Aug 26, 2010
Aug 25, 2010
Sleeping with the Enemy
The time came recently to adjust my financial risk tolerance upwards.
The exchequers of His Obamaness have finally abandoned all but the most pro forma pretense that the American dollar still represents a significant unit of actual value. One result is that a still marginally solvent man has watched his interest income decline to zero or so near as to make no difference.
Why should banks and businesses pay 5 or 6 per cent interest on (once) safe CDs and notes when Ted and Ben are there at the Federal Reserve window, cheerfully shoveling out free greenbacks to every dense dingbat with a corporate business card?
Why should banks and businesses pay 5 or 6 per cent interest on (once) safe CDs and notes when Ted and Ben are there at the Federal Reserve window, cheerfully shoveling out free greenbacks to every dense dingbat with a corporate business card?
So it's back to working the market with the modest goal of replacing a few hundred dollars a month lost in the bubble, a cauldron aided and abetted, if not almost totally caused, by idiotic decisions on the Potomac. A smirking nod to the clowns who believed they could afford McMansions on a McSalary.
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If you're going to invest, you study. You become slavish to the protracted fairy tale usually known as the "financial press." Part of this morning's work is research on an evil companion to statism, Cogent Communications, COGT, NYSE, $8.74.
This investment service has a spiel on COGT and a couple other "underpriced" stocks which reads in part:
Facing another day of red ticker symbols, I went looking for some stocks that appear to be trading well below any sort of logical level. When the market stabilizes and logic returns, it's these oversold names that are often some of the strongest rebounders. It happened in 2002 and again in 2008, when many stocks traded below book value or for not much more than the cash on their balance sheet. Increasingly, the summer of 2010 is feeling like one of those blue market periods. So let's look at some of these ultra-cheap stocks. (My emphasis.)
So here we have a published financial advisor who ignores two painful realities any battle-scarred investor understands deep in his bones.
(A) Published corporate balance sheets often contain lies that make a politician look like Diogenes. One stock in which I am interested, ID, claims a book value of several dollars a share. Read the actual balance sheet, strip out the "good will" and the "intangibles" and you're left with a piece of paper representing a negative value.
(B) That cash on the balance sheet is tissue paper merely superficially resembling the money we used to have in our wallets. Thank you Ben. Thank you Tim. Et al.
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However, it's my view that COGT, for other reasons, can be bought now and profitably traded. After all, it's a growth industry -- fingerprinting citizens to help government keep track of the evil you do, such as making fun of congress and presidents, past and present.
(Looking in mirror: "Hi, ho.")
If it will help you think less harshly of me, I promise to continue investing in today's version of the French peasants' gold horde -- primers, lead, powder, bricks of .22, and "value packs" of 12 gauge. I already have a lot of canned tuna and chicken.
(Looking in mirror: "Hi, ho.")
If it will help you think less harshly of me, I promise to continue investing in today's version of the French peasants' gold horde -- primers, lead, powder, bricks of .22, and "value packs" of 12 gauge. I already have a lot of canned tuna and chicken.
Root Hog or Die
Most of us, even my fellow raving libertarians, are somewhat more compassionate than that toward unfortunate people -- at least the poor who give productive living a diligent shot.
The Unwanted Blog offers a suggestion. We end the food stamp program on grounds that it is routinely abused. (I venture to add that it is also part of the federal and state Full and Lucrative Employment Program for otherwise unemployable bureaucrats.)
He suggests we offer actual food instead, namely the "meal loaf" made famous by Lockup for bad guys who won't behave even in prison. It is a complete meal all done up in a blender. Think of ham hocks, peas, bread, a spud, and your dessert brownie all happily homogenized and served at armpit temperatures. Your coffee is poured over the whole shebang. Why not? The Hope is to Change hunger to good nutrition, and the meal loaf will do it.
Which provides the peg for a story.
-0-
Marv M.and I were undergraduates at a northeast Iowa university* where we pursued BAs while always working at at least two jobs. I tended bar, worked in the college electrical shop and made a pittance teaching scuba. Still, tuition, books, rent, interminable fees, and the cost of keeping my '56 Ford on the road kept me broke. OK, so the occasional coed played her pocket-emptying part, but, hey, a man must be part of the passions and actions of his times, right?
So I can't imagine that one spring day I trotted on down to Olson's Sporting Goods on the bank of the Cedar River and bought a WW2 Polish Radom for about $30 (sigh). ** I suppose I was motivated by being, for one of the few times in my life, a walking gun-free zone.
Mr. Olson was a kindly soul who made a fair living is his sprawling river bank shop selling hunting, fishing, and camping gear. He also rented boats and had a scuba compressor. The benches along his sea wall were routinely occupied by bank fishermen, trying out his bait, drinking his beer and pop and tossing the empties into the black water. All this began to coalesce to our benefit when he grumped that one of his rental customers, trying to replace a shear pin, dropped a ten-dollar prop into the Cedar. (Why didn't the a**hole row back and let me fix it here?" )
He wondered if I'd be willing to dive for it for half the value, my 15 minutes as Travis McGee. Sure.
