Wednesday, September 30, 2015

"I think earnings are misstated and sort of a complete mirage."

September 30, 2015
Carl Icahn: I think markets are overpriced, earnings are misstated

"I think earnings are misstated and sort of a complete mirage," he said Wednesday.

On the Illusion of Prosperity blog, we are not believers in mirage theories!

Oops. I just got a text from my lawyer. He warns me not to use "we" when there is only one of me. He also states that I should not swear to disbelief in mirage theories under oath. He's concerned that illusions and mirages might be similar in the eyes of the law. Imaginary lawyers. Whatcha gonna do?

First World Problem of the Day

Early this morning I went to Planet Fitness to exercise. When I arrived, there was a guy practicing/tuning a trumpet. I didn't give it much thought but after 30 minutes I felt the need to say something about it. It was loud enough that the notes were sneaking through my headphones as I nearly blissfully listened to Spotify.

Should I say something? Or not? I don't know his situation. What if he's the owner? I'd definitely want to say something. What if he's just some guy down on his luck and living out of his car? I don't think I'd want to say anything. In the end, I figured the truth probably lied somewhere between the two extremes.

Do I talk to the employee about it? I don't know. Seems kind of cowardly. I wasn't looking to get anyone in trouble. This is the same employee who warned me when I joined not to listen to music so that others could hear it. I appreciated that. And yet, everyone could hear that trumpet. Very confusing. And when I say everyone, I mean the trumpet player, another person working out, the one employee, and me. It was 3am. Not many people there.

Perhaps it was best just to ask the trumpet player to play softer and explain that I could hear it through my headphones. I decided to do that, even though I know how nearly impossible it would be to play a trumpet softly. He was very nice about it. He stopped and then left.

I exercised for another 90 minutes, took a shower, and as I was walking out the door I decided to ask the employee what the story was. He said the guy lives in his car and he lets him play when there aren't many people around. He tends to do it once every few weeks.

Damn. That was one of the scenarios that actually went through my head before I complained.

Moral of the Story

Complaining about first world problems, especially to those with bigger problems, may end up making you feel like a schmuck.

Why did I do it? It rarely ends well. At best, a tiny violin should play. At worst, well, yeah. Been there, done that. Today!

Live and let live. I really try to live by that but every now and then I lose my way.

Quote of the Day

September 30, 2015
How to draw down your retirement savings

When markets are in a downturn, "great, tighten the belt," Ward said. Conversely, a strong market can enable retirees to draw down a bit more, since they will still be leaving plenty of savings in the portfolio.

Markets have been in a downturn this year. Great, tighten the belt. And if enough people tighten the belts, the markets will continue the downturn.

Where might it end? Great Depression II tightens the rust belt?

Aren't death spirals fun? Many financial experts like to talk about the wealth effect. What they don't often say is that it can easily work in both directions. Sigh.

Tuesday, September 29, 2015

10 Jobs Hiring Older Workers

September 21, 2015
MSN Money: 10 jobs hiring older workers

This article has offered up some real job prosperity for those aged 50 and over (like me). No doubt about it. Check out the wages that our lifetime of experience can generate!

Median Hourly Wage

1. $12.19
2. $12.81
3. $12.72
4. $11.74
5. $11.24
6. $12.72
7. $11.16
8. $11.51
9. $11.90
10. $23.14

If you are like me, then I know what you are thinking. Job #10 please!! It might not match the pay of a CEO, but it is certainly vastly superior to the rest in the list!

That's the Bridge Tender job. If you have a lot of bridge tending experience and live in a city with thousands of bridges then I would encourage you to apply. The federal, state, and local governments are practically giving these jobs away!

Forehead. Desk. Whack. Depressing. Whack. Depressing. Whack. Depressing. Sigh.

Quote of the Day

September 28, 2015
JC Penney: When the Ceiling Becomes the Floor

Shares of J.C. Penney (JCP) have gained 50% this year, which means it’s time for an analyst upgrade.

History shows that the best time to upgrade a stock is right after it has risen the equivalent of 15 years of 30-year treasury bond interest in just one year.

In related news, JC Penney is currently trading down 2.96% as I type this. No worries. That's only 1 year of 30-year treasury bond interest. If it continues to fall at its current rate, there won't be a downgrade for a fortnight (14 days), lol. Sigh.

Analysts and generally crappy timing, baby. That's what I'm talking about.

This is not investment advice. I have no opinion on where this stock goes from here. I can say this though. I'm certainly not buying JC Penney based on a Wall Street analyst opinion. If it was such a sure thing, why would they tell me? Generosity? A willingness to offer free profitable advice to their fellow man? Did Henry Blodget teach us nothing?

Monday, September 28, 2015

"Considerable Margins of Safety"

December 29, 2014
Why I'm Backing A Brilliant 2015 For BHP Billiton plc, Glencore plc And Rio Tinto plc

However, it is mostly as a result of the considerable margins of safety that are currently on offer through BHP, Rio Tinto and Glencore that I’m bullish on their share price prospects for 2015. It could be a stunning year for investors in all three companies.

Glencore? Brilliant 2015? Stunning year? Got TASER?

Of course, finding the most appealing stocks for next year is not an easy task. That's especially the case if, like most private investors, you lack the time to trawl through the FTSE looking for the best opportunities.

All that time spent trawling and all he's got to show for it is an old tire, a washcloth, a waterlogged sneaker, and a selfie with his "best opportunities" treasure, lol. Sigh.

September 28, 2015
Glencore craters 29% as analysts fear debt will ‘evaporate’ stock’s value

Glencore GLEN, -29.42% GLCNF, -27.70% shares have now lost 76% in value year-to-date, as the miner and trader struggles with weak results, slumping metals prices and broader concerns about its balance sheet.

Excessive debt and leverage. Whatcha gonna do?

Quote of the Day

September 28, 2015
One strategist admits he was wrong about oil stocks and thinks this admission could make him wrong again

"Firstly, we are downgrading energy from overweight to market-weight," Parker writes. "We made a really bad call by going overweight energy at the beginning of this year... We are clearly burned by our wrong overweight, and worry that this downgrade could be the beginning of an energy rally."

This is the very same strategist from Morgan Stanley who just told us that all we think we know is wrong.

It's official. Today is Opposite Day, lol. Sigh.

The Sarcasm Report v.246

September 28, 2015
Morgan Stanley's stock market guru explains why everything you know is worthless

Everything you think you know is wrong.

Here is something I thought I knew. Morgan Stanley didn't understand risk heading into the Great Recession.

August 22, 2011
Morgan Stanley at Brink of Collapse Got $107 Billion From Fed

Aug. 23 (Bloomberg) -- As markets convulsed in September 2008, Morgan Stanley Treasurer David Wong briefed the Federal Reserve on a “dark” scenario in which the U.S. firm would need at least $10 billion of emergency loans from the central bank.

It got 10 times darker by month’s end. Morgan Stanley borrowed $107.3 billion, the most of any bank, according to data compiled by Bloomberg News using information released in response to Freedom of Information Act requests, related court orders and an act of Congress.

Pretentious asswipes.

I thought it was wrong to swear on this blog, but apparently I was mistaken. What can I say? Everything we thought we knew is wrong.

The Planet Fitness Report v.001

August 6, 2015
5 things to know about Planet Fitness

Planet Fitness, Inc. priced its initial public offering at $16 a share late Wednesday, the high end of its guidance range. The company sold 13.5 million shares to raise $216 million. Shares will start trading later Thursday on the New York Stock Exchange under the symbol “PLNT.”

I used their local facilities in the past a few times as a guest (my girlfriend had a membership). As far as gyms go, I liked it.

I joined last week. Including taxes, the start up fee, the annual membership fee, and monthly fee, it will cost me roughly $200 for the first year. I think it is a pretty good value, especially if it keeps me motivated. I can't say if my particular membership will be a good value for them though.

I've used their exercise equipment for 10 hours in one week. Assuming I keep the pace (definitely not a given), that's 520 hours in a year. I have never resold a piece of exercise equipment. I use them until they die. I paid roughly $2000 for a high quality stair climber about 15 years ago. It was a good investment but it's dying. It developed a squeak and nothing I have tried has fixed it. I bring this up because 520 hours on exercise equipment is a lot of wear and tear.

One thing that always motivates me is getting my money's worth when I buy something.

I intend to do just that at Planet Fitness. It's four miles from where I live. It will cost me about $4 each visit (wear and tear, gasoline). That expense dwarfs the membership costs. I wonder how many factor that in? In order to justify the trip, I want to exercise a lot when I am there. That's why I intend to use their equipment for two full hours.

