How's your Ego Doing?

November 7, 2011

No matter how selfless any one of us may make ourselves out to be, there is no escaping the fact that we all have an ego. In fact, the mere act of thinking one's self to be selfless is feeding into that ego.

You don't have to be Sigmund Freud to know that ego is indispensable and the source of many of our problems. Those problems can be self-inflicted, but more likely are those that we inflict upon others in pursuit of satisfying an ego.

An example of a self-inflicted problem related to ego is when you believe that sometimes a cigar is not a cigar. The inevitable comparison is ego deflating and may lead to ED.

Ego dysfunction, which in turn to can lead to another kind of ED.

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Daytripping

I must have missed something in life. I grew up at a time when The Beatles were just beginning their "US Invasion" and can still remember their first appearance on The Ed Sullivan Show.

It was a time of free love and drugs, although the option to pay was always available.

Do you remember the song "Daytripper"?

If you really grew up at that time and took in all of what was going on, you likely can’t remember that song, but you can still probably take a guess and be right.

I took a guess and was totally wrong. I just assumed that it referred to LSD trips. The actual lyrics said otherwise, although McCartney said otherwise to the otherwise. According to him, Daytripper" was an example of playful wordplay in an attempt to mask the true meaning and escape the wrath of more prudish critics.

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Read me a Story

I can still think back to those days when my kids would be put to bed each night with a story.

"Moo. Baa. La La La."

That phrase will be stuck in my mind until the day I die, as like most parents, I found myself reading the same story over and over, night after night, because that was the story that wanted to be heard.

Whatever it took to get the little darlings to sleep. Whatever it took. Even Moo. Baa. La La La.

I was only talked off the ledge because the nice policeman promised me I'd never have to hear those sounds again.

Instead, it was a book devoid of silly sounds, but sadly chronicling the deaths of brave, hungry, thirsty, polite, sleepy and explorers, leaving only a single smart explorer to survive.

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Anti-Climactic Much?

The past week was all about superlatives. Best of all, the superlatives were all headed in the right direction.

It really didn't matter that so much of that direction was dictated by rumor after rumor. People who were smart enough to do the stupid thing and not take profits when common sense dictated otherwise were well rewarded on paper.

With the close of trading on Friday we were hearing all kinds of statistics centering around the market's performance this October.

By all accounts we had seen the single best performing month since 1618, or in meteorological terms "ever since records have been kept"

It was that good. You actually had to go back to when Native Americans were occupying Wall Street to have had as good a month as we'd just experienced.

Even the old adage "buy on the rumor and sell on the news" couldn't bring the market down after the rumor of breaking an impasse over the Greek financial crisis came into being.

At least to a degree, as today the Greek Prime Minister announced that the final details of the debt agreement will be put to a referendum. So, that certainly makes it a done deal.

What could possibly go wrong?

But in October jut about everything went right, as long as your standard is that you need at least a 17% gain.

Shorts were reportedly being squeezed, talk of IPO's was beginning to burn up the airwaves and people were clicking on the ads on this site.

That final indicator seems to be a very accurate one. People click on financial related ads when they're feeling good about multiplying the wealth. When the market is going down no one in their right mind clicks on an "Open an E*trade Account" ad.

Even Groupon was looking rehabilitated and in some corners was being compared to LinkedIn, with regard to the reception its IPO would be expected to receive.

 

By some measure, those all may be sufficient to mark a near term market top. And so, today, perhaps befitting the fact that it's Halloween, the market just gave a middle finger to those superlatives and proceeded to lose almost 2.3%.

The diagnoses for the drastic response today came quickly.

“Risk aversion is once again taking hold in markets,” said Brown Brothers Harriman & Co. strategists in a market commentary following this anti-climatic end of the month day.

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Point your Crosshairs to the Right

Warning.

I'm starting the week off with a rant of sort.

When I first got started with Twitter about 6 months ago, one of my earliest Tweets was about Sallie Mae.

I really don't remember what that Tweet was about, but I did get an eye opener in the process of trying to find just the right tone for my stock related Tweet.

Not really being familiar with the world of "hashtags" and not knowing that a stock was represented by the "$" sign, I searched for Sallie Mae Tweets.

