Thursday, June 30, 2005

National Change Card

Here's an idea that I've thought about on and off. Figure I'd throw it out here and get some opinions and feedback. We all know how much of a pain it is to keep coins around. They are dirty, heavy, and cumbersome to use. We also know that there are quite a few people out there who are opposed to a completely electronic currency system. So here's a compromise.

Let me introduce the National Change Card (NCC). This card would be a government-issued card that would keep track of your change up to $0.99. Because the NCC can hold only a small amount of money, there is very little risk of fraud and also there are virtually no big brother issues. Basically, whenever you purchase something using cash, you'd hand them cash plus the NCC. Any amount that would typically have been returned as coinage would not be deposited onto your NCC. Say you purchased a $1.90 item. Now, you'd have $0.10 on your NCC. Now, say you were to purchase a $24.08 item and you handed the cashier $25, you would receive a $1 bill and your NCC balance would now be $0.02. If you forget to bring your NCC, you could simply type in the official NCC number along with a pin code. If an NCC was ever lost or stolen, you are out at most $0.99, plus any fees you'd pay to get a new one. The various state DMV offices could take care of these issues.

Implementing the NCC would remove the need for the government to mint coins. And, there would simply be more efficient use of money, which would be seen as an uptick in consumer spending. These two points alone should be enough to offset any costs associated with issuing and maintaining an NCC for everyone. Visitors to our country could be issued temporary cards or a system could be set up to allow use of passports from different countries in lieu of the Change Card.

The government could certainly push the cost savings towards bettering education or any number of worthwhile projects. What do you think of the NCC? What are potential problems and pitfalls? Could they be resolved?

Tuesday, June 28, 2005

Vegas and More

Had a wonderful time in Vegas. I flew in Friday evening, and met up with the Marquis, Crest, and PetDander. I spent Friday night through early Saturday morning playing a 10-hour session of drunken poker with PetDander. The games were extremely soft, and so we both ran over the tables. We played sober poker on Saturday afternoon, and made a few more bucks. On Saturday night, we played a profitable session at the new Wynn hotel. Then, I decided to give back a little over half of my poker winnings playing some negative expectation games including Blackjack (no counting), Caribbean Stud, and Roulette.

Also, while in Vegas, I caught part of the National Spelling Bee on TV. That was really some ridiculous stuff I saw. The words were ridiculous, but even more ridiculous was that these kids were actually able to make use of the etymologies and figure out their proper spellings. Seriously weird words. I looked a few of them up and many of them only show up in unabridged dictionaries.

Anyway, I caught one of the first flights out of Vegas on Monday morning. I then proceeded on to work, where I was reasonably productive. Then I crashed hard when I got home. Today was a much better day for both me and the market, although EBAY is down about a buck from my poor entry. The rest of the market moved pretty solidly today after oil prices backed down a bit and consumer confidence had a strong showing. Constellation Brands (STZ) is going to join the S&P500, which is pretty awesome. Not too much else to report.

Friday, June 24, 2005

EBAY Re-Entry

I have re-established a trading position in EBAY @ 34.47. Remember, this is the same position that we sold off in two chunks at 35.80 (via covered call exit) and in the 38.50's. Won't be risking too much on this, since EBAY is a mover and highly volatile. Willing to risk a buck or so.

Thursday, June 23, 2005

Vegas, Baby!

Off to Vegas tomorrow. Will meet up with the Marquis, Crestfallen, and PetDander. Going to be staying in an off-strip hotel this time around. The World Series of Poker has really driven up Vegas hotel rates. Let's not even get into airfare. To get into Vegas mood, I ended my vacation from poker this week, and clearing the PokerRoom bonus. Hopefully, Vegas will treat me well. That would really be nice after today's market bloodbath.

Also, just to give an update, Solectron's earnings report was neutral at best, which was disappointing to say the least. On the positive side, they announced winning a significant contract with Lucent in their conference call. Despite meeting analysts' earnings expectations this quarter, they remain in a revenue-challenged environment unfortunately. Additionally, they are experiencing serious revenue volatility in certain segments of their business, and they guided their revenues about 5-10% lower than previous expectations. They are still cash-rich with a whopping $1.6B in cash. This is after they paid down $500MM in their most expensive debt. They did hint at a stock buyback during the call as well. So, I need to decide if I want to add to this position, hold on, or dump the shares. I am most likely going to continue holding on to what I've got. After all, I did initiate the position at a decent price at $3.50.