I also intend to visit often. I'm paying Planet Fitness whether I use their facilities or not. I'm therefore choosing, as a night owl, to visit at 3am in the morning each weekday. Or does that make me a morning person? Beats me, lol. But hey, it's working. I've been 5 times and enjoyed it. I do 30 minutes on a recumbent bike (moderate resistance), 30 minutes on the treadmill (2 mph, 11% incline), 30 minutes on the bike, and then 30 more minutes on the treadmill. The routine burns between 900 and 1000 calories in total. Should improve as I lose weight and get into better shape, not that it should matter. That's a lot of exercise and a lot of calories. I feel it.

The real savings will come in other ways though. It's been a rough two years. First, I had that horrible ankle sprain two summers ago. Last year I got Shingles. This year I was just plain lazy. So began the blood pressure medication. Enough is enough. I want off of it. I refuse to become obese. At my age (51), nothing good could come from that.

So anyway, that's my plan. One week down. I'm 6'3" and 230 pounds. Barring injury or illness, I'm not stopping until I see 200. No excuses. I figure if I put it in writing here, then I will feel obligated to do it. Thanks support team!

I don't know what my other long-term goals with Planet Fitness are. This may be just a one year and done situation. I may just be using them as a motivating kick start. Next summer I hope to be doing more hiking. The treadmill should prepare me well for that.

And lastly, I feel really good about this. Hello exercise endorphins. Seriously, I just got back from exercising this morning. Riding the wave, baby. That's what I'm talking about. Life is good. :)

Friday, September 25, 2015

Warning: Volkswagen CEO Pledges to Do Everything to Win Back Your Trust

September 25, 2015
The Latest: New VW boss vows to win back public's trust

Incoming Volkswagen CEO Matthias Mueller is pledging to do everything to win back the trust of the public in the wake of the emissions scandal that erupted in the U.S.

1. Many CEOs in his position might try to earn back your trust. He intends to win it!
2. He will do everything to win!

Be careful gambling your trust with this guy in a high stakes poker game. He seems to be using the same tactics that got Volkswagen into trouble in the first place. They did everything to pass those emissions tests! Everything!

If you have three aces and lose to four aces, there's only one deck, and nothing is wild, then don't come crying to me, lol. Sigh.

In all seriousness, will do everything to win? Oh, yeah. I can feel the trust building. Not.

Quote of the Day

September 24, 2015
The Onion: CEO Has Big Ideas To Grow Company’s Problems

"I was initially skeptical of any aggressive growth strategy given the current size of our company’s problems, but after hearing Adam outline his proposals, I’m now completely confident that we can double the size of our problems over the next quarter."

Rumor has it that his main proposal involved merging with Volkswagen. He seems to be a day late and a dollar short though. That ship has sailed. ;)

Thursday, September 24, 2015

I Wish I Could Lock in a Dismal Return

I'm serious. If I could lock in a dismal return then I would put my entire retirement nest egg in it. Don't believe me? Well, maybe I can convince you just how awesome dismal returns can be!

September 24, 2015
Millions of boomers are making this big retirement mistake

The trouble is that the bond market, a traditional safe haven for retirees and near-retirees, has had dismal returns since the recession.

Had you bought the 30-year treasury in June of 2009 (the end date of the Great Recession), then you'd be sitting on a bond yielding 4.5% right now. That's nearly 3% higher than what the consumer price index has been doing since then. A 3% real yield? In a safe haven? If that's considered dismal, then sign me up!

But wait, that's not all! You would be sitting on a 4.5% bond that some other investors might be willing to sell a kidney to own right now. In other words, the price of that bond has gone up big time.

So, yeah. I would love to lock in a similar dismal return going forward. No doubt about it.

Unfortunately, based on recent stock market action, we seem to be entering a worse than dismal returns environment. If that's the case, then locking in an actual dismal return might still be attractive. Got 0.0% I-Bonds? I do. Might even buy more in November. Sigh. Despair

It's always darkest just before it goes pitch black.

CAT Got Your Tongue?

September 24, 2015
Caterpillar to cut up to 10k jobs; lowers guidance

The company also noted in its restructuring announcement that 2015 is the company's third consecutive down year for sales and revenues-and 2016 "would mark the first time in Caterpillar's 90-year history that sales and revenues have decreased four years in a row."

For those keeping track at home, 90 years ago was 1925. Why is it important? It was before the Great Depression. What an awesome record to break! Sigh.

This strong and resilient economy has made me nearly speechless. That's right. CAT's got my tongue! Badum-ching.

The 30-year treasury yield is back down to 2.88% as I type this. Behold the rising long-term interest rate environment in all its glory, lol. Sigh.

Wednesday, September 23, 2015

The Two Most Popular Long-Term Interest Rate Camps

Camp 1: "Eventually, Interest Rates Will Rise"

January 17, 2014
A couple of frugal years before pensions kick in will do the trick

Eventually, interest rates will rise. Bonds, which are the core of annuities, will pay more. Annuities will raise their payouts and, given that much of what they pay – especially later in life when death is closer – is untaxed return of capital, they will be more attractive.

Good luck on that theory. The 30-year treasury yields about 0.75% less now. 2014 was a great year for bond prices. Go figure.

Camp 2: "Interest Rates Will Rise Eventually"

June 17, 2014
Why You Shouldn't Be Afraid of Rising Interest Rates

NEW YORK (TheStreet) -- There is no question interest rates will rise eventually. When they do, interest rate-sensitive investments like bonds and bond funds will likely fall, perhaps even sharply.

Wasn't really afraid of rising rates. As a long-term saver, I was much more worried about falling rates. The 30-year treasury yields about 0.5% less now. Go figure.

So here's my question. It takes two opposite camps to make a market. For every seller there must be a buyer. Where is the opposite camp? Why aren't they talking? Must it fall on me? Well, okay.

Camp 3: "Eventually, We'll Be Stuck in ZIRP Again"

There, I said it. Behold the elephant in the room. If we did it once then we can do it again. Eternity is a long time.

Hey, if the rising interest rate theorists can use the word eventually to make their case then so can I. Eventually can take an eternity. Hell, eventually our sun will exhaust its fuel. Better dump those solar company stocks now before it is too late, lol. Sigh.

Seriously, if you have to use the word eventually to make your case then you better not be offering timing advice.

If everyone knew for sure that long-term interest rates would rise from here, then everyone would be selling them. To whom though if everyone is selling? Gotta have a buyer in order to sell! This isn't rocket science!

There are no free lunches. There is no trade that is guaranteed to pay off. If there was then we could all get rich betting on the obvious.

Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected. - George Soros

Today's Puzzle: Four Secrets

September 23, 2015
Time: 4 Secrets to Graduating From College With No Debt

You can live with your parents, work year round, cut expenses, take classes while still in high school, attend a cheaper college, and receive financial aid and/or scholarships?


That's six things, but only four of them are secrets? Which ones? I gotta tell you, I'm stumped.

It might have something to do with going to college in the early 1980s. Times have changed. It's a different era now.

For what it is worth, my trick to graduate debt free was to live with my parents (who helped support me), work year round (one year of it), cut expenses, take classes while still in high school (just a couple), attend a cheaper college, and receive a scholarship. Seriously.

Time has uncovered 30-year-old secrets, handed down through generations and then nearly lost forever. They must be very proud. Now if they could just find Jimmy Hoffa!

Hey, live by the click bait, die by the click bait. Secrets? Bah!!

Quote of the Day

September 23, 2015
Why millions of Americans are raiding their retirement savings

Some 41% of post-crash skeptics have stopped saving; 77% have no confidence in financial institutions; and 67% view the markets as risky.

1. What exactly is a post-crash skeptic? One who is skeptical that there was a crash? Or one who is only skeptical because there was a crash?

2. Why did post-crash skeptics stop saving? I'm skeptical these low interest rates will give me the savings I will need in the future so I try to save even more. Does a squirrel stop collecting nuts for the winter if the nuts are sparse? Or does he say "f%^k it" and relax on some van down by the river?

3. 77% have no confidence in financial institutions? None? Why do I suddenly feel like an optimist? I have some confidence. I'm not saying it's much, but it's more than zero, lol. Sigh.

4. 33% don't think that markets are risky? This must get very confusing when "risk on" is mentioned on CNBC, lol. Sigh.

5. If only 23% have any confidence in financial institutions then how can 33% believe that financial markets aren't risky? Now that's a conundrum!

