You're waiting for a bus. A couple people are standing under the shelter, but you choose not to. It starts to rain.
Do you step under the shelter? Or, do you stand outside and rail about the advantages the other people have?
Obvious to anyone? Maybe not. I was at a cocktail party and was introduced to someone who immediately launched into how the government, media and local football team were all being mismanaged. It was all canned stuff he parroted off some radio show or web site.
Predictably, he got around to how "big oil" was gouging us and still unfairly receiving government aid in all kinds of ways. Fine. If you know that to be the case, go buy energy stock and make the choice of benefiting from it instead of bleating about it.
Step out of the rain.
Saturday, September 29, 2007
Thursday, September 20, 2007
Okay, I hear you
You're more interested in future market picks than past. I don't want to be responsible for anyone else's outcomes, so I give tips out about as readily as I recommend restaurants or set up blind dates.
But, I have read the entrails and placed my next big bet. Things are contantly shifting and the trick is to detect that window of opportunity before the market corrects.
Look for an industry where there is a key ratio - make that a basic ratio - upside down. That's as much as I'll say.
But, I have read the entrails and placed my next big bet. Things are contantly shifting and the trick is to detect that window of opportunity before the market corrects.
Look for an industry where there is a key ratio - make that a basic ratio - upside down. That's as much as I'll say.
Tuesday, September 18, 2007
Not so tiny bubbles
Let’s see, the stock market was tanking, mutual fund managers were moving investment offshore and there’s an election year around the corner. Gentleman, place your bets. If there was ever a time to get bullish, this was it.
Of course, I was relying upon the Fed to do the equivalent of shooting a hole in the bottom of a leaky boat to let the water out. When it appeared they might actually do something that resembled long term strategic thinking, Greenspan’s in-your-face book came out and nudged them over the edge. Thank you and excuse me while I cash in my chips.
While the bet paid off even better than I imagined, I just can’t get all that giddy about it. I see this as more of a political move than sound fiscal policy for the country. Isn’t this how we created the bubble?
If Deion Sanders was Prime Time,” then Alan Greenspan must be “Subprime Time.” His recent statement that he didn’t see the danger of the subprime mortgage loan bubble coming down the road is like Timothy McVeigh claiming surprise at the destruction of the Murrah Federal Building. A band aid for the construction and financial lobbyists is going to create even bigger bubbles for the future. Better to bite the bullet now and deal with the fact that we’re a nation in debt, publicly and privately.
That aside, we often focus on the hit taken and overlook everything else. Mortgages are the tip of the iceberg. Credit card debt and vehicle financing are part of the house of cards we’re resuming construction on.
Greenspan’s suppressed interest rates were the miracle pill for a vehicle industry desperate to move iron. Mortgaging their future, the manufacturers stoked the subprime boiler. Where 20% down was once the floor, single-digit became common. Or, just use “your discount” as the phantom down payment, essentially eliminating any requirements or screening.
Instead of marketing based upon the price of a vehicle, it became a matter of monthly payment figures; deceptively palatable numbers. Those could be made tantalizingly low by stretching the term of the loan up to and beyond five years. This is dangerous territory, because the value of the vehicle would decline below the loan balance, leaving the borrower “upside down.” And, to make matters worse, borrowers were offered the option of rolling their lethal unpaid balances into a new loan if they would buy newer vehicles. A discounted interest rate also helped skirt some of the emerging restraints on repossession.
And then there came the big push of the lease, which not only took the monthly payment perception tack, but also made the disguised repo virtually automatic. Lenders could recoup the interest rate discount on the back end with questionable charges for “excessive wear and tear.”
While mortgages get the press as the bubble, they are just the first domino. Subprime borrowers will let their housing and credit cards go before their wheels. A significant number have multiple evictions in a year. So, the burst of the mortgage bubble is not the end, but a harbinger.
Subprime borrowers will also skip a mortgage or rent payment (same thing, since the landlord needs the rent to make the loan payment on the property) before their cell phone bills. Ironically, that’s how lenders are skip-tracing them – cell phone billing addresses.
