Friday, December 31, 2010

Donuts to Dollars

New Year's Eve is a time for reflection about the year past and the year ahead. How anyone can do that, inebriated, in with a group of other inebriated people, with party hat on and blow-out noisemaker going, is a topic for another day. This morning, my wife and I celebrated New Year's, in our usual manner, by getting a dozen donuts. If you should ever ask me why this last day of the year is different from all other days, I will say it's the donuts.

Not being inebriated, then, I am capable of reflection in complete sentences. Right now, I'm reflecting about my reasons for buying the five stocks that I currently own. While not as analytic as a chart or balance sheet, the matter of what was I thinking when I bought these stocks might provide the earnest reader with a useful and corrective homily for his own trading behavior.

Conoco Philips (COP)

In my investing career, I have gone from fearful to foolhardy. In the case of oil stocks, back in 2004, I bought only piddling amounts of Cimarex and Encana, because I was fearful of oil. I was fearful because I listened to Cody Willard, a real westerner, tell about the inevitable tendency in the oil business to go boom and then go bust. Crude oil was then booming through $50, on its way to $147. Even $50 was, to Willard, a boom of such historic proportion that the bust must be coming soon with devastating effect on those left holding the barrel. Willard was a smart guy on Cramer’s website, and his uncle had stories to tell about the wildcatting days. Nevertheless, I bought a little oil because Cramer was pounding the table about the sector, but Cody made me scared to risk a substantial amount of capital, or hold the shares long enough for them to go through the roof. Result: I made a couple of thou, but left the big money on the table.

Now, I am both wiser and more foolhardy – in 2008, I acquired a starter position in Conoco because Cramer, still high on oil, was buy-buy-buy on it, along with everybody else. Over time, with a little success, my confidence grew and my fearfulness subsided, and I increased my stake to a couple of thousand shares. And I’m still holding them. Here at year’s end, with a cost-basis of $51.99, I’m up 32%, and the intermediate outlook for oil stocks is great, especially Conoco. It’s a sure thing, if you’re patient.

Nevertheless, Cody was right: Oil did go boom to $147, before going bust, but he made his call at $50, on the way up. So the early bird was way too early, and got the shaft. But I wonder how many people rode it all the way up and then rode it all the way back down. I sat it out the first time, but this time I’m on board. As always, the trick will be to know when to get off.

But I’m not worried. This time up, we have a road map: $90 oil to $100, and then, eventually, back to $147. The wise will get off somewhere between $110 and $147. The foolhardy will ride the thing all the way up and then (one would hope) bail somewhere on the terrifying ride back down. (Of course, the market reserves the right to change the road map at any time.)

Oil Services (OIH) (posted on 1/11/2011)

In March of last year, I decided to increase my exposure to the oil sector: I bought 500 shares of Exxon Mobil (XOM). Exxon is a supertanker of a company and slow to move - for the rest of the year, it basically went nowhere, while Conoco went up smartly. Daniel Dicker, on Cramer's web site, recommended Exxon over Conoco at year's end precisely for this reason - the slow will later be fast. So what did I do? I sold my Exxon in December, mainly from boredom, making about 17% on the transaction. Then, last week, I bought 400 shares of the oil services ETF (OIH). I did this on the recommendation of both Joe Terranova and Pete Najarian on the stock channel's Fast Money show. So far, OIH is not boring: the day I bought it, it closed up a buck from my purchase price; then, yesterday, it closed down a buck and six bits. Today, it has been up as much as $4, and now, around 3:30 PM, it is still up about $3. For an ETF, this sucker moves!

ATP Oil and Gas (ATPG) (posted on 1/12/2011)

Another oil. I first heard about about ATPG from a trader on Cramer's website. The story was that it was a hated stock with a very high short interest because the company was deeply in debt, trying to pull off a big coup with new technology for drilling offshore in holes abandoned by other big oil companies. If the company went bust, you would lose all your shekels, but if it succeeded, the stock could go from $15 to $75 in a hurry. I liked the story. So I read more about it on YAHOO's ATPG message board: there appeared to be a lot of posters with experience in the oil business who were betting the farm on success, but they were saying that you had to be patient. I can be patient, so I bought 1000 shares in November, 2009, and traded them between $12-14 to pick up a few thou. Then some good expectations surfaced and the stock shot up to $23. On the way up, I bought another 1000 shares at $20.42. I should have stood in bed. Shortly thereafter, the BP oil spill fracas occurred and the stock went to 9, fast. Suddenly, I was $10,000 in the hole, but I held on, trading between $9-14, to reduce my loss a bit, giving me a cost basis of $15.68 on 2000 shares. When BP's hole got plugged, ATPG recovered slowly, hampered by the headwind of the moratorium on drilling in the gulf. When the moratorium ended and ATPG was cleared to resume drilling, the stock started to move back up. It is now trading above $17 and my stake is back above water. I remain a believer and am holding the stock. It's a slow train coming, but Hallelujah Land is up around the bend.

(To be continued, with C and GOOG.)

Sunday, December 19, 2010

Sleeping with one eye open

At this time of year, when the chilly winds blow cold and the end-of-year holidays conspire to shut the country down for a couple of festive weeks, I become reflective about why I am not richer than I am. I think of past follies, like selling Apple at $67 and being afraid to buy it back at $85, because Jobs was sick. But then I tell myself that I could have bought Microsoft in '86, or even as late as '95, and today I would be so stinking rich, that life itself would lose its allure.

