Tuesday, May 31, 2016

Triple Your Money!

May 2007
Kiplinger: Triple Your Money

Want to try your hand at tripling money over eight years with individual stocks? Charles McQuaid, manager of Columbia Acorn, suggests looking for companies with resilient business models, rising profit margins, an ability to gain market share and strong demand for their products. Oh, yes, the shares must also sell at the right price. Once you've found a winner, he advises holding tight. "With great businesses, if you sell, you end up regretting it most of the time."

McQuaid is still enthusiastic about two top holdings, despite enormous price appreciation over the years: Coach (COH) and Expeditors International of Washington (EXPD). Every time an economist predicts the death of the American consumer, shares of Coach, a luxury-accessories maker, slip. McQuaid then picks up more shares, which recently traded at $49. "If the consumer's dead, she's being buried with a brand-new Coach handbag," he quips.

He quips? Oh, Charles. You're such a scamp! Hahaha!

It's been 9 years. Coach closed today at $39.41. The consumer died. She was buried with her used Coach handbag.

Switzerland's Humanitarian Aid

May 31, 2016
CNN Money: Venezuela is running out of everything: Bread, sugar, toilet paper...

In order to get cash loans to pay for its debt, Venezuela has shipped $2.3 billion of gold to Switzerland so far this year as collateral, according to Swiss government import data.

Reminds me of a favorite quote.

What is it that makes a complete stranger dive into an icy river to save a solid gold baby? Maybe we'll never know. - Jack Handey

May 31, 2016
Los Angeles Times: It costs $150 to buy a dozen eggs in Venezuela right now


Automated Automation

May 31, 2016
OmPrompt Launches New 'Automated Data Extraction Automation' Solution

Not only is it automated, but it uses automation! That's up to twice as good as the competition!

The new ADE solution uses powerful data extraction algorithms and self-learning cognitive processing tools to solve a common supply chain challenge directly, accurately and promptly. This issue (having to manually process a diverse range of lower-volume documents from the extended customer community) is currently a challenge for companies, in both labour and time.

In layman's terms, some sales people are now at extra risk of losing their jobs. Oh, and we're one day closer to Skynet.

The Perfect Car for the Ultimate Road Trip

May 14, 2013
I quit my job to drive 13,500 miles and visit every state capital (except Alaska and Hawaii's).

If you drive an average of 500 miles per day, you can finish this trip in 4 weeks. So what's the downside? You need a car and that's a lot of wear and tear. Expensive!

That's where Uber comes in.

May 31, 2016
Inside Uber’s Auto-Lease Machine, Where Almost Anyone Can Get a Car

Uber's lease is more flexible than most subprime leases, the company said. After the first 30 days of the lease, a driver can return the car to Uber with two weeks notice, without any additional fees, apart from the payments they owe and the $250 they paid up front. Many other leases also charge drivers by the mile if they exceed a certain mileage threshold. Not Xchange, though; Uber wants to incentivize drivers to keep logging miles.

For less than $700 you get a brand new car for 4 weeks. You can personally use it to visit every state capitol in the continental US? What's the catch?

Xchange isn't intended to be a moneymaker, said an Uber spokesman. But it has plenty of critics who accuse the company of looting the pockets of its drivers. The program is plagued by a lot of questions that surround other subprime lending programs aimed at risky borrowers with bad credit. Is Xchange really offering good deals?

Risky borrowers with bad credit probably can't afford the gasoline and hotels. For good borrowers with good credit, this might be the perfect touring vehicle though! Woohoo!

Seriously. I guess it all depends on what is in the 28-page lease agreement.

Are Real Yields Too High?

With real yields seemingly so low, seems like such a silly question. Right? Well...

I posted the following chart nearly 3 years ago.

August 15, 2013
Illusion of Prosperity: The Long-Term Death of Real Yields

Click to enlarge.

The black line shows the real interest rate investors earned on the 10-year treasury from the time of purchase (we don't know what the real yield is until 10 years have elapsed). The blue line shows what the real interest rate investors earned on the 10-year TIPS (we know instantly because the rate is the real yield).

The 10-year TIPS yielded 0.57% as I posted that in 2013. It only yields 0.25% today. Most financial experts warned savers about the risk of rising real yields but few warned savers about the risk of falling real yields. For savers, the latter risk is far more terrifying. Sitting in cash? Waiting for higher real yields that never seem to come? Nightmare.

I have and continue to be believe that it will be harder and harder to make money off of money in the future. That's why I was so willing to lock in long-term real yields before they could potentially fall further. That plan has worked out exceedingly well, at least so far.

So, where do we stand now? If we extend the blue line in the chart out three years, then today's real yields are above the long-term trend. Why is that? Here is one explanation.

When the stock market has been doing well, people prefer stocks over bonds. We therefore saw higher real yields heading into the dotcom bust and we saw higher real yields heading into the housing bust. In hindsight, those were therefore particularly good times to lock in a guaranteed long-term real yield for the long-term. Are we heading into another stock market bust? Or has the past year or so been a false alarm? I would not claim to know.

What if our fragile economy actually requires real yields to fall over the long-term though? Falling real yields allow things like corporate debt and home mortgages to be refinanced with easier and easier terms. That's been going on for nearly 40 years so far. Rising real yields would do just the opposite. I don't think our economy could tolerate that.

What is our economy going to be like when, not if, this ongoing falling real yield support ends? It can't go on forever. South Park has shown us what negative real yields do in the extreme. It isn't pretty.

Is today's 0.25% real yield on the 10-year TIPS a blessing or a curse? The easiest and most reliable answer is that we will know in 10 years. Anything else is just a guess. Good luck out there. We may all need it. Sigh.

Sears: Innovators of Low Efficiency Box Technology

We all know that Sears sells high efficiency appliances. I bought a Kenmore freezer for my garage about 15 years ago. Still going strong. No complaints.

But have you heard about their low efficiency cardboard boxes? They're really quite legendary.

May 27, 2016
Consumerist: Oversized Box From Sears Has Enough Room To Stash Preteen Daughter

“The box was big enough that my daughter got in with them and they still had room for all the packing material,” Corey writes. His daughter is 12 years old, if you were wondering.

There's a very amusing picture of his daughter in the box with the tools. Really puts the oversized box in proper perspective. Hahaha!

Watch out Amazon! Eddie Lampert is gunning for you!

Monday, May 30, 2016

Comprehensive List of All AAA-Rated Companies in the U.S.

1. Johnson & Johnson
2. Microsoft

The entire list has been sorted alphabetically and the monospaced Courier font was chosen. Since the list is comprehensive, this should really cut down your search times, lol. Sigh.

April 27, 2016
MarketWatch: Exxon Mobil’s downgrade leaves just two AAA-rated companies in the U.S.

In a sign of deteriorating credit quality...

Strong economy. Resilient economy. Investor paradise.

P.S. If memory serves, only lost two companies from the list since the last time I bothered to check. Yay.

Chicago: Good News, Bad News, and Mixed News

First, the bad news:

May 30, 2016
Chicago Tribune: Memorial Day weekend violence adds to a violent May in Chicago

By Monday afternoon, the tally of those shot in Chicago this year was at least 1,492, according to data compiled by the Tribune, with at least 250 killed. By this time last year, 957 had been shot, with 164 killed.

Now, the good news:

Out of the 7.4 billion people on this planet, only 2.7 million live in Chicago. That's only 0.036%.

Hey, I just work with what I've got. I'm not a good news miracle worker.

And lastly, the mixed news:

March 25, 2016
Chicago Tribune: Chicago area sees greatest population loss of any major U.S. city, region in 2015

The potential fallout is both political and financial. Federal and state government dollars are often distributed to local government agencies based on population; so the population loss creates long-term budget concerns. Communities pouring millions into new roads and schools, for example, based on rosy projections of future growth are left with fewer taxpayers to cover the cost.

I know what you must be thinking. This looks like awful news. How can it possibly be considered mixed? Well, those who left really dodged a bullet!

Bad Mark. Bad. Bad. Sigh.