Tuesday, September 22, 2015

Taking the Group Out of Groupon

September 22, 2015
Groupon is laying off 1,100 employees and shutting down its operations in 7 countries

“We believe that in order for our geographic footprint to be an even bigger advantage, we need to focus our energy and dollars on fewer countries,” Williams said in the blog post.

First get the number of countries down to one, then get the number of customers down to one. Genius!

Quote of the Day

September 22, 2015
Bummer: Stocks badly missing strategists’ mark

The S&P 500 has fallen 4.5 percent this year, badly underperforming Wall Street expectations. If stocks close the year around this level, it will be the first time that the S&P has missed strategists' targets since 2008.

That's a damn fine quote.

Under normal circumstances it definitely would have been the quote of the day. These are not normal circumstances though. We must therefore look to the comments of this article to find perfection.

Is Jeremy Siegel still screeching "Dow 20,000 by year end"? - DONNA_SUMMER

Bingo, lol. Sigh.

Volkswagen's Nick of Fury

September 22, 2015
Volkswagen's US boss: We totally screwed up

On Tuesday, Olaf Lies, a German politician who also sits on Volkswagen's supervisory board, told radio station Deutschlandfunk that he expected heads to roll at the company once it is clear who was responsible for falsifying the U.S. tests.

Let me get this straight. First you tell us that fraud is just a screw up and then a German politician with "Lies" in his name tells us that heads will roll? Seriously?

This sure could make a great Agents of S.H.I.E.L.D. episode, lol. Sigh.

Mad Money: Compare and Contrast the Exuberant Bullishness

Bear Stearns is not in trouble, I mean if anything they are more likely to be taken over. Don't move your money from Bear! That's just being silly! Don't be silly!

That was then. This is now.

September 21, 2015
Cramer: I was wrong—run far away from this stock

Now, look, I got La Quinta wrong. Mea culpa. I should have been more skeptical and less willing to believe the CEO's exuberant bullishness.

Irrational exuberant bullishness, baby. That's what I'm talking about. Booyah.

Monday, September 21, 2015

Quote of the Day

September 21, 2015
Why US manufacturers are nixing the US for China

For us, it's more important to find well-educated, motivated people at the right cost—which, by the way, is probably one quarter of the U.S. cost. - Racho Jordanov, CEO and president of JHL Biotech

That Dog Must Be Fed!

September 21, 2015
Fed’s Lockhart Says Interest-Rate Rise in 2015 Still Very Much on the Table

Very much on the table! :)

How to Make $26.56 Working from Home

September 20, 2015
DraftKings, FanDuel make millions, and give them away, as fantasy revs up

"The money that comes in, we take about a 10-percent cut and we pay out everything else in prizes, so it's really self-funding."

1. Start with one million dollars in net worth.
2. Gamble all of it 100 times on bets that pay 90 cents on the dollar.
3. Try not to spend the remaining $26.56 all in one place.

$1,000,000 x 0.9100 = $26.56

Behold the power of negative compound interest. Isn't gambling fun?

Corporate Fraud Is Apparently Alive and Well

September 21, 2015
Volkswagen stock drops 20% on US diesel recall probe

Cynthia Giles, an enforcement officer at the EPA, said on Friday the cars in question "contained software that turns off emissions controls when driving normally and turns them on when the car is undergoing an emissions test".

The feature, which the EPA called a "defeat device," masks the true emissions only during testing. When the cars are on the road, they emit as much as 40 times the level of pollutants allowed under clean air rules meant to ensure public health is protected, Giles said.

Everyone always needs a fraudulent car to drive! They just aren't making any more fraudulent cars!! Buy now or forever be priced out!!!

The Religion Known as Economics

September 20, 2015
Could negative rates be next on the Fed's policy menu?

"Maybe we should have done three times as much QE, but nobody knows what three times QE would have done. By contrast, negative interest rates is right there in standard theory," Kimball said, which means that we can predict its effects by using basic economic models and beliefs.

Praise be! Believe it!!

Right now, when a $100 bill is deposited into an account, $100 is added to that account. However, a central bank could create a situation whereby that $100 deposit only led to a $98 increase in the account.

There won't be ANY unintended consequences from that, let me assure you! People will be filled with optimism and good cheer! Consumer spending will increase dramatically with this new "tax" on savings! Believe it!!

Or not.

March 2, 2015
Bill Gross sees negative rates turning investors into Oliver Twist

Pension funds and insurance companies are perhaps the most important examples of financial sectors that are threatened by low to negative interest rates. Both sectors have always attempted to immunize their long term liabilities (retirement, health, morbidity) by investing at a similar duration with an attractive yield. Now that negative and in almost all cases low short term rates are expected to persist, long term bonds and similar duration assets do not offer the ability to pay claims 5, 10, 30 years into the future.”

It is a
similar story for households, which struggle to save enough money at a high enough rate to pay for education, health care and retirement, he says. “Negative/zero-bound interest rates may exacerbate, instead of stimulate low growth rates in all of these instances, by raising savings and deferring consumption.”

I believe that rational people decrease spending when confronted with reduced earnings on savings. That's certainly what I did when real interest rates fell. I'd like to think that I'm somewhat rational anyway, when I adjust my spending to adapt to the new reality. As a long-term saver and retiree, I don't wish to outlive my nest egg. Go figure.

Know what? It's probably just the crazy talk of a standard economic theory heretic. Never mind. Pretend I didn't say a word. Embrace the future prosperity.

Sunday, September 20, 2015

The Sarcasm Report v.245

September 18, 2015
Zacks: The Single Biggest Obstacle to Trading Success

We’ve created such an approach with our new strategy that incorporates Zacks Rank #1s, the top Zacks Ranked Industries, and a special combination of various Growth, Value, and Momentum style inputs that have shown extreme profit potential.

We call this secret formulation the Zacks Black Box Trader.

Best of all, there is no human bias to this computer driven and operated strategy. Just a straightforward, quantitative model that has tested off-the-charts,
beating the S&P in 10 out of the last 10 years, more than quadrupling its returns with an average annual gain of 31.8% vs. the S&P's 7.5% over that same time frame. And with less risk while doing so.

It's a new strategy that presumably uses 10 or more years of historical data to accurately predict 10 or more years of historical data.

Color me impressed.

Quote of the Day

September 18, 2015
Cramer: We just avoided a huge disaster

I think you have to take heart the fact that we avoided a potential disaster, which is what could have happened if the Fed had tightened. - Jim Cramer

Please allow me to run his words of wisdom through the NASCAR translator.

This strong and resilient stock car market can handle entering hairpin downturns at 200.0 miles per hour, but don't think for a second that it can handle entering the corners 0.25% faster than that! 200.5 mph would be disastrous!!

Saturday, September 19, 2015

CNBC's Doctored Strange Headline Love or: How I Learned to Start Worrying and Embrace the Crash

September 18, 2015
CNBC: This bank just slashed its S&P earnings outlook to zero

No. The bank did not do that. It slashed its S&P earnings GROWTH outlook to zero. Big difference!

September 17, 2015
CNBC: Wells Fargo CEO: Our goal is NOT to make money

No. He did not say that. He said the number one goal was not about making money. It's about serving customers. Once again, big difference!

Can't you just picture the CEO waking up every morning looking for new ways NOT to make money? If that's their goal and they can't succeed at it then they must be the most incompetent bank of all time! All it would take is excessive risk taking, you know, like what was going on heading into the Great Recession, lol. Sigh.

Does CNBC think that we all just fell off the backs of turnip trucks or is September National Click Bait Month? In any event, it's working! WTF am I supposed to do with all these turnips now that the truck has driven away? Oh, wait. I know!

Free turnips for sale! Today only! Buy one free turnip for free and get another free turnip absolutely free! How do I NOT make money? Volume, baby. That's what I'm talking about! Hahaha!!

Friday, September 18, 2015

The Sarcasm Report v.244

September 18, 2015
Honeywell CEO: 'I want to become the Apple of the industrial sector,' and why Tom Brady was wronged

The Apple of the industrial sector, eh? Well, okay. I just hope that you've thought through all the risks.


September 18, 2015
The Market Ticker: PS: Screw You Too Obama

Had the school and its staff had any reason to believe there was an actual explosive device their first duty would be to evacuate the building and get everyone, including themselves, away from the "believed" bomb -- not sit with it and leave everyone in the building exposed to serious injury or death.

I really want to believe that. I really, really do. I'm only 99% convinced though, and here's why.

It was the 1990s (before 9/11). Several coworkers and I had just attended a Game Developers Conference. We were in a California airport checking through security on our way home. One of my coworkers had something in his carry-on bag that required further attention.