The real folly is in fretting about the past. The only thing that counts is what I'm betting on now. Contrary to all intelligent opinion, I have now put two-thirds of my assets into five stocks, with the rest in cash. The stocks are Google, Conoco, Citigroup, Exxon Mobile, and ATP Oil and Gas. Cramer would say I'm overweight oil, but I don't care. I feel very comfortable because I know and understand these companies and their prospects. I believe that having enough confidence in a company to own it for a long time is the most critical element of investing success. I am so confident of these five stocks that I have acquired substantial positions in each of them.

I think that this is a time to be in the market. I am trying to resist the temptation to trade. The traders I watch are all clucking about the current level of bullish chatter they're hearing and, contrariwise, they are all still waiting for that slow train that they are sure is coming, which is the apocalypse promised by Roubini, Schiff and Fred Hickey. But the bullishness that the traders see is just headline frothiness. What they don't see is the deep, persistent and resistant level of bearishness underneath, which is them. It's this mother-lode of bearishness that supports my bullishness.

Meanwhile, I'm still taking lessons in the art of selling something.

Tuesday, December 7, 2010

And the Parabola Shall Be Made Smooth

In pundit-speak, GOOG opened up 10 today, with the rest of the giddy market, and ramped to nearly +15, before fading with the morning dew to a range of +10-13, where it is presently (3 PM) stuck.

The market wants desperately to see Santa Claus this year and GOOG's got its story back. Actually, GOOG has three stories going, and they're all good:
  1. Google is not a one-trick pony anymore.
  2. Mobile advertising is going parabolic.
  3. GOOG owns 75% of mobile advertising.
And, I should add, Apple continues to do well - contrary to popular opinion, what is good for Apple is good for Google, too.

So, when is the party over? New Year's Eve? A little hangover might be due, but I wouldn't think of selling any GOOG for the next couple of years.

Loosen your seatbelt - it may not be as bumpy as you might think.

Wednesday, November 24, 2010

Lyrical Analysis

There's always another hard luck story that you're gonna hear.

For us long-distance runners in GOOG, there's nothing much to do between earnings reports, besides watching traders, trying to make money from themselves. After the earnings pop, last Google Eve, GOOG suffered a mighty rise, kissing its previous high for the year, before falling back.

Now, the GOOG bashers are back out of their holes, but they've lost their passionate intensity. The Mullahs of fundamental and technical analysis are recalibrating their instruments to account for the change, but we don't have to fool with that.

There's a new kind of analysis that I call lyrical. Lyrical analysis is simple - it focuses on the story. With lyrical analysis, you only have to know one thing - has the story changed?

Lyrical Analysis for GOOG

Old story : Google is a one-trick pony
New story: Google is not a one-trick pony

Result: the all-time GOOG high of 741 is in sight.

Forget fundamental and technical analysis. With lyrical analysis, all you need to know is the story.

Wednesday, October 13, 2010

Google Eve

Google Eve is a time for kicking back, for not doing things like driving and playing horseshoes. It's a time for putting past failures behind and future successes ahead, which could start, either way, as early as tomorrow. It's a time for renewing bodily fluids. It's a time for spending a quiet night in the woods with Snow White and the dwarfs.

Monday, September 27, 2010

Google Up, Diatribe Follows

Google closed up $3.12 today. Good.


I'm a soft-spoken man - slow to anger and quick to forget. It's been my practice to suffer fools, if not gladly, then at least in the belief that we are all fools before Yahweh. Humility has its place. But I'm exercised about a video, in circulation for a couple of weeks, that I just saw today on Facebook.

The video shows a painting of a young, disheveled man, slumped on a bench in the park. Behind him, are depicted all the past presidents with looks on their faces ranging from aghast (Lincoln) to grieving (Bush) to gleeful and approving (Frank. D. Roosevelt and Clinton). They're all looking at Obama, standing in the foreground, facing away from everybody, with his jaw sternly set and arms folded, and his shoe on the Constitution, which somebody has thrown on the ground. One of the early presidents, whom I don't recognize, is beseeching Obama in a crouch that was unbecoming when John McEnroe assumed it, many years ago. If you want to see the video, google for it. I'm not going to show it to you.

Now, I didn't just come in on a boat, I know how a lot of people think these days, but I am moved to respond to this video, to make up for all the times I've heard and seen this kind of crap before and didn't vent spleen.

I'm tired of all the people who, in speech or painting, call Obama arrogant, when what they really mean is uppity.

I'm tired of all the fundamental Biblical literalists who want to apply their ridiculous logic to the Constitution of the United States. Who believe that, if the Founding Fathers had intended on regulating McDonalds, they would have put something in the Constitution about it.

And I'm tired of being angry about the real constitutional outrages in recent memory: the 2000 voting debacle in which SCOTUS cheated Al Gore out of 8 years of splendid misery; the granting to corporations of the same rights and privileges enjoyed by humans, including the right to buy the congressman of your choice and, presumably, abortion services; and the canonization of the right for every citizen to be packin' , in churches and day care centers, and other places where life might be threatened. I'm not an expert on Constitutional law, but I can read. When the Founding Fathers wrote "the right of the people to keep and bear arms," they meant "the people", in the sense of "We the people." If they had been thinking about individuals, they would have written "the right of people to keep and bear arms."

I'm tired of those who call out Muslims, Catholics and Jews for moral turpitude, without including Baptists in the list.

I'm tired of those who don't believe in Global Warming for political reasons, when it is clearly prophesied in Revelation 16:8,9.

I'm tired of people, who don't have to worry about where their next RV is coming from, who can't stand their taxes being raised, even a little.

I'm tired of Don't Ask, Don't Tell. What the hell is that?

