worry about for years to come. Their gravy train is over. And FEMA? Where art thou FEMA? So much government waste of taxpayer dollars for so little. The emotional train wreck ahead is only beginning.

Thursday, September 01, 2005

Passing the Gas in Georgia.............

Last nights gas lines at local gas stations reminded me of my days in sunny San Diego in 79-80. Gassing up when your "day" to get fuel, simply because your last name began with a "P" was Monday, Wednesday or Saturday. Gas prices are probably still cheap per gallon. Far cheaper than mouth wash, liquor or honey per gallon. The truckers are going to have problems. SUV's are getting alot cheaper on every car lot in America. Detroit is getting beat again. Maybe this will drive light rail public transporation infrastructure in America far faster than anyone could imagine. Imagine.

Committed............

Listening to the gaming companies announce they are "committed" to the gulf coast states and will rebuild their gaming facilities is rather amusing. Why don't they just say "we suck so much money out of this region from people who don't understand the odds in playing negative-expectation games that we can't afford not to rebuild?"

Last exit for the lost.............

North Carolina is the last state in the South to have approved of a state lottery. Now they too will extract billions from citizenry in lotto tickets. The human predators in LA, MS and AL need to be dealt with like the scum and grime they are. Listening to the bumbling Army Corps of Engineers and FEMA "chieftains" is like listening to my sons 3rd grade class. Plenty of blame to go around and no one wants to step up and get anything done without all the bureauacracy. The loss of life, property and and jobs will be small compared to the emotional toll inflicted. I keep thinking about this being America's tsunami. This is but a speck compared to the lives lost in the Tsunami last year overseas. How many people will just leave their homes behind? Just walk and never come back.

Monday, August 29, 2005

Katrina Looters..........

Should be shot on sight........the values of the old West should be resurrected.

Katrina

I am sorry for the property loss for so many. Watching the politicians worry about getting the Gulf Coast casino's back into operation is comical. They want the tax revenue to clean up and continue their unabated spending habits. Yet the gaming coffers are filled daily by individuals who could do far more with their discretionary dollars to clean up what they need to clean up. America is not "winning" from the "something-for-nothing" gaming mentality. Everyone knows it, no one admits it. Especially the politicians.

Saturday, August 27, 2005

Prices headed higher...............

The lobster catch in Maine is down about 75%, to approximately half a lobster per trap, from the normal two of the last several years. The price of lobsters having increased 50%, total revenues from lobsters are down by about 60%. The catch of herring, the basic feed, is also down, increasing the cost of feed. Thus, things are very bad for Maine lobster fisherman right now.

French nonsense................

The Associated Press Friday, August 16, 2005; 11:00 PM PARIS,
Lance Armstrong's record setting seventh Tour de France victory, along with his entire Tour de France legacy, may be tarnished by what could turn out to be one of the greatest sports scandals of all time. Armstrong is being quizzed by French police after three banned substances were found in his South France hotel room while on vacation after winning the 2005 Tour de France. The three substances found were toothpaste, deodorant, and soap which have been banned by French authorities for over 75 years. Armstrong's girlfriend and American rocker Sheryl Crow is quoted as saying "We use them every day in America, so we naturally thought they'd be ok throughout France." Along with these three banned substances, French authorities also found several other interesting items that they have never seen before, including a backbone and a testicle.

Motorola -- Oakley

Last night I had the opportunity to preview an interesting combination of Oakley sunglasses with a tiny Motorola Razorwire cell phone attached. I'm not a technogeek but that combination will attract alot of interest. If nothing else, it looks real good for the fashion conscious, "must-have" types out there that can't miss a phone call while working out in the sun. Together the package runs over $550. Far beyond my reach of buying 5 pair of sunglasses for $30 bucks at the mall. Have a great weekend. Do something fun, eat something delicious, teach a kid something, spend an hour in a church and tell someone you love them. It'll do the body good.

Friday, August 26, 2005

Does your broker make you broker?

You may not know it or want to admit it, but your stockbroker is just a salesman. Sometimes, they go by the titles of financial consultant, financial adviser and financial planner to name just a few. Many of these sound quite similar to “investment advisor”---but there is a huge difference. Investment advisors, like Chippewa Partners which is a Registered Investment Advisor, have a fiduciary duty to their clients. That means they have a legal obligation to place the clients interests ahead of their own, and to clearly identify all sources of compensation, the amount of compensation and any potential conflicts of interest. It’s all laid out in the Investment Advisers Act of 1940.