I didn't find it, but mucking around in the silt revealed the most amazing trove of pop and beer bottles, worth a solid five cents each anywhere fine beverages are sold. Air was a dollar tank, and at depths involved -- around ten feet -- a tank lasted well over an hour. So the the profit margin was good. We mined that lode four or five times, Marv tending a line for me and hauling up booty, me working the rocks and mud by feel.
A typical dip yielded 100 bottles and more, call it five bucks after air expense. Five dollars would swap for a couple pounds of fat hamburger, a can of tomatoes, a big onion, and two boxes of Creamettes, with a little beer change left over.*** That was the year I learned to cook Hungarian. That was another year in which we didn't often go hungry.
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If this sounds like a BS pitch for retroactive nobility, so be it. It happened, and I have taken the lesson seriously to heart. In fact, it colors my views on social justice to this day, even to modifying my opinion about meal loaves for the poor.
Anyone who goes diving for deposit bottles in order to make goulash can still get food stamps.
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* -- Actually, it was a pretty good college with pretensions and eventually became a half-assed university.
** -- Buying a 9mm in those days carried the perceived risk that you might have trouble finding ammunition for that oddball Eurocaliber.
*** -- For those who find this unbelievable, remember that it was in the days before Lyndon Johnson read John Maynard Keynes and learned he could hide the cost of the Vietnam War and his Great Society by installing a Borg-Warner overdrive unit in the presses. Later presidents have, of course, giggled with delight at their inprovisations on the theme.
He suggests we offer actual food instead, namely the "meal loaf" made famous by Lockup for bad guys who won't behave even in prison. It is a complete meal all done up in a blender. Think of ham hocks, peas, bread, a spud, and your dessert brownie all happily homogenized and served at armpit temperatures. Your coffee is poured over the whole shebang. Why not? The Hope is to Change hunger to good nutrition, and the meal loaf will do it.
Which provides the peg for a story.
-0-
Marv M.and I were undergraduates at a northeast Iowa university* where we pursued BAs while always working at at least two jobs. I tended bar, worked in the college electrical shop and made a pittance teaching scuba. Still, tuition, books, rent, interminable fees, and the cost of keeping my '56 Ford on the road kept me broke. OK, so the occasional coed played her pocket-emptying part, but, hey, a man must be part of the passions and actions of his times, right?
So I can't imagine that one spring day I trotted on down to Olson's Sporting Goods on the bank of the Cedar River and bought a WW2 Polish Radom for about $30 (sigh). ** I suppose I was motivated by being, for one of the few times in my life, a walking gun-free zone.
Mr. Olson was a kindly soul who made a fair living is his sprawling river bank shop selling hunting, fishing, and camping gear. He also rented boats and had a scuba compressor. The benches along his sea wall were routinely occupied by bank fishermen, trying out his bait, drinking his beer and pop and tossing the empties into the black water. All this began to coalesce to our benefit when he grumped that one of his rental customers, trying to replace a shear pin, dropped a ten-dollar prop into the Cedar. (Why didn't the a**hole row back and let me fix it here?" )
He wondered if I'd be willing to dive for it for half the value, my 15 minutes as Travis McGee. Sure.
I didn't find it, but mucking around in the silt revealed the most amazing trove of pop and beer bottles, worth a solid five cents each anywhere fine beverages are sold. Air was a dollar tank, and at depths involved -- around ten feet -- a tank lasted well over an hour. So the the profit margin was good. We mined that lode four or five times, Marv tending a line for me and hauling up booty, me working the rocks and mud by feel.
A typical dip yielded 100 bottles and more, call it five bucks after air expense. Five dollars would swap for a couple pounds of fat hamburger, a can of tomatoes, a big onion, and two boxes of Creamettes, with a little beer change left over.*** That was the year I learned to cook Hungarian. That was another year in which we didn't often go hungry.
---
If this sounds like a BS pitch for retroactive nobility, so be it. It happened, and I have taken the lesson seriously to heart. In fact, it colors my views on social justice to this day, even to modifying my opinion about meal loaves for the poor.
Anyone who goes diving for deposit bottles in order to make goulash can still get food stamps.
---
* -- Actually, it was a pretty good college with pretensions and eventually became a half-assed university.
** -- Buying a 9mm in those days carried the perceived risk that you might have trouble finding ammunition for that oddball Eurocaliber.
*** -- For those who find this unbelievable, remember that it was in the days before Lyndon Johnson read John Maynard Keynes and learned he could hide the cost of the Vietnam War and his Great Society by installing a Borg-Warner overdrive unit in the presses. Later presidents have, of course, giggled with delight at their inprovisations on the theme.
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