Quick Market and Portfolio Update

Let's see what's new recently.

Threw in the towel on Applied Materials (AMAT). That short stung a bit; my exit price today of 17.10 hands me a 5% loss.

General Electric (GE) is reorganizing into six different business units, each focusing on a particular industry.

Ameritrade (AMTD) and TD Waterhouse are merging as the online brokerage space continues to consolidate.

RF Micro Devices (RFMD) continues to tear higher. Up a whopping 35% since position was initiated.

Dryships (DRYS) has recovered half of the quick 10% loss it dealt me. It also officially announced the dividend I mentioned a while back. When shipping rates increase, DRYS should do better.

Solectron (SLR) earnings are due out after the market closes. It has really been shining lately, and today's price action is promising.

So You Want To Be A...?

In a number of schools, students participate in a Career Day of some sort. Often, the students are allowed to choose which careers interest them most. And, teachers are almost always encouraging no matter what the student chooses. A side-effect of this is that it becomes quite common for the "doctor" or "lawyer" rooms to fill completely, while many of the other rooms remain fairly empty. We all know that in the real world, most of the population is not made up of doctors and lawyers.

I personally feel that being encouraging is generally a great attribute for a teacher. However, I also feel that sometimes this blind encouragement ultimately sets up a child for failure, which can prove to be quite devastating, especially emotionally. If it is clear that a child has an incredibly low chance of achieving their career goal, is it better for a teacher to ease them into accepting the reality of the situation or better to continually provide encouragement? Note that this does not necessarily mean that a child is not intelligent. This situation could easily come up where a child aspires to be an artist or a professional ball player, but does not have the talent required to achieve their career goal.

Sooner or later, the child will reach a point in his or her life where it becomes painfully obvious that they're not going to make it. Either they are told this by a teacher or they come to that conclusion on their own after a string of failures. Or, perhaps another possibility is that one day they see that the path is too difficult, and so they decide on their own that they would rather not pursue the career in question. It is likely that the child was probably better off not heading down the wrong path to begin with. Much like navigating through a labyrinth, heading in the wrong direction often leads to a lot of lost time and wasted effort. However, it is also quite possible that what the child loses is more than made up by what is gained in terms of psychological development and also having partaken in some worthwhile learning experiences.

So anyway, a few friends and I argued about this over lunch not too long ago. And, I really have to say that I am on the fence on this one. I don't know which side to join. Is it generally better to be encouraging even when you are nearly certain that the path leads to a dead-end? Or, is it better to coax the child into a more realistic frame of mind? Maybe the answer is highly dependent on the mental and emotional state of the child in question. But, one thing I know for sure. If I ever talk about becoming a professional poker player, I want everyone (and their mothers) to tell me that I'm not good enough.

Tuesday, June 21, 2005

One Fish, Two Fish, Red Fish, Blue Fish

Random Question of the Day: If you put a male fish and female fish at opposite ends of a fishless lake the size of Lake Tahoe (22 miles long, 12 miles wide, 72 miles of shoreline, greatest depth of 1,645 feet). Do you think that they would eventually find each other and have baby fish?

Been thinking about this on and off for some time, and I really have no idea. Does it depend on the fish? Say there was a nuclear disaster and the world was almost wiped clean of human existence. Somehow a single male and female human survives this on the island of Guam (about 30 miles in length and 8 1/2 miles wide). They are on opposite sides of the island. Assuming there were no advanced communication systems available to them, would they eventually find each other and procreate?

Sunday, June 19, 2005

Weekend and a Blogjective View of Blobjects

The weekend started off with a small get-together at the new apartment of Jojo and Imoan (pronounced I-Moh-Ahn, like Samoan). It was a relaxing night filled with conversation, beer, wine, and more beer. Conversation ranged from life at a big city law firm to musical potlucks where everyone in attendance shares a few non-mainstream songs to pineapple guavas, which I've been told are fruits that look like hairless kiwis and taste like pears. Heineken Special Dark, Anchorsteam Summer Beer, and some Gew├╝rztraminer filled the conversational lulls. All in all, a great start to the weekend.