Finally, I'm tired of my own invective. It's not becoming of a Google shareholder. My apologies to Sergey and Larry.

Monday, September 20, 2010

Riding the GoogleCoaster with Mr. Jim

I've been reading Jim Cramer's commentary on his website for ten years, first as a freeloader and then as a paid subscriber. It has been a ticket inside his head, regarding the business of trading stocks. I admire the way that he not only provides tons of useful advice, but also gives me access to his emotional ups and downs in the process. I get to see that his roller coaster is just like mine.

I owe Cramer for getting me into GOOG for the first time in late 2004. I was fearful, but he banged on the table of his columns that GOOG must be bought until I dipped my toe in the water, first for 10 shares and then for more. I now own 500 shares.

Over the intervening years, Cramer has been hot and cold about GOOG. A year ago, he was hot, touting his target of 700 for the stock. Then he became deeply offended (I think that's the right term) when Google got in its tiff with China and moved its servers to Hong Kong. He applauded Google's moral courage, but castigated the decision - it was not good for business.

Since then, he has not mentioned Google in his posts, even when there was reason to. This morning, he filed a piece, titled "Apple, Web, Storage Are Tech Winners", and, although he cited virtually every other tech company in the Internet arena, he made no mention of Google.

However, just about an hour ago, as the stock was up 15 points on the day, he had to give Google its due:


Maybe now, we'll get some respect from Mr. Jim. At least, for a while.

Friday, September 10, 2010

Tuning the 'Net Means More Tuna in the Net

Google Instant is Google's new and improved search method which use's Google's vast storehouse of data to anticipate what users are looking for, even when they aren't sure themselves. You could call it mind reading, but new science always looks like magic, and this is a baby step in the direction of the semantic web. I've used it and am pleased with it, for being subtle and unobtrusive, as well as mind-blowing. Technical folks are in awe of what Google has wrought.

On a stockholder level, you could argue that Google Instant is more about increasing margins by reducing costs, specifically Traffic Acquisition Costs, which represent the cost of running the network and software required to make search come to click.

More efficient searches (fewer round trips to the Bigtable in the Sky to get to your click) means less network activity per click. Of course, the increased density (velocity) will result in more clicks per unit time.

Google is tuning the Internet to its bottom line. Nobody else does it better or more relentlessly.

Tuesday, August 10, 2010

The Unseen Hand

I think the market itself is an honest game. There are just too many marbles being pushed around to allow even the big boys to put their faces on the ebb and flow for very long.

That doesn't mean they don't try. Thousands do, I'm sure. But I'm even surer that there are thousands more who suspect and believe that miscreants are not only trying, but succeeding in manipulating markets constantly to the detriment of us, the small and meek. It happens all the time, they say. They can see it in their charts. A practice so vile that it is referred to only by its initials: MM.

Now, I'm an unbeliever in these matters, but now and then I sense a pattern in the movement of a stock I own that suggests the action of an unseen hand, be it Yahweh, or some hedge fund in New Jersey, I'm not sure. I had that feeling, last week, with ATPG, the thinly traded oil stock I own.

ATPG, a Gulf driller, has had its problems of late and, at the end of July, the stock was foundering in the neighborhood of $10.50. Then, it started off August with an unsuspected gap up to $11 at the open, followed by a gradual drift up in the direction of $12. That was August 2 and it closed around $11.50. On Tuesday, it began a steady rise to $12.31, then settled back to just under $12 at the close. I watched these events with increasing interest. Clearly, the stock was breaking out, but at whose behest, god or devil, I couldn't say. On the fourth, it opened up a dollar, near $13, and continued inexorably to the middle of fourteen.

Then, as the faithful were rejoicing, the stock began to swoon with as much purpose as it had shown on the ride up. The gas went out of the ATPG balloon, ending two days later with a big raspberries, on the floor of $10.46, a dime lower than its price at the month's beginning.

Everyone on the ATPG Message Board began to scream "MM" to each other and themselves. These abused innocents, suckered in once again, can be likened, in their belief, to the astrologers of old who beheld divinities in the heavens. They saw them in their charts.

But I remain skeptical, convinced as I am that only one force has both ability and desire to pull a trick like that. I sense the hand of Yahweh. I hear divine laughter. It's his MO.

Saturday, August 7, 2010

What are we going to do with Uncle Google?

Let's say Google has a monopoly in search. At some future point in time. Not 65% share, but 95%. The remaining 5% will all be Apple fan boys, and may be disregarded. So, Google has 100% of all searches that mean anything. What then?

Antitrust tools are mostly blunt instruments for breaking up monopolies. But, in this case, the monopoly is vested in the Algorithm. You can't split up the Algorithm and parcel pieces of it out to Google competitors. It is a singularity. What competitors would want is access to Google's proprietary database, but that would be like giving away the family jewels. Google wouldn't want to do that. Or would it?

In a way, Google does this now. They give access to the second derivative of their data by letting anyone buy keywords and see the demographics that they produce. This is a valuable service and Google invented it. By rights, the stock should be much higher than it is now, but I digress.

As a monopoly, the antitrust people would ordain that search be set up as a public utility which would then be allowed to collect all the data, even from the Apple fan boys. And the data would be made available to anybody, pretty much as it is now, by purchasing keywords in order to gain access to aggregate demographics, which they could use as they please. Of course, the business would continue to be one of placing advertisements as purchased by the advertisers. So you see, it's not the data that other companies need, it's the function to which they are applied. Google provides this function now, better than anybody else can, for prices which are set by the going rate. However, as a public utility, the profit that Google will make for providing these services will be regulated by the government. Fair and square. That should settle the hash for all search wannabes who think they are smarter than Google.