He'd been given a free ping pong ball gun. It was in its original packaging. It was made of clear plastic. You could see all of its internal parts. He intended to surprise his son with it.

He was asked what it was. He said it was a toy ping pong ball gun. He was told to remove it from its packaging. He complied. He was told to fire it at the wall behind us. He complied.

I sighed in relief knowing that security's fears were not fully realized. The ball did not explode or release a deadly cloud of toxins instantly killing all of us in the area. It simply bounced harmlessly off the wall. Whew!

For the sake of argument, I'm therefore not entirely sure what people do when they suspect there may be a bomb. If that was airport security's plan, then I can only imagine what others might do. You know, people without the proper security training, lol. Sigh.

True story. I swear.

Quote of the Day

September 18, 2015
The Wall Street Journal: If Investors Bail, Will Your Bond Fund Flail?

It can easily cost 3% or more to sell less-liquid junk bonds–far more than the trading costs on high-quality corporate or government bonds.

Who thinks the typical "chasing yield" retail investor has a firm grasp of all the risks associated with owning non-investment grade bonds?

Four Things the Fed Should Use Next Time to Communicate Their Rate Hike Decision More Confidently

1. A tin can.
2. Another tin can.
3. Some string.
4. A clown horn.

Hey, I'm not claiming that it would exude confidence. I'm simply claiming, based on how the stock market received the Fed's good news, that it would exude *more* confidence.

What the Fed Sees (Musical Trubute)

September 18, 2015
Here's what the Federal Reserve wants to see before raising interest rates from record lows

Who cares what they want to see? Let's talk instead about what the Fed does see! Their justification for not raising rates was certainly dire. I think it is so dire that it needs a musical tribute, lol. Sigh.

The Fed tried to warn us that the rates would not go high
All the time to warn us so we only bought "strong buys"
They all tried to tell us but I guess we didn't care
We turned our backs and heard the growling bear

All the burning markets weren't just Chinese can't you see?
All the misplaced savings meant that burning stocks weren't cheap
Dividends bought in bulk soon heading for the floor
Burning markets lost forevermore

Greenspan tried to help us find some jobs a while ago
When we finally got them Ben did become our foe
The party Yellen gave for us when we could not pay
Now there's nothing left for us to save

All the burning markets weren't just Chinese can't you see?
All the misplaced savings meant that burning stocks weren't cheap
Dividends bought in bulk soon heading for the floor
Burning markets lost forevermore

Years have passed and we keep thinking, all this ZIRP's a sin
We look back into the past and think of bonds back then
We know that we lost everything we bet that we could win
I guess we should have listened to the Fed

All the burning markets weren't just Chinese can't you see?
All the misplaced savings meant that burning stocks weren't cheap
Dividends bought in bulk soon heading for the floor
Burning markets lost forevermore

Burning markets lost forevermore

If Janet Yellen Was an Air Traffic Controller

Captain: Tower, we've lost an engine of air speed and altitude growth. Over.

Tower: Captain, don't panic. I have a dual mandate to keep you safe. Over.

Captain: Our air speed has fallen and our altitude is falling. Over.

Tower: I need you to drop your nose to increase your air speed. Over.

Captain: Understood. Air speed picking up nicely. Altitude falling rapidly. Over.

Tower: I need you to raise the nose to increase your altitude. Over.

Captain: Understood. Altitude leveling off now. Air speed falling rapidly. Over.

Tower: I need you to drop your nose again to avoid the stall. You also need to raise the nose to maintain your altitude. Over.

Captain: Understood. Tower, the stick broke off. I think I may have applied too much leverage attempting to comply with your instructions. Over.

Tower: No, you are fine. There can never be too much leverage. There is no reason to blame the tower for your excessive risk taking. Nobody could have seen this coming. You are still well positioned for a "soft" landing. Over.

Captain: Understood. We're spiraling to the ground now. It's almost over. Ov...

In all seriousness, there are 7 million fewer unemployed than there were 5 years ago. Growth has been pathetic given how much of a tailwind that should have been.

There are only 8 million unemployed left. What's going to happen to growth once the tailwinds are gone? You'd have to be an extreme optimist to think there are more than a few years left before some sort of landing "unexpectedly" appears. Based on the speed we're approaching the ground, you'd have to be an eternal optimist to think the landing is guaranteed to be soft, or even likely. Sigh.

Thursday, September 17, 2015

Don't Pay Off That Student Loan Debt Yet!

September 16, 2015
Don’t pay off your student loans — yet

And since student loan interest rates are usually relatively low, a borrower’s money may be put to better work elsewhere, says Dash. For example, if a borrower is paying 4% in interest on a student loan and is looking at an investment that could provide them with a 6% return, it makes more sense for them to invest that money — as long as they’re comfortable with the risk involved, he said.

Says Stephen Dash, the founder and CEO of Credible, a company in the student loan refinance business.

Why is this "borrow money to buy risk assets" story rarely told near market bottoms? It's both a mystery and a conundrum.

Quote of the Day

September 16, 2015
How the Looming Fed Rate Increase Will Affect Your Retirement

"The rate hike is becoming something like the Great Pumpkin from the Peanuts cartoons ... higher interest rates from the Fed are out there somewhere, but never quite seem to materialize, no matter how patiently we wait," said Lawrence Solomon, a CFP and Director of Investments and Financial Planning at OptiFour Integrated Wealth Management.

Welcome to Great Pumpkin Day!

This We Know

September 17, 2015
When the Fed raises rates, here's what happens

No, when the Fed raised rates in the past, this is what tended to happened in the past. Big difference. You cannot predict the future with 100% accuracy simply by looking at the past.

A rate hike will come and the bull market will stumble, bond yields will climb and the economy will slip into a recession.

This we know.

We don't know that. I can prove it. I don't know it and I am part of the we. Therefore, if I don't know it then we can't know it. It doesn't even matter why I don't know it, but you can probably guess why. I don't know anything about the future with absolute certainty.

I can say with 99% certainty that a rate hike will come. So let's say that it does come, using the "beyond a reasonable doubt" criteria. Could the following happen next?

1. The bull market stumbles.
2. Short rates rise. Duh!
3. Long rates fall though. (Bond yields do *not* climb.)
4. The yield curve inverts. (Often presages a recession.)
5. Recession.

I'm not asking if it will happen. I'm simply asking if it could. If it could happen then we cannot know what the article claims we know.

There's a reason why history is taught in school but future is not.

Picture the first test in future class. The teacher asks what will happen in the year 2020. Little Jimmy thinks he knows the answer. The earth will be encased in a block of ice. Little Jimmy knows something that the teacher does not. Little Jimmy's father is an evil mad scientist and is currently working on a weapon of mass refrigeration.

Won't the teacher feel incredibly stupid when what he thought he knew about the future wasn't correct? Won't he feel especially stupid for giving little Jimmy a failing grade in future class? Never underestimate what a vengeful, proud, evil mad scientist father will do to prove his son right, lol. Sigh.

We cannot "know" the future. Anyone who thinks they can is delusional. Further, anyone who claims to know what long-term interest rates will do in the future is exceptionally delusional. If long-term rates were truly guaranteed to rise then we could all make guaranteed money shorting the hell out of treasuries. Good luck on that sure thing.

The No @#$% Sherlock Report v.004

September 16, 2015
Time for a hike? World’s central bankers speak out

Elvira Nabiullina, Central Bank of Russia Governor:

There are two scenarios possible that raising interest rates will have, bearing in mind that market players are expecting this particular event and in many ways have priced it into the valuation of their assets. And in this (first) case there are not going to be any dramatic changes in the market environment," she told CNBC.

"But the second probability is also possible – that
markets may respond in a very nervous way and then generally speaking, increase global turbulence that may affect the Russian economy as well."

Scenario Summary:

1. No drama.
2. Drama.

This controversial summary is both approved by Vladimir Vladimirovich Putin and backed by modern mathematical set theory. I therefore have no choice but to trust its conclusion with a high degree of confidence.

There may or may not be drama. Like Elvira Nabiullina, I'd literally be willing to stake my life on it.

Wednesday, September 16, 2015

This Blows

September 15, 2015
The stock market is in a 'coil' and ready to break loose

Here comes some technical analysis.

In an afternoon email Tuesday, Rich Barry, floor governor at the New York Stock Exchange, said that word on the floor among traders is that the stock market is in a "coil" formation.

And what this means is that no matter what happens next, it's going to be big.

Does the video mean that I think technical analysis is generally worthy of baby vomit or am I implying that something big might be coming up?