I wanted to know how to do this Tweet thing properly, after all. I wanted to do my research, make certain that I had appropriate references and citations and be cogent and poignant within the contxt of 140 spaces.

Oh, and funny, too.

I certainly didn't want the Tweet to be frivolous or to waste anyone's precious time.

I was stunned to see the venom out there about one of my favorite stocks. There was nothing funny about Sallie Me in the eyes of people Tweeting about it.

To me, Sallie Mae was beautiful. I wasn't really prepared to learn just how ugly it was in the eyes of some many others.

I had owned shares, on and off, for about 3 years, always selling call options in the process.

During that time, I'd gone along for the ride from about $6 to $16. It wasn't straight line, but that's how I like things. So much better to make money raking in call options that way.

But people hated Sallie Mae. Not the stock, but the company.

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Now What?

Like most people who have a vested interest in life, I woke up this morning to the apparent good news that some kind of an agreement had been reached on the Greek crisis.

Most other natural laws were not being violated, according to the early morning news, but this was a real shock to the sytem of universal truths that we count on to make it from day to day. Otherwise, we'd all be stuck to the ceiling.

You'd be more inclined to believe that had Newton discovered the parachute before the Law of Gravity, things would be very different today for all of us.

Reportedly bond holders of Greek debt will take a 50% haircut. I still don't completely understand what that means, especially since I've always been a bit mystified by the world of bonds and currencies. (See: I Don't Understand Currencies)

Britain, which is putting up nothing in the bailout, simply called the EU's key players "morons", offered their advice and went back home. Much like Geithner did last month, except without the bangers and mash awaiting him at the airport.

That I understand.

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I Hate Haircuts

There's been so much talk about "haircuts" lately.

Wall Street is good when it comes to descriptive terms that may or may not describe anything. We've had quantitative easing (1 and 2), risk on/risk off, kicking the can down the road, dead cat bounce, rip your face off rally and now haircuts.

As best as I can figure, in financial terms, the extent of a "haircut" refers to how much give back is necessary to achieve something resembling financial solvency.

As opposed to the real world of hair cutting where there is no cost differential based on the amount of hair shorn, it appears that the extent of the haircut elicits fevered opinions as the perceived costs are culturally unsettling.

Greeks, apparently are a hairy bunch. Thank goodness Armenia isn't a member of the EU.

As soon as talk centers on the possibility of Greece perhaps needing to take a bigger haircut than initially thought, there's more rioting on the streets of Athens.

Retiring at age 27 instead of 25 makes some people very angry. Angry enough to toss Molotov cocktails made from the strange green antiseptic liquid that cleans the instruments of haircutting.

Haircuts do that sort of thing to people.You know how irrational people can be when they get a haircut that doesn't suit them or that doesn't satisfy their preconceived notions.

With the remnants of my Jew-Fro, I still aspire to look like Jennifer Ansiton after each haircut, but am serially disappointed.

Speaking of haircuts and serial disappointments, look at poor Jon Corzine, CEO of MF Global.

On Tuesday, MF Global had the fine distinction of losing even more, on a percentage basis, than even Netflix.

Did I mention that Jon Corzine was follicularly challenged?

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Fear of Missing Out

In polite company, you never refer to behavior as "dumb". Instead, it's simply inappropriate or unexplainable.Just like really wealthy people are never crazy. They're eccentric.

There are lots of reasons for unexplainable behavior, that's why they're really not "unexplainable". They're just dumb.

If you watch shows like "Dateline" often enough, you've seen every bizarre act and the reasoning behind the act. You've also learned that there's never a shortage of unexplainable behavior.

Television ratings seem to do particularly well when the reason behind the action is passion. When it comes to motives, greed is also a big favorite in the  gawker community.

We like hearing stories that have greed as an underlying factor.

Murder for insurance money is very popular, especially if unrequited passion was also involved. How great is it to watch an episode about a wife that allegedly killed her husband for the insurance money so that she and the cabana boy could retire tothe Dominican Republic?

Greed is also a big factor in investing. People do really stupid things because of greed. But greed is nothing more than great passion for money or other items of value.