Today, we visited the San Jose Museum of Art to check out the Blobjects & Beyond: The New Fluidity in Design exhibit before it is removed early next month. The exhibit was really fascinating, and I truly enjoyed it. I was exposed to a plethora of fluidically designed objects such as these shown here.


Some Blobjects

It was a visual experience that really gave a glimpse of our future. It seems that everything these days is moving away from an angular design to one that is more fluidic. This exhibit really heightens your sensitivity to this trend, which has been ongoing for quite a number of years. Some common household items also have been affected by this blobject movement. One in particular is the toothbrush, which has gone from a tool with hard angles to one much more curvaceous. Another interesting blobject on display was a Ty Nant water bottle. There isn't much else that embodies the idea of the blobject better than this simple water bottle.


Ty Nant Water Bottle

Of course there were other exhibits at the museum. While they were also fascinating, they did not hold my interest nor open my mind as much as the Blobject exhibition.

Friday, June 17, 2005

Raft Puzzle

Here's a puzzle I just heard about today. I found it enjoyable.

We have the following people on one side of a river: Policeman, Criminal, Parent A, Parent A's two children, Parent B, and Parent B's two children. There is a 2-person raft available for use. Only the Policeman and the two Parents know how to control the raft. The goal is to move all the people to the other side of the river.

Here are additional constraints:

Criminal cannot be with anyone without the presence of the Policeman.
Parent A cannot be with any of Parent B's children without the presence of Parent B.
Parent B cannot be with any of Parent A's children without the presence of Parent A.

Have fun.

Thursday, June 16, 2005

Cyclical Dominance

Here's a numbers puzzle to think about during your idle cycles.

Let's start with some background. Say we have a spinner with 3 numbered sections. Each section in this spinner is equally likely to be picked when the spinner is spun. Now, say that this spinner had the numbers 1, 2, and 5. Let's take another spinner with the numbers 3, 7, and 9. If we put both the spinners in a heads-up competition against each other, the second spinner (3 7 9) would win in the long-run. So, we say that Spinner 3 7 9 dominates Spinner 1 2 5.

Onto the puzzle. We have 3 spinners just as described above. How can you assign the numbers from 1-9 to each of the sections, using each number exactly once, such that we have cyclical dominance? That is to say, Spinner A dominates Spinner B dominates Spinner C dominates Spinner A. Put yet another way... say we lay these spinners out on a table much like weapons prior to a duel. I then ask you to choose your weapon first. I will always be able to choose another that dominates yours (i.e. gives me the advantage) if there is a dominance cycle.

Follow-up question. There is more than one possible configuration that satisfies the cyclical dominance constraint. When you find one, check to see if your configuration is a fair one? A fair configuration being defined as one where any pair of spinners chosen will result in the same advantage for the dominant spinner.

Tuesday, June 14, 2005

Market and Portfolio Update

The PPI data came out this morning. The data was quite tame, which should calm some of the inflationary fears. The markets did not cheer this data. This suggests that the market participants are more interested in the CPI numbers due out tomorrow. The retail sales figure, which also came out this morning, fell more than expected. Perhaps this helped curb any enthusiasm that the PPI numbers could have brought about.

Don't ask Best Buy about the retail sales figure. This quarter, they absolutely smoked the estimates, posting an enormous upside surprise. Enormous, as in 0.51 actual EPS versus a consensus estimate of 0.30 EPS.

Been a while since we had a market check-up and portfolio update. Here are selected opinions and views on a few of my holdings...

RF Micro Devices (RFMD) - Looks like it's moving again. Nothing obvious that is driving the move, but I believe that generally, they'll be doing much better in the next few quarters. When they decided to re-focus on their core competency (power amplifiers) and exit their losing WLAN business, they did themselves a huge favor. Expanding and growing into other areas is a good thing, but only when it can be done properly. They weren't able to do it right, and so the decision to discard the losing side business, namely Resonext, was a smart one. Hope they can really show improvement and provide visibility in their next earnings call next month.

Harrah's Entertainment (HET) - Continues to make new highs. The Caesar's merger closed yesterday after everything was finally approved. Harrah's has an incredibly strong line up and such a strong brand name. It's really one of my strongest performers over the years.