A broker has no such obligation, unless the client has given him discretionary authority to trade without the clients’ approval. Many brokers, however, masquerade as investment advisers. Television is full of advertising which trumpets “objective” advice and makes the firms sound more like trust companies. The firms try to project an image of having a fiduciary duty without actually having one. But how can any salesman or sales organization offer truly objective advice. They can’t. Very few investors understand that a broker’s role is to buy and sell investment products. Never forget, the nature of broker’s compensation and the relationship with their employer can seriously diminish chances of having efficient, well-performing portfolios.

As an arbitrator for both the New York Stock Exchange and the National Association of Securities Dealers I have had plenty of opportunity over the last decade to look into the bowels of Wall Street brokerage houses. It’s not pretty. Every year I am more afraid for investors who don’t have the time or training to understand how brokerage firms operate.

Here are some things to consider:

Most brokers are paid by a formula that increases the broker’s portion of commissions and fees as revenue increases. Some brokers will sell anything to anybody before year-end to cross larger investment schedules that put them into a higher pay-out grid. And the products they will rely on the most are the ones with the highest fees and the highest commissions, such as variable annuities and “loaded” mutual funds. The situation is even worse if the broker is switching firms and is offered an increased payout for bringing clients to the new firm.

“Flipping” or “churning” of syndicate equity offerings is rampant. Brokers are paid far more to sell investment products that are syndicate offerings than stocks that have been trading for some time. If your broker is trying to get you to purchase syndicate offerings of stocks or proprietary products and then sell them soon afterward, watch your wallet. “New” investment products are usually money-makers for the firms and brokers, not for clients.

So-called separately managed accounts, a popular form of customized portfolio, can lead to unusually high fees. With these accounts, the broker charges a “wrap fee,” with the broker’s fee wrapped around the fee of the investment manager. And the broker’s fee is often a good deal more than the manager’s fee—sometimes twice as much. Total annual fees can exceed 3%. When the fee is debited from the account each quarter, the broker’s portion is not itemized, so the client is in the dark on exactly what the broker charged.

The brokerage industry’s alternatives to money-market funds are called sweep accounts, which are very profitable to the firms. They make much more money on sweeps than they would by farming out your cash to a money market mutual fund, like the Reserve Fund, which we use for clients’ at Chippewa Partners. A money-market fund has a fiduciary duty to provide the best rate possible for its shareholders, while a brokerage firm does not.

Stockbrokers worry about generating income for themselves, before worrying about your results. If they don’t, they lose their job even if market conditions warrant doing nothing with your portfolio. They still need to churn your assets. Also, your stockbroker’s fancy title is not awarded for achieving results for clients’, it is for generating big fees and commissions to his employer no matter how well your portfolio performed. Do you think it is responsible and prudent to trust your retirement and lifesavings to a salesman rather than a fiduciary like the investment management firm of Chippewa Partners?

For an independent, fee-only relationship-based alternative consider,
Chippewa Partners
Native American Advisors, Inc.
Dean T. Parisian, Chairman
(770) 772-1621
A Registered Investment Advisor, established in 1995. Alpharetta, Georgia www.chippewapartners.com

Tuesday, August 23, 2005

The "Golden Arches" of Mickey D's...........

8/22/2005Like an Old Friend, by Victor Niederhoffer
On a trip back from Maine, the first thing that comes to mind is that McDonalds has saved more lives from car accidents than all the safety rules since the beginning of time. Their coffee is excellent and after billions of servings in tens of thousands of restaurants, they've come up with the perfect blend for taste and staying awake. I had such a coffee on my journey and it kept me awake infinitely better than the comparable cups at competing places.
Some other great things about McDonalds:
It's like an old friend. You always know you're going to get the same food and of a high quality anywhere you go. Their limited menu from which billions of people have been served makes an the incentive that McDonalds owners and customers alike have to create a better product. This means that each product has evolved so it fits the know-hows and tastes, and aptitudes of all humanity.
Everything is special, unique. The natural flavor in their French fries. The vegetable oil they cook them in. The flavor of their fish fillet. The variety of the goods served range from tofu and ginger salad to yogurt with fresh strawberries and a granola, fruit and walnut salads -- at all of their restaurants now.
How many people have been made happy and clean by their clean restrooms, been able to go into a safe well lit establishment for their ease of mind, had their deals closed by young lawyers working late at a 24 hour establishment, had a chance to enjoy a family dinner with their kids or a meeting with their friends without being chased out or harassed, been able to read a book with good lighting -- or in the case of a McDonalds in New Haven, had an opportunity to run a club of antique car hobbyists in their parking lot without hassle and in complete safety.
Not to be minimized is the freedom that McDonalds provides for all families to allow a two wage earner family where the cooking doesn't have to be at home every day. And related to this are all the men that don't have to worry about messing up their home and cleaning the dishes for a breakfast. I once read that something like 15% of the population eats breakfast at McDonalds each day. And considering the opportunity cost of cooking, and cleaning the quality of the Egg McMuffin, this seems like a reasonable choice.
It's a litmus test for the servile people to hate the fast food restaurants because as Durkheim said, such restaurants take away the conspicuous consumption that they were able to achieve by being able to afford a meal away from home that their lower status neighbors or competitors were not able to afford. Don't tell me however that the lack of alcohol at McDonalds, the cleanliness, the lack of smoke, the ability to be with their kids has not done more for the happiness and good of the world than all the do-gooders and tree huggers combined.