Sincere apologies to those who live in the Chicago area. :(

Wall Street's Toughest Test

May 30, 2016
170,000 people are about to take Wall Street's toughest test

Ethical and professional standards are heavily tested at all three levels of the exam. CFA charterholders are required to adhere to a strict code of ethics that touches upon every aspect of their professional lives or face seeing their charters revoked. In recent years, ethics have come to the forefront, particularly after the financial crisis. Clients, employers, the capital markets, and the investing public are assured their interests take priority for the CFA charterholder.

Question 1: Would you ever lie on an ethics test?

Question 2: If you just lied on this ethics test, do you at least feel any remorse?

Question 3: Place your teardrop in the box. Did you force it or did it come naturally?

Question 4: You have stumbled upon a financial memo which implicates you in widespread company accounting fraud. After disposing of the whistleblower's body in a remote location, what do you do with the original document and all supporting documentation?

Question 5: As you contemplated the answer to the last question, were you laughing or crying?

Ethics, so easy that even a baby can pretend to have it. ;)

Fed's Bullard: Global Markets Well-Prepared for Summer Rate Hike

May 29, 2016
Fed's Bullard says global markets seem well-prepared for summer rate hike

Principal: I've brought you in to discuss your son's application for entry into first grade.
Parent: Is there a problem?
Principal: Is it true that your son is 13 years old? That's about 7 years later than we would expect.
Parent: It is. We wanted him to be well-prepared.
Principal: Is it also true that your son is not yet potty trained?
Parent: We prioritized his academic training above all else.
Principal: Potty trained?
Parent: Our son was hitting the books before he could even walk. Every waking minute of every single day was allocated to his academic education.
Principal: Potty trained?
Parent: Our son speaks fluent English, Spanish, Japanese, German, French, and Italian.
Principal: Potty trained?
Parent: Our son has mastered Calculus and Quantum Physics.
Principal: Potty trained?
Parent: Our son is currently on The New York Times Best Seller list.
Principal: What's the title?
Parent: "Please Call the Authorities!"
Principal: Have you read it?
Parent: No, but I do know the first chapter is devoted to potty training.
Principal: Anything else you want to add before I call the authorities?
Parent: Our son really is quite passionate and gifted. We told him the book wouldn't sell well, but he convinced us to let him try anyway. He sure proved us wrong!
Principal: What do you think inspired him?
Parent: It's hard to say. He seemed almost desperate for others to read his story.

The global markets have had nearly a decade to prepare for the second 0.25% rate hike. Heaven help us all if they haven't been sufficiently potty trained. Nobody wants a s#%tstorm! ;)

Sunday, May 29, 2016

Best Staring Contest in a Movie

I watched Nighthawks last night, again. It's an okay movie but there's one scene in particular that blows me away.

The contest starts at 1:23. Remember, no blinking allowed!

I love everything about this scene. It's probably the reason I've seen the movie more than a few times in the past 35 years. It's also why I was thrilled to find the song on Spotify. I've been in a retro music mood lately.

Simple pleasures! :)

The Rationalized Investor

May 28, 2016
Barron's: 5 Reasons the Stock Market Won’t Crash–Yet

If stock valuations looked way too exuberant; if the inflation-adjusted house price were far above its previous peak; if the yield curve were flat or inverted; and if the price of oil were surging to triple-digit peaks—then investors might want to resort to defensive measures, like selling everything and going short.

It takes all four of those things simultaneously to resort to defensive measures? That's really good to know! I have therefore come up with a cunning plan to ensure none of that happens.

The Global Great Depression II Plan

1. If you never look at stock valuations then they can never look way too exuberant. Nobody who owns stocks will want to look at stock prices during the Global Great Depression II. Trust me on this.

2. As long as inflation-adjusted house prices are only moderately above the previous bubble peak, and not far above, then there's nothing to worry about. That goes without saying. The Global Great Depression II should prevent this condition from happening in the first place though. Better safe than sorry.

3. The Global Great Depression II can definitely keep the yield curve from flattening or inverting. Permanent ZIRP permanently prevents it. As long as the short end is stuck at 0% and the long end is above 0%, then risk on, baby. Risk on! Woohoo!

4. The Global Great Depression II should easily keep oil prices from surging into the triple digits, as millions upon millions of laid off workers watch TV and surf the web instead of driving to work. Fantastic news! Don't you think?

So how do we get there? Stop buying goods and services. It's that easy. Stay home. Instead, use that money saved to purchase stocks. Barron's says they're a sure thing. Can't lose. In fact, the less goods and services you buy in exchange for the more stocks you buy, the more likely we can achieve the Global Great Depression II dream. In fact, if nobody is buying goods and services, then there won't be any need for any workers. We will have achieved economic utopia!

As a side note, since when did shorting stocks become a defensive measure? I always thought defensive measures tended to protect capital from potential losses, but hey, maybe that's just me. It's amazing what can be learned from reading Barron's. Next time I'm feeling defensive I'm just going to short stocks at random. And if I'm feeling extra defensive, I might just need to borrow money to do it. You know, leverage up my defensiveness.

This is not investment advice, lol. Sigh.

Breaking News: Hedge Fund Closures Good for Hedge Fund Managers

May 29, 2016
It may be the end of hedge funds as we know it

The thing is, the closure of many hedge funds may end up being a good thing for managers in the long run. Not for all managers, obviously, but for those that can make it through the tough times.

I absolutely agree. This is similar to what happened when the automobile was first introduced. The closure of many horse stables ended up being a good thing for horse stable managers in the long run. Not for all horse stable managers, obviously, but for those who made it through the rough times.

Were you aware that the average horse stable manager today makes up to 500 times what the average corporate CEO makes? It's absolutely true. In 2013, the average horse stable manager earned $33,000.

You think I was being deceptive with my "up to 500 times" claim? What? I beg to disagree. This is a common and accepted practice in America.

It is no different than an "up to 75% off everything in the store" sale. Nobody expects everything in the store to be 75% off. It simply means that nothing in the store is more than 75% off. It's just the store's way of warning shoppers that the bargains will be capped. It seems to work. Shoppers seem to appreciate the honesty. ;)

Saturday, May 28, 2016

This $8 Flawless Homemade Air Conditioner Is Flawed

May 25, 2016
Consumer Reports: Can a Homemade Air Conditioner Keep You Cool?

After multiple runs using 8 to 12 pounds of three different forms of ice—cubes, reusable ice packs, and a frozen gallon jug of water—the homemade air conditioner was able to lower the temperature of a small room by only 2° to 3° F, and within 30 minutes the room temperature began to rise again.

Consumer Reports has missed a very important point here. What's making the ice? It better not be the refrigerator sitting in the same room. Making ice requires energy. The more ice made the more energy is needed. Since a refrigerator is normally not able to expel that extra energy out the window like a typical air conditioner does, that energy must instead heat the room. This is above and beyond the offsetting cooling ability of the ice that was created, since refrigerators are not 100% efficient, nor is it possible that they ever will be.

This is why it is a bad plan to leave a refrigerator door open in an attempt to cool a kitchen. It will do the opposite. The kitchen will actually get warmer.

From the comments:

As to your freezer working harder to freeze the ice all I can say is LOL! It's common knowledge that a full freezer is more efficient than a half empty one! but that's easy enough to check for yourself - i'm betting your freezer will come on at the same or nearly the same rate - what really makes your freezer work harder is opening the door, DUH! Your freezer HAS to come on at a certain rate no matter what anyway. - female small

Science says a full freezer is more efficient than a half full freezer because when the door is opened less cold air can escape and less warm air can enter.

Science also says that a half full freezer is even less efficient when the door is opened, the cold air escapes, and warm water bottles are used to fill the empty space.

I say that when a freezer is entirely filled with warm bottles, the refrigerator screams in pain, and an angel in heaven burns its wings off. That's assuming that heaven is a very small studio apartment containing a very large temperamental refrigerator, one $8 homemade air conditioner, and a sole angelic tenant who believes in miracles. Burn, baby burn.

But hey, maybe that's just me. Hahaha!

P.S. We use two large industrial fans purchased at Costco to cool our two story house. We put the fans on the second floor up against the screens of two windows. The fans point outwards to push the heat out in the evenings. The cool air is then drawn in through our downstairs windows, as if by magic. Why push out instead of pull in? Most fans push a column of focused air but pull from multiple directions. You can therefore generally push more air through a screen than pull through it. That's been my experience anyway. Give it a try!