Everybody's heard the axiom that "bulls and bears both make money, but pigs get slaughtered", but when it comes to battling with human nature, axioms don't stand a chance. It's a lpt easier to spout them than to heed them.

Another investing axiom, although not encased in such a short memorable saying, is that you don't stay long going into the weekend if there's uncertainty in the mix.

This past weekend was one of those that you would have expected smart investors to have been on the sidelines.

After all, the previous week saw gains every day, even though some of those came in the very last hour of trading. The rally was fueled by speculation that the European Union was closing in on at least a short term solution to averting a Greek default.

Stocks climbed and precious metals took big dives.

But on this Friday, one of those quadruple witching Fridays, even in the face of unsettling news on the EU front, th e market still went higher.

In the last hour of trading on Friday I posted on Twitter questioning my intelligence, as I would have expected a sell-off heading into the weekend. Least of all, the bad news that went counter to the rumors and hope should have put a damper on things. Add to that the 5 straight days of gains and it would seem that profit taking would be in the cards.

Sure, maybe the smart guys took their profits on Friday, but I sort of doubt it. Who then was behind what happened on Monday? Definitely not the little guys like me.

Of course, I had a vested interest in seeing some profit taking, as I stood to lose nearly 50% of my holdings to assignment unless the market reversed course.

It didn't.

As I wondered why it didn't do the obvious, I learned of a new psychiatric disorder called FOMO - Fear of Missing Out.

It actually refers to the need to be constantly plugged into social media. It helps to explain why people would risk their lives to text a meaningless message while driving. It also explains why I kept breaking into a cold sweat on Monday as it was again one of those infrequent days that I had to work outside of the house.

Bad enough that I was cut off from CNBC, but Twitter was nowhere near as ubiquitous as its become in my normal life. The need to responsibly attend to work saw to that.

All I knew was that the market opened down around 250 points.

From my perspective that was what I'd been hoping for. It gave me a chance to buy back shares of British Petroleum, Textron, Dow Chemical, DuPont and Triple Q's at less than they had been assigned to me.

But why did the market go up on Friday when it semed so obvious that it should have done just the opposite?

FOMO.

Fear of missing out on more irrational upward price movements. Given that most of last weeks' price increases were based on rumor and hope, what reason would anyone have had to actually go against the flow? History and common sense were no match for unexplained price action. Axioms were meaningless when there was still the prospect of more inappropriate price climbs.

In this context FOMO is greed.

Otherwise smart people fall prey to FOMO all the time. I suppose that it's really a normal reaction. I feel it everytime I sell shares or everytime I decide to buy shares in one company and not another.I definitely felt it Monday morning as I went on a wild shopping spree in the first 30 minutes of trading and then wondered whether I missed out on even better bargains because I didn't wait longer to blow through the money.

It's hard to imagine yourself being the only one with nothing to party about, so you give in to the FOMO.

This morning at back at my usual perch and will be so for another month.

Twitter and CNBC will be fully engaged. I won't miss out on a single opportunity to say something irrelevant in 140 spaces or less.

In the meantime, as the market reversed much of its downward trend in the last hour of trading on Monday I decided not to sell any call options.

Yet.

But I have no FOMO.

There'll be plenty more opportunities to miss out on and there'll never be a shortage of them, either.

Tweets and texts come and go but FOMO is here to stay.

Invest like TheAcsMan

Option to Profit is available as either an eBook or 300+ paperback. Take a humorous look at a serious topic and learn how to make your portfolio finally go to work for you in bull and bear market environments.

See a sneak preview of Chapter 1.  hoco blogs

More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.

Find  OTP Book at Amazon, B&N or now you can also Order direct  from publisher. Use 10% Discount Code P4S2ZD8H>

  

Kicking the Can Down the Road

The other night, the NFL record for longest field goal was tied for the second time.

I still remember when Tom Dempsey, the otherwise unheralded kicker for the 1970 New Orleans Saints, beat the Detroit Lions with his 63 yard field goal.