The answer is simple. Yes. ;)

25 Things You May Have in Common with Janet Yellen

1. She is able to communicate using a voice box.
2. She walks fully upright. She does not slither along the floor.
3. She looks naked compared to other primates.
4. She has hands. She can grasp physical things.
5. She has a brain. It allows her to think she knows what she is doing.
6. She tends to wear clothes, but is not forced to do so.
7. She can control fire, but perhaps not a FIRE economy.
8. She can blush if overwhelmed with social anxiety.
9. She had a long childhood. 18 years, give or take.
10. She can survive long after having a child, unlike salmon.
11. If she puts a Q-Tip in her ear, then she must look at it afterwards.
12. If a waiter warns her that the plate is extremely hot, then she must immediately touch it to determine just how hot it really is.
13. Her best dancing moves come directly after stepping through an unexpected spider web.
14. She's squeezed a pimple before she knew it was ready.
15. She sounds out Wed-nes-day and Feb-ru-ary in her head every time she needs to spell them just so she'll never forget.
16. She wonders if she'll be thought of as a shoplifter if she exits a store without buying anything.
17. If she's wasted time reading 16 things in one of the many lists on the Internet, then she will continue reading anyway just to complete it.
18. When she looks in a mirror, she will often verify that nobody is behind her.
19. Although she doesn't believe that people can move things with their minds, she's tried to do it herself at least once.
20. When she's really, really tired, she's been known to tell herself repeatedly that she really should be going to sleep. However, she's just not sure that she has the energy to brush her teeth. And so she waits. This also might help explain why we've been trapped in ZIRP so long.

And here are five more things you may have in common.

September 16, 2015
You may have more in common with Janet Yellen than you think

The Four Wells Fargo Riders of the Quarterpointpocalypse

September 16, 2016
Ready or not rates are rising and investors are ready: Wells Fargo

I refer you once again to the comments.

HFT's are primed and ready to front run your carefully thought out strategies. Perfectly legal. - L T

"Ready or not rates are rising and investors are ready: Wells Fargo" Confused or not I'm confused. - Chuck

Good thing we had 10 years of articles warning us about this day. - Bob

Oh my God! A quarter of a point. Who gives a #$%$. Just shows you the market is nothing but short term swings controlled by short term bull#$%$. - donald

Sarcastic investors truly are ready... or not... for the quarterpointpocalypse! ;)

Tuesday, September 15, 2015

The Crock of @#$% Report v.031

September 15, 2015
Hewlett-Packard will cut up to 30,000 jobs as part of restructuring

“We've done a significant amount of work over the past few years to take costs out and simplify processes, and these final actions will eliminate the need for any future corporate restructuring.

This is the very last one-time non-recurring corporate restructuring charge investors in Hewlett-Packard will ever experience. Honest.

The split is expected by the end of October. Afterward, the company’s personal computer and printing business will become known as HP Inc., while its technology infrastructure, software and services businesses will be called Hewlett-Packard Enterprise.

That said, investors in HP Inc. and Hewlett-Packard Enterprises may experience a few more one-time non-recurring corporate restructuring charges at some point in the future, especially if either of them eventually slides into bankruptcy. But what are the odds of that?

August 14, 2015
Rating Action: Moody's downgrades Hewlett-Packard Company to Baa2; outlook stable

"HP's Baa2 rating reflects the anticipated spin-off the Enterprise business and the remaining company's strong to leading market positions in printing and personal computers, countered by the secular growth challenges in both segments that will persist for the foreseeable future," stated Richard Lane, Moody's Senior Vice President.

If there's one thing we can rely on, it's the foreseeable future.

The Sarcasm Report v.243

March 26, 2014
Small, Frequent Meals Don't Rev Metabolism

Dieters are often told to eat small, frequent meals instead of two or three bigger meals a day to shed extra pounds, but eating this way does not boost metabolism and may increase diabetes and cardiovascular disease risk, researchers found.

December 16, 2014
Small, frequent meals are better for your metabolism

Big feasts and too many treats don’t just pack on extra pounds. Duke research finds that overeating can also change your metabolism – meaning how the cells in your body process the food you consume – and that can lead to chronic health problems including diabetes. Smaller, more frequent meals are optimal, the researchers say.

You heard it here first. If you wish to avoid diabetes then you should not eat small, frequent meals. You should eat small, frequent meals instead.

In related news, economists say that the Fed should not hike interest rates in September. The Fed should hike interest rates in September instead.

Theory: Safe Havens Are Very Risky and Risk Assets Are Very Safe

I hope you don't expect me to actually defend this seemingly popular theory that l don't believe in.

This is a frickin' Illusion of Prosperity blog!

Risk assets are very safe? What? Did you think I was having a nervous breakdown? That my head was filled with delusions? Shame on you for attempting to gawk at the crazy man! Hahaha! :)

Shame on me too for potentially leading you there. I couldn't have done it without the help of the financial news media planting the seeds though. Sigh.

See Also:
4 Super-Safe High-Dividend Stocks to Buy Now
Opinion: 10 ‘safe’ stocks for worried investors
Why Oil Stock Dividends are ‘Mostly’ Safe
Blah, blah, blah, blah, blah
Blah, blah, blah

The 10-Year Treasury Could Easily Hit 4% in the Next Two Months

November 12, 2013
Dennis Gartman: If it’s Yellen, you should be sellin’ bonds

“It’s the first time in a long time I’ve wanted to be that way,” he said on CNBC late Monday, but he’s convinced rates are heading sharply higher from here. The benchmark 10-year note traded at a yield of 2.77% on Tuesday morning, but it could easily reach 4% in the next two years and 6% within the next 10 years, said Gartman, who publishes The Gartman Letter, a note about the capital markets.

It's Yellen! Were you sellin'? Just two months left to go! Big money! Big profits! Never too late to sell! What was 2.77% nearly two years ago has fallen to 2.18% today. Sharply higher? Well, not exactly.

September 14, 2015
Gartman: Long bonds, short stocks

Dennis Gartman, The Gartman Letter, analyzes the latest market trends and explains why to sell stocks and buy bonds.

What? Buy bonds? I have no desire to watch the video, but I can say this. The explanation better not involve Yellen if he wants it to rhyme again. Cryin'? Dyin'? Lyin? Wait, I know. He demands another sacrifice! If it's Mayan, you should be buyin' bonds! Based on the stock market action over the past month, it is most definitely Mayan!

That Gartman. He's master of the short-term rear-view mirror technology if you ask me. Works great on straight roads with little traffic, but then again, so does the front window. Go figure.

Disclosure: Holding long-term inflation protected treasuries and/or I-Bonds since the creation of dirt, assuming dirt was created in 2000. Long 15 years and counting. They said buy and hold was dead. Yawn.

Monday, September 14, 2015

The Sarcasm Report v.242

September 13, 2015
Pimco, Fidelity Stung by Collapse of Petrobras's 100-Year Bond

When Petroleo Brasileiro SA sold 100-year bonds in June, the move was largely seen as a sign the corruption-tainted oil producer had put the worst of its problems behind it.

The sign was crystal clear.

Attention Yield Seeking American Investors: Would Our Corruption-Tainted Company Really Be Selling You 100-Year Bonds If the Worst of Our Problems Weren't Behind Us?

Payed vs. Paid

September 14, 2015
New study asks why birds fall in love

The researchers observed more infidelity (first in the females, then in the males) in the artificially paired mates, even though males payed just as much attention to their females when they'd been paired at random. There were fewer instances of copulation (so fewer fertilized eggs overall) and less attention paid to newly hatched eggs, leading to high mortality rates in the early days after a hatching.

Payed or paid? Which is correct in this instance? It's not so simple.

Payed is actually a nautical term so seamen may be involved. However, copulation is a reproductive term so "seamen" may still be involved. You know, because seamen might have a gal in every port. What did you think I meant?

Not getting it?

What's big and black and full of seamen? A submarine!

See? Nautical. Nothing more. Those seamen may have payed the rope to dock, then paid the gals to dock. You know, because ships normally can't dock for free. Someone must get paid, presumably the gals working for the harbormaster. What did you think I meant?

Good grief. Can't even try to share what I learned about grammar today without being accused of excessive sexual innuendo? Seriously?

What's the world "coming" to? What? I only put "coming" in quotes to imply that I was being judged like the second coming of Jesus Christ. What did you think I meant? ;)

How to Lose Money as a Junk Bagholder

1. Read a whole book on just exchange traded funds.
2. Don't read a single web page on closed-end funds.
3. Invest in a closed-end junk bond fund.

September 14, 2015
are these funds a scam?