What If Jim Cramer Were a Trauma Surgeon?

May 26, 2016
CNBC: Cramer: Why lower oil prices aren’t helping millions of Americans

Nurse: The patient is bleeding profusely from both an arm and a leg. He requires immediate attention!
Doctor: That's too bad. Nothing I do can help.
Nurse: Couldn't you stitch up his arm?
Doctor: I could but it wouldn't help.
Nurse: Why not?
Doctor: Isn't it obvious? [long dramatic pause]
Nurse: No! Why?
Doctor: His leg would still be bleeding profusely.
Nurse: Couldn't you stitch up his leg?
Doctor: I could but it wouldn't help.
Nurse: Why not?
Doctor: Isn't it obvious? [long dramatic pause]
Nurse: No! Why?
Doctor: If I stitched up his leg instead, then his arm would still be bleeding profusely.
Nurse: What if you stitched up his arm and his leg?
Doctor: It would help but I can't do that.
Nurse: Why not?
Doctor: Isn't it obvious? [long dramatic pause]
Nurse: No! Why?
Doctor: Stitch up his arm and his leg with just two hands? I'm not a miracle worker!
Nurse: What if you stitched up his arm first and then stitched up his leg next?
Doctor: I could but it wouldn't help.
Nurse: Why not?
Doctor: Isn't it obvious? [long dramatic pause]
Nurse: No! Why?
Doctor: The patient died while you've been asking me all these pointless questions. This only proves what I've been saying all along.
Nurse: And what's that?
Doctor: Isn't it obvious? [long dramatic pause]
Nurse: Yes, I guess it is. Nothing you do can help.
Doctor: Booyah.

Bad Mark. Bad! Bad!

In all seriousness, lower oil prices are certainly helping millions of Americans. Is there some sort of financial news competition for posting the article with the most outlandish headline? Or is this all just part of a modern clickbait society?

I must admit that I too am guilty. Cramer as a trauma surgeon? Now that's outlandish! ;)

The Phone Number Blocking Whack-A-Mole Game

One of my telemarketer opponents is being amazingly persistent.

01. 425-260-2220. Blocked!
02. 425-260-1188. Blocked!
03. 425-260-9271. Blocked!
04. 425-260-9080. Blocked!
05. 425-260-3654. Blocked!
06. 425-260-1694. Blocked!
07. 425-260-3163. Blocked!
08. 425-260-5149. Blocked!
09. 425-260-9714. Blocked!
10. 425-260-1492. Blocked!
11. 425-260-1873. Blocked!
12. 425-260-6142. Blocked!
13. 425-260-1252. Blocked!
14. 425-260-5358. Blocked!

You are a worthy adversary, my friend. Time is not on your side though. You can only leave 9,986 more useless 15-second voicemails on my mobile phone! I shall prevail!

I have never given my mobile phone number out to anyone other than friends and family. I have not placed it on the useless Do-Not-Call list, nor should I have to.

Wireless Phones and the National Do-Not-Call List

For example, it is unlawful for any person to make any call (other than a call made for emergency purposes or made with express prior consent) using any automatic telephone dialing system or any artificial or prerecorded voice message to wireless numbers. This law applies regardless of whether the number is listed on the national Do-Not-Call list.

Is it any wonder Congress has such a low approval rating? Just wait until we run out of phone numbers because the criminal telemarketers have gobbled them all up.

Forehead. Desk. Whack. Whack. Whack.

Advice for Former Pasco Frozen-Food Plant Employees

May 28, 2016
The Seattle Times: Layoffs grow at Pasco frozen-food plant closed by listeria recall

“Local employment opportunities are available right now for these skilled workers, so it’s the best time for us to release them to seek jobs,” said Gene Grabowski, a crisis-communications expert serving as spokesman for CRF Frozen Foods.

With local unemployment opportunities currently at 6.7%, well above the national average, you may need some help with your resume. I'm here to help!

Resume Keywords

* As part of a team, earned national recognition.

* Participated in life or death non-Yogurt based active culture research.

* Indirectly responsible for the non-deaths of well over 99.99% of customers served.

* Implemented massive redistribution of company products from the ground up.

* Maintained dignity when escorted from the building.

Bad Mark. Bad! Bad!

In all seriousness, crisis-communications expert serving as spokesman? Sounds like our next Fed Chairman if you ask me.

Dammit. Said I was being serious. Sorry about that.

Full disclosure: My girlfriend is returning 10 pounds of our Listeria tainted frozen vegetables to Costco today. Yay.

First World Problem of the Day

In Real Racing 3, a game I play for free on my Apple iPhone, I can currently earn up to 5 pretend gold per day by watching up to 5 advertisements. I watch all 5 back-to-back.

Ad #1

Reaction: Microsoft is making Kenya a better place. Nice. I've seen this ad so many times in the past few days though. So many times. Mute. Avert eyes.

Ad #2

Reaction: Crap. Not that ad again. Continue to mute! Avert eyes!

Ad #3

Reaction: F#%k me. Turn phone upside down. Stare at it for 30 seconds in contempt.

Ad #4

Reaction: F%^k Microsoft. Up the #%^*ing #%^!!!

Ad #5

Reaction: Microsoft! To the last, I will grapple with thee! From hell's heart, I stab at thee! For hate's sake, I spit my last breath at thee!

Hey, I'm no saint. I have my share of really stupid first world problems too. I own it. Hahaha! :)

P.S. Apologies to Microsoft shareholders. I didn't mean to imply that the advertising isn't 100% effective. Oh, it is. I assure you. Microsoft. Microsoft. Microsoft. Microsoft. Microsoft. See? Can't stop talking about the company which once sold me products. ;)

Friday, May 27, 2016

Deeply Flawed Human Drivers vs. Self-Driving Cars

May 27, 2016
Yahoo Finance: Human drivers are still way better than self-driving cars

Yet the deeply flawed human driver is still superior to a computerized one.


The trickiest challenge for self-driving cars -- which may still take decades to hone -- is getting computers to process unpredictable situations as quickly and effectively as a human being can.

A Tribute to the Former Bond King

May 26, 2016
Gross Trying to Short Credit to Reverse Decades of Instinct

It’s becoming increasingly difficult for money managers to justify their fees or their jobs, Gross said.

“I know that my investors want three, four, or five percent, or else they can keep it in the bank or stuff it in their mattress,” he said.

So I must leave, I'll have to go
To Janus Funds, no more Pimco
And win a fortune in a game
My life will never be the same

The $4.3 Trillion Nothingburger

May 27, 2016
Yahoo Finance: The Federal Reserve's $4.3 trillion ticking time bomb

The Federal Reserve has a big problem if it wants to raise rates again.

The first time? No problem. The next time? Big problem. Yeah, right. As a long-term holder of long-term treasury bonds, I welcomed the move. I did not become a mythical bond vigilante. I did not panic. Nothingburger.

According to several leading economists, it’s also possible that the Fed will become technically insolvent (though it always has the power to print its way out of such a disastrous state).

In a world with thousand upon thousands of leading economists I do not trust to predict rain when it is raining, several completely anonymous ones say the Fed could become insolvent. Maybe. Good to know. I'll plan accordingly by embracing the nothingburger.

Currently, the Fed pays 0.50% annually to banks to keep that money out of the economy. It might not seem like much, but the comparable rate paid by the U.S. Treasury for T-bills is 0.28%. In other words, the Fed pays banks nearly twice as much as the Treasury does.

This is awesome news for me! Capital One, a bank, is paying me 0.75% on my online savings account. What idiots! That's nearly three times as much as the Treasury does! The savvy Fed is only offering 0.50%. Yellen must be a shrewd negotiator.

This is a huge expenses for the Fed.

This is a huge expenses? Seriously?

But it gets worse.

Of course it does.

The Fed is taking capital losses on its $4.3 trillion bond portfolio, and those losses will eventually accelerate. When the bonds that the Fed holds mature, it realizes losses because it paid above-market prices for most of them to begin with.

I've been a buyer too. I'm holding to maturity. Even if I sold today, which I'm not, none of my bonds would have a capital loss. Not one.

It's almost like long-term rates have not risen from when I bought them.

It's almost like my long-term bonds become shorter-term bonds over time.

