Wednesday, December 27, 2006

Turntable time

Yesterday I set up a turntable system. Record player. It's incredible.

I bought a new turntable about 5 years ago but rarely used it because it was connected to some worn out speakers at first, and then to one of those big Bose jobs next. When moving furniture from my parents house I got two big almost new Sony speakers(same size as my worn out Advents) from my New Orleans jazz loving mother and father. So with turntable and speakers, I pulled out my old(1974) Sansui amplifier, some new cable, and now I have a sound in my big lower level family room that is startlingly good compared to that muted CD sound.

Several comments on all of this:
---Bose is in my opinion a well advertised hoax. The small clock radio is good but expensive. The sound for something that size and for that purpose is just fine. The larger Bose is poor. There's no sound separation and there are not even any bass and treble controls. I was given the larger one by my team when I left my last job and it was a wonderful gift, but I don't think it's a product that lives up to its hype.
---The Sansui amp was bought along with two big Advent speakers and a Dual turntable in 1974. The combination cost about $650 at a time when as a teacher I was making $7,200 a year pre-tax. Now that was a time when I had my priorities straight.
---My records are almost all from the 60's and 70's with a few 50's and 80's. Even scratched they just sound juke boxy wonderful on big speakers. Strolling in Greenwich Village yesterday I went by Bleecker Records and they carry a selection of "new vinyl". Artists do still sanction real records to get that sound. So I bought a new vinyl, "Otis Blue", an old Otis Redding album. It's good, but I'm not so sure that it is as good as my scratched original old vinyl "The Soul Album" by Otis Redding. Perhaps it's not, or possibly the scratches on the older one are ingrained in my subconscious in a positive way.

If you have the chance, try out some vinyl.

Apple trade today

Was anyone lucky enough to hit the Apple trade today. Related to options dating issues, AAPL was down significantly to the mid 77's at 10am. By 3pm it was back up to mid-81's. I'm not a day trader but I had to act like one when I saw this opportunity. This just shows one advantage that a retail investor has. Institutional investors can and do see these anomalies, but if they do anything meaningful for them the size of their trades moves the market. The retail investor can make a normal long trade or take an option position within their investment parameters and not move the market at all. In other words, they get the full spread between their trades.

Monday, December 25, 2006

Goodbye James Brown

James Brown leaves us on Christmas Day. It was the winter of 1966 at the Greensboro Coliseum that I saw a performance that was so amazing and energized that it left me, and I think the entire audience, mesmerized and exhausted. Never had seen anything like it, my first live music spiritual experience. On and off the stage, wrapped in his cape, led by attendants, new capes, charging back on to the stage over and over again, audience becoming increasingly hysterical, cape into the crowd, scarf into the crowd, more and more...please, please, please.

Merry Christmas to all

Merry Christmas to friends, relatives, acquaintances, and any readers tonight.

What a day of domesticity. Cleaned the kitchen in the morning after guests came over last night. Wrapped presents. Did a little extra tree trimming. Made roast beef hash. Bought oysters and Italian sausage so that tomorrow I can make my own tray of stuffing that no one else here would touch. Dug through old family photographs to help Alex with a major school English project that has multiple essays about her life. And listened to music all day: The Ultimate R&B Christmas with Otis Redding, Booker T., James Brown, Gladys Knight etc.; Dylan's Modern Times; Electric Flag, A Long Time Comin'; Mojo Nixon's Holiday album; Jingle Bell Jazz, courtesy of Williams Sonoma; The Real Sock Ray Blue, Texas Prison Field Recordings Vol. 3 by Mojo Nixon and the Toadliquors; and Radiohead's the bends. Nice day.

How can I cap off this day of home life. My friends at gave their thousands of readers what looks like a wonderful recipe for bread the other day(I'll try it) so, I say to myself, why not share my non-recipe for roast beef hash with my much smaller group(how many people could I really harm). Here it is.

-Have guests over for dinner and cook a rib roast.
-Find out that two college age guests are vegetarians. Cook yams and extra vegetables. Have lots of leftover rib roast. So the next day...
-Bake 8 to 10 small to medium size red potatoes at 400 degrees until they are done.
-Put a pot on the stove
-Warm olive oil and four or five chopped up cloves of garlic
-Add really big Spanish onion, chopped.
-Add black pepper, cayenne pepper, and a little cumin
-Saute about 10 minutes or until onions are cooked
-Add one green pepper, finely chopped
-Add one red pepper, finely chopped
-Saute more
-Chop up leftover rib roast into small pieces but by no means too small, and don't cut all of the fat off.
-Put the meat into the pot with the onions etc.
-Simmer on low heat
-Chop cooked red potatoes into quarters, leaving skin on
-Put into pot
-Add some Worcestershire sauce and tabasco
-Stir again
-Put on lid and cook on medium heat for 10 minutes or so and stir if needed. Then put on low heat for 30 minutes at least, keeping lid on. Some potatoes should blend in with everything and others should stay intact, creating that hash consistency.
-When it seems to be ready, it is.