I see so much bashing on these funds. Are they really something to steer clear of? I read a whole book on just ETF's and they didn't mention anything about excessive risk with these leveraged bond funds.

This person is asking the questions that others should have been asking last month.

ETFs vs. Closed-End Funds

1. ETFs generally trade close to their net asset value (NAV).
2. By contrast, CEFs are more likely to trade at a premium or discount to their NAV.

Is it a scam to have bought Pimco's High Income Fund at 50% above its net asset value? Is it a scam to buy a new car at 50% above its MSRP? Hey, if you want the fund or the car at any price, then any price it shall be!

PHK lost another 6.2% today. I don't believe it trades above its net asset value any longer (Pimco's site hasn't been updated with today's data yet). The bagholder premium is now gone. Mission accomplished.

Bag investors should have no fear though. I'm confident that there are many, many more bags out there for those who don't know where to look, lol. Sigh.

See Also:
Today's Junk Bagholder Fractal Adventure!
Junk Bagholders
Mister Peabody's Improbable Investment Machine

Quote of the Day

September 14, 2015
CNBC: Fed 'one and done' is a Wall Street fantasy

However, anyone who lived through the stagflation of the 1970s or who looks historically at the relationship between inflation and unemployment rates can proclaim with absolute certainty that the Phillips Curve is completely bogus.

Who would look historically at the relationship between inflation and unemployment though? That would take a fairly cynical person. Know anyone?

September 7, 2010
The Failed Keynesian Phillips Curve

Hey! Who would have guessed? I did! There's even a chart! Woohoo! ;)

The Sarcasm Report v.241

September 13, 2015
How can you make early retirement happen?

First, the bad news for those who wish to retire just one year early.

Given that retiring early can be very expensive, David Blanchett, head of retirement research at Morningstar Investment in Chicago, recommends delaying your retire-early plan by at least one year.

Ouch. Now, the bad news for everyone else.

Others also suggest contemplating and planning for all that could wrong.

All that could wrong? Seriously? Well, okay, I'll make an attempt to contemplate all that could *go* wrong. Maybe that's good enough.

You walk into your boss's office and submit your "burning bridges" letter. He accepts your resignation and informs you of the accounting scandal, and since your entire 401k was invested in "cheap" company stock your retirement plan has been completely wiped out.

You pack up your things and head to the parking lot. Your car is not where you left it. It's currently moving at 110 mph down the interstate followed closely by six police cars, two of which are unmarked. Turns out that your wife was secretly really into the drug trade. Who knew?

You walk to the bus stop. Hey, a bit of good luck. The bus waiting is the one on your home's route. Upon entering, you notice that nearly everyone has their hands up. There's a man in a hood collecting wallets and purses. Not to feel left out, you comply. After several more hours talking to the police you are on your way home.

Upon arriving, you see your house in flames. The fire department is attempting to salvage what they can, but let's face it, it's just not your day. Only your mailbox survived, miraculously sheltered from the harsh environment.

Oh, look! You've got tons of mail! Hurray! Shall we start with the letter from your insurance company explaining that your policy has been cancelled due to lack of payment? How about the letter from a law firm you've never heard of? Perhaps the thick letter from the IRS? What could they want? How about that hand written letter from your oncologist? Decisions, decisions.

A pack of wild dogs appears. You are on the run now. You hoof it to the nearest convenience store to escape. Everyone inside is currently engaged in a heated discussion about the breaking news story. There's been a worldwide epidemic. People are apparently being told to stay indoors and avoid contact with others. That's when the military tanks appear. Why do they have red stars? There's quite a bit of shooting in the distance. The noise seems to be rapidly getting closer. It's time to act! Survival is paramount!

All is not lost. There is still one box of Twinkies left on the shelf. You make eye contact with the only other person who sees it. He's 6' 6", muscular, and armed with what looks like an AK-47. Russian? He's about 3 feet closer to the box than you but you've got something he doesn't. Hunger and a 'tude.

That's right... boss fight!

You have been promoted to level 2 retirement contemplator and planner! Congratulations!! You may allocate three points to your attributes and you have acquired a special skill.

To be continued...

Sunday, September 13, 2015

Simple Advice for Corporate America

September 3, 2015
Tricked out student housing equals big developer profits

"Just look around for yourself to see. It's always a fun time here," said John, a junior at the university, swimming up to the side of the pool.

"Everybody needs a way to unwind. You can't study all the time. Everyone needs to have their outlet, so it gives everyone their outlets," said Ashton, another junior, joining the poolside chat with her friends.

Better invest in pools now or you won't be able to attract and retain the workers of the future!

The Crock of @#$% Report v.030

September 11, 2015
How to play a Fed rate hike: Experts

A Federal Reserve rate hike will have "absolutely" no impact on the value of equities, but because it will nonetheless move some stock prices, investors should be prepared to scoop up names that overreact, market pro Charlie Bobrinskoy said Friday.

Charlie Bobrinskoy just couldn't be satisfied by claiming that it would have a small, tiny, bitty, puny, minuscule, modest, slight, trifling, teeny, meager, microscopic, inconsequential, or trivial impact. No, sir. He had to say "absolutely" no impact.

1. Place one straw on camel's back.
2. Absolutely no impact?
3. Repeat.

You gotta start somewhere. When the back eventually breaks, should we blame just the last straw or was it a combination of all of them?

Butterfly effect

In chaos theory, the butterfly effect is the sensitive dependence on initial conditions in which a small change in one state of a deterministic nonlinear system can result in large differences in a later state.

Perhaps Charlie Bobrinskoy would like to share his proof that the butterfly effect won't be in play here. How hard can it be? I'm confident that the global economic system is so simple that a child chosen at random can perform the simulation in his or her head. It should therefore be child's play for a market pro to do it!

I mean really, it's as easy as throwing dice.

The butterfly effect is exhibited by very simple systems. For example, the randomness of the outcomes of throwing dice depends on this characteristic to amplify small differences in initial conditions—the precise direction, thrust, and orientation of the throw—into significantly different dice paths and outcomes, which makes it virtually impossible to throw dice exactly the same way twice.

Oops. Bad example. Never mind.

You know what? F%^k it. The Fed should just raise rates to 20% for a few years and we'll count how many companies in the S&P 500 survive. All 500, right? It's the only way to be "absolutely" sure that rate hikes can't affect the value of companies.

Saturday, September 12, 2015

Quote of the Day

September 12, 2015
Can't afford 15-year mortgage? Then don't buy

While I generally agree with the premise of the article, I would point out that the only people who truly know if they can afford buying homes are the ones who don't need loans in the first place. Therefore, if only those who knew they could afford homes were buying homes then we'd be in the midst of a Great Depression. No doubt about it.

I bought my one and only home in 1997. I was getting married in a month and thought I could afford it. I put 20% down and we had two incomes. A funny thing happened within the next two years though.

1. One of us tended to spend quite a bit more than the other. Go figure.
2. Divorce. Poof. One income vanished.
3. Massive accounting fraud at the company where I worked. Years of accumulated stock options turned to dust.
4. A rapid series of seemingly endless layoffs appeared. I made the cut each time thank goodness. Well, sort of. I eventually quit the hellhole but that's another story.

Had it not been for waiting until the age of 33 to buy a home then any one of those could have easily put me in serious financial trouble. It certainly helped that I had the good fortune of other investments paying off.

In 1999, I was able to pay off the house. I had a mortgage with a 7% rate. As a saver by nature, I wished to remove that burden. My tax preparer tried to talk me out of it. Said I could make more elsewhere. A few years later she had a change of heart on that advice, as you can probably expect. 1999 was not exactly the ideal year to swing for the investment fences.

So where is the quote of the day? It's in the comments.

Author needs to learn about the time value of money. When you can get a 30-year loan at 4% interest when rates are going to far exceed that in the future (and drive up inflation), then you are actually in BETTER financial position the further you push out the loan. The other consideration: most people could not own a home in expensive places like California without a 30-year mortgage. Very superficial article. - Christopher Prince

1. The time value of money argument only works if you can find better investments, much like my tax preparer thought she could do for me. We know one investment that won't work. You certainly shouldn't borrow at 4% to invest in 30-year treasuries yielding just 3%. You could try investing in the mortgages of others I suppose, but wouldn't that seem a bit silly? How about the stock market? Sure thing? Well, maybe. Oh, wait. Maybes can't be sure things.

2. He's absolutely convinced, just like many others seem to be, that interest rates are going to be higher in the future, but not only that he knows with certainty that they will far exceed today's rates. I sure wish I could predict the future with such conviction. Embrace that debt, baby. Can't ever have too much with that mindset.