Is almost like it's nearly impossible to take much of a capital loss on a long-term bond that has only one day left until maturity.

It's almost like we no longer even call it a long-term bond if it's only got one day left until maturity.

It's almost like we call it a short-term bond instead.

Seriously. The Fed pays $1000 to buy a bond. It matures and pays the Fed back its $1000. The Fed also earned interest while it owned the bond. Where is the capital loss? Simple answer: This story is complete and utter nothingburger. And when I use nothingburger in this context, I really mean that since my time is valuable to me, and I read it, then I have suffered "a huge expenses." Never get this time back. It's gone, lol. Sigh.

I write an Illusion of Prosperity blog and am no particular fan of the Fed, but sheesh, the Fed's balance sheet ranks only slightly higher than being inconvenienced by an extra traffic light on my list of long-term worries.


Thursday, May 26, 2016

The Sweet Spots for the Global Economy

May 26, 2016
Wall Street Journal: Oil Prices Poised to Hit Sweet Spot for Global Economy

Range of $50 to $60 a barrel represents ‘goldilocks’ scenario for consumers, industry and the oil industry alike

What's the sweet spot for illicit drugs?

June 30, 2005
UN report puts world's illicit drug trade at estimated $321b

Annualized  worldwide illegal drug sales are greater than the gross domestic product of 88 percent of the countries in the world...

Just look at that GDP!

The bulk of the money, $214 billion, was made at the retail level; drugs sold in streets and back alleys.

Most investors love to see a good retail sales report. There is no reason our streets and back alleys can't become the envy of the world, more so than they already are.

Most of the buying was in North America, with 44 percent of all estimated sales, followed by Europe with 33 percent.

Looks like we're already in the sweet spot. That's fantastic! Now we just need to work on the other sweet spots.

Coal? It's too expensive. Nobody will be driving coal powered cars until the prices come down.

Nuclear weapons? Shouldn't cost more than a suitcase if we want consumers to buy and use them.

Human trafficking? Life is priceless. So what, maybe $15 per hour?

In all seriousness, Americans are driving 3.2 trillion miles per year in total. How much is enough?

Twitter Loses Commerce Executive

May 26, 2016
USA Today: Twitter loses commerce exec, disbands unit

The stock is down 80% from the peak. That money is lost. Here's the good news though. The lost executive in charge of commerce should much easier to find. There are only so many places he could be hiding.

Thank you. You've been a wonderful audience. ;)

Compound Interest Demystified

May 24, 2016
Time: The Magic of Compound Interest

Let’s say you start with $1,000 in the bank. If the interest rate is 4%, you’ll have $40 more in the account at the end of the year. That’s simple interest. But in a year or two, you earn interest not just on the original $1,000, but also on the $40 in interest you’ve already earned.

Let’s say you start with $1,000 in the bank. Since the national average interest rate on savings accounts is currently 0.06%, you’ll have 60 cents more in the account at the end of the year. That’s simple interest. But in a year or two, you earn interest not just on the original $1,000, but also on the 60 cents in interest you’ve already earned.

60 cents per year might not sound like much, but...

March 24, 2015
This Costs the Average Person 60 Cents Per Year

Answer: Charging your cell phone

That's assuming that the price of electricity never goes up and we're trapped in ZIRP, of course.

Two Things That Could Be Viewed as a Win

May 26, 2016
TheStreet: Should Investors Fret Over Abercrombie & Fitch's Stock Dip on Earnings Miss?

But Abercrombie's news wasn't all bad.

Same-store sales at California lifestyle-inspired Hollister were unchanged from the prior year, which could be viewed as a win for the value-oriented clothing chain, since same-store sales at Gap's (GPS) mostly U.S.-based Old Navy chain fell 6% in the quarter.

Although the stock is currently down 18% on the news, at least one portion of their business managed to eke out flat same-store sales.

Although it took 13 minutes to park, at least the driver was ultimately successful.

Politician's Wet Dream: $3.84 Tax per Gallon

May 25, 2016
Philadelphia Council President: ‘Divisive’ 3-cents soda tax isn’t happening

“This has been one of the most divisive proposals since I’ve been here,” Clarke said during a budget hearing Wednesday, adding: “Everybody on this side of the table knows it’s not going to be a three-cents-per-ounce-tax.”

Seemed like the perfect tax. A slam dunk! Not sure what went wrong. Oh, well. Back to the drawing board.

Hey, maybe they can try this same tax on gasoline. It's sure to be very popular with the commuters! Just need to tell them that it will be good for the climate. You know, less heat, more rain!

Wednesday, May 25, 2016

The Only Company in the S&P 500 with Majority "Sell" Ratings Is Up 9% Today

May 25, 2016
MarketWatch: Only one company in the S&P 500 Index has majority ‘sell’ ratings

What about “sell” ratings? There’s only one S&P 500 stock with majority “sell” ratings: Transocean Ltd. RIG, +9.22% Among the 38 sell-side analysts covering the contract driller, two rate the shares “buy,” while 15 have neutral ratings and 21, or 55%, have “sell” or “underweight” ratings.

Ticker is RIG? Oh, the irony! Hahaha!

A Favorite Quote Applied

Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one. - Charles MacKay

May 25, 2016
This rally is 'false' and here's the tell: Trader

From the comments:

Pulled everything out at the beginning of the year , don't care where it goes, 30 years of up and down is enough for me. - joe

And just like that, there were N-1 remaining in the herd.

Don't get me wrong. I'm not suggesting that investors in the stock market are necessarily insane or that the stock market is currently a game of musical chairs. Only hindsight will be the judge of that.

What I will say is that hindsight won't show that what Joe did was insane. How could it? Neither missed opportunities (if the market rises) nor locking in a gain (if the market falls) are grounds for insanity.

Signs of the (New York) Times

May 25, 2016
USA Today: New York Times offering buyouts

"In order to make essential investments while preserving our financial health, we need to do everything we can to contain and — where we can — reduce our costs," four Times executives said in an email to employees.

This strong and resilient economy can no longer afford to pay as many people to write about how strong and resilient this economy is.

We bloggers will make every effort to pick up the slack though, at an infinitesimal fraction of the cost.

Jeremy Siegel: Treasury Bonds Are in the 14th Inning

August 10, 2010
WSJ: The Great American Bond Bubble - Jeremy Siegel and Jeremy Schwartz

If 10-year interest rates, which are now 2.8%, rise to 4% as they did last spring, bondholders will suffer a capital loss more than three times the current yield.

I think it is safe to say that Jeremy Siegel believed bonds were in the 9th inning in August of 2010. It's been more than five years. Assuming one inning per year, bonds must therefore be in the 14th inning.

Those who purchased the 10-year treasury five years ago are now holding 5-year treasuries that are still yielding 2.8%. Current investors of 5-year treasuries are only getting half that.

Hey, Jeremy! When are they going to lose their money? That mythical bubble better pop before the bonds mature! Or did you not factor in what holding to maturity could do?

The rush into bonds has been so strong that last week the yield on 10-year Treasury Inflation-Protected Securities (TIPS) fell below 1%, where it remains today. This means that this bond, like its tech counterparts a decade ago, is currently selling at more than 100 times its projected payout.

Yes. All the long-term TIPS I have purchased over the years are exactly like the tech stocks during the dotcom bubble. Well, there are a few differences.

1. Since I have and am holding to maturity, I don't require a greater fool.

2. I am guaranteed to get all my money back plus compensation for inflation.

3. I am given additional interest as well.

Yes, sir. Exactly like failed tech stocks! How did tech investors ever lose money with such favorable guarantees? It shall remain a mystery that only the "Wizard of Wharton" can solve!

Full Disclosure: Still comfortably sitting in the long-term TIPS he so desperately warned me to sell. Still planning to hold to maturity. Still waiting for the mythical short-term Saver's Paradise to magically appear. Still hoping for higher interest rates so I can reinvest on more favorable terms when  my bonds mature. Still not holding my breath though. Still hoping for the best. Still planning for the worst.

It might not be the smartest plan, but it'a heck of a lot better than the dumbest plan. I have no regrets about my decision to lock in real yields for the long-term in this economy. Hindsight has been kind to me. The era of making easy money off of easy money is over. I believe and believed that with every fiber of my being, but would love to be proven wrong. Sigh.

