Kwanzaaian Economics

I've always liked the disclosure that begins with the words "it is not within the scope..."

Disclaimer, disclosure. It's all the same, isn't it?

Disclosure is a nice way of of saying that idiots need not apply and should have their hands held elsewhere if they need help pulling up their big boy pants.

Disclaimer is what you do when you know that despite your disclosure, people will still follow their blind prejudices, knowing that they can always blame someone else for their mistakes.

So let me disclose that it is not within the scope of this blog to create awareness of higher levels of being or finance. It is only meant to entertain me and keep me away from the neighbors.

I do very little on Facebook (or life, in general), having joined at the same time as I started this blog and started Tweeting. All were done with a singular purpose and objective in mind, which was to sell books.

I do belong to one membership site, which is comprised of past students at the small elementary school that I had attended. It happened to be a Yeshivah, which if you're unaware, is the Jewish version of a parochial school.

Jews, as you may be aware, through personal experience, or through your redneck stereotypes, can be an argumentative group.

It's alright for me to say "My Hebrew" in  mixed company and "My Heeber" when outsiders aren't around, but it's not permitted for you to do the same.

Click to read more ...

Full Disclosure

For starters, allow me to make full disclosure.

On Monday I sold puts on shares of Groupon as a reflection of a short term bullish sentiment on its shares.

Unless you've been living in a cave or have been on an South Pole expedition you know that Groupon is that beleaguered daily deal space leader that has had a rough time of things.

If either of those are the case, you probably also still own shares of Research in Motion.

Sometimes you are your own worst enemy and there are no better recent examples of that adage than Groupon and Research in Motion.

From its IPO, including pre-IPO and post-IPO behaviors its been an embarrassment every way you can imagine. Embarrassment is one thing, but for those that purchased IPO day traded shares at $26, the drop below $15 is more meaningful.

In the past, I've been critical of Groupon and its juvenile leadership and arrogance. If you really care. take a look.

If you're really without a reason for living, I suppose that you could check through the Twitter archives and read other miscellaneous comments that I'd made over the months, especially about CEO Andrew Mason, although he certainly wasn't the only culprit.

During that time, I'd never own shares, nor had any interest, long or short in the shares of this company.

On Monday, I finally decided to take a position, by selling those April 2012 puts.

I did so following Groupon's press release regarding yet another accounting issue.

In the past, I've done very well selling puts on companies after they've taken big hits, but not being terribly speculative or risk taking by nature, those positions have always been small.

In this case, if I am assigned shares, I'll be on the hook for about 0.28% of my portfolio.

Since Monday, other than mentioning the fact that I had taken the position, I've made no comments, derogatory or laudatory, regarding Groupon.

Not as if I actually would influence anyone by doing so.

Click to read more ...

Is that All it Takes?

The day started with a nice surprise for me.

Still upset about the bad luck I'd had when my computer froze during the final minutes of FrIday's trading session, I was prepared to start the week with most of my Freeport McMoRan shares assigned from me after just having sold those calls earlier in the day on Friday.

Compound that with only a net $8 profit from the big mega-Millions drawing and you've got some blood pressure raising seething going on that can be internalized for only so long.

Sometimes, though, the system is neither perfect in its execution nor in its pricing.

For example, sometimes really stupid people win really big lottery prizes.

They can be safely assessed as having been stupid on the basis of blowing through tens of millions of dollars and more in just a few years and being left with nothing but memories of days of grandeur.

That reportedly happens fairly often, so there may be an inverse corrrelation between jackpot winners and IQ. I still don't understand all of the testimonials of past jackpot winners who claim that their lives became worse in so many untold ways after their good fortune.

Seven out of ten people that I polled on that issue agreed that it was a sign of stupidity at its greatest height.

Sometimes the system gets it wrong too, as shares are expected to be assigned if they closed more than a penny above their strike price.

But the surprise, the yawn of a system taking a break, was right there, staring at me this morning.

I felt as if I'd gotten a gift when only the smaller lot of my Freeport shares was assigned, leaving a bit more than 75% of the shares still safely stored in my portfolio.

Not quite a Mega-Millions jackpot, but I gladly accepted it.

Of course had those shares not taken a well deserved climb well higher this morning, I'd be muttering about the inequity of the system letting me down and would be raging against those 1% fat cats that comprise the 1% of the 1%.

Instead, move over and make room for me and my boys, Mac and Moran.

Click to read more ...

IPO-Ville

It's rare when a story can hold our attention for more than a single day.

But I'm glad that there's something to take my mind off the fact that I didn't follow through with my strategy to purchase option straddles on Green Mountain Coffee Roasters and MasterCard in advance of their earnings.

There's always next quarter and the next earning's season.

By then, the Facebook story should just about be hitting full stride, as every effort will be made to get shares out at least 6 months prior to year's end, to avoid increased capital gains taxes on newly minted millionaires.

Granted that the Facebook S-1 was released after yesterday's closing bell, but counting the speculation regarding its release, we're well beyond the time limits of our attention, now having surpassed 24 hours.

For me, I knew that the market was beginning to get a bit "frothy" to borrow a phrase from our dear past Chairman of the Federal Reserve, Alan Greenspan, when my son, who had all of a single stock trade under his belt, was beginning to digest the Groupon S-1 offering.

And he offered comments and observations demonstrating that he was no fan of its CEO, Andrew Mason.

Mason had a rocky pre-IPO experience, but has been virtually invisible ever since Groupon came public. Probably a good thing, given Groupon's performance to dtae.

The Facebook S-1 revealed lots of previously inknown information, including the fact that Lee Harvey Oswald had not acted alone in the JFK assasination.

He had friends and they were poking one another with increased frequency before and on that fateful day.

On a potentially positive note, the news that Facebook shares would become the new US currency has already been supported by Congressman Ron Paul and he is preparing to drop his demand for a return to a gold standard and now plans to drop out of the GOP race, having now achieved his ultimate victory.

The news that Facebook would also release a secondary offering of shares, available through an egalitarian Dutch auction, contingent on Zuckerberg's college girl friend coming back to him on hands and knees gave individual investors some hope to share in the process of wealth creation out of nothing at all.

Click to read more ...

The Hype

There were two big stories today and even if you don't follow business news, you couldn't possibly escape either of the stories.

They were almost like radiation. You might wish that you could escape, but you can't. You can't even feel safe.

Chances are pretty good that you're a Facebook user to some degree and chances are pretty good that you're an Amazon shopper.

There are reportedly 800 million Facebook users worldwide. No one really knows that much about Amazon, though, as it tends not to release very specific data regarding  itself, other than what is required by the Securities and Exchange Commission.

Sometime today Facebook is expected to announce details of its IPO. Following the model so well popularized by the likes of Linkedin, Groupon and Zynga, Facebook is only going to release 5-10% of its outstanding shares, with a reported valuation approaching $100 billion.

There's no way you could have avoided any of that news over the past couple of days.The hype has been incredible. In fact, Herb Greenberg of CNBC did an interesting piece the other day of a "respected" broker-dealer huckster perhaps skirting regulations and hyping the need to invest in the pre-IPO ownership of the next Facebook, which now happens to be Facebook.

This one will be among the hottest IPO's known to mankind and we'll undoubtedly hear lots about the inequity in the process of distributing shares, as anyone that you're likely to know will be shut out of that process.

Click to read more ...

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.

Click to read more ...