Of course, that won't happen any time soon, so Google has ample time to make zillions for its patient shareholders. But, when it does happen, Google will finally have to come up with other ways to make obscene amounts of money.

Friday, July 16, 2010

The Analysts Who Couldn't Shoot Straight

If Google doesn't make its earnings and revenue numbers, whose fault is that? Google's, for not hitting the analysts' marks, or the analysts', for guessing wrong?

I know what I would say, but that's not the way it works. The way it works, the average of all the analysts' estimates is taken as the magic number that Google is to strive for. Google, however, doesn't strive for magic numbers. And so we long distance runners in GOOG are taken out and shot. Until next Google Eve. It's simple, really.

So what was it this time? It was that Google hired more people during the quarter than the analysts thought they should. But wait a minute, isn't that what companies are supposed to be doing - hiring employees to grow the business and help Obama bring us out of recession?

Sure, margins take a little hit, but that's the way it works - spend money to make money. It's simple, really.

Wednesday, July 14, 2010

Google Eve

The posts of Google Eve Past stretch back in time. Years of fear, punctuated by an occasional hooray.

We have spent time at Dover Beach, following ignorant armies around. We have joined together in virtual weenie roasts on other beaches, singing "Kumbaya" into the night. We long distance runners in GOOG are bound by a common misery.

Tomorrow Google will report stellar earnings and the stock will go nowhere. I just hope Schmidt shows up this time. Let Larry and Sergey drink coffee with Jobs.

I can't summon up enough enthusiasm to stage a virtuality. No beach. No dancing girls.


Sunday, July 11, 2010

Smart phones concentrate the mind wonderfully

Let's talk interfaces.

The Windows UI was way better than MS-DOS. But Windows could have been way better than it was. They should have lost the mouse at the get-go. I'm sure that every first-time user of the mouse probably said to himself, why can't I just point? But the mouse came from the sacred days of Xerox PARC and it was a gadget and a market unto itself. Even Microsoft sells them.

A touchscreen interface has always been available in Windows from its earliest days, but nobody used it or even talked about it. Windows used the mouse.

That's the great thing about smart phones. They don't use the mouse. A smart phone with a mouse connected to it would have been laughed out of town. So we have what we should have had all along - our fingers, which were made for pointing, and whishing, and other simple tapping maneuvers. Moving our fingers is perfectly natural, but the mouse was done in by the form factor.

The form factors of smart phones are also responsible for another, more subtle revolution in interacting with these devices. The screen real estate is so small that web app developers have had to structure their processes into discrete steps, where each display involves only one step. Navigation is done from one level to another, not from page to page, and is handled by the operating system.

Consider the Back button in PC browsers, like IE, or even Chrome. Hitting the Back button there will cause a return to the last loading of the page, without regard to the app's structure and state, or the user's intention. That's what I mean about levels. They are defined to the Smart Phones' OS Back history by the application.

The result is a UI which makes you do one thing at at time. Nice. The opposite strategy was encouraged by Microsoft itself in its Office Suite - the first few iterations of MS Project, for example, put forth a terrifying collection of everything on a single screen. Every form and list that could be created and updated in this application was there in frames that could be expanded and collapsed at will. If you didn't know your way around, you were lost. Good riddance to all that.

Of course, the only problem with Smart Phones is the form factor. You can't do everything with them. But that doesn't mean that we'll be stuck with PC's forever. The PC's form factor is too big. The race is underway now, between Google and Apple, to find the smallest form factor that'll let you do everything.

I can see the end of the PC now. And, with it, Windows. Microsoft is Smith Corona, which is history for toast.

Saturday, July 3, 2010

Black Swan Killer

A couple of weeks ago, I speculated on the requirements and design of a system which could scale up to cleaning oil spills of any size.

Now, I'm both chagrined and gratified to learn that a component of the system I described already exists and has been available since long before I started thinking about it.

It's an ocean-going vessel that can skim huge volumes of oil. It meets the requirements that I laid down. Its name, on the back, is an in-your-face "A WHALE".

We need a fleet of these ships. We need a Manhattan project to build them. And they need to be maintained in constant readiness - to provide insurance for governments to authorize; oilmen to invest; fishermen to fish; tourists to come; and merchants to open their doors to receive them.

If "A WHALE" works, a fleet of these ships could take the Black Swan risk of finding oil off the table. I can't think of a better project for public money to subsidize and maintain.

It could change everything.

Tuesday, June 29, 2010

Advice to Google

This morning, while the market was tanking, I read an internet article about a rumor that Google is working hard on a social network that is intended to be a Facebook killer. The word is that Google will essentially reproduce the Facebook model.

I was moved to attach the following comment to the article:

If Google needs to put up an anti-Facebook (and they do), they should not copy Facebook. They should build a serious place for serious people, even businesses. Demote the "friend" notation which, in FB, limits the discourse to silliness, and elevate user-defined roles and relationships that can be multiply assigned within groups. Groups should be expanded to include user-defined "offices" and "organizations". Finally, tie the concept of "actions" to an easy-to-use work-flow engine, and promote it with all the people who work for a living and are candidates for Google apps which will be integrated with the system.

There it is, the once and future next big thing.

Thursday, June 24, 2010

With or Without the Money

GOOG close: $475.10

Damn. Another six weeks of winter.

As a certified Long Distance Runner in GOOG, at times like this, I often say to myself: why should I worry? I won't need the money any time during the next six months.