Jeremy Siegel: "We're in the First Inning"

May 25, 2016
CNBC: Siegel: We're in ‘first inning’ of a big shift that's great for stocks

And contrary to those who argue that many dividend payers have become overvalued and are due for a drop, Jeremy Siegel says the rush to dividend names is just beginning.

The best part?


A False Sense of Securities' Securities Trifecta

May 24, 2016
CNBC: Too much of a dividend can be a really bad thing

The relentless drive to seek passive income from dividends has left many investors with a false sense of security. - Mitch Goldberg, president of ClientFirst Strategy

June 1, 2015
DHS Tests Uncover Security Failures at US Airports

An internal investigation of the Transportation Security Administration revealed security failures at dozens of the nation’s busiest airports, where undercover investigators were able to smuggle mock explosives or banned weapons through checkpoints in 95 percent of trials, ABC News has learned.

December 11, 2015
Retirement and Social Security Insolvency: How to Prepare

There’s little doubt that the U.S. Social Security system is broken.

I must be a pessimist, because it's clearly the worst of all possible worlds.

Not only must Americans worry about stock market securities' security and the Transportation Security Administration's security, but we must also worry about Social Security's security.

Call me cynical, but I'm starting to question the security of things with security in their names.

I am admittedly biased though. We were experiencing round after round of layoffs where I once worked. Employee morale was in the toilet. One of the top executives said something in an article that I will never forget. It is permanently etched into my brain.

We have a fun environment with creativity and fun.

Now we have a secure environment with creativity and securities. Get out the party hats! Things haven't been this secure since 1999!

Surveys, Surveys, Surveys

May 24, 2016
Most Americans Wouldn't Join a Clinical Trial, Survey Finds

TUESDAY, May 24, 2016 (HealthDay News) -- Just four in 10 Americans have a positive impression of clinical trials, a new survey finds.

July 27, 2015
Survey Response Rates

Internal surveys will generally receive a 30-40% response rate (or more) on average, compared to an average 10-15% response rate for external surveys.

Of the one in ten who respond well to surveys, four in ten respond well to clinical trials. Good to know.

Those who have never seen this British sitcom have missed out on one of the greater joys in life! :)

Tuesday, May 24, 2016

Who Wins When the US Sells Deadly Weapons to Vietnam?

May 23, 2016
CNBC: Who wins when the US sells deadly weapons to Vietnam

Emergency surgeons?

We, uh, may need emergency surgery... in the studio.

Compounding and Confounding Medical Errors

May 23, 2016
Just 5% of Terminally Ill Cancer Patients Understand Prognosis

Patients were asked what stage cancer they had, their current health status, how long they expected to live and if they had recently had a life-expectancy discussion with their doctor. Just 5 percent of the patients accurately answered all four questions about their disease and prognosis correctly.

5% sounds very optimistic. We're not done factoring in the rest of the errors yet. How about those doctors?

July 7, 2014
Do doctors understand test results?

Gigerenzer's research shows just how confused doctors often are about survival and mortality rates. In a survey of 412 doctors in the US he found three-quarters mistakenly believed that higher survival rates meant more lives were saved. He also found more doctors would recommend a test to a patient on the basis of a higher survival rate, than they would on the basis of a lower mortality rate.

Not done yet. Need to factor in defensive medicine.

One trend, evident in some health systems more than others, is for doctors to practise medicine "defensively", recommending treatments that are least likely to leave them open to being sued.

Not done yet. Need to factor in the lawyers.

February 2, 2013
Guilty as charged

According to a study in 2006, America has more lawyers per person of its population than any of 29 countries studied (except Greece), and it spends two to three times as much on its tort system, as a percentage of GDP, as other big economies (except Italy, where things are nearly as bad).

Not done yet. Need to factor in the Corporate America propaganda machine.

P.S. I'll probably get sued for saying this sarcastically, but it makes me feel real good, as an American, to share the lawyerin' top honors with Greece and Italy. Gives me great confidence in our long-term financial future, lol. Sigh.

Wells Fargo Braces for ZIRP

May 24, 2016
Wells Fargo lowers targets for returns on equity, assets

Since Wells Fargo's 2014 guidance, it has taken actions to prepare for lower interest rates for a longer period of time. Banks typically do so by getting rid of assets that are sensitive to high rates, and shifting to assets that perform well during low rates. As a result, Wells Fargo said it will benefit less if interest rates suddenly jolt upward.

I wonder what prompted them to brace for a lower interest rate environment? Could it be their 0.01% Way2Save® Savings account? They must already have all the deposits they need, because they certainly aren't getting my money with that offer! Seriously.

Can you say deposit glut?

May 13, 2016
Dennis Gartman: I’m becoming more bullish on gold

The problem with low or negative interest rates is that they encourage people to take money out of banks and hold cash, which is deflationary, he added.

And yet, bank deposits continue to rise. Deposit glut I say. Deflationary I could buy, but the only bank run I see is running to the bank to deposit money. How else do you explain a 0.01% savings account even after the Fed raised rates?

Look. Who are you going to believe? Dennis Gartman talking on CNBC, on a Friday the 13th no less, or a random sarcastic anonymous barefooted sleep-deprived blogger on the internet posting from the comfort of his own couch? Oh, please. It's not even close at all! Dennis Gartman? You're insane! I am deeply offended!

Doesn't change my opinion though. Deposit glut. Makes it hard to make money off of money. Very hard. And it won't be getting any easier either. Sigh.

This is not investment advice.

Astrology This Week: Good News for Virgos

May 24, 2016
The Onion: Your Horoscopes — Week Of May 24, 2016

Virgo | Aug. 23 to Sept. 22

You will quickly accomplish every goal set out for you at your job this week, which will once again spell peril for 1,200 Detroit autoworkers.

Very funny. Not gonna happen though. The economy is too strong, too resilient, and we all know satirical astrology has no basis in fact. We only read it for the humor.

May 24, 2016
GM will lay off 1,600 workers at 3 factories

About 700 workers at GM's pickup plant in Pontiac will be furloughed starting Feb. 1, while another 500 at the Detroit-Hamtramck sedan factory will be laid off starting Jan. 12, spokesman Chris Lee said Thursday. In addition, 400 workers at a two-seat sports car assembly plant in Wilmington, Del., also will be out of work starting Dec. 8.

Oops. My bad. Pontiac is close to Detroit, isn't it? Sigh.

Treasury Bills Are Like a Best Buy! Duh!

I apologize. The headline is a bit misleading.

Best Buy released their earnings report today. The market's reaction was of the not good variety, which is something the more savvy Best Buy investors have grown to expect.

What do I mean? Well, investors who bought Best Buy stock 7 years ago (May 26, 2009) and held until today, have seen their investment grow roughly 0.4% in total (adjusted for dividends and splits). Oddly enough, this is similar to what short-term savers have earned in 3-month treasury bills over that period.

Risk vs. reward, baby. That's what I'm talking about.

Surprisingly, some aggressive risk-takers did make out like bandits loading up on Best Buy's stock yesterday though. That is, their stock of electronics.

May 23, 2016
Masked thieves tunnel their way into Hoover Best Buy, steal $100,000 in electronics

Rector said there have been similar attacks on Best Buy stores in Florida, Georgia and Texas. "We're pretty sure they're related,'' Rector said. "It's pretty big."

Thank you. Thank you very much. You've been a great audience. I'll be performing here all week. Sigh.

Belated Middle-Earth Advice for the Swiss Banking System

May 24, 2016
Swiss bank to be shut over Malaysia scandal

GENEVA - A Swiss private bank will face criminal proceedings and be liquidated after allegedly committing serious breaches of anti-money laundering regulations in connection with the suspected embezzlement of a Malaysian state investment fund.

One of the most important things that clients hire you for is to help them stay on track with their most important thing.

If laundered money is a client's most precious thing, then you must not put the client's laundered money at risk.

The Future of Goldman Sachs

May 23, 2016
CNBC: It’s the end of Goldman Sachs as we know it

"For Goldman Sachs, the question is: What will they become when they grow up," said CLSA banks analyst Mike Mayo.

The answer is simple.