What I remember most about that is Alex Karras, the Detroit Lion defensive tackle, who was a oretty funny guy, appeared on Johnny Carson's Tonight Show and put a great comedic touch on describing the tragedy of that kick in his team's eyes. Mind you, his team's eyes were also seeing the fact that Dempsey, who had a congenitally malformed foot and wore a special kicking shoe, had less than an athletic physique.

Tom Dempsy's professional life span didn't last much longer following that kick, but it's been an inviolate part of football lore for more than 40 years.

The nice thing about have a finite lifespan is that kicking things down the road is a great strategy.

It works for people and governments, too.

My guess is that people that can kick the can down the road without any real guilt probably extend their lifespan by greatly reducing stress. At the point that they realize that the "jig is up" and the end of the road is figuratively approaching, its time to literally approach the end of the road and kick the can.

People that are protected from the overhang of stress usually make better decisions, as well.

Maybe not better decisions when assessed with regard to the longterm, but at least better decisions for them, which in turn leads to even less stress.

Talk about a real win - win situation.

There have been lots of movies made about people returning to earth from the after-life to make amends for the lives they've lived.

Although I'm not a cinematic expert by any means, I don't think that any of those movies have ever examined the guilt associated with taking advantage of passing your financial responsibilities to your unseen great-grandchildren's grandchildren.

My personal hero is the father of a friend of mine who actually took out school loans in his son's name, used the money for himself, and then saddled his son with the debt.

How is that not a great strategy?

It's so good, in fact, that governments and leaders, whether elected or otherwise do exactly the same thing, finding great inspiration from the alternative life form band, Devo.

Dependence on foreign oil? Kick it.

Social Security Trust Fund problems? Kick it good.

Rising deficits and debt? You must kick it.

Chinese own too much of our debt? Issue more, preferably a long Sebastian Janikowski kick on that one.

So when I heard Treasury Secretary Geithner this morning at the Seeking Alpha Conference sponsored by CNBC, emphatically say that the European Union would not see a repeat of Lehman Brothers, it gave me great cause for concern.

He seemed to be saying that the problem wouldn't get kicked down the road and that tough, but responsible actions would be taken by the world banking community to ensure that  the Lehman debacle wouldn't repeat itself.

As you look around the European Union that can has been kicked around alot, but it always seemed to end up in Germany's backyard. But then again, we've had some bad experiences when Germany's ventured out of its backyard in the past, so maybe it's for the best.

Yet, just when it seems that there will be some way to quench the flames without a great deal of hardship, you get Finland, flexing its influence and introducing such responsible banking concepts as "collateral".

Actually, if Finland really had any influence, you'd see Nokia phones being used by others than just unemployed elves. As Finland realized it really didn't have quite the bandwidth it thought, they acquiesced, besides how much feta per capita did they really need, anyway? Given Finland's location, just about anything can qualify as a much needed chill pill.

The market then tanked earlier today when word came out that the other EU powerhouse, Austria, was against the Greek bailout. It's no coincidence that chill pill and buzz kill rhyme.

Funny thing about those Austrians and their language. Apparently, it's hard to understand those Germanic languages, as somehow Austria's intentions were not reported properly and when clarification was made the market started a voracious climb.

My own experience with that group of languages is that it's much easier to comprehend when it's being yelled at you in very close proximity to your face. Even if you don't quite understand the words, the tone gives the real message.

Austria needs to scream more. Maybe even some hand gestures.How do you say "Nein" in Austrian?

When everyone eventually realized that Austria, in fact, didn't come out against a bailout, only delaying until Friday some sort of vote, the market did a 400 point turnaround.

With options expiration on Friday I looked for more opportunities to pick up some crumbs and there were plenty as the price trend was going higher.

So I took the opportunity to sell call options in DuPont, British Petroleum and Riverbed Technology.

On top of that, I sold some more January 2012 Sirius-XM Satellite Radio Puts.

Although I'm not likely to get all of my remaining positions hedged, I'm reasonably happy, as my shares have been handily outperforming the S&P 500 during this recent 3 day climb.

I was especially happy to see that my troika of environmentally disasterous stocks, British Petrolueum, Transocean and Halliburton have also fared nicely, especially in the wake of today's report which scolded all three for last summer's rig disaster.

