Seven Deadly Sins (Archives)

This is a re-print of a blog posting that appeared in the original Szelhamos Rules blog that ran for precisely 1 year from 2007-8 and was dedicated to the memory of my father, who was a Holocaust survivor. The original title was "Aren't Rumors Great?" and appeared on October 24, 2007. It is reprinted this evening following Jim Cramer's mention of the "7 Deadly Sins" during the broadcast of his 7th Anniversary celebration of Mad Money.

Many more, Jim. Let's make it to at least 14 deadly sins.

I don’t really remember what the seven deadly sins are. I think that rumor mongering is among them, but I’m really not sure. That ugly looking person over there, the one that I saw sneaking out of the crack house told me that it was one of the seven deadlies. But would you really trust someone who strangles kittens? Maybe you might elect them president. You know who I’m talking about, but you wouldn’t want to trust them.

Maybe rumor mongering doesn’t rank up there with gluttony, lust, avarice, Sleepy, Dopey and Doc, but it should.

Today, though, it was a rumor that turned everything around.

Maybe, in hindsight, rumor mongering should be counted among the seven holy virtues. Because, really, is humility that great of a virtue? Couldn’t we just lose humility? There should be some kind of a rotation of both virtues and sins. There just has to be a way to make room for a good rumor.

But I do like rumor mongering. It can easily go both ways. You have to love that kind of versatility. The last time we had that kind of versatility, football players were still wearing leather helmets.

But today, it was obvious that rumor mongering must be a virtue. How else would you categorize something that turns the market around from a 200 point loss? It has to be a virtue. There’s certainly nothing virtuous about a 200 point loss.

The day really started off badly. Merrill Lynch, which just 2 weeks ago announced that it would take $5 billion in sub-prime and bad loan losses came out with their earnings this morning. Funny thing, that in the past 2 weeks they were able to find another $3 billion in losses.

They just didn’t see it coming, I guess.

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Zombie Bystander

With the exception of "Shaun of the Dead," I've missed the entire Zombie and Vampire fad.

I am totally ripped. however.

Having cultural roots in the land that gave us the original Vampire I still have no interest, even while I check the Hungarian stock market close on a daily basis and keep hoping that my unspent Forints from a few years ago can be converted into something more valuable than bird cage liner.

Somehow, though, neither Vampires nor Zombies will ever have much of a long term impact on my life.

Today, as the market was having a rare 2012  triple digit day, it did, as I was a Zombie Bystander all through the session.

In the past, I would have called that a "Buy and Hold" kind of guy and would probably have added a derisive sneer, but in a diplomatic and non-judgmental sort of way.

It didn't start with a whisper. It didn't start with a bite from an infected Zombie, nor did it start with my genetic makeup. Lord knows that I've aged, despite having that Vampire blood circulating sluggishly through my veins.

With Sugar Momma out west with her "home girls" for a week, Laszlo the Dachshund and I have been on our own and living the lives of carefree bachelors, which includes wearing hideously colored Grinch flannel pajama pants to collect the mail.

If pressed, I would defend myself by saying that the Grinch outfit was a gift from Sugar Momma and wearing them all day was just a way to break down the distance for the week.

Sugar Momma is somewhat of a snob when it comes to two things and two things only.

Wine and coffee.

Whereas I must have my coffee, I really don't have the same level of appreciation that she does for Starbucks or her favorite, Peet's, which reminds her of her carefree Berkeley days.

In fact, if anything, these days, I've entirely changed my mind about Starbucks.

At one time, despite the fact that I knew about their decadently fattening and cholesterol soaked offerings, that probably shave years off a loyal customer's life span, they still gave off an air that followed along Google's mantra of "Don't be evil." That mantra derives from Google's 6th point of their 10 point corporate philosophy.

"You can still make money without doing evil."

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Law of Large Numbers

It seems that as everyone is all a buzz about Apple, the nay-sayers are beginning to pop up.

Again.

Most recently, the nay-sayers were prepared to pocket their profits after Apple disappointed those expecting an announcement of a dividend or stock split.

