Instant Losers

Welp . . . I mean well, the bottom fell out today. I am the first to admit when I'm wrong (i.e. I called the bottom after October 10th). But give up? Never!

It looks like tomorrow I will buy GE, RIO, and EWZ, as put options are set to expire against me, and I will pay more for those shares than what they are bringing on the exchanges. Instant losers. Is there a book title in there?

I'm not too worried though, because my position sizes are appropriate for the current market conditions. But there is still the possibility that they could go to zero, which I would hate to see, as the positions do represent about 10%of my portfolio. Maybe it's time to cut the losses, close up shop, and stay in cash until I'm the only person left on earth with any money.

Did I say I wasn't a quitter? Hmm, maybe I'll reevaluate that one, because first and foremost I want to be a laster.

Eject, Eject, Eject

The market feels like an ejection seat at the moment . . . you know, the plane soared until the wings came off. Then we plummeted from 14,000 to the lows of October before rocketing out of the plane in an ejection seat. Now it feels as if we're drifting downward slowly, as if hooked to a parachute on a slightly breezy day. Rest assured that we will eventually hit bottom, but that doesn't mean gravity will stop pulling.

Today a friend said that if the economy doesn't improve soon, he's moving back to Venezuela. Think about that.

Regardless of what you think will happen, it's smart to have a doomsday plan. Here is mine: (1) Take all my money out of the banking system, (2) buy U.S. government issued gold coins with about half my cash (if the shit really hits the fan, gold bullion, which sells at a discount to U.S. issued coins, will be outlawed and possession of it punishable by prison time for treason . . . I kid you not; review your history books if you don't believe me), (3) buy one year worth of non-perishable food items (frozen, dehydrated, and canned foods), (4) buy a few gasoline powered generators, (5) by a lot of gasoline, (6) install a hand pump for the water well, (7) buy farming equipment and seeds and install irrigation lines in preparation to produce food on a large scale, (8) buy guns . . . lots and lots of guns and ammo, (9) fortify the homestead, (10) defend myself against any mother fucker (individual or government agent) who tries to rip me off.

I know it may seen a little extreme, but Allan Weisbecker recently wrote a blog entry about Chase Bank not having $30k in their vault available for him to withdraw on the spot . . . his response was something along the lines of "I know a pot dealer who keeps more than $30k in an old Aunt Jemima waffle box in his freezer." Seems a little ridiculous; I know. Times are tough.

As of tomorrow, I will own GE . . . a lot of it, since the put options I sold are going to be exercised against me. That purchase doesn't worry me too badly, but I would like to be "in the money" after the exercise, i.e. $16 - premium I received > stock price at tomorrow's close. EWZ and RIO are very close to the exercise prices of the options I sold, so even if those are put to me, I should be showing a profit from the get go.

Have a wonderful evening!

The Republic of Pirates

The Republic of Pirates is the true story of the Golden Age of Piracy. It is the tale of sailors who could not make an honest living--men who were treated unfairly and, as a consequence, chose to live under their own regimes after being pushed too far by the merchants and naval commanders under whom they served, often times against their wills and without pay or even decent means of sustenance.

The most interesting point illustrated in this book is the fact that pirates lived in a true republic. Pirate ships were countries governed by democratic laws. They sailed through a world that could not harness them or impose regulations upon them, in much the same way that the earth is full of social norms unaffected by the physical reactions occurring in the universe surrounding it. In this manner, pirates received fair treatment for the risks they were willing to take in attacking and plundering wealthy merchants:

"Damn them as a pack of crafty rascals. And you captains and seamen, who serve them, as a parcel of hen-hearted numbskulls! They vilify us, the scoundrels do, when there is only this difference between us: they rob the poor under the cover of law . . . and we plunder the rich under the cover of our own courage." ~Sam Bellamy, Captain of the Wydah~

The Republic of Pirates neither vilifies nor glamorizes piracy but does a good job of realistically describing the life of pirates and the reasons that sailors abandoned legally sanctioned work to become pirates. In most cases, the reason was simple: Piracy offered fairness in a world that continually pushed sailors into unacceptable corners. Without consciously doing so, The Republic of Pirates illustrates that people are capable of tremendous feats when they truly believe they've hit rock bottom--whether it be rejection from a love interest, brutal treatment by superiors, or just the hopelessness engendered by hunger and a meager existence. The most interesting stories in the book, however, are of wealthy men who abandoned their estates and lives of leisure in order to pursue a romanticized vision of outlaw life on the sea.

If you like history and want to understand the broad context behind piracy, which includes the recent activity off the coast of Somalia where $100 million worth of oil and 25 hostages are currently under the control of pirates, then I highly recommend this book.