Which beggars the question: when will I need the money?

I expressed this thought a few posts ago and have been pondering it ever since. Since I retired, we have been living substantially on my secure government pension without having to impair the quality of our deliberately modest life at all.

Over the past 15 years, our net worth has greatly increased, but very little of it has been due to my stock trading prowess. I must do this for fun. I'm lucky. Even when I'm unlucky.

My confidence is that, over time, I won't lose so much of it that, when I need some, it won't be there.

Tuesday, June 22, 2010

Applespeak 2010

In 1984, during the Super Bowl, Apple put up a commercial that ripped the doors off, originating the tradition of earth-shattering commercials on that hallowed sports occasion.

The commercial showed a great hall, filled with row after row of identical, seated clones, all watching a large screen which projected the flickering image of a dictator, bellowing Newspeak to the throng. Then, down the center aisle, an athletic man, carrying a sledge hammer, ran toward the screen. As he neared the front, he began swinging the hammer around his head. When he let it go, the hammer made a graceful arc toward the screen and smashed it to smithereens. The inmates, deprived of their sustenance, began to howl, identically.

The message was clear: Steve Jobs was way cooler than Bill Gates.

So far in the new millennium, Steve Jobs is still the coolest guy around. But I'm here to tell you that the jig is up with these 1984 metaphors.

Today, in 2010, Larry and Sergey ought to remake the commercial with the two of them running down the aisle with hammers to throw up against a big screen of Steve Jobs, bellowing Applespeak to an admiring Bog.

Monday, June 21, 2010

How long, Google Eve?

A few minutes ago, Tim Collins noted on RealMoney that Google is testing a big technical level today. From my view, if GOOG closes below its 30-second moving average, we may be in for a bit of nasty weather.

This would be no concern of a long-distance runner in GOOG like me, if I didn't insist on following the play every day. Silly me. Come Google Eve, it will all be made straight.

Saturday, June 19, 2010

Cleaning the Black Swan

My experience with problems and problem solving is that problems always seem insoluble until the requirements for a solution are defined. When requirements have been defined, then practical, simple and economic solutions can, with a little ingenuity, always be found.

There's no reason to believe that this kind of thinking can not be applied to the catastrophe in the Gulf of Mexico.

In my opinion, the high-level requirements for an ideal "Oil Spill Cleaner" would be a system in which:
  • oil-befouled water would be "vacuumed" up and run through a process which would separate the oil from the water, with the cleaned water being returned to its repository and the oil being directed to tanks for reclamation.
  • Additional mechanisms would be designed to perform the same operations below the water surface to any arbitrary depth.
  • The process must be available and ready to be deployed immediately to any location where an oil spill has been detected.
  • The process must be scalable to contain oil spills of any size.
A system to fulfill these requirements can easily be imagined:

I see the basic component as a sea-going vessel, where the "gill" for taking in oil-spilled water would be a mechanism running the entire length of the vessel. The vessel would be designed so that it could move sideways through the water at a very low rate of speed. It would also be designed to move forward through the water in the normal way at higher rates of speed. Finally, the vessel would be designed as a large oil tanker for receiving and storing oil.

A vessel, so designed and outfitted, could motor normally and quickly to a spill location and then begin moving sideways at a slow speed to take in a broad section of oil-water for processing through its vessel-long "gill". It would not be necessary to build longer vessels for larger spills - the vessels would be designed as components that could be deployed in larger numbers to scale up to large spills. The strategy would be to deploy a sufficient number of vessels to encircle the spill. (Note that, with such a system, most oil-spills could be contained by a small number of vessels while the spills were still small.)

For oil that collects below the water surface, it may be efficacious to design an additional, submersible component that could vacuum up oil at any arbitrary depth. These components could be made relatively small so that they could suck up a quantity of oil, and then return it to the "mother" vessel by making frequent round trips. The "mother" vessel could process surface oil at same time that it was deploying and receiving oil obtained by the deep-water submersibles.

Since the system would result in the reclamation of spilled oil, the process could pay for itself. However, since actual spills will be relatively rare events, it would not be profitable for even a consortium of private corporations to design, build and maintain such a system in constant readiness. Governments will have to subsidize the entire process. They will pay for the system, but, of course, they should contract the design and development to the private sector.

The question may arise as to whether it would be feasible even for governments to maintain a system that might never be used. But that's not the issue. Such a system will be required for governments to be willing to allow deepwater oil wells to be used in the future.

Another question involves the feasibility of testing such a system in the absence of a major oil spill. The testing will be crucial for convincing the governments to put their faith in the system.

This brings me to my final thought: I say, give the job to Google to head up the design and martial the required, expert resources for development. Tell Larry, Sergey and Eric to have a prototype ready for testing by the end of the month. We may never again have a better test bed than we have today in the Gulf of Mexico.

Friday, June 18, 2010

BP's Black Swan

Congress is beating up BP on the charge that BP should have built in the available technology that could have eliminated the risk of the catastrophe that has happened. But that's not the way corporations work. I'm sure that they calculate the probable risks of untoward events occurring, and they measure these risks in relation to the expense of eliminating them.

You can't mitigate all risk, so it's a question of how much can reasonably be tolerated. No corporation allocates capex to defend against a meteor hit on its corporate headquarters. In like fashion, I'm sure that BP did not plan to prevent an oil spill on the scale of what occurred, on the rationale that nothing like that has ever happened before. We thought that the financial industry is the only area where Black Swan Events can arise. Not so - any complex enterprise can have them too.

The Black Swan swam into BP's waters. BP never saw it coming.