As the afternoon started wearing on I began having some doubts about foraging for crumbs, because the market had climbed 270 points and suddenly every talking head was exuberant about the market's future.

Well, wouldn't you know it, just as the unbridled enthusiasm got on the air, the market cut its gains in half during the last 30 minutes of trading.

I didn't mind. For me, the ideal end of an options cycle is having my positions close out right near their exercise prices. For my part, I wish this had been Friday.

I love kicking the same stocks right over into the next options cycle and then selling at the money options on them.

For me, kicking them down the road is a strategy that can never go wrong, regardless of life expectancy.

On the other hand, things may start getting serious in Europe. They may actually address the issues instead of kicking them down the road. That raises the questions as to whether our markets have already discounted that and will drop upon the reality occuring and whether precious metals will reverse their climbs, as fiscal responsibility enters our vocabularly.

Nah, that's not going to happen. No one ever  got re-elected by making the responsible decision.

The EU should just follow the lead of Americans everywhere in dealing with financial crises.

They need to get a new credit card and take those 0% Cash transfer offers

Invest like TheAcsMan

Option to Profit is available as either an eBook or 300+ paperback. Take a humorous look at a serious topic and learn how to make your portfolio finally go to work for you in bull and bear market environments.

See a sneak preview of Chapter 1.  hoco blogs

More about the book and purchase options. Scroll down and read the Szelhamos Rules blog, updated every weekday.

Find  OTP Book at Amazon, B&N or now you can also Order direct  from publisher. Use 10% Discount Code P4S2ZD8H

  

Why Raising the Retirement Age is a Bad Idea

Look, to start, I'm already biased on this issue. Not that I've been objective ever before, but for some reason this time I feel compelled to make full disclosure.

I'm 57 and work about 10-15 days a year. Sugar Momma doesn't like it when I refer to myself as being "semi-retired". I just enjoy moving the border closer and closer to my current age. Mentally, I retired about 30 years ago, but in some form of transfigurative migration, I had left my soul behind as I dutifully trudged off to work-places past.

The big story on Tuesday was the goings on in the streets of Athens.

The cradle of democracy, a nation that arguably, per capita, has contributed more to mankind throughout civilization's history, is sadly in  great turmoil. Or as they say in Greece, jdoiedu.

The economic and financial engines in Greece are a mess, but certainly not the only mess in the world. Protesters tossing Molotov cocktails, police firing tear gas, all while in the shadow of the great wonders of the world, are sad. In some other places those events may pass for national reconciliation day activites, but in the civilized world, people take notice.

The idea of significantly raising taxes, dropping social and government services and increasing the retirement age is a hard one to swallow, especially if, as a citizen, you blame external forces for your economic crisis.

Luckily Goldman Sachs has broad shoulders, because it really needs them these days.

I really don't have the motivation to look up the details, but Greek citizens can retire far younger than can the typical American.

And although many conservative pseudo-economists distort the American story and claim that 50% of US citizens pay no income taxes, the situation in Greece is pretty enticing, when it comes to being able to avoid tax payments.

All it really takes is the ability to lie. At least in the United States there is the dual requirement of being able to lie and getting away with it. That latter requirement is far from a given.

I do understand the need to raise revenues and decrease services, as a general strategy during difficult times. Unfortunately, it would take well-intentioned elected officials to feel and more importantly, act the same way in Washington. We're not fooling anybody if we think that's going to happen in our lifetime.

Well, at least in my lifetime.

But the retirement thing, that does bother me.

I actually have not been effected by the gradual increase in our own social security age eligibility, although my Sugar Momma is effected.

But besides the fact that I don't really want to work, there are some very pragmatic reasons why increasing the US retirement age may not be the way to go, at least not with the direction that the economy has been headed these past few years.

Unless you've been hiding away someplace for the past 20 years, certain jobs are disappearing from the United States. The jobs and industries that were created to replace those missing sectors of our economy are now disappearing, as well. I'm also now old enough to remember when unions were decried and criticized for acting like Chicken Little when suggesting that technology and automation would replace humans in the equation.

Nonsense, was the polite response to that uncanny ability to see into the future of the American workplace.