Continuing to be naughty. Throwing a shoe to their clients. Betting on that shoe to fall. Throwing another shoe to their clients. Actively betting that shoe will fall too. Patiently waiting for that other shoe to drop. Profiting off that shoe's demise. You know, doing God's work.

May 23, 2016
Time: 10 Ways Rich People Are Worse Off Than You

1. Their Kids Might Grow Up to Be Spoiled

Being wealthy can have a downside for your kids. One wealthy respondent to a study conducted by Boston College’s Center on Wealth and Philanthropy worried, “Money could mess them up — give them a sense of entitlement, prevent them from developing a strong sense of empathy and compassion.”

I'm continually amazed at the sheer number of unsolvable first world problems. Take this one, for example. Other than simply handing less money to children, giving all that money away to charity instead, or simply burning all that money (presumably with a paid team of off-duty fireman standing by to control the blaze), there really is no workable solution. Thankfully, the majority of people on this planet are not burdened with the horror that money can be.

As a side note, here is yet another unsolvable first world problem.

Although you might not worry about true poverty, you might always feel like you’re one stock market crash away from wearing rags.

This is a horrible burden for the wealthy that the poor can never truly understand. Few people wearing rags worry about wearing rags. It just is.

Monday, May 23, 2016

Black Swan Protection

May 2016
Kiplinger: How to Protect Your Portfolio Against Black Swans

Good luck on that.

One Very Black Swan

The S&P 500 Parabola Will Fail with 100% Certainty

The only thing we know with 100% certainty is that SPY will not stay in the parabolic trend channel forever. There must eventually be a trend failure, either to the upside or to the downside. It is guaranteed (for SPY can never trade below $0).

If you are a heavily leveraged momentum trader who is long the S&P 500, then you have to ask yourself a question. Will the trend fail to the upside?

There is a bonus question, of course. What if SPY stays in the parabolic trend channel longer than you can stay solvent?

No idea how panic selling ever starts. No idea at all. Boo! (Bad Mark. Bad! Bad!)

Full Disclosure: Sitting in long-term inflation protected treasuries for the long-term, with intent to hold to maturity so no greater fool is ever needed. No desire to gamble in this abnormal stock market's casino any more than I have to (neither long nor short). Doesn't stop me from watching though. Good luck!

P.S. It's a real pain to make these charts on the laptop, but some charts are definitely worth my time. Now we wait. When will the trend fail? Who will be happy? Stay tuned.

Source Data:
Yahoo Finance: SPY Historical Prices

The Sarcasm Report v.254

May 23, 2016
MarketWatch: Since no one is buying clothes, here’s what stores are selling instead

With apparel struggling to generate sales, a number of retailers are putting greater emphasis on home goods and furnishings.

Amazon.com: Search "t-shirt"

6,141,397 Results

Yeah, no one is buying clothes.

Sunday, May 22, 2016

The Fine Print

I'm holding a coupon from Sports Authority in my hand.




VALID 5/1/16 - 5/30/16

Not valid at closing stores? All their stores are closing. So, yes. It's definitely going to be an adventure.

There's a lot more even finer print on the back. Don't have my microscope handy so I guess I shall pass. Who knows what it says? Call me cynical, but it might hold me responsible for paying for their bankruptcy if I use their coupon!

Don't you just love how the fine print continues to grow? It's taking over our lives. When is the last time you read an end-user license agreement when software is updated? Heck, I probably agreed to donate Apple a kidney, lol. Sigh.

Candy Mountain. It's going to be an adventure.

The Hole Retail Story

May 18, 2016
Yahoo Finance: The whole retail story in 2 earnings announcements

The divergent quarterly results of Lowe’s (LOW) and Target (TGT) on Wednesday confirm a trend in consumer spending: Americans are spending less on apparel while spending lots in home-related categories.

Are people still shopping at grocery stores? Buying cars? Filling their prescriptions? Eating at restaurants? Buying gasoline? Furniture? Electronics? Sporting goods? Shopping online? How's Eddie Lampert at Sears holding up? Are there any Memorial Day sales this year? Are we going to have a great Christmas? How about next year? Have robots replaced all the retail employees yet? Is Walmart still hiring older workers to greet shoppers and make sure nobody is leaving the stores without paying? How about the bathroom situation? Have we finally figured out who can use which ones? Has Cramer chimed in yet? Is Ackman still shorting Herbalife? When can I expect sales taxes to go up again? Why don't they ever seem to fall? Are Canadians still coming down to buy stuff or is our dollar too strong? Would now be a good time to buy stuff in Canada? How about Apple? The gaming industry? People still downloading apps? Any good ones I don't know about?

Oops. That's one helluva paragraph. Sorry about that. Unfortunately, I have many more questions to ask. I don't know. Seems like I'm missing part of the whole retail story, but maybe that's just me.

So help me, if I get to the last page of this whole book and find out the butler did it, this story's gonna suck.

Dammit. That was supposed to be the end of my post but... Are people still buying physical books? Or are they all electronic now? What's the current Emergency Room Bill to College Textbook price ratio? Why do those two seem so linked? Coincidence? How can textbooks be so expensive when most books with text are so cheap? Where has Borders gone? Is Barnes & Noble next? What will replace them? Will our strip malls shrink? How about nail salons? Can there ever be too many?

Gasping for breath! I need to know!! Are...

To Be Continued

The Department Store of the Future

May 20, 2016
The department store of the future? Think Disney

Okay. I'm game.

Department Store of the Present

Department Store of the Future

Disney's The Black Hole: A journey that begins where everything ends.

Four Fantastic Reasons to Be Optimistic!

May 21, 2016
CNBC: It's going to end badly, but you have to buy: Strategist

1. Just look at that headline. Wow! Can't argue with that logic. It's going to end badly, but you must buy, lol. Sigh.

2. However, Dwyer cited 74 straight months of payroll growth, weekly initial unemployment insurance claims being at a multi-decade low in addition to consumer confidence nearing a cyclical high, as reasons for optimism.

3. In 2009, we reached 23 straight months of payroll contraction, weekly unemployment insurance claims reached a multi-decade high, and consumer confidence reached a cyclical low. That was the time for pessimism. As you can see, this is nothing like 2009. In fact, it's the exact opposite. Optimism!

4. Those pessimists who sold all their stocks near the cyclical bottom in 2009, and have been parked in cash earning nothing for 7 years, can finally and safely become optimists again and jump back in near the potential cyclical high of 2016! Sell low, buy high! Optimism for the win! Woohoo!

Just one question. As an optimist, how can this possibly end badly? As an optimist, who therefore expects the best possible outcome, I just don't see it.

Sarcasm? Investment advice? Just me being silly from lack of sleep? You make the call. ;)

Q1 Earnings Season Must Be Worse Than We Thought

May 20, 2016
Yahoo Finance: Q1 earnings season summarized in 4 charts

If you think that at least one of the four charts shows actual earnings, then you will be sadly disappointed. No, sir. Each chart summarizes words about specific topics taken from the conference calls. I kid you not.

Let me offer you an example. The fourth chart summarizes how many times China was mentioned compared to previous quarters. Apparently, this is more important to summarize than earnings per share growth.

Fourth, there was a drop in the number of China mentions, something LPL Financial sees as encouraging. Concern about China’s slowing growth, and therefore reduced demand for products from around the world, had driven heightened volatility in January and the beginning of February.

Well, this simply will not do. As a blogger with gloom and doom tendencies, I will attempt to do my part to get the conversation focused back on China again, using fresh information from the past week. Brace for it! Here we go!

May 16, 2016
China Growth Weaker than Expected; Markets Shrug

China reported slower economic growth than expected over the weekend. Industrial output, investment and retail sales growth in April all missed street expectations, reports Barron’s Asia Stocks to Watch Blog.

May 18, 2016
Will the real Chinese unemployment statistics please stand up?

Wolf says that migrant worker numbers have declined in the past three quarters, particularly in the first quarter of this year suggesting that migrant workers, who are among the most mobile/vulnerable and quickest to respond to economic downturns, have begun to move in the opposite direction i.e. back to their rural home villages.

Apologies in advance if I have ruined the upcoming Q2 earnings season by mentioning China so many times in one blog post. In my defense, this is a free blog and therefore...

Talk is cheap.