Morning View

Running on little sleep. Spent the day yesterday shopping for furniture in Orlando with a friend. Then, assembled furniture until about midnight. Came home and went to sleep. Woke up at ten after four this morning to take my mom in for surgery, which was an hour earlier than I needed to be up. On the bright side, I was able to see the Big Dipper on this brisk Florida morning. Oh how I've missed that signpost in the sky during the autumn months when it's been below the horizon at my latitude. I do feel very connected to nature and to history when I gaze up at something as marvelous and easily recognizable as the Big Dipper and realize that ancient people must have experienced the exact same sense of awe. I feel secure in knowing that everything is going to be fine--that in the grand scheme of the universe, the problems we face on earth are really irrelevant. A sense of peaceful calm eased over me this morning as I looked skyward and breathed a sigh of relief. Life is grand.

Speaking of stars, my mother named a star after me for my birthday. That's right: Skywayne is now officially in the heavens! Good thing, because that's probably my only chance. :-)

For other astronomy junkies, I received this link yesterday from a very special person: Photographs of Newly Discovered Planets. It's worth a look. Later today, I will post my first book review. I've been going light on the reading for some reason this year. I plan to step up my game in 2009, so don't worry. I haven't started researching the books I'd like to read yet, so if you have any suggested reading or if you are considering something that you'd like me to read first, shoot me an email or post in the comments.

Back In The Groove

I am ready to get back in the groove of blogging. It's been six days . . . . During that time, I celebrated my 31st birthday by kayaking to an isolated beach in the Merritt Island National Wildlife Refuge with friends to watch Space Shuttle Endeavor launch for a rendezvous with the International Space Station. The experience left me in absolute awe, from the manatees we saw in the intracoastal waterway to the blindingly bright launch from Kennedy Space Center, which lit up the moonlit sky like dawn--almost exactly the way movies portray nuclear blasts. My entire body was covered in goose bumps.

Today my aunt, uncle, and cousin unexpectedly showed up with four pounds of stone crab claws and eight filet mignon steaks. We cooked up the crab claws enchilado style and my steak was perfectly rare. We topped it off with birthday cake. I am full! Then my uncle and I went outside, laid on my grandfather's sailboat, and identified constellations and saw a few shooting stars. It was perfection. At times I miss my $150,000 per year career in Dallas, but one opportunity cost of that job was missing many, many experiences like tonight. No amount of money is worth that.

Tomorrow I am going to help a friend shop for furniture, then I'll get back to trading the market. I'll also follow-up with more details of my recent adventures.

Gutted by Goldman

The title says it all. I lost big today by putting too much faith in the "smartest guys on the street." I bought GS at $76.50 and put in a trailing stop order of $6.00, which was greater than the average true range ("ATR"), and I was stopped out early this morning. Goldman is the cream of crop, and I do not seeing them going the way of Bear Stearns or Lehman, but I am going to wait for GS to start moving upward before dipping a toe again.

China announced a $500+ billion bailout for their economy yesterday. Unlike other markets around the world, the U.S. is almost completely non-responsive to the news. I don't know what the hell to do at this point (other than sell put options on GS when it is finished selling off), so I am just going to go out and enjoy the day.

Wouldn't it be interesting to be a fly on the wall in the White House today--to watch President Bush and Barack Obama interact?

Bluegrass

Went to a Country Days festival today on the Silver River to hear some good bluegrass, and I was not disappointed. The band played some classics, and I had a great time. The Civil War buffs where firing a cannon that dates back to 1862, and there were a lot of neat craft tents sent up. It was a good way to enjoy the beautiful Florida weather.

As for yesterday, my ride was over an hour late, which caused us to miss the Blue Angels. I was and still am pissed about that. Space Shuttle Endeavor is scheduled to launch next Friday, on my birthday, and I will probably head over to the Cape and camp out, since I've never seen a shuttle launch up close. Maybe I'll take the sailboat over too. You never know! One thing is certain, however: The people I am planning to camp with are reliable and punctual, so it's unlikely that I will miss the launch!

Jet Watching

On my way out the door to Cape Canaveral on Florida's east coast--home to Kennedy Space Center. The Blue Angels are performing today. I've seen the Air Force's Thunder Birds, but never the Blue Angels, and the weather is absolutely perfect today. For those of you who don't know, I love airplanes and aeronautics, so today is going to be a real treat for me . . . assuming my ride ever gets here. Tardiness is rude and one of my biggest pet peeves.

In other news, I am excited that my friend Eliza is visiting from New York City this weekend, and I hope that she and I are able to get together tomorrow.

As for the market, I bought Goldman Sachs yesterday at $76.50. That's $38.50 cheaper than the exercise price of Warren Buffett's $5 billion worth of warrants on the company. If GS trades back up to the $115 level, my return will be in the range of 50%. That means I got a much better deal than good 'ol Warren, even if he does get a 10% dividend.

I am still short put options on RIO, GE, EWZ, and KMP. I could have covered all of those at about $10 per contract earlier in the week, but frankly, I would just as soon buy the stock if the options are exercised against me as take profits soon, because this is the perfect time to cherry pick a long-term portfolio. In other words, I will end with a 100% return on the options I sold, or I will end up owning the stocks, which might actually be preferable.

Keep your eye on BNI. I really like the rails here and this stock is a bargain at $80 or better for the long-term.

Have a great Saturday!