Monday, August 15, 2005

Worth reading again.....Mark Cuban on the market

The Stock Market
I get asked all the time to write a book about business and my approach to it. I’m not ready to take that leap yet, but along the way, when I find a book that really impresses me, I try to help it find an audience. In this case, it wasn’t long ago I read my now favorite book about the stock market called The Number by Alex Berenson. I liked it so much, I volunteered to write the forward for the paperback edition which comes out this week.
Here is the foreward I wrote for The Number. I recommend that anyone with an interest in the market jump at the chance to buy it.
In 1990, I sold my company, MicroSolutions — which specialized in what at the time was the relatively new business of helping companies network their computer equipment — to CompuServe. After taxes, I walked away with about $2 million. That was going to be my nest egg, and my goal was to protect it at all costs, and grow it wisely.
I set about interviewing stockbrokers and settled upon a broker from Goldman Sachs, Raleigh Ralls. Raleigh was in his late 20s, and relatively new to Goldman. But we hit it off very well and I trusted him. As we planned my financial future, I made it clear that I wanted my nest egg to be invested not like I was 30 years old, but as if I were 60 years old. I was a widows and orphans investor.
Over the next year I stuck to my plan. I trusted Raleigh, and he put me in bonds, dividend-paying utilities and blue chips, just as I asked.
During that year, Raleigh began asking me a lot of questions about technology. Because of my experience at MicroSolutions, I knew the products and companies that were hot. Synoptics, Wellfleet, NetWorth, Lotus, Novell and others. I knew which had products that worked, didn’t work, were selling or not. How these companies were marketed, and whether or not they were or would be successful.
I couldn’t believe that I would have an advantage in the market. After all, I had read A Random Walk Down Wall Street in college. I truly thought that the markets were efficient, that any available knowledge about a company was already reflected in its stock price. Yet I saw Raleigh using the information I gave him to make money for his clients. He finally broke me down to start using this information to my advantage to make some money in the market. Finally after more than a year, I relented. I was ready to trade.
Notice I didn’t use the word invest. I wasn’t an investor. I just wanted to make money. The reason I was ready to try was that it was patently obvious that the market wasn’t efficient. Someone like me with industry knowledge had an advantage. My knowledge could be used profitably. As we got ready to start, I asked Raleigh if he had any words of wisdom that I should remember. His response was simple. “Get Long, Get Loud”.
Get Long, Get Loud. As we started buying and selling technology stocks, most of which were in the local area networking field that I had specialized in at MicroSolutions, Raleigh put me on the phone with analysts, money managers, individual investors, reporters, anyone with money or influence who wanted to talk technology and stocks.
We talked about token ring topologies that didn’t work on 10BaseT. We talked about what companies were stuffing channels - selling more equipment to their distributors than the distributors really needed to meet the retail demand. We talked about who was winning, and who was losing. We talked about things that really amounted to the things you would hear if you attended any industry trade show panel. Yet after hanging up the phone with these people, I would watch stocks move up and down. Of course as the stocks moved, the number of people wanting to talk to me grew.
I remember buying stock in a Canadian company called Gandalf Technologies in the early 90s. Gandalf made Ethernet bridges that allowed businesses and homes to connect to the Internet and each other via high-speed digital phone lines called ISDN.
I had bought one for my house and liked the product, and I’d talked to other people who’d used it. They had decent results, nothing spectacular, but good enough. I had no idea Gandalf was even a public company until a friend of Raleigh’s asked me about it. What did I think about Gandalf Technologies? It was trading at the time at about a buck a share. It was a decent company, I said. It had competition, but the market was new and they had as much chance as anyone to succeed. Sure, I’ll buy some, and I would be happy to answer any questions about the technology. The market size, the competition, the growth rates. Whatever I knew, I would tell.
I bought the stock, I answered the questions, and I watched Gandalf climb from a dollar to about $20 a share over the next months.
At a dollar, I could make an argument that Gandalf could be attractive. Its market was growing, and compared to the competition, it was reasonably valued on a price-sales or price-earnings basis. But at $20, the company’s market value was close to $1 billion - which in those days was real money. The situation was crazy. People were buying the stock because other people were buying the stock.