Have you seen the unemployment rate lately? Everyone seems to agree that number is under-stated due to the people that have simply given up even looking for employment.

It's hard to believe that anyone would actually give up on the search unless they were already within sight of retirement.

On a positive note, Zynga, the creator of Facebook's wildly popular Farmville is likely to announce its IPO today, with a suggested valuation of $15-20 billion. Morgan stanley is said to be the lead underwriter, but I think Goldman Sachs would be more up for the task. Based on its recent stock performance, Goldman could also be the leading supplier of organic fertilizer to Farmville Nation.

Fascinating, but with the exception of corn and marijuana, Zynga may turn out to be worth more than the value of any other US cash crop, based on 2005 data.

Not only will Farmville create virtual farming employment, but may singlehandedly save the American family PC farm.

Let's face it, physical labor and the service sector are honest endeavors, can both be very rewarding and honorable. But they may also be the only kind of productive work a portion of the population could ever be qualified to do.

But wait, aren't those the very jobs disappearing or being off-shored?

I'm not trying to be an elitist about this, but it goes back to the notion that even if you equally distributed all wealth to a population, within minutes there would be both millionaires and paupers.

As our population grows, albeit, it is now growing slowly, newly minted adults will need jobs. But where are those jobs coming from? Increasing the retirement age, coupled with decreasing standards of living simply dry up the exisitng pool of available jobs, as the now elderly won't even be able to afford to retire.

Of course, from an employer's short-term perspective, given the expense of a codger like employee pool and their attendant medical mneeds, a cheaper and healthier alternative may be irresitably beckoning toward them to fire the asses of those highly experienced leeches.

Disequilibrium in immigration, birth rates, death rates and retirement rates can have drastic effects on our society.

Instead of listening to annual summertime stories of how inner city youth are unable to find summer employment and how that bodes poorly for street crime statistics, lets transport that model to the entire country.

Take your choice. Marauding gangs of unemployed and disaffected youth or hobbling throngs of terminated geezers eating away at the fabric of American society, all clawing for the few jobs left in the United States.

So where will  the job-seeking migration send Americans? It's not like the south or southwest are lgoing to be booming anytime soon. It's also not very likely that China will find itself with a shortage in its labor pool. Libya's burgeoning domain shortening industry is mostly run by an albino savant in a basement somewhere in Detroit, so that's not going to be the solution, either.

Right now we look at Greece. Not long ago we looked at Tunisia.Well educated, yet high unemployment.

That' a bad combination for civil rest.

I'm just trying to do my part as a citizen who cares about our youth's future livelihood and don't want to see generational warfare in the streets.

I'm more than happy to stay at home, especially on those days that I can make more money by just tapping a few keyboard entires.

Yesterday I sold a few more lots of Freeport McMoRan calls, although these were the end of the options cycle variety. I was also finally able to get good prices for shares of Google and Praxair, also end of the cycle kind of trades.

In my one moment of weakness, well, there are actually many, but the one that I'm willing to divulge, I sold some put options. If you read with any regularity, you know that I don't do that very often, even though I do have a short chapter in the Option to Profit book on the topic.

Last month I lost a little bit on Yahoo puts, but more than offset that with Harbin Energy and Sirius-XM Satelitte Radio puts.

Today, the briefly fallen angel was Spreadtrum Communications.

I'd never heard of them before, but the backdrop was that Muddy Waters, and no, that's not some sort of bluegrass singer, advised that they had taken a sizeable short position of this Chinese company.

What could go wrong with a Chinese company?

Muddy Waters has a recent track record of being able to panic stock prices of companies that they short. They also recently opened a set for Boz Scaggs.

So after a large plunge in Spreadtrum of about 30%, I sold $9 July puts, that were at the time $1.50 out of the money.

Like Harbin before it, Spreadtrum turned around on a dime, reversing the plunge.

It was just that kind of day. The kind I'd like to see everyday, to a point.

So I'm trying to do my part. I'm staying away from the employment market, despite Sugar Momma's recent exhortations.

What can I say. I'm just a patriot who doesn't want to see fellow citizens rioting in the streets.

You're welcome.

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