Monday, June 14, 2010

Gimme a dozen IPads

One reason Apple stock is a perpetual high flyer is that its products are the darlings of stock traders. I remember another stock with products that Wall Street traders went gaga for and it, too, had a great run that defied gravity - Krispy Kreme Doughnuts.

Sunday, June 13, 2010

Business to Government: Get Out of Dodge

Unemployment remains in the vicinity of 10%. In the opinion of everybody, that is too high.

But consider this: the ranks of the unemployed are now swelled by a group of people who, in former times, were not looking for work, because they didn't have to work - they were retired. This time around, they want to be retired, but they're looking for work because their nest eggs have been savaged. These folks are Baby Boomers - and there's a lot of them.

Baby Boomers are a bubble all to themselves. They're now reaching retirement age, but they are staying in the job market and clogging it up, and a lot of them are not finding work. They're making that unemployment number higher than it would otherwise be.

The question is, why are these people unable to find work? Because businesses are not hiring. Business collectively has a staggering amount of capital laid up. They have the wherewithal to hire us right out of this recession, but they're not doing it because they are fretting that the Government is not subsidizing them further in the process.

Business wants the Government to give them all the money, with no strings attached, before they will start.

The message from Business: No more trickle-down until the Government leaves town.

Friday, June 11, 2010

From the Undisciplined Trader's Handbook

Homily for the day:

Always trade what you see, what's in front of you right now.

That's what the smart guys say. But when I, the Undisciplined Trader, apply this rule, I see a five-cent gain and I sell to protect it. What I don't see, is the stock five bucks higher. So I'm nickel-and-diming when I should be big-timing.

I need to learn how to trade what I don't see.

Thursday, June 10, 2010

BP Tube

"Why don't we just plug up the tunnel
with you on one end and the Commandant on the other?"
Animal to Sgt. Schulz in "Stalag 17"

Everybody is coming up with their own solutions for plugging the BP leak. Meanwhile, on RealMoney, Tim Collins is trying to master the arithmetic involved in determining the amount of oil that's currently being captured by BP's engineers and how much is still leaking.

Forget about that - all we need to see is that pipe in the video with nothing coming out.

Wednesday, June 9, 2010

Musing, into the close

This morning, things were looking up.

GOOG was holding its own, around 485. My big oils (XOM and COP) were moving with the pop in the price of oil. And there were early rumors that some oil company in the Gulf of Mexico is going to sue the Government to remove the moratorium on drilling, so my little oil (ATPG) shot up 12% right out of the box. ATPG's daily chart in Google Finance was a thing of beauty - a picture of a short squeeze in motion, which is to say, a vertical line, straight up. Even Citibank popped 5%, which is to say, +17 cents.

This afternoon, around three, something happened. The Euro declined. Or Steve Jobs caught a cold. I'm not sure. But the market went to hell. Everything went down.

Fortunately, I don't need the money today. Chances are, I may not ever need the money.

Friday, June 4, 2010

Just in from the bleachers

Right now, in midafternoon, the DOW is down a bracing 311 points. Another couple of days like this and we'll be looking at Cramer's (projected) bottom, from below, looking up.

And, as the DOW is drum major to the band, everything is looking puny today. XOM and COP are both down big, mainly because I bought more of them yesterday, two points higher. However, GOOG and ATPG, of late descending faster than the speed of falling, have apparently cast off ballast and are resisting the trend. They're still down, but inveterate watchers of these stocks will testify that they are giving up ground grudgingly.

That's the way it looks to the Undisciplined Trader, me.

Saturday, May 22, 2010

GOOG Gets No Respect

No respect at all.

Traders and Hedgies may know their charts, but they don't know GOOG. Witness this exchange between Stupid Trader and Google Guy:

Stupid Trader: "Google has only one business - it's just an advertising company, like the New York Times."

Google Guy: "Google is an automated, infinitely scalable vacuum cleaner that extracts cash from the world. They don't need another business. Next question."

Stupid Trader: "Google is cockamamie. A bunch of clowns. They give everything away free. They give their employees Friday off. They give prizes to spaceships. They give their CEO a pass on earnings call day."

Google guy: "Everything Google does is tactically and strategically designed to increase traffic to their vacuum cleaner. Next question."

Stupid Trader: "They can't execute."

Google Guy: "Yes, they can."

Stupid Trader: "They put NEXUS out with no customer support service."

Google Guy: "So?"

Stupid Trader:

Google Guy: "Next question."

Stupid Trader: "Apple will rule the world."

Google Guy: "Apple is a gadget-maker. They don't know anything about vacuum cleaners. Next question."

Stupid Trader: "China."

Google Guy: "Google."

Stupid Trader: "They took themselves out of the biggest market in the world."

Google Guy: "No, they didn't. They just moved to a nicer neighborhood. Google still has 30% of China. Are you really buying Baidu?"

Stupid Trader: "I was thinking about it."

Google Guy: "Next question."

Stupid Trader: "Google is too big. They can't keep growing every year like they used to."

Google Guy: "Oh, yeah?"

Sunday, April 25, 2010

Conversation with My Hair Cutter

- I've decided to get my hair cut short.

- How short?

- I'm not sure. Real short.

- Why you want to do that?

- I don't want to comb it anymore.

- You won't like.

- Why not?

- Won't look good. You got bald spot.

- I don't care about looking good anymore. I want convenience.

- Won't look good. Bald spot show through.

- Yes, but now I'm looking at a severe comb-over situation. Bald might be better.

- Won't look good. You won't like.

- I don't care.

- What about beard?

- Keep the beard.