No one knows for sure. But, I’d take the profits now and gird for the downhill when the chickens come home to roost.
Of course, I was relying upon the Fed to do the equivalent of shooting a hole in the bottom of a leaky boat to let the water out. When it appeared they might actually do something that resembled long term strategic thinking, Greenspan’s in-your-face book came out and nudged them over the edge. Thank you and excuse me while I cash in my chips.
While the bet paid off even better than I imagined, I just can’t get all that giddy about it. I see this as more of a political move than sound fiscal policy for the country. Isn’t this how we created the bubble?
If Deion Sanders was Prime Time,” then Alan Greenspan must be “Subprime Time.” His recent statement that he didn’t see the danger of the subprime mortgage loan bubble coming down the road is like Timothy McVeigh claiming surprise at the destruction of the Murrah Federal Building. A band aid for the construction and financial lobbyists is going to create even bigger bubbles for the future. Better to bite the bullet now and deal with the fact that we’re a nation in debt, publicly and privately.
That aside, we often focus on the hit taken and overlook everything else. Mortgages are the tip of the iceberg. Credit card debt and vehicle financing are part of the house of cards we’re resuming construction on.
Greenspan’s suppressed interest rates were the miracle pill for a vehicle industry desperate to move iron. Mortgaging their future, the manufacturers stoked the subprime boiler. Where 20% down was once the floor, single-digit became common. Or, just use “your discount” as the phantom down payment, essentially eliminating any requirements or screening.
Instead of marketing based upon the price of a vehicle, it became a matter of monthly payment figures; deceptively palatable numbers. Those could be made tantalizingly low by stretching the term of the loan up to and beyond five years. This is dangerous territory, because the value of the vehicle would decline below the loan balance, leaving the borrower “upside down.” And, to make matters worse, borrowers were offered the option of rolling their lethal unpaid balances into a new loan if they would buy newer vehicles. A discounted interest rate also helped skirt some of the emerging restraints on repossession.
And then there came the big push of the lease, which not only took the monthly payment perception tack, but also made the disguised repo virtually automatic. Lenders could recoup the interest rate discount on the back end with questionable charges for “excessive wear and tear.”
While mortgages get the press as the bubble, they are just the first domino. Subprime borrowers will let their housing and credit cards go before their wheels. A significant number have multiple evictions in a year. So, the burst of the mortgage bubble is not the end, but a harbinger.
Subprime borrowers will also skip a mortgage or rent payment (same thing, since the landlord needs the rent to make the loan payment on the property) before their cell phone bills. Ironically, that’s how lenders are skip-tracing them – cell phone billing addresses.
No one knows for sure. But, I’d take the profits now and gird for the downhill when the chickens come home to roost.
Saturday, September 15, 2007
Coincidence
Doctor J sat across from me, looking at the photographs of kayaks on my wall. Not the basketball player, but a psychiatrist who works for me and was waiting for me to complete a phone call. I hung up.
“That silver boat is pretty.”
“Yes, but the main reason for buying it is that it does a lot of things pretty good and doesn’t get damaged easily.”
“Sounds like the reasoning for selecting your number two (associate director).”
“I suppose you could say that.”
“You may use the same yardsticks for picking your employees or friends as you do your kayaks.”
“That would be for you to say.”
She smiled and shrugged. “No, for you.”
We completed our business and she headed back into the fray. I turned and contemplated the pictures.
There was the Yukon, the boat that merits the longest tenure in a fleet that I continuously tweak. It’ll carry a load under all kinds of conditions and remains pretty steady. Hmmm. I could think of a paddling friend like that. She willingly helps shoulder all our burdens and is the rock of the group.
Then, there’s the Night Hawk. Extremely high quality, but also gorgeous, sleek and sexy. The image of a woman I know sprang to mind.
The Fun is aptly named. Bouncy, adventurous and just a whole lot of fun bundled in a smaller package. Just makes you smile. Another paddler I know.
The Tourer has many good qualities and is very predictable. My ex.