3. He seems to think that rising interest rates will drive up inflation. Isn't that a bit like saying that carts push horses around? Perhaps he should tell the Fed his theory. If rising rates push inflation up, then falling rates must push inflation down. Woohoo! Now we finally know what's going wrong!

4. He mentions that most people can't afford 15-year mortgages in expensive places like California. He uses that as a basis to say how "very superficial" the article is. Fascinating. I say it is fascinating because the author wrote the following.

The 15-year loan is not for everybody. You can manufacture dozens of excuses as to why it can't work for you, legitimate or otherwise. Some of the more legitimate reasons revolve around specific real estate markets, such as San Francisco, Los Angeles and, of course, Manhattan. Yet those are exceptions to the rule, not the rule.

You would think that someone who can predict the future with such accuracy would realize that San Francisco and Los Angeles are expensive markets located in California. But then again, if you can predict the future then what is the point of reading these articles in their entirety?

I jest. The real reason I picked this as the quote of the day was because at least seven people liked it. One person even gave it an Amen. For what it is worth, I'd say he's preaching to the debt choir. I truly hope that it works out well for everyone, but you won't catch me borrowing money to invest and/or holding my breath. Sigh.

First World Problem of the Day

September 11, 2015
Why are the rich pulling their kids out of school?

"We've had one family from the Middle East request a residential teacher to teach at their children within their penthouse in Knightsbridge because even getting to a school with drivers and guards is so much of a hassle," Spriggs said.

Teach at their children? Really?

Teacher: You will be paying me to teach your children?
Father: No, we are paying you to teach *at* our children.
Teacher: I'm a bit confused.
Father: Our children will not be taking orders from the likes of you.
Teacher: If your children would prefer to do other things while I am teaching...
Father: Then you will teach *at* them, in a low calming voice, as they do those other things!!
Teacher: Can I speak to their mother about this?
Father: You may speak *at* her. Don't expect a reply though. Like our children, she does not speak to the help.

Perhaps teachers really are underpaid. I don't think I could be one for more than a few minutes in that environment. ;)

One Junk Food Product That Will Make You Miss Being a Kid

September 12, 2015
20 Junk Food Products that Will Make You Miss Being a Kid

Well, that list was certainly disappointing. I would not swear under oath that I have eaten any of those products, much less miss them. Seriously.

I Miss: Marathon

When I was a kid there was an amazing candy bar called the Marathon. It was made by Mars and came in a bright red wrapper and was almost ten inches long (the candy was only 8 inches). Inside was a braid of firm caramel covered in chocolate.

Yes! Now we're talking.

That candy bar once tried to kill me. My dad had to perform the Heimlich maneuver to remove the sweet caramel from my throat. No joke. Ah, the element of danger! I also once made the horrible mistake of trying to eat that candy bar while chewing a piece of gum. It formed an unpleasant cement type substance that took a very long time to remove. Life lessons, baby. That's what I'm talking about, lol. Sigh.

That said, I miss what was once my favorite candy bar! If I ever see it on the shelves again, I will definitely be a buyer. Who knows? Might even be able to rip out a few crowns with it! That caramel was especially firm and sticky.

I'm normally not a risk taker these days but a trip down Marathon memory lane would so be worth it! Hahaha! :)

Alien Conspiracy Theory of the Day

September 8, 2015
Alien Nuclear Wars Might Be Visible From Earth

If we can see "them" then "they" can see us.

The Trinity test involved only one explosion. But if there were many more explosions, involving many more nuclear weapons, it might generate enough heat and light to be seen from nearby stars, or from the deeper reaches of our galaxy—so long as someone out there was looking.

"They" may have better sensors than we do, sensors that might not even be limited by the speed of light. That means "they" may have seen us on July 16, 1945.

In 1955, Area 51 was acquired by the United States Air Force. Why? What was the real reason? To study alien scouting ships?

In 2002, Dick Cheney said that deficits don't matter. Well, deficits definitely wouldn't matter if "their" invasion fleet was first detected in 2002 and it would take just 14 more years for "their" slow moving colonization ships to get here. Would it?

In 2016, we're going to elect our next president. Donald Trump was born on June 14, 1946. That means he was conceived roughly two months after the Trinity test. Coincidence? I can't speak for you, but I'm going to need to see his birth certificate!

Crazy theory? Well, maybe. But consider this. Which candidate wants to move 11 million terrestrial aliens to Mexico? Is this some sort of practice run for the real thing? Think of the logistics and infrastructure needed to move millions of extraterrestrial aliens around this planet! Think people! Before we have blood coming out of our wherevers! ;)

Friday, September 11, 2015

Today's Junk Bagholder Fractal Adventure!

Click to enlarge.

Click to enlarge.

Which chart shows the 5-year history and which one shows the 1-day history? You'll have to look closely to solve the mystery! Behold the power of fractals!!

In all seriousness, who knew that chasing a "sure thing" high yield in a closed end fund with a huge premium over net asset value could be so risky? It's down another 12% since I wrote about it just 9 days ago.

It's the junk bagholder improbable investment machine gift that just keeps on giving. Let's check to see how morale is holding up.

September 11, 2015
disaster and criminal

Why? it is not Pimco at blame (or mostly not..) - it is the PHK buyers and holders who chose to ignore risks and pay 40-5-6- and 70% above NAV for no logical reason whatsoever.

In my opinion, the Pimco High Income Fund is/was the poster child for "risk on" at any price.

This is not investment advice. As a retiree who values sleep, I have no desire to be a junk bond speculator. I'll leave that to the professionals.

See Also:
Junk Bagholders
Mister Peabody's Improbable Investment Machine

If Mortgage Rates Move 2%, Here's What Happens to Housing

January 7, 2015
Record-Low Mortgage Rates Seen Luring Back Japan Buyers

Japan Housing Finance Agency’s 35-year fixed rate loan set a record low of 1.47 percent this month.


“Mortgage rates were already low, so renewing a record low won’t have much impact,” said Yoji Otani, a property analyst in Tokyo at Deutsche Bank AG. An increase in wages is necessary to stoke demand amid rising property prices and building costs that have pushed new apartment prices higher, he said.

Oops. My bad. This is not Japan stuck in ZIRP. This is the ZIRP-free USA! Everyone knows mortgage rates will rise to a more normal 6%, not fall to 2%. Let me try that again.

September 11, 2015
If mortgage rates go to 6%, here's what happens to housing

And as interest rates begin moving back up to more "normal" levels, that could spell trouble for home prices.

Interest rates have been falling for 35 years. If rates really do start going back up over the long-term, which I am extremely skeptical of, then that would require "new normal" analysis.

Want scary? Who thinks housing will be doing fantastic if mortgage rates drop 2% from here? Why did rates drop? Trying to fend off Great Depression II, Return of the Killer Depression?

As a long-term saver and as an observer of underfunded pensions, I'm more concerned about long-term rates falling than rising. Do you have any idea how hard it will be to make money off of money if long-term mortgage rates are a mere 1.5%?

Other than to say that mortgage rates *always* have two ways they can move, even over the long-term, this is not investment advice. There are no sure things.

Quote of the Day

September 10, 2015
Wall Street’s Deep Divide Sends Fed an Urgent Message on Rates

Seven years at zero doesn't seem to have fixed everything. - Peter Tchir of Brean Capital LLC

Well, as long as it has done the important things like permanently putting an end to recessions, permanently ensuring that the unemployment rate only falls, permanently removing the risk of all risk assets, and permanently kicking the unsolved problems can down the road, then I doubt too many people will complain.


Oh, crap. Why did I have to unexpectedly drop the "J" bomb right when I was feeling so optimistic about ZIRP and our long-term future?

Thursday, September 10, 2015

Astronomers Locate the Most Distant Galaxy!!

September 10, 2015
Astronomers Locate 'Most Distant Galaxy' in The Universe

Hurray! It's the most distant galaxy in the universe. We've finally found the edge! We now know how big the universe really is! This is an absolutely amazing discovery!! Why aren't more people talking about it?

EGS8p7 shattered the record for the farthest known galaxy, but it likely won’t stand for long. Astronomers are nearly positive that there are billions more galaxies that we still can’t observe with the technology we have available.

What? How could we have found the most distant galaxy in the universe if there are others even further away? This is a paradox of astronomical proportions!!

In other news, I'm happy to report that I just located the most distant dog toy in my current observable universe. It's a small blue spherical ball hanging out by our front door.