- You won't like. Won't look good.

- I don't care.

- Make you look old.

- I don't care.

Friday, April 16, 2010

Google Day

The day after Google Eve is Google Day, when earnings are released. Google Day is like Groundhog Day, in that the same shit keeps happening over and over again. The earnings blow through the roof and the stock tanks. Like Bill Murray, I'm slowly coming to a state of acceptance, even celebration, of this.

What was it this time? I'll tell you: Schmidt didn't show up and they didn't tell us about it ahead of time. That's it. The investing world went into a tizzy. Even the Fast Money guys, two of whom are long GOOG, were clucking about it. Everybody agreed that it really wasn't bad, but it sounded bad.

When is everybody going to stop hyperventilating and realize that, when Google went public in 2004, they made it clear that they had a big job to do, revolutionizing the Internet, and they were going to spend all their time on that and none of it worrying about investor relations. That means no meetings with agendas on deciding when to announce the CEO's absence from the earnings show.

Schmidt was probably having a latte somewhere with Jobs, talking about interesting stuff.

Wednesday, April 14, 2010

Google Eve

Google Eve is upon us again.

All is quiet on the Google front. No gatherings or celebrations are planned this night. Not that there isn't cause, but we GoogleHeads have learned to take these events in stride. The word going out is for an evening of quiet meditation in anticipation of a good result tomorrow.

Think on this:

Friday, March 19, 2010

The Joy of Retirement

I know today is Friday.

It's not Saturday or Sunday because the stock market is open.

It's not Monday because I'm not celebrating the end of the weekend.

It's not Tuesday or Wednesday or Thursday because I'm not thinking that next weekend is still a few days away.

I know it's Friday because I take the trash out on Thursday evening and, this morning, my empty trash can is in the middle of the street.

Tuesday, March 2, 2010

Smart Money

The smart money, which is to say the guys who predicted the Dow would go to 5,000 in 2008, is now saying that GOOG is destined for 480 soon.

Yesterday's action made me think that we have seen the near term low at 520. Today's action - up 9 plus - makes me think I'm right. If GOOG closes strong (9+), I'll be reasonably certain of it.

The smart money doesn't see it that way.

Monday, March 1, 2010


To the Lord let praises be.
It's time for dinner now let's go eat.

My little sermon for today has for its text the homily:

Never let a trade turn into an investment.

What does this mean? It means you should never deceive yourself into thinking that a dinky little stock you just bought for a few days is, in fact, a long-term investment, long enough at least for you get all your shekels back. It expresses the wisdom that this is a recipe for riding a loser all the way to the ground.

I confess that I have deluded myself in just this way, more than once. And I repent of it. However, my experience has shown me that the rule only applies to stocks that are losers. If your stock goes down just because it is temporarily in what Cramer stoops to call the Bow-Wow Chateau, then, I humbly suggest, that you have a recipe for selling out at the bottom.

A more comprehensive strategy would allow an investment to be held as a trade if the outlook is bright in the near term, but as an investment, even if the near term is grim, if the long term is great. And it would be allowable to change a trade into an investment or an investment into a trade, as the situation warrants.

I have applied this strategy to trading-and-investing ATPG. I am now in investment mode, but am constantly re-evaluating the situation, going forward, to determine if I should go back into trade mode.

So far, I have been successful with this strategy. But, considering that I am an undisciplined trader, I have not been playing with enough shekels to really hurt myself.

ATPG Trades

Thursday, February 4, 2010

Unnatural Action

Last Friday, I bought 1000 ATPG at 14.65. I had already made some walking around money with this stock and this was cheaper than I had bought it before. It had come down from the region of 20 and the expectation was that it would regain that promontory in time.

On the other hand, the market was on the cusp of a correction of unknown magnitude which could drag everything down with it. And did I say that oil stocks make me nervous? So, on Monday, after the stock had spiked up at the opening, I sold my stake for 15.20, with the idea that I might be able to buy it back lower. The notion that the managment of this company was playing a very risky game with shareholders' money was not in my calculations at the time.

Naturally, after I sold, the stock kept climbing and closed at 15.52, its high for the day. It was time to try a little patience. On Tuesday, it kept climbing and achieved 16.25 at one point. Then, at 3:48 PM, just before the close of trading, ATPG management issued a press release and, in the remaining 10 minutes, the stock dropped like a rock and closed at 15.47. In after hours trading, the stock continued to slide, below 15 - way below. I quickly read the press release and it seemed benign: production up by a third and some senior debt was being reconfigured for the long-term benefit of the company. I checked the Yahoo! Message Board for ATPG to see what kind of chatter was going on and they seemed as puzzled (i.e., ignorant) as I was. Still, the going price seemed to stabilize in the low 14's, so I bought my thousand back for 14.25. At the close of after hours trading, it settled in around 14.80. I felt gratified.

Wednesday, I tried to find out what was going on with the company. There was precious little news, but the tape never lies. Eventually, I read a piece that said, sure, production was up a third, but it was expected to double. And the financial maneuvering was a panic move by management to stay afloat when the expected production wasn't there to service their debt. I quickly sold out at 14.64 and was glad to get it. Right now, it's going for 13.16.

If you're smart and know what you're doing, you don't have to be lucky. If you're not smart, it really helps to be lucky. The moves I made since last Friday weren't completely stupid, but blind luck got me out of a treacherous situation with a small gain, rather than a big loss.

I don't plan to trade ATPG anymore. I promise.

Friday, January 29, 2010

Natural Law

Well, push has come to worse, and worse has come to shove. I bought back GOOG at 556 and now it is being exchanged at 529. You can't pick the bottom. That's a law of nature.

