Parisian Family Office, CEO. Began Wall Street, 1982. Founded investment firm, CHIPPEWA PARTNERS, Native American Advisors. Active Trader. White Earth Chippewa Tribal member. Was NYSE/FINRA arb. Conservative, raised on Great Plains reservations. Pureblood, clot-shot free. In a world elevated on a dopamine binge, this is his take! Written from MT Ghost Ranch on the Yellowstone River, TN farm Pamelot or San Jose del Cabo, Mexico, CASA TULE'. Always been, will always be, an optimist.
Saturday, December 24, 2005
"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!!!!
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
Thursday, December 22, 2005
"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.
Can anyone say, "far too few, far too little and far too late"?
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.
Sunday, December 18, 2005
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.
Dean T. Parisian
Saturday, December 17, 2005
The world is a better place for all your efforts.
Thursday, December 15, 2005
Wednesday, December 14, 2005
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".
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
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.
Monday, December 12, 2005
Thursday, December 08, 2005
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
Uninformed seat-holders maybe? Nawwwwww. Not a chance
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
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
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
"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
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
Wednesday, November 09, 2005
"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
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
Anyone for a walk on a gorgeous Sunday afternoon?
Sunday, November 06, 2005
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.”
Saturday, November 05, 2005
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.
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.
Nice to go, great to be back.
It might make it safer for Georgia drivers and less costly to me as a State Farm policyholder.
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?
Wednesday, October 26, 2005
"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
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.
Dean T. Parisian
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.
And the AMT is government theft.
Is anybody in Washington looking out for the little guy?
Monday, October 24, 2005
Friday, October 21, 2005
Thursday, October 20, 2005
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.
Wednesday, October 19, 2005
Friday, October 14, 2005
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.
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
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?
Wednesday, October 12, 2005
Tuesday, October 11, 2005
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.
Thursday, October 06, 2005
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.
Wednesday, October 05, 2005
Tuesday, October 04, 2005
Thursday, September 29, 2005
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
Monday, September 26, 2005
Friday, September 23, 2005
Thursday, September 22, 2005
Wednesday, September 21, 2005
Monday, September 19, 2005
Thursday, September 15, 2005
Wednesday, September 14, 2005
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
Monday, September 12, 2005
Saturday, September 10, 2005
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.
Thursday, September 08, 2005
Monday, September 05, 2005
Friday, September 02, 2005
Thursday, September 01, 2005
Monday, August 29, 2005
Saturday, August 27, 2005
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.
Friday, August 26, 2005
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,
Native American Advisors, Inc.
Dean T. Parisian, Chairman
A Registered Investment Advisor, established in 1995. Alpharetta, Georgia www.chippewapartners.com
Tuesday, August 23, 2005
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
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