Five Tips for First Time Car Buyers

As we all know, buying that first car can be daunting. There are so many decisions to be made. You're not in this alone though. Much wisdom can be found on the internet for those willing to look.

1. The Right Car

Since this will be your first purchase, you might overspend on the car of your dreams. You must not yield to temptation. Stick with a car specifically made for the masses. You can always trade it in for a new one once that new car smell is gone, several years from now. You know, like many do.

May 20, 2016
Los Angeles Times: McLaren builds a car for the masses, with a $200,000 price tag

The 570S, the exclusive British builder's first sports car, is being advertised as an affordable, daily driver — an attainable McLaren, available to any auto enthusiast with around $200,000 to spare.

It's the perfect affordable daily driver for the masses. It will get you to work and back. Enough said.

2. Zero Percent Financing

It is absolutely vital that you obtain zero percent financing for your affordable commuter car. Each one percent increase will cost you roughly $2,000 per year in extra interest. Fortunately, we live in the age of ZIRP. If you threaten to leave the dealer's lot without making a purchase, they will be very eager to work with you.

3. Extended Loan Terms

A common theme in recent years is the extension of auto loan terms. What once required just four to five years to pay off a car has been extended to six, seven, and sometimes eight years. You can use this trend to your advantage by demanding a century loan. Somebody needs to be the first to get one. It might just as well be you.

By combining zero percent financing with a one hundred year loan, the monthly payments on your $200,000 commuter car, for the masses, will be just $166.67 per month. Totally affordable!

You can thank me one hundred years from now when you resell it for a large profit at an antique car auction. It's not just a car, it's a smart investment.

4. Safety Buffer

No investment is risk free. Cars depreciate rapidly once driven off the lot. A McLaren is no exception. You'll want to be especially careful during those first 24 hours. Try to keep your speed under 100 mph in the turns, and under 150 mph in the straights, at least until you've mastered the intricacies of driving a car specifically designed for the masses.

December 2, 2014
27-year-old crashes $1.2M McLaren P1 on 1st day of ownership

The crash occurred shortly before 8am on Tuesday November 25th near Dallas, and from the looks of the pictures, that's not going to buff out too easily.

5. Advanced Buffing Kit

Be sure to ask the salesman about throwing in an advanced buffing kit for free. It's always good to be prepared for whatever a wet spot in the road combined with excessive speed and reckless driving might throw at you.

Happy car buying!

Just Say No to Money Mistakes

May 21, 2016
The money mistakes even the rich make

...an individual who invests $10,000 per year at a 10% annual return from ages 30 to 36...

Ah, the wonders of youth. I'm 51. My memory may not be what it once was, but I can still remember one particular day when I was 30 to 36 though. The date was March 27, 2000. My biggest regret in life is not putting my entire retirement nest egg in the PowerShares QQQ ETF when I had the chance, for if I had, I would not be where I am today.

QQQ Closing Price (adjusted for dividends and splits):

03/27/2000: $106.61
05/21/2016: $106.47

Total Net Loss: 0.13%

For those keeping track at home, that's more than 16 years of nothingburger (unless one factors in not keeping up with inflation, which would make it a s%^tburger).

Where would I be today? Seeking out even riskier assets? Gambling in Vegas? Desperately swinging for the fences? Living out of a cardboard box? Who can really say for sure?

It's all water under the bridge though. In today's rich yield environment, only a fool can't count on 10% returns. Start with 3-month treasury bills yielding 0.31%, add some 30-year treasury bonds yielding 2.63%, and then simply fill in the gaps with the proven growth opportunities found in the Nasdaq 100. You simply can't lose.

10%? Piece of cake.

Saturday, May 21, 2016

Jim Cramer's Situational Awareness Is Second to None

May 20, 2016
CNBC: Cramer Remix: My biggest worry for next week

Some investors fear a bubble in technology, but Cramer couldn't find a single example of a tech bubble when he reviewed the conference calls from last quarter.

February 29, 2000
The Winners of the New World

A-ha, that just leaves us with tech. That's why we keep coming back to it. That's why, despite the 80% increase in the Nasdaq last year, we are looking at another record year now.

With Your Help, We Can Create 40 to 50 Million Quality Jobs

May 20, 2016
What drought? Nestle plans $35 million plant to bottle water in Phoenix

1. The plant is projected to fill 264 million half-liter bottles in its first year...
2. The plant is expected to create 40-50 jobs.

It stands to reason that if a whopping 40 to 50 jobs are created if 264 million half-liter bottles are filled each year, then 40 to 50 million jobs could be created if 264 trillion half-liter bottles are filled!

There are three things necessary for this plan to work.

1. We must not allow Nestle to simply build one fully automated mega-bottling plant that can fill 264 trillion half-liter bottles with just 40 to 50 workers. We must spread these plants out.

2. We must all drink a great deal more bottled water than we currently do. I know it won't be easy, but if each American pledges to drink a million bottles per year, then that would be more than sufficient.

3. Everyone needs to pee into Lake Mead. This is extremely important. We can't have that water go to waste, somehow finding its way back into our oceans through alternate paths. For if we do, there won't be enough water to fill the bottles.

May 21, 2016
Lake Mead Water Level Drops To Record Low As Drought Dries Up Colorado River Basin

The water level in Lake Mead — the United States’ largest reservoir that serves as a source of water for over 20 million people — has dropped to an all-time low, the U.S. Bureau of Reclamation, which manages the reservoir and the Hoover Dam, said Friday.

So, get drinkin' and get peein'! Hahaha! Sigh.

Friday, May 20, 2016

Corporate America's Bottom 99%

May 20, 2016
Fortune: Corporate America Is Drowning in Debt

If you remove the top 25 cash holders, you’ll find that for most of Corporate America, cash on hand is declining even as these companies rack up more and more debt at historic rates. The bottom 99% of corporate borrowers have just $900 billion in cash on hand to back up $6 trillion in debt.

So, other than that, Mrs. Lincoln, how did you like the play?

Third World Problems vs. First World Problems

The TD Bank Crapshoot

May 20, 2016
TD Bank Is Killing Its Money-Eating Coin Counters

In early April, NBC’s Today show tested the machines by pouring in about $300 worth of pennies, nickels, dimes, and quarters. In one case, the kiosk spat out a receipt worth 15% less than the deposit.

If only the bank could have determined that it was short-changing customers before the class-action lawsuits appeared.

Unfortunately, that would have required strict accounting standards. You know, like when you deposit $100 in the bank and they add exactly $100 to your account. At the end of the day, if they only find $99.99 in their till, then they'll spend hours and hours attempting to reconcile where that missing penny went.

You know, like a bank would.

Did I mention that my mom once worked in a bank vault? She did. If they were off so much as a penny at the end of the day, nobody went home until the error was found. Seriously.

I wonder how long those coin counters would have been in operation if the error would have been in favor of the customer? One can only imagine how many days that would have taken to fix. And since I have an active imagination, I'm going to guess a number less than two.

We're Finally Winning the War on Drugs!

May 20, 2016
Coke Has Suspended All Production in Venezuela

Coca-Cola FEMSA has suspended all production in Venezuela because of a sugar shortage, the Mexican beverage multinational said in a statement.

Coca-Cola? Oops. My bad. I totally misread the headline! Sorry about that.

Quote of the Day

May 20, 2016
CNBC: Signs of fear are running rampant through the market

The fear out there is that there is another shoe to drop somewhere down the road. - Michael Cohn, chief investment strategist at Atlantis Asset Management


May 20, 2016
Wall Street Journal: Foot Locker Posts Drop in Basketball Shoe Business

Decline in youth participation in certain sports coupled with the broadening casual-athletic trend weighed on sales at Foot Locker’s Eastbay chain, which focuses on selling gear to high school athletes.

Today's kids don't need basketball shoes to play basketball. They just need a couch and a video game controller, lol. Sigh.

Full Disclosure: I play video games a lot, and almost always barefooted. Seriously.

The McDonald's Growth Strategy: Appealing to Middle-Earth Values

May 18, 2016
McDonald’s Corporation Stock Up 40%: Can the Rally Continue?

All-day breakfast is already eight months old, but it continues driving sales growth for the company. Breakfast offerings are filling a pricing gap on the menu, and many customers are adding all-day breakfast items to traditional lunch or dinner orders.