The funny thing is that the "buy on the rumor and sell on the news" kind of thing never happened.

It's sort of maddening when the script isn't followed and the Talking Heads are left out to dry and quickly disavow their admission of shorting shares. Although to be fair, there were plenty of Apple bulls to be found, as well.

Ordinarily, any company climbing as much, and as rapidly as Apple has in recent months, would have sold off on the realization of good news and would most definitely have plummeted on the news not having been realized.

Instead, there was no reason for Steve Jobs to roll over. The kids he left to take care of the place didn't trash it at the very first opportunity. It's almost as if they actually cared about their legacy.

No dividend, no split, no Flash.

Among his other positve attributes, you probably have to add "respect for the sacred" to Tim Cook's list.

But the re-appearance of the nay-sayers is only natural.

They popped up briefly when the iPhone 5 failed to appear, but still, it's easy to understand why being a nay-sayer is so appealing.

No one remembers the guy who climbed aboard the moving train, but everyone remembers the guy that decided to take the train when it was  subsequently learned that the plane he was supposed to take ended up crashing.

That guy was a genius.

With excitement growing about some kind of iPad product release, shares have moved up to another all-time high. It seems that latter part of the preceding sentence could have been said any number of times since I lost my Apple shares to assignment at $425 not that long ago.

Now, every cynic is citing "The Law of Large Numbers" as a reason to be wary of investing in Apple.

As anyone knows, investors pay for future growth. Also, as anyone knows, according to Woody Allen, an investment is like a shark, in that it has to "constantly move forward, or it dies."

I try not to burden myself with knowledge or accepted wisdom and I don't mind distorting quotes or taking them way out of context.

I do like to wait for the next train though, rather than trying to catch a speeding one that's already left the track.

For me, Apple has left the track, but I also think that the shark will soon stop moving, but certainly not to the point of death. It will still be menacing to others by virtue of its size and reputation and occasional demonstrations of past glory.

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That's what Makes a Market

There are a lot of insipid expressions out there.

I know, because I was the one credited with the 2012 CNBC word of the year, "Eurosis," replacing last years' "Hopium."

Lately things like "catch a falling knife" a "rip your faceoff rally" and "kicking the can down the road" have been used to describe one thing or another. Some of those expressions seem like good ideas, but most fade away, never having the cultural staying power or applicability to other situations.

Of course, there are always the tried and tested expressions that have meaning through all eternity.

"Bulls and bears make money, but pigs get slaughtered."

RIght? You know that one.

A polite way of expressing the fact that someone did something stupid or the fact that the action was incomprehensibl3e is to say "Well, that's what makes a market."

That observation is always going to be correct. There has to be someone on both sides of any deal. Theoretically, depending on the time scope, they could both be on the right side of the trade, but let's be honest.

No one cares about the other guy. Win-win is another of those insipid expressions.

Yesterday, I got a glimpse into the incomprehensible.

Following a minor procedure for which I had some sweet, sweet sedation, I began having some significant pain.

May the Good Lord have mercy on Dr. Conrad Murray, but I think I see what Michael Jackson found appealing about Propofol.

From the time of the onset of my kidney stone and its few  moments of intense pain, I've had a prescription for the narcotic analgesic Percocet. In that three week period I hadn't taken any of those pills until yesterday afternoon.

About an hour after popping a pill, the pain was gone, but a strange feeling came over me at about the same time.

I felt as if I had no affect, at all.

None. Even less than I usually am in possession of and believe me, there have been times that Sugar Momma has poked me to see if I was still alive, despite my eyes being wide open and speaking.

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Under the Radar

This Monday morning, which was just a dreary and cold mid-Atlantic day, there wasn't too much to cheer about.

Over the past three years, I've been drafted into the culture of football and now find myself, somewhat uncharacteristically, actually caring about games.

Culture. Football. Talk about oxymorons.

Just a few short years ago my only foray into football would have been to watch about a half's worth of the Super Bowl and take the occasion to excuse the non-stop ingestion of deep fried anything.