The Pyranha is another fun kayak, but puts me in the mood to try things I probably shouldn’t. I can think of several guys like that.
With the Ricochet, everything is about setting and achieving high goals. One of my best friends incarnate
Probably just coincidence..
“That silver boat is pretty.”
“Yes, but the main reason for buying it is that it does a lot of things pretty good and doesn’t get damaged easily.”
“Sounds like the reasoning for selecting your number two (associate director).”
“I suppose you could say that.”
“You may use the same yardsticks for picking your employees or friends as you do your kayaks.”
“That would be for you to say.”
She smiled and shrugged. “No, for you.”
We completed our business and she headed back into the fray. I turned and contemplated the pictures.
There was the Yukon, the boat that merits the longest tenure in a fleet that I continuously tweak. It’ll carry a load under all kinds of conditions and remains pretty steady. Hmmm. I could think of a paddling friend like that. She willingly helps shoulder all our burdens and is the rock of the group.
Then, there’s the Night Hawk. Extremely high quality, but also gorgeous, sleek and sexy. The image of a woman I know sprang to mind.
The Fun is aptly named. Bouncy, adventurous and just a whole lot of fun bundled in a smaller package. Just makes you smile. Another paddler I know.
The Tourer has many good qualities and is very predictable. My ex.
The Pyranha is another fun kayak, but puts me in the mood to try things I probably shouldn’t. I can think of several guys like that.
With the Ricochet, everything is about setting and achieving high goals. One of my best friends incarnate
Probably just coincidence..
Friday, September 14, 2007
There's gold in them thar hills
The media pundits are wringing their hands about how the recent mortage crisis is costing jobs and money, and what the government needs to do about it. I'm having deja vu and am salivating. This is looking something like the Resolution Trust Corporation (RTC) of a few decades ago. Major banking screwup and government solution (disguising a banking bail-out); it's an incompetence fest, begging for shrewd entrepreneurs to capitalize.
I've set a different course for myself at this stage of life, but can't help but noodle out the possibilities. Huge. Pick the less obvious niches and strategies, so you're not fighting over the carcass with the jackels, and count your bucks.
RTC was the government owned asset management company, mandated to liquidate the assets of financial institutions during the crisis of that time, primarily real estate and mortgage loans. Nothing could go wrong here.
It appeared custom made to generate some fortunes. I analyzed the metrics and an amazing stat jumped out at me. Banks now owned more hotels than investors and operators. This was due to massive foreclosures.
The too obvious move was to buy hotels cheap from the banks. The better move was to wait for the RTC to intervene in a deal, and muck it up, and buy the properties from them even cheaper. I did some of that, but it still leaves you investing money and having to operate hotels; no small feat.
The really lucrative opportunity appeared to be property management, and this turned out to be the case. The strategy was to approach banks stuck with all these properties they didn't know how to operate. The pitch was that they couldn't sell them in their current operating condition, so you would manage the properties for them, managing them into salable shape. Of course, you'd use management from your current hotel ops to do this, so you were essentially adding revenue stream without much incremental cost. Almost pure profit.
Some would jump into this market and go one step better. Or worse, depending upon your moral compass. They would hire management for the hotel properties on the bank's dime, but use them for their own properties. Free personnel.
Economic crisis doesn't mean no one will make money. It means the clever ones will make more.
I've set a different course for myself at this stage of life, but can't help but noodle out the possibilities. Huge. Pick the less obvious niches and strategies, so you're not fighting over the carcass with the jackels, and count your bucks.
RTC was the government owned asset management company, mandated to liquidate the assets of financial institutions during the crisis of that time, primarily real estate and mortgage loans. Nothing could go wrong here.
It appeared custom made to generate some fortunes. I analyzed the metrics and an amazing stat jumped out at me. Banks now owned more hotels than investors and operators. This was due to massive foreclosures.
The too obvious move was to buy hotels cheap from the banks. The better move was to wait for the RTC to intervene in a deal, and muck it up, and buy the properties from them even cheaper. I did some of that, but it still leaves you investing money and having to operate hotels; no small feat.