There is no doubt that introducing the all-day breakfast was a great idea. There are only four months left for that growth engine to provide the most annual bang for the buck though. So what's next? How does one expand an all-day breakfast into something even more?

It's quite simple, really.

If there is one thing the typical American really needs, it's one breakfast followed by yet another breakfast!

Note to self: Visit the gym today. Seriously. Sigh.

Thursday, May 19, 2016

The Bond Market vs. Bryan Rich

May 19, 2016
Forbes: Market Still Leaning The Wrong Way On The Fed - Bryan Rich

That makes betting on lower yields a very dangerous one, if not a dumb one. When people are positioned the wrong way in asymmetric trades, the adverse moves tend to be violent.

If betting on 10-year treasuries is dumb, then shorting 10-year treasuries must be smart. Thanks Bryan for this sure thing gamble! And if it is the sure thing that you suggest, I'll use credit to increase my leverage! Even bigger sure thing profits heading my way! Woohoo!

Before I place my bet, I think I'll backtest previous sure thing Bryan Rich theories to see how much money I would have made in the past. How about those sure thing retail stocks?

The Stock Market vs. Bryan Rich

December 18, 2013
Forbes: Five Retail Stocks Analysts Think Will Double - Bryan Rich

Faster growth will improve the job market, improve confidence and bolster consumer spending. In this scenario, retail stocks will be among the biggest beneficiaries.

Bryan, you da man! Feelin' real optimistic!

1) Wet Seal (WTSL) has a current share price of $2.58.

Bankrupt in 2015. Oops. Still four left though!

2) Pacific Sunwear of California (PSUN) has a current share price of $3.20.

Bankrupt in 2016. Seriously.

3) J.C. Penney (JCP) has a current share price of $8.32.

Now $7.60. Phenomenal relative performance! Least worst so far! Woohoo!

4) Francesca’s Holdings (FRAN) has a current share price of $17.64.

Now $10.41. Still some money left, which is nice.

5) American Apparel (APP) has a current share price of $1.05.

Bankrupt in 2015. For those keeping track at home, that's 3 bankruptcies out of 5.

You know what? Maybe I'll just assume, for now, that the bond market as a whole is at least as smart as Bryan Rich or the Fed. I know it sounds crazy, but what do you expect? I'm just an anonymous blogger on the internet. Crazy is as crazy does.

This Year's S&P 500 Target: 1,573 to 2,458

May 18, 2016
CNBC: The S&P 500 could plummet to 1,573 this year: NorthmanTrader's Henrich

"If GAAP earnings can reverse the trend and reverse higher, then markets can break to sustained new highs with technical targets of 2,334 and 2,458," Henrich told CNBC.

That's 4 significant digits of precision on both the downside target and the upside target. Scientists and mathematicians agree, you can therefore trust these numbers.

Invest accordingly!

What? Confused about what to do? Need I really spell it out?

1. The S&P 500 could fall 22.89% ± 0.01%. Scary! Sell your stocks!

2. The S&P 500 could rise 20.49% ± 0.01%. Awesome! Buy back those stocks you just sold!

3. Repeat until transaction fees financially ruin you.

I can't speak for you, but I'm always looking for new ways to add more technical analysis into my life. It makes everything so much more predictable.

The Easier Way to Be Debt-Free by 2017

May 19, 2016
How to Become Debt-Free by 2017

For example, consider this situation: you have a credit card with a $5,000 balance and a 12 percent APR. “If you pay the minimum monthly payment of $100, it will take you 70 months to pay off the card and you will pay an additional $1,966 in interest,” Wong explains. “But, if you raise your monthly payment to $120 per month, you can pay off the card in 50 months and pay $1,500 in interest.”

The easier part is paying an additional $20 per month on your credit card. The harder part will be convincing 2017 to wait 50 months. ;)

Absolute Proof That America's Top Executives Are Dangerously Underpaid

May 19, 2016
Ex-Dean Foods chairman charged with insider trading

Davis misappropriated funds from the charity in August 2011 to finance repayment of a gambling debt he owed to a Las Vegas casino, the SEC complaint charged.

Assuming his gambling expenses were set in stone, if his income would have been twice as much then he may not have needed to allegedly misappropriate funds from an emergency shelter for battered women and their children to finance his lifestyle.

This isn't rocket science people. Top executive pay must be increased to prevent this tragedy from ever happening again.

As for the actual insider trading charges, who really wants to dig into all those gory details? A professional golfer scores big? Sneak previews of quarterly earnings announcements? Boys will be boys.

Mangus Beef

May 18, 2016
USA Today: Non-GMO demand growing despite report that says GMOs are safe

Research may prove genetically modified organisms are safe to eat, but the swelling trend toward non-GMO foods shows that many skeptical shoppers don't care.

Now that research may have magically proven that all genetically modified organisms that have existed and will exist in the future are always safe to eat, I want to tell you about the exciting new research this blogger's been working on in his secret laboratory.

Mangus Beef FAQ

What is it? First, we started with ordinary Angus Beef. For some reason, people seem to love it. We then genetically modified it based on DNA material we secretly extracted from the foot soldier formerly known as Private Gus. This allows the beef to stand on two legs, gives them opposable thumbs, and allows them the use of rocket-propelled grenades and automatic weapons. By doing this, our new Mangus Beef creations can fully protect themselves from all predators, looters, drones, tanks, and/or evil-doers. This represents a huge cost savings for us. Our laboratory no longer requires expensive fences, checkpoints, or security personnel. Mangus Beef protect their territory with great enthusiasm.

What do Mangus Beef eat? This is a premium product and therefore only eats the best genetically modified corn. By combining the natural great taste of sweet yellow corn with the protective qualities of hemlock, nuisance pests are virtually eliminated. Only Mangus Beef are able to survive the ingestion process. Granted, not all Mangus Beef survive, just the strongest and healthiest.

What do we do with the Mangus Beef that do not survive? Do we simply dispose of them? Heavens no. Nothing goes to waste at our facilities. Shareholders can rest easy knowing that any sickly or dying Mangus Beef are simply fed to our remaining strong and healthy Mangus Beef.

What about the news of Mad Mangus Beef Disease? These news stories are completely fictitious. We deny any and all wrong doing. We continue to vigorously defend ourselves in the court of law against these slanderous and libelous accusations.

Mangus Beef. Proven 100% safe by USA Today, based on the conclusions of some scientists. It's what's for dinner.

In all seriousness, I eat genetically modified foods. That said, I'm 51, have no children, and realize that in the grand scheme of things, the human race will probably not survive forever anyway. The universe can be an unforgiving place. Unfortunately, history shows that humans are prone to make mistakes.

Wednesday, May 18, 2016

Yield to Authority?

No, more like chasing yield to Sports Authority!

May 18, 2016
Sports Authority to close all remaining stores

When Sports Authority was bought by a hedge fund 10 years ago, it was the largest sporting goods retailer. But it has struggled with the debt load associated with that leveraged buyout a decade ago.

It's not all bad news though.

But even retailers who are not in financial distress are closing their weaker performing stores. Among chains trimming locations are Walmart (WMT), Macy' (M)s, Kohl's (KSS), Target (TGT), Sears (SHLD) and Kmart.

Although Sears Holdings Corporation is trading at a record low, is down well over 90% from its peak, now trades at just $10.70, and earned negative $10.58 per share over the last year, at least it is not experiencing financial distress.

Would you like to know how it has avoided financial distress?

May 15, 2016
Innovation: Why Bezos Succeeded, While Lampert Failed At Sears

In March, 2005 Sears shareholders approve the deal. The stock trades for $126. Analysts praise the deal, saying Lampert has “the Midas touch” for cutting costs. Pumped by most analysts, and none moreso than Jim Cramer of “Mad Money” fame (Lampert’s former roommate,) in 2 years the stock soars to $178 by April, 2007. So far Lampert has done nothing to create value but relentlessly cut costs via massive layoffs, big inventory reductions, delayed payments to suppliers and store closures.

Jim Cramer's former roommate has the Midas Touch! He touched Cramer! He touched Sears! He creates mad money out of nothing!

Thank you. Thank you very much. I'll be performing here all week, lol. Sigh.