I looked at the Super Bowl as being Saturated Fat Sunday.

Now, I even have four pro football games under my belt, although if given the opportunity to go to a game, the weather is still a factor in my decision process, as well as who's going to be singing the National Anthem.

I'm still far from a fanatic. I even turned off the New York Giants game last night during overtime and never even bothered to go down to the basement and turn on the big screen TV to get a more real-life feel.

It's not as if I had to be up early the next morning, it's just that I was probably depressed because Simpsons episodes had been pre-empted in favor of the football game and I'd already seen that eposode of Chappelle about 300 times.

I did take the Baltimore Ravens loss harshly, though, particularly knowing that my kids are big Ravens fans. The manner in which they lost the opportunity to tie the game and force it into overtime was especially hard to accept, as an easy field goal was not as advertised.

The big news this morning was that loss and the resignation of the co-CEO's of Research in Motion and the subsequent appointment of a new CEO.

The two items are not in any way related, but then did become so.

The question of the day on CNBCm tied it all together as they asked who likely got more sleep last night, Billy Cundiff, the Raven's kicker or Thorsten Heins, the new RIMM CEO?

Ordinarily, being named new CEO is a pretty positive thing, unless you're Leo Apotheker.

In this case the market didn't react terribly kindly to the announcement of Heins' ascension, especially since he was considered to be somewhat of an insider who may have also been asleep as the ship was sinking.

Oh, and the accent didn't help either as the prevailing joke was that RIMM hired Leo Apotheker's son.

I don't know what kind of jokes are circulating today regarding Cundiff's miss, but I doubt that there are many. People take their football more seriously thatn they do their stocks.

One was tragic, the other just business going about business.

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It's a New World (Szelhamos Rules Archive February 1, 2008)

The original Szelhamos Rules ran for precisely 1 year, from February 2007 - February 2008. This article originally appeared February 1, 2008 on the occasion of a Google share price plunge and the announcement of Mcrosoft's bid for Yahoo!.

As a Google shareholder, I haven't been very happy lately. In fact, I was upset about some of what I considered to be Google's disregard for its shareholders even when it was approaching $750. Imagine the rants that are going through my mind now that Google is pointing another $40 points lower in the pre-open following yesterday's earnings release.

Why exactly were we spending money on space shots?

Focus guys. Focus.

I understand why Richard Branson does it, but Google? Is there something to search for on the moon? Maybe they can use the lunar surface to house their servers in an ecologically friendly fashion.

So the word comes out today that Yahoo received a so-called "unsolicited" bid from Microsoft for $31, a hefty premium to yesterday's close. It will probably take all of 10 minutes for Yahoo's board to meet and accept this "unsolicited" offer. But just a few short months ago, Yahoo was at $31, without any takeover rumors propping it up.

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Reconnaissance

If you're a purist, you know that "reconnaissance" is a term that is applied to the gathering of information regarding an enemy. Although typically done covertly, it isn't considered espionage since it's carried out by combatants or agents of combatants.

Today started a period of reconnaissance for me, but I really wasn't trying to gather information on enemies. The great thing about being anti-social is that you usually are short on the enemies side of the ledger as you are on the friends side.

Reconnaissance today started with evaluating the prospective daughter-in-law population.

As the first half of an 11 hour roundtrip today, I drove to New York City very early this morning to meet my son's 6 AM flight returning from Israel. He had spent the last 10 days there as part of a great program called "Birthright," which allows college and recent college graduates to make that trip at no cost along with others.

No strings attached.

When I initially dropped him off to begin the trip, I immediately noticed that within his group there seemed to be a very favorable female to male ratio.

Did I mention that all of the girls were Jewish? Did I mention that "favorable" meant many more females.

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As if Yesterday Never Happened

This is precisely why I need to get out of the house more often. Either that or do something to diminish my ability to understand, comprehend and discern the babbled word.

Or maybe just learn how to work the "Mute Button," but I've never been very good with technology.

Oh, and add recall to that list. Sometimes being able to remember details is a bad thing.