To add to the volume, a mid-sized investment bank that specialized in technology companies came out with a buy rating on Gandalf. They reiterated all the marketing mishmash that was fun to talk about when the stock was a dollar. The ISDN market was exploding. The product was good. Gandalf was adding distributors. If they only maintained X percentage of the market, they would grow to some big number. Their competitors were trading at huge market caps, so this company looks cheap. Et cetera, et cetera.
The bank made up forecasts formulating revenue numbers at monstrous growth rates that at some point in the future led to profits. Unfortunately, the bank couldn’t attract enough new money to the stock to sustain its price. It didn’t have enough brokers to shout out the marketing spiel to entice enough new buyers to pay the old buyers. The hope among the “sophisticated buyers” was that one bank picking up coverage would lead to others doing the same. It didn’t happen. No other big investment banks published reports on the stock. The volume turned down.
So I did the only smart thing. I sold my stock, and I shorted it to boot. Then I told the same people who asked me why I was buying the stock that I had shorted the stock. Over the next months, the stock sank into oblivion. In 1997, Gandalf filed for bankruptcy. Its shares were canceled - wiped out - a few months later. I wish I could take credit for the stock going up, and going down. I can’t. If the company had performed well, who knows what the stock would have done?
But the entire experience taught me quite a bit about how the market works. For years on end a company’s price can have less to do with a company’s real prospects than with the excitement it and its supporters are able to generate among investors. That lesson was reinforced as I saw the Gandalf experience repeated with many different stocks over the next 10 years. Brokers and bankers market and sell stocks. Unless demand can be manufactured, the stock will decline.
In July of 1998, my partner Todd Wagner and I took our company, Broadcast.com, public with Morgan Stanley. Broadcast.com used audio and video streaming to enable companies to communicate live with customers, employees, vendors, anyone with a PC. We founded Broadcast.com in 1995, and we were well on our way to being profitable. Still, we never thought we would go public so quickly. But this was the Internet Era, and the demand for Internet stocks was starting to explode. So publicly traded we would become and Morgan Stanley would shepherd us.
Part of the process of taking a new company public is something called a road show. The road show is just that. A company getting ready to sell shares visits the big mutual funds, hedge funds, pension funds - anyone who can buy millions of dollars of stock in a single order. It’s a sales tour. 7 days, 63 presentations. We often discussed turning up the volume on the stock. It was the ultimate “Get Loud.” Call it Stockapalooza.
Prior to the road show, we put together an amazing presentation. We hired consultants to help us. We practiced and practiced. We argued about what we should and shouldn’t say. We had Morgan Stanley and others ask us every possible question they could think of so we wouldn’t look stupid when we sat in front of these savvy investors.
Savvy investors? I was shocked. Of the 63 companies and 400-plus participants we visited, I would be exaggerating if I said we got 10 good questions about our business and how it worked. The vast majority of people in the meetings had no clue who we were or what we did. They just knew that there were a lot of people talking about the company and they should be there.
The lack of knowledge at the meetings got to be such a joke between Todd and I that we used to purposely mess up to see if anyone noticed. Or we would have pet lines that we would make up to crack each other up. Did we ruin our chance for the IPO? Was our product so complicated that no one got it and as a result no one bought the stock? Hell no. They might not have had a clue, but that didn’t stop them from buying the stock. We batted 1.000. Every single investor we talked to placed the maximum order allowable for the stock.
On July 18, 1998, Broadcast.com went public as BCST, priced at 18 dollars a share. It closed at $62.75, a gain of almost 250 percent, which at the time was the largest one day rise of a new offering in the history of the stock market. The same mutual fund managers who were completely clueless about our company placed multimillion orders for our stock. Multimillion dollar orders using YOUR MONEY.
If the value of a stock is what people will pay for it, then Broadcast.com was fairly valued. We were able to work with Morgan Stanley to create volume around the stock. Volume creates demand. Stocks don’t go up because companies do well or do poorly. Stocks go up and down depending on supply and demand. If a stock is marketed well enough to create more demand from buyers than there are sellers, the stock will go up. What about fundamentals? Fundamentals is a word invented by sellers to find buyers.
Price-earnings ratios, price-sales, the present value of future cash flows, pick one. Fundamentals are merely metrics created to help stockbrokers sell stocks, and to give buyers reassurance when buying stocks. Even how profits are calculated is manipulated to give confidence to buyers.