The really lucrative opportunity appeared to be property management, and this turned out to be the case. The strategy was to approach banks stuck with all these properties they didn't know how to operate. The pitch was that they couldn't sell them in their current operating condition, so you would manage the properties for them, managing them into salable shape. Of course, you'd use management from your current hotel ops to do this, so you were essentially adding revenue stream without much incremental cost. Almost pure profit.
Some would jump into this market and go one step better. Or worse, depending upon your moral compass. They would hire management for the hotel properties on the bank's dime, but use them for their own properties. Free personnel.
Economic crisis doesn't mean no one will make money. It means the clever ones will make more.
Thursday, September 13, 2007
I beg to differ
My doctor is a very bright guy and we have some enjoyable conversations during our sporadic meetings. Unfortunately, his foray into light conversation is his way of relaxing you, and is the harbinger of the digital exam. Digital sounds so high tech for something that is most definitely manual.
We were discussing recent comments by an office holder we both have confidence in. He agreed with them, but I thought he was falling prey to the halo effect. I disagreed by the stance taken in this instance. Mental note: don’t debate with someone who has you in a compromising position.
I first heard of the halo effect in reference to employee performance reviews. Don’t fall into the trap of viewing a good employee as doing everything as good as it should be done, and vice versa. But, it applies across a much broader spectrum, including people I look to for wisdom.
Ben Franklin – “Genius without education is like silver in the mine.” Too sweeping for my taste. True genius will out, with or without education. Education is valuable, but it’s generally just the rules of the game, not how to win. There’s a whole lot of people out there with degrees, but relatively few making breakthroughs or setting records.
Lee Iaccoca - “Management is nothing more than motivating people.” Management is analysis, planning, execution and post-analysis. Motivation is a small part of that and is mainly positive reinforcement of those who are already motivated. If someone isn’t self-motivated to excel at what they’ve accepted the job to do, that’s their nature. There’s nothing you can do about it.
Kay Henry (entrepreneur) – “Women are better at building teams.” While Kay is right on with many things, this doesn’t wash. Teamwork is scripted at an early age, usually in sports, and most girls didn’t participate until fairly recently. You learned to savagely compete for a starting position, and then to turn around and mentor those who wanted to win it back from you. You were taught to be a wedge-buster, hurtling yourself into the phalanx of blockers on a kickoff, so a teammate could slip through and get credit for the tackle. You were coached to hit that sacrifice fly, so a runner could advance. “Taking one for the team” was reiterated to you then, so you recognized it later when it was part of business. Most girls of my era, and for a long time subsequently, were scripted to compete individually. That’s changed and there’s been much progress with the help of mentoring. But, with a relatively short history of team scripting, it isn’t valid to say they’re ahead of the game.
Lewis Black (comedian/social commentator) – “Success is becoming what we hate.” If aspiring writers hated published authors, why would they strive to join the ranks? If you thought it was shallow to be wealthy, would you strive to make big money? I suppose some reasons could be posited, but none are especially rational. Besides, hate is not a primary trait of successful people.
Winston Churchill – “It is a mistake to look too far ahead. Only one link in the chain of destiny can be handled at a time.” Even Winnie contradicts this, urging us to look farther into the past so we can see further into the future. The first to foresee are the first to plan and act.
We were discussing recent comments by an office holder we both have confidence in. He agreed with them, but I thought he was falling prey to the halo effect. I disagreed by the stance taken in this instance. Mental note: don’t debate with someone who has you in a compromising position.
I first heard of the halo effect in reference to employee performance reviews. Don’t fall into the trap of viewing a good employee as doing everything as good as it should be done, and vice versa. But, it applies across a much broader spectrum, including people I look to for wisdom.
Ben Franklin – “Genius without education is like silver in the mine.” Too sweeping for my taste. True genius will out, with or without education. Education is valuable, but it’s generally just the rules of the game, not how to win. There’s a whole lot of people out there with degrees, but relatively few making breakthroughs or setting records.