The past few days Microsoft has been on a roll, above and beyond the market.

You remember Microsoft. You know, the company that was everyone's whipping boy. Although, to be fair, it is enirely possible that I've misinterpreted the expression "dead money" and the snarky tones and sneers may have always been completely unrelated to the stock.

Back when I was younger, it was incredible how popular you could suddenly become if you had a Spalding rubber ball, when one was desperately needed for a stickball game.

If you dont know what stickball is (or was), think basketball instead.

Suddenly, Microsoft is everyone's favorite stock and no one is owning up to their past.

Instead of "dead money" it's "undervalued." All of a sudden Talking Heads are taking note of its dividend, the very same dividend that has long been decried as insufficient and not enough to make purchase of shares appealing.

The jokes.

Zune, Bing, WIndows cell phone, Vista, Clippy, Ballmer, Skype. It just goes on.

No one wants to admit that the own, want or need a Microsoft product. You never hear anyone sing "Oh baby you, you got what I need'" when it comes to Microsoft. People are ashamed and embarrassed.

It's like admitting you crave veal or sauteed infants.

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The Smartest Guys in the Room?

Let's climb into the "Wayback Machine" and travel to a place that I like to call February 2007.

Back then, I was just getting started with managing some of my own investments.  I had decided to finally start putting my money where my theories were and focused on putting some 401(k) rollover funds to work.

Since the rest of my investments were sitting with my trusty broker, with whom I'd had a 25 year history, I thought that regardless of my personal mis-steps, I'd still be in reasonably good shape.

But barely 6 months later I was looking to rework my entire portfolio by putting my own stamp on all of its holdings.

To remind past readers, or just to inform new ones, the decision to do so came only after the unexpected death of my broker. The happy  25 year run that took us from E.F. Hutton to Paine Weber and stops in-between suddenly ended

Back in early 2007 I was far more discerning when I made my stock purchases, only because the portfolio that I was managing was relatively small. Since I was selling call options on all of the holdings and needed to do so in a sufficiently large quantity to offset bid and ask discrepancies, my self managed portfolio wasn't entirely diversified and could easily suffer from the kind of hiccoughs that can be so common.

At that point, I already owned shares in those triple digit darlings Google and MasterCard, and Apple was soon to join them. Back then, there was no shortage of triple digit stocks.

That changed.

With some money in hand following the sales of Intel and Dell Computer (see why I hate Tech stocks), I was trying to decide between purchasing from between two more triple digit darlings:

Sears Holdings or Goldman Sachs.

Goldman was at about $215 and Sears was nearly $190 at the time.

It was never really a fair fight. Goldman always had the inside track.

No, not because Eddie Lampert, the Chairman of Sears Holdings and allegedly the next incarnation of Warren Buffett, was a Goldman alumnus, but because the Goldman CFO was a high school classmate of mine.

Easily the smartest guys in any room.

You may know some of the story as it all infolded between February 2007 and December 2011. If you don't know the story, take a moment to check your brokerage statements.

You know, the ones that you were afraid to open.

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Rational or Emotional?

It's so hard to balance the emotional side from the rational side in all aspects of life.

Although I often write and talk about setting aside human tendencies like fear, greed and envy when it comes to investing, it's so much easier to say than it is to practice.

Life itself is no different.

The other day I posted a comment on James Altucher's blog. If you haven't read the Altucher Confidential, you really should take a look. He writes in an entertaining way and addresses universal emotions and trials by recounting his own life experiences.

However, in response to the comment, I received a reply that was interesting, to say the least and was the impetus for today's theme.

My initial comment was in response to Altucher's recommendation to author wannabes to consider the route of self-publishing.

Once, self-publishing was only for the wealthy, those not minding to waste their money and the delusional.

These days, it's a reasonable way to put out a product. Success is limited only by marketing efforts and ingenuity.

Speaking of which, take a look at an 11 year old's contibution to the theatrical marketing efforts of Option to Profit. We're still open to suggestions as to who to cast as the protagonist in the film version.

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