But one thing worked out today. Last November, I bought a bunch of ATGP at 14.82. Then, in December, I sold it for 15.85, because oil stocks make me nervous. To my chagrin, it ran up to 20, after that. Then it started selling off a couple of weeks ago and has dropped like a rock.

Today, I bought the bunch back for 14.65. Nice. But don't worry, it closed at 14.47. The sanctity of natural law has been preserved.

Saturday, January 23, 2010


Sometimes, on Google Eve, when our campfire vigil comes to a close, we don't have to worry about dousing the fire. On those occasions, the market does that for us.

Last week, I had already bought an extra hundred shares of GOOG in anticipation of a great earnings report that would bode well for the future, if not beyond. I waited until we had a selloff from the near-term high of $629 and picked up the hundo for $580. It looked good because Karen Finerman, of Fast Money, was buying at $600.

Then, on Thursday, a lot of things hit at once and the market (which was down already) got ugly. Midday, GOOG was struggling to hold $578, so I put in an order to sell my hundo at $582. If it got there, fine. If not, I'd hunker down.

GOOG spiked to $586 and my order executed. In the next hour, earnings were released and the stock got Meislered, which is technical for "whacked". At 4:20 PM, I bought the hundo back at $556.45

Most of the day Friday, GOOG stayed above my purchase price. But at the close, it slumped to $550.01. In the after hours, some stupid news from Larry and Sergey, that could have waited until Monday, came across the wire and traders, still around at that hour, shorted GOOG down to $545.25, on the hope that there's worse to come.

Wednesday, January 20, 2010

Google Eve

Chances are better than expected that Google will report quarterly earnings tomorrow after the bell. So, Google Eve is upon us, once again.

The bean counters have, to a man, turned giddy about Google's performance last quarter. But the market has turned churlish toward festiveness of any kind, so we must expect a period of downward pressure to satisfy the Schadenfreudians among us.

But we need not be concerned about that. It is customary, on Google Eve, to gather around the campfire, under the Google Sky, sharing Google stories with believers and skeptics alike. Karen Finerman will be on hand, this time, to testify about her conversion from skeptic to Google shareowner at $600. Google, she will declare, is now a value stock. It's really different, this time. Be there.

Tuesday, January 12, 2010

Troglodyte Implications

I just printed a conversation in GMail and it worked very well. Just what I wanted and nothing more. But, as the pages were printing, I started thinking, what's the point of printing anything? In the very near future, all communications will connect to everybody, on-line. Printing will be instant garbage. Why would anybody do it? So that somebody could read it? Why would they do that? Are they not connected? Who are these people? Meanwhile, I needed to print the damn thing, and so I did, despite the troglodyte implications.

Monday, January 11, 2010

The Undisciplined Trader

That's me. In the recent unpleasantness of last year, I called every shot right until the last one. In the maw of the panic, I was selling when I should have been buying. I've been out-of-sync with the market ever since.

That's why I'm still overwhelmingly in cash, lent out for no interest at all. It's why I still own only two stocks (GOOG and NLY), though they have both been big winners from the lows of last March.

A couple of weeks ago, I sold a thousand NLY. I did that before and was able to buy it back cheaper. This time, the stock refuses to sell off in response to my sale.

A month ago, I also bought a thousand ATPG around 14.82. I watched it go almost to 17 and then got nervous when it started dropping. Oil stocks make me nervous. I got out at 15.85. The stock then went to 20.

I could still get right with these stocks. This is where patience comes in. All I need is a good pullback in the market.

On the other hand, last week, I looked at Google at 625 and thought about selling a hundred, but I knew I wasn't going to do that within a couple of weeks of what is expected to be the biggest earnings party that Google has thrown in several years. If I had sold the hundo, I could've bought it back any time today for 595. But I don't care. I want to go to the party.

Saturday, January 9, 2010

Barron's Google Page Rank Index

My subscription to Barron's weekly ran out a few weeks ago, but the fool keeps delivering it to me. That means I can report on the Barron's Google Page Rank Index.

Every week, Barron's includes on one page an index of companies that are cited in that issue of the magazine. Along with each company cited, the page numbers of the citations are shown. In other words, an index. Or you could think of it as an old media, pitiful version of Google's page rank mechanism by which everything in the world is rated.

I check this index every week to see how many times Google has been cited. I think of it as an estimate of Barron's opinion of Google at any given time. Barron's usually has a low opinion of Google. This is evidenced by the large amount of Barron's space given to Fred Hickey, when Fred Hickey, in the opinion of most responsible analysts, is a fool. Right up there with Peter Schiff. Fred Hickey is on record as saying that fair value for Google is $25. Fair value for Google has never been $25.

Most weeks, Google will be cited two or three times less than Apple. Sometimes, it is not cited at all. Often, when Google does get cited, it's somebody badmouthing the company. Like Fred Hickey.

Lately, the situation has been improving. Today, Google is mentioned five times, two more than any other company in the list, including Apple. And the mentions are good. On page L14, Eddie Brown, who used to appear on Rukeyser's show, says that Google "is doing everything right."

This is part of a groundswell of improvement in traders' opinions of Google's chances from the current level of $600. Karen Finerman, on FastMoney, is downright evangelistic, telling everybody to just buy it. Pete Janarian agrees, with the stipulation that options be purchased. Finerman says, "Just buy it." She didn't used to be that way. Cramer pegs it for $750.

We've been here before. But, this time, it will stick. Barron's Google Page Rank Index confirms it.