Lee Iaccoca - “Management is nothing more than motivating people.” Management is analysis, planning, execution and post-analysis. Motivation is a small part of that and is mainly positive reinforcement of those who are already motivated. If someone isn’t self-motivated to excel at what they’ve accepted the job to do, that’s their nature. There’s nothing you can do about it.
Kay Henry (entrepreneur) – “Women are better at building teams.” While Kay is right on with many things, this doesn’t wash. Teamwork is scripted at an early age, usually in sports, and most girls didn’t participate until fairly recently. You learned to savagely compete for a starting position, and then to turn around and mentor those who wanted to win it back from you. You were taught to be a wedge-buster, hurtling yourself into the phalanx of blockers on a kickoff, so a teammate could slip through and get credit for the tackle. You were coached to hit that sacrifice fly, so a runner could advance. “Taking one for the team” was reiterated to you then, so you recognized it later when it was part of business. Most girls of my era, and for a long time subsequently, were scripted to compete individually. That’s changed and there’s been much progress with the help of mentoring. But, with a relatively short history of team scripting, it isn’t valid to say they’re ahead of the game.
Lewis Black (comedian/social commentator) – “Success is becoming what we hate.” If aspiring writers hated published authors, why would they strive to join the ranks? If you thought it was shallow to be wealthy, would you strive to make big money? I suppose some reasons could be posited, but none are especially rational. Besides, hate is not a primary trait of successful people.
Winston Churchill – “It is a mistake to look too far ahead. Only one link in the chain of destiny can be handled at a time.” Even Winnie contradicts this, urging us to look farther into the past so we can see further into the future. The first to foresee are the first to plan and act.
Tuesday, September 04, 2007
Prediction
Prediction: Ellwood Bartlett will make millions. True, he recently cleared about $32 million in the Maryland lottery, but that’s just the beginning.
Ellwood teaches Wicca and Reiki, and was smart enough (I’m giving him credit, here) to declare that his favor with the pagan gods caused his win. How many people do you think will be signing up for his courses, not to mention his soon-to-be-released (I’m guessing) books and DVDs? He’ll clean up.
Is this a great country or what?
Ellwood teaches Wicca and Reiki, and was smart enough (I’m giving him credit, here) to declare that his favor with the pagan gods caused his win. How many people do you think will be signing up for his courses, not to mention his soon-to-be-released (I’m guessing) books and DVDs? He’ll clean up.
Is this a great country or what?
Sunday, September 02, 2007
Checkpoint
I was driving home last night and there it was a sobriety checkpoint. Yeah, like I needed this. I was exhausted and just wanted to get home. It was a holiday weekend.
I waited my turn and an officer approached my car. After the customary exchange of pleasantries, he asked if I had anything to drink.
“One glass of wine, about three hours ago.”
He shined his flashlight at me and I flinched at the glare. “Your eyes seem to be bloodshot.”
“I’ve been in a hot tub. You know, chlorine.”
“Hmmmm.”
“Look officer, I spent the morning at a family breakfast at my ex’s where she just had to trot out my offenses dating back thirty years. The afternoon was a date, but at the girl’s parents, who make Gomez and Morticia Addams look like the Cleavers. Then, I got dragged through a shopping mall, where we missed maybe two stores. She insisted upon dinner at a sushi bar, which was more of a bait shop to me. I think I’m about due.”
“Have a nice evening, sir.”
I waited my turn and an officer approached my car. After the customary exchange of pleasantries, he asked if I had anything to drink.
“One glass of wine, about three hours ago.”
He shined his flashlight at me and I flinched at the glare. “Your eyes seem to be bloodshot.”
“I’ve been in a hot tub. You know, chlorine.”
“Hmmmm.”
“Look officer, I spent the morning at a family breakfast at my ex’s where she just had to trot out my offenses dating back thirty years. The afternoon was a date, but at the girl’s parents, who make Gomez and Morticia Addams look like the Cleavers. Then, I got dragged through a shopping mall, where we missed maybe two stores. She insisted upon dinner at a sushi bar, which was more of a bait shop to me. I think I’m about due.”
“Have a nice evening, sir.”
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