And now to put a few more presents under the tree as everyone is finally upstairs.

Again, Merry Christmas.

Saturday, December 23, 2006

Extended family makes stock picks

The Holidays bring together families. In-laws, cousins, aunts and uncles, nieces and nephews, as well as a few close friends gather and, at times with little in common, make conversation for hours as they wait for food, eat food, and digest food. What to talk about? Politics and religion are generally best avoided. Anything intellectual is not often common ground. Children are a great topic but how long can that go on. Remembering what happened in 1994 when John dropped the gravy bowl kind of comments get old too. So what's left. There's cars, sports, Donald Trump, cooking, the weather in St. Louis compared to Buffalo, television programs, movies, and the market. Yeah the stock market where your brother-in-law always is willing to give a supposedly informed opinion and your 26 year old niece already makes money having something to do with investments.

And the stock picks for this year are:

Uncle Charlie: "You can't go wrong with GE. So what if it was flat as a pancake for the last three years. It's a great American company, it pays a good dividend and it's finally beginning to get back on track. Hell, they have more than 10% earnings growth every year but ever since Jack Welch left they lost their buzz. But trust me, you can't keep a good company down. Buy it and hold on and you'll put your grandchildren through college."

Nephew Paul: "Apple is it. Every kid in college either has an Apple PC or wants one. Dell sucks. Gateway's gone. Sony's blown it. HP has come back, but on Dell's back, not Apple's. The only problem is that they are so creative that they are coming up with better PC's and better Ipods so often that you're always wanting the next one. But that's not their problem. It's mine. So what if the stock has gone up a lot. It's come down from its high almost 10% in the last week. Get on this train before it leaves the station for good. Sorry Charlie, GE looks good but Apple's the future."

Next door neighbor Sal: "You guys are talking about things that everyone knows about. You don't make real money like that. My buddy Anthony tells me he makes a killing every year on stuff no one knows about. He says buy Wabash, that's WNC he says, and you'll double your money in a year. With a name like Wabash you can see why they're overlooked. Wabash, ever heard of it. I thought so. He says it makes trucks used in construction and it's in Ohio. I'm in. Just watch. Anthony does his homework."

Cousin Kate: "I got one like that too. My friend in Houston says buy IESC now. Don't hold back. I don't know what IESC stands for but has something to do with fixing electronics systems. She says because it went bankrupt a few years ago ago and didn't make any money this year that nobody likes it. But her friend Josh works there and he's pumped. Double your money at least he says, so I got you there Sal."

Niece in the investment business: "Sal and Kate, don't take this personally but you guys are nuts. Do you know anything about these companies? Double your money or more in a year is a big red flag to start with. No investment pro knows about this but Anthony and Josh do. That might not be the way the market works. What do I like? Big financial stocks look good to me. Sad to say maybe but these middlemen pass risk in other directions and take a cut on everything. Some like Goldman Sachs and Morgan Stanley are stocks that have gone through the roof this year but others like JP Morgan Chase, while going up, still have legs. JPM has done ok, it pays almost a 3% dividend, is in lots of good businesses, and most importantly has a CEO that knows how to reward investors. Since it was announced that he would become CEO 15 months ago the stock is up around 40%. He worked with Sandy Weill for lots of years and always made money for shareholders, and did the same at Bank One. Big investors pay more for good proven management which JPM finally has. They don't need extraordinary earnings growth because they will get p/e multiple expansion. This has more potential than GE and less risk than Apple. And don't even think about those Wabashers."

Informed brother-in-law: "Get creative folks and think about the simple buy low sell high concept. What's low right now and it's something that everyone needs. Homebuilders have been clobbered. Now's the time to buy. You say now I'm nuts. This situation right now means consolidation is coming. The top 10 homebuilders have only a 15% share of the total market. No Samsung or Toyota is coming in. They could go down more for sure, but you can always buy more if they do, because they will go up eventually and go up a lot. I like Hovanian which is trading at around 5 times current lower earning and has traded as high as 19 times earnings within the past 5 years. These aren't tech stocks. They're simple. It's easy to see why they are down so much now and why they will go back up when things shake out in house prices. So buy good quality, and buy low."

Cousin Fred: "I've had enough. Whenever folks start talking like they know all this stuff about the stock market, it's just gambling time. Just go up to the reservation and be done with it. The hotel rooms are nice and almost free, so if you want you can just send your money down on the elevator and watch a good movie."