I get asked every day to invest in private companies. I always ask the same couple questions. How soon till I get my money back, and how much cash can I make from the investment? I never ask what the PE ratio will be, what the Price to Sales ratio will be. Most private investors are the same way. Heck, in Junior Achievement we were taught to return money to our investors. For some reason, as Alex points out in The Number, buyers of stocks have lost sight of the value of companies paying them cash for their investment. In today’s markets, cash isn’t earned by holding a company and collecting dividends. It’s earned by convincing someone to buy your stock from you.
If you really think of it, when a stock doesn’t pay dividends, there really isn’t a whole lot of difference between a share of stock and a baseball card.
If you put your Mickey Mantle rookie card on your desk, and a share of your favorite non-dividend paying stock next to it, and let it sit there for 20 years. After 20 years you would still just have two pieces of paper sitting on your desk.
The difference in value would come from how well they were marketed. If there were millions of stockbrokers selling baseball cards, if there were financial television channels dedicated to covering the value of baseball cards with a ticker of baseball card prices streaming at the bottom, if the fund industry spent billions to tell you to buy and hold baseball cards, I am willing to bet we would talk about the fundamentals of baseball cards instead of stocks.
I know that sounds crazy, but the stock market has gone from a place where investors actually own part of a company and have a say in their management, to a market designed to enrich insiders by allowing them to sell shares they buy cheaply through options. Companies continuously issue new shares to their managers without asking their existing shareholders. Those managers then leak that stock to the market a little at a time. It’s unlimited dilution of existing shareholders’ stakes, death by a thousand dilutive cuts. If that isn’t a scam, I don’t know what is. Individual shareholders have nothing but the chance to sell it to the next sucker. A mutual fund buys one million shares of a company with your and your coworkers’ money. You own 1 percent of the company. Six weeks later you own less, and all that money went to insiders, not to the company. And no one asked your permission, and you didn’t know you got diluted or by how much till 90 days after the fact if that soon.
When Broadcast.com went public, we raised a lot of money that certainly helped us grow as a company. But once you get past the raising capital part of the market, the stock market becomes not only inefficient, but as close to a Ponzi scheme as you can get.
As a public company, we got calls every day from people who owned Broadcast.com stock or had bought it for their funds. They didn’t call because they were confused during our road show, were too embarrassed to ask questions and wanted to get more information. They called because they wanted to know if the “fundamentals” - the marketing points - they had heard before were improving. And the most important fundamental was “The Number,” our quarterly earnings (or in our case, a loss). Once we went public, Morgan Stanley published a report on our company, as did several other firms. They all projected our quarterly sales and earnings. Would we beat The Number?
Of course, by law, we were not allowed to say anything. That didn’t stop people from asking. They needed us to beat the forecast. They knew if we beat The Number the volume on the stock would go up. Brokers would tell their clients about it. The Wall Street Journal would write about it. CNBC would shout the good news to day traders and investment banks that watched their network all day long. All the volume would drive up the stock price.
Unfortunately, patience is not a virtue on Wall Street. Every day, portfolios are valued by at closing price. If the value of your fund isn’t keeping up with the indexes or your competition, the new money coming in the market won’t come to you. It just wasn’t feasible for these investors to wait till the number was reported by companies each quarter. The volume had to be on the stocks in you fund. To keep the volume about a stock up, and the demand for the stock increasing, you needed to have good news to tell.
Volume, The Number, whisper numbers, insiders granting themselves millions and millions of options - these are the games that Wall Street plays to keep on enriching themselves at the expense of the public. I know this. I have tried to tell people to be careful before they turned over their life savings and their financial future to someone whose first job is to keep their job, not make you money.
Till I read The Number by Alex Berenson, I never had a book that explained how the market truly worked that I could tell my friends, family and acquaintances to read. I never had a book that would truly warn them that the market was not as fair and honest as mutual fund and brokerage commercials made them out to be. I may be a cynic when it comes to the stock market, but I am an informed cynic, and that has helped me make some very, very profitable decisions in the market.
If you are considering investing in the market, any part of it, or if you are considering giving your hard earned money over to someone else to manage, please, please read The Number first.
— Mark Cuban, Dallas, Texas, January 2004

Native American Advisors CHIPPEWA PARTNERS