Jet-Setting

Another round of jet-setting is in the works. Cape Canaveral and Kennedy Space Center the next two weekends in a row--tomorrow for the Air and Space Show, the 14th (my birthday) for the launch of Space Shuttle Endeavor. After that, it's off to Tampa, Barbados, Dallas, Austin for a wedding, and then New Orleans for a bachelor party. Damn, I need the holidays just to slow down a bit. At this rate, I will be out of money very soon!

Buffett Recounted

Other than play tennis for three hours, I basically did nothing today, so I am going to take a moment to recount how we ended up in the second row at the Buffett concert. It all started when we arrived at the Ford Amphitheatre to discover that the road to the main entry gate had been barricaded and the line behind it was already about a quarter mile long. Sigh . . . .

After a few minutes, I noticed that there was an open gate about three hundred yards away and that several people had circumvented the road barricade by walking through the gate and down the road that was adjacent to and directly behind the guards watching over our line.

"I'm going to try it," I said to my crew. "I'll call you and let you know what I find." Five minutes later I was first in line at the main entry gate. Fifteen minutes later, the other three were there too. Then we waited . . . for over an hour and a half, and the anxiety began to build.

"What if the ticket scanner for this line doesn't work?"

"What if our tickets blow away or we lose them right before the lines open?"

"Will they not let us in because we have these candy bars?"

My sister-in-law just rolled her eyes and said, "You all need medication." I could have definitely used a beer.

When the gates finally opened, we were off to the races (after being frisked by what seemed to everyone in our line to be the slowest frisker of them all)! Once in the amphitheatre, we had to get first-come-first-serve white wristbands that read "Entering moshing and or crowd surfing areas is at own risk" in order to gain access to the floor seats closest to the stage. Seats were available in the front row, but there was a amplifier obstructing the view, so I opted for the better angle in row two. To my frustration, the amplifier was removed just before the concert began. Ah, we were close enough.

As I described in an earlier post, Buffett played Last Mango in Paris as the one and only encore, which he dedicated to the late Ed Bradley and Captain Tony Tarracino, who died the day before the concert. Jimmy sang through tears, and we all felt blessed to be so close at that extremely moving moment.

On the way out, I had my picture taken with now President-Elect Obama. He was decked out in Parrot Head gear. See for yourself:

Election Day!

Thank goodness! After today, we can all be friends again. I credit my brother with that line. I worked the polls today as a Voting Rights Attorney. It was a hell of an experience, and I actually helped a handful of people, which was gratifying, even though Obama lost the precinct by a mere 28 votes. Things are looking good for Barack otherwise, and I am very happy--kicked back with a High Life watching coverage of the returns! GOBAMA!

Also, this is a picture of the beautiful young woman who won my extra ticket to the Last Chance for Change Jimmy Buffett concert. We sat in the second row, less than fifteen feet from Jimmy. As an encore, Mr. Buffett sang The Last Mango in Paris through tears. He dedicated his performance to Ed Bradley of 60 Minutes fame and the man behind the song, Captain Tony Tarracino, who died on Saturday, November 1st (the day before the concert). It was a moving experience. Later, I will recount in full detail exactly how we ended up in the second row and the anxieties that played into the experience.

Oh yeah, hi Mom! Love you!

EST

Today I am celebrating our return to Eastern Standard Time. Hooray! In honor of the time change, I set protectionist orders on my short option positions and paid no attention to the markets. Tomorrow I am working at the polls as a Voting Rights Attorney. It's my first day of work in a really long time, so I am a little nervous. Besides, it's election day in Florida, so there's a little pressure to "get it right."

Otherwise, I played tennis. Hard fought battle today. My opponent won the first set. I rallied from the trailing position of 5-2 to win the second set 7-5. And then I was crushed in the third set. My serve just wasn't there today.

In other news, the Last Chance for Change Buffett concert in Tampa was a blast. We ended up in the second row, which was absolutely amazing. I'll dedicate a post to it complete with pictures later in the week.

Remember to vote tomorrow!

Unbelievable

In case you missed it, that was a prank call on Sarah Palin by the Canadian comedy duo Marc-Antoine Audette and Sebastien Trudel, who pretended to be President Sarkozy of France.

The call teaches us a few things about Governor Palin. First, she is totally oblivious as to who holds the position of Prime Minister of Canada, i.e. the caller referred to singer Steph Carse rather than the real Prime Minister, Stephen Harper, and Sarah Palin had no idea.

Also of interest is the fact that the fake Sarkozy said he loved the Larry Flint "documentary" entitled "Nailin Paylin." The Governor responded to that statement with "Oh, good, thank you, yes."

Two questions: Did she actually star in the film and was that one of her lines?

It's a little disturbing that Governor Palin didn't pick up on the fact that she was being pranked when upon complementing Sarkozy's wife for being beautiful, the caller said that she is "So hot in bed." Other big tip offs came when the caller asked if Joe the Plumber was Palin's husband and when he referred to the French equivalent of Joe Plumber as Marcel with bread under his armpit.

Hilarious, assuming Palin never becomes President or even VP, scary otherwise.