Sister-in-law Edna: "No more nonsense. Come eat dessert."

(Disclosure -- the writer, right or wrong, owns a few shares in all companies mentioned)

Thursday, December 21, 2006

ETF divergence after Thailand's finance moves

Thailand's financial bungling of this week has led to an interesting divergence in ETF performance and the performance of indexes and mutual funds. Mutual funds, either managed or indexed, report their results daily based on the value of the securities in their accounts. ETF's, on the other hand, hold indexes of stocks but are traded as a stock. The value of the ETF stock does not necessarily reflect the value of their holdings. This is especially so because many ETF's are predominately held by institutions who own them both for investment and hedging purposes.

So this week after the Thai announcements the following happened. On Wednesday Asian markets rebounded and the Fidelity Southeast Asia mutual fund was up 1.6% and the Fidelity Pacific Basin Fund was up 1.1%. On the ETF side, EPP, the Pacific ex Japan ETF, was down 3.5% and EWS, the Singapore ETF, was down 2.7%. On average that's around a 4% divergence. On Wednesday and Thursday combined the huge EFA, the global Europe, Far East, Australia ETF, was down over 5% while global markets were modestly up for the two days.

What's going on here. While at first the issues of the week may have seemed like a one day event, using the ETF's global investors are selling and shorting the indexes in a big way, believing that these markets are now heading down, or gambling as some might say. Local investors in Asia see bargains and have jumped in to take advantage of what they see as an opportunity. That may be a real bad move, at least in the short term.

For now, someone should drag the Thai finance minister onto the golf course for the remainder of the year and not let him near another financial journalist. The Thai Central Bank's moves were naive and misguided in execution but they tried to bail out. The Finance Minister, however, has no idea how to speak publicly. When asked by a British journalist on a Bloomberg video if he had consulted with other Asian finance ministers about these actions he said "No, but they all know me and if you are Asian you understand this. We all do." Well that certainly reassured everyone.

Saturday, December 16, 2006

The Copper Standard

The Gold Standard ended in 1972 with the demise of the Bretton Woods agreement. Now perhaps, totally unplanned, a new standard is evolving. The WSJ reported yesterday that the value of the copper and zinc in a penny is worth 1.12 cents and the value of the copper and nickel in a nickel is worth 6.99 cents. Rules are now being put in place to limit the export of these coins and to prohibit melting them. So finally my tennis ball cans and pickle jars of small change have some value.

Saturday, December 09, 2006

Human Flower Project?

Human Flower Project is a blog related to flowers run by a friend of mine. The web address is Believe it or not my friend, Julie, asked me to contribute. The post is now there and I invite you to take a look. Not only will the mystery of what possibly I could say on a blog about flowers be solved, but you will see the work of a prolific writer about flowers and traditions around the world. And like the flower photographs that are on every post, the writing is beautiful.

Wednesday, December 06, 2006

Iraq Study Report

The Iraq Study Report out today could mean many different things:

1. that the report is a serious study by a group of experienced, earnest and well-meaning individuals who have done their best to take a bi-partisan approach to this bleak situation.

2. that the report is an orchestrated effort by and using former Washington insiders to give President George Bush political cover to change course.

3. that the report is a constructive call on the Bush administration to begin to use international negotiation as an indispensible tool in dealing with foreign relations, something that George H.W. Bush believed completely and his son has ignored.

4. that the report is a barely concealed call to get out of Iraq as soon as possible.

5. that the report is naive or cynical in its assessment that the U.S. will ever leave the Iraqi military and security forces with the ability to avoid absolute chaos for Sunnis and Shiites, and carnage for the Kurds.

6. that the report is an assessment by Texans influenced by the Texans of Brown and Root, probably the major commercial beneficiaries of the Vietnam War and now a subsidiary of Texans at Halliburton, that the good times are over.

Perhaps it's a mix of all of the above. I hope that the above order of importance is correct, with a big emphasis on #1 and an insignificant emphasis on my cynical #6.

Butter is better

With New York City banning trans fats completely I learned something important that I knew intuitively all along. Butter is better. It turns out that perhaps the worst food for trans fats is margarine. When I was young the wisdom was that both the cost differential and the health benefits dictated that margarine be our dinner table fat. Whenever we went to my grandmother's house in the mountains, I learned over and over again that butter was better, and the margarine of my home was almost tasteless. But the healthfood gurus of the '70's and '80's certainly didn't suggest that butter was a good thing. I don't know or care much about the health risks of butter at this point, but now I know that margarine is off the charts unhealthy. Luckily I never liked it enough to eat much of the stuff.

An important fact, I guess, that I learned today is that "no trans fats" means not enough to break the line on some government definition. The things to look for on the labeling are "partially hydrogenated" and "shortening". Those are trans fats.