I'd get up to take a close picture of it for you but if I move closer to it then some other dog toy would become the most distant dog toy in my current observable universe.

I've also considered having one of our dogs bring the toy to me so that I could take a picture of it, but once again some other dog toy would become the most distant.

I could try moving all the dog toys to me and compressing them into a singularity. Would that work? They'd all be the closest and the most distant at the same time, and close enough to take a good picture.

On the other hand, I think that would defeat the purpose. As a scientific observer, I should really be looking for a solution that doesn't require me to alter the states of the dog toys. Further, the picture might not be all that impressive. A black hole that small might be very difficult to detect. I might need to light some candles to show some swirling gases rapidly orbiting the dog toy mass.

I do not yet have a solution for this dog toy paradox! It's very frustrating!!

Science and math are so hard. Fortunately, heckling is much easier. And for that, I am very grateful. Hahaha! :)

A Friendly Reminder for Mexico

The cash we keep sending you is very valuable so please stop pooping on our vegetables! Thank you! Have a nice day! :)

September 10, 2015
2nd death linked to salmonella-tainted cucumbers

The outbreak, caused by a strain called salmonella Poona, has been identified as coming from cucumbers grown in Mexico...

September 5, 2015
What We All Need To Know During A Cucumber Salmonella Outbreak

While Salmonella comes from animal feces, fruits and vegetables can become contaminated.

Why I Have Near Zero Confidence in Financial News

September 10, 2015
Is Yahoo’s core business really worth $0?

Some parts are valued straightforwardly. For example, Yahoo holds nearly $6 billion in cash and marketable securities; dividing by Yahoo's 941 million shares, one finds a value of about $6 per share.

Most seem to love talking about cash. Few seem to love talking about debt. Why is that? Why did I have to look elsewhere to find out that Yahoo has $1.2 billion in debt. How can one do a net worth analysis if one ignores liabilities?

If Yahoo borrowed another $10 billion in cash should its stock price really go up another $10 per share? Or would that all be just smoke and mirrors?

If debt isn't mentioned on the article, and it's not, then what else might the article be missing in its simple "worth" analysis? Why should I trust any of it?

Put another way, if I told you that I had $2 million to fund a comfortable retirement then you might assume that I am doing great. It might be really easy for me to sell you a book on how I managed to do it so that you could do it too.

However, if the the first chapter of my book starts off by telling you that I borrowed $2.2 million to both fund my lifestyle and spend $200k to print books for suckers, then you might start to think that I'm a con artist. Behold the power of debt to change an opinion.

In all seriousness, there's no way you can accurately determine the value of a company in a page or two of simple analysis, which is very sad because most news won't even give you a sentence or two of simple analysis. Then there's Mad Money. Got lightning round cowbell? Booyah. Sigh.


Pacioli's comments are worth a read. It seems debt is not being ignored. I therefore must add the "my personal blunders" tag. Hey, nobody's perfect! ;)

Quote of the Day

September 10, 2015
Elon Musk: Nukes can make Mars more like Earth

You would be justified in assuming that the quote of the day would involve Mars and nukes but that could not be further from the truth. I instead refer you to the comment left by Mary Dixon.

There is a saying that where there is no vision the people perish,God uses so many people to work mysteriously in our lives. I want to testify of the good work done by a faithful Dr Max Yayan, a spell caster. In my life I never thought there is such thing as love spell intercession. My problem started a year back when the father of my two kids started putting up some strange behavior, I never knew he was having an affair outside our home. it dawn on me on that faithful day when he came home to pick his things that was when I knew that situation has gotten out of hand and he then told me he was quitting the marriage which I have built for over eight years, I was confused and dumbfounded I called on family and friends but to no avail. two months after I started having problem with my kids welfare rent-age and all of it, I really went through hell. until a day I was browsing on the internet and I happen to meet a spell caster I never believed on this but I needed my man back so I gave the spell caster my problem at first I never trusted him so I was just doing it but you know a problem shared is half solved after 2 days my husband called me asking after our kids and apologized for the pain he has caused me, telling me that he is coming back home and that was all. Now we are living happily. If you are facing any problem right now and you need to resolve it immediately do not fail to contact him on this email: you can get more info on his website on you can contact him now if you find yourself in any situation you are not pleased and he can be of help to you.. Contact Dr Max Yayan today on his email ( or call him on phone (+234XXXXXXXXXX). Thanks!

"234" is the international prefix for Nigeria. The prince just called. He wants his paragraphs back.

Want scary? The people who might actually contact the faithful love spell caster known as Dr Max Yayan are also among the people who may someday help pay our Social Security. Not so funny now, is it? Sigh.

My Worst Case Stock Market Scenario

A long time ago on a message board far, far away somebody posted their worst case scenario. As is typical, it involved a big plunge. I shared my scenario and he admitted that mine was worse. I will share it yet again here today.

The Stock Market Trades Sideways

That's it. It doesn't sound so bad, right? I beg to differ.

Imagine that it trades sideways for a very long time.

Imagine all the money lost on call options.

Imagine all the money lost on put options.

Imagine all the money sitting in cash waiting for an opportunity that never comes.

Imagine the shortfall in expected pension returns.

Imagine all the money not made by hedge funds.

Imagine no way to make money either up or down except for dividends. Bulls make no money. Bears make no money. Pigs make no money.

Imagine dividends dwindling due to the sour investment climate trickling over to consumer spending.

Imagine inflation eating away nest eggs like a slow death by a thousand cuts.

Imagine inflation eventually picking up, which would make a sideways trading stock market unbearably painful.

I'm not saying this will happen. I'm simply arguing that it is my worst case scenario. It is one reason that I have embraced long-term inflation protected treasuries over the long-term. I'm not much of a risk taker in retirement.

That said, anyone who thinks they are *absolutely* safe buying short-term protection for their long-term stock market portfolios simply isn't being imaginative enough when it comes to worst case scenarios. There are no absolutes. There is no safe store of value.

I could think up even worse, of course. I can't protect myself against large asteroids striking the planet or terrorists with suitcase weapons of mass destruction. There's no point dwelling on the unprotectable. If the you know what truly hits the fan someday, let it be long after I'm dead and cremated. Call me an optimist, lol. Sigh.

This is not investment advice.

Two Subway Promotion Ideas

September 6, 2013
The Onion: New Subway Promotion To Honor Subtember 11

...visitors of the restaurant’s tens of thousands of franchise locations will be able to “fly on in” and pick up two footlong subs of their choice for only $9.11.

It just doesn't get any less politically correct than that. Or does it?

The Jared Fogle Septender

Up to 7 inches of tenderness sort of kind of NOT suitable for kids of all ages!!

I did not just go there. Oh, dear. I did.

Shame on me. Bad Mark! Bad! Bad!

How will Subway ever live this down? They bet the advertising farm on a "sure thing" who will be forever imprisoned in our thoughts.

July 7, 2015
We’re All Making The Same Dumbass Joke About Jared From Subway

We embrace anything that makes it possible for us to sound-off on any and every issue that comes our way. We condemn people in our court of public opinion where the trials last maybe three minutes, and that’s only if we are in a break between Netflix episodes.

Hey! My joke isn't the same! That said, I am in a break between Netflix episodes. Seriously. ;)

Wednesday, September 9, 2015

Two Common Math Errors That Can Ruin Your Retirement

May 14, 2015
The Fiscal Times: 7 Common Myths that Can Ruin Your Retirement

Factoring in inflation, and that non-recurring expenses tend to increase with age, that amounts to some $40,000 per year for a 30-year retirement.

I've been retired 16 years. I apparently need $40,000 per year for health care expenses to go another 30 years. That's a whopping $1.2 million. WTF! Two people would therefore need $2.4 million. It better at least come with a bonus foot massage!

A typical couple would need nearly $250,000 on hand to have a 90 percent chance of covering all their medical expenses in retirement.

How am I supposed to turn $250,000 into the $2.4 million you just claimed that I need? I know. I'll invest in a 30-year treasury at 3% and let the power of compound interest perform a g#%^*mn f%^king miracle, lol. Sigh.

At an average 3 percent rate, your costs will double every 10 years.

1.0323.5 = 2.00

Assuming a 3% inflation rate, it would take 23.5 years for costs to double. Not 10. If close only counts in horseshoes, hand grenades, and nuclear war, then you've gone scoreless but at least you still have all of your limbs and are completely free of radiation, lol. Sigh.

The financial math in this article is not like rocket science, assuming you don't want the rocket to tip over on the launch pad then expend all its fuel in a single explosion.

Myths, assumptions, and bad math, baby. That's what I'm talking about. Sigh.