Applied Materials (AMAT) - Still have this short position. It gave me a scare at one point when it went into the 17.40s. Didn't quite breach my panic point, and thus I still hold the position. Slightly out of the money, but not too worried. At the very least, it does help decrease the variance of my portfolio.

Dryships (DRYS) - Very disappointing start to this newly initiated position. Down a quick 10% here. Planning on holding for much longer-term, so I won't sweat the moves. That's part of the game.

Dow Chemical (DOW) - Initiated a position at about the same time as DRYS. At least it's ticked up about 2.7% since I entered.

Altria Group (MO) - Suffered a drop today having to do with timeliness of a court-ruling. However, it had a major courtroom victory the other day. A proposed 25-year $130 billion anti-smoking program was reduced to a mere 5-year $10 billion program. Department of Justice loses again. Their first major loss took place in February when an appeals court rejected the $280B sought under the Racketeer Influenced and Corrupt Organizations (RICO) Act. Basically, we're moving closer and closer to a time when big MO won't be as crippled by all this legal activity. This would then bring us closer to a break-up date. Altria Group will most likely be broken into 3 parts: Kraft Foods, Phillip Morris USA, and Phillip Morris International. It would make the most sense for them to break it up in this way, since they could then continue selling their tobacco products very aggressively in foreign countries, while being more careful when marketing in the US. Still a very interesting company with a lot of value tied up internally that will only be released when the company is broken up.

Solectron (SLR) - They broke $4 for the first time since I've owned them. Earnings are soon. That should really shed some light on the business. I'm looking for some big positives. As I said earlier, I believe strongly that contract manufacturing is generally improving.

Hibernia (HIB) - Still not sure if I want to let this convert into the cash and Capital One (COF) stock combination. Or, if I simply want to sell now and move the funds into another spot. While I think COF is not necessarily bad, I prefer a higher-yielding stock, since I prefer my portfolio to be balanced in this respect.

Monday, June 13, 2005

Anagram Fun

Here's a quick one for you word lovers to think about. I heard this one only recently. I am thinking of a common 5 letter word. When you rearrange the letters of this word in alphabetical order, you have another common 5 letter word. When I say common, I mean the words are understood by elementary school children. I'll provide a few cryptic clues, just for fun. If no one gets it, I will post the solution in a comment in a few days.

Clues: Anna Kournikova, Macaroni, and Nut Tool

Sunday, June 12, 2005

Weekend Adventure

We thought about trying something different for dinner on Friday night. We decided on Creole food. After reading quite a few reviews of various restaurants, we chose to make the half-hour drive to San Carlos and dine at Creola.

From the outside, the restaurant is very unassuming. If one were to drive by it, nothing special would have been thought about it at all. But once inside, there was a definite romantic ambience present. There were a decent number of selections to choose from, and the prices were reasonable, ranging from $12 to $25.

We ordered crawfish hushpuppies to start, which were delicious. Next, we shared a rather fancy salad topped with slices of pear and also a bowl seafood gumbo. For the main course, I had the Cajun Jambalaya and Alligator feast, and she had the Seafood Pasta which had plenty of crawfish. The portions were not too small, and so we were completely stuffed after this, not leaving us any room for dessert. I highly recommend this restaurant, and I will likely go here in the future if I have an itch for Southern cooking.

On Sunday, we decided to check out Bonfante Gardens, the home of the Circus Trees. In addition to the oddly grafted trees are several very well-kept botanical gardens. The park is often considered a place for young children, but I enjoy it for the scenery and the variety of plants on display. From what I've read, nowhere else in the world can one find these types of circus trees



Circus Trees at Bonfante Gardens



Rocky Scenery at Bonfante Gardens

Friday, June 10, 2005

Respect the lower case

When a person or some other entity makes a discovery, starts a group or following, or even produces a literary work, a word is sometimes created. Usually the word is named after the creator, and much more often than not, the word is capitalized. This capitalization distinguishes the word from standard words. Over time, as the word gains acceptance by society and becomes commonplace, it can lose its standing as a proper word. It sheds its capitalization, truly liberating itself from its social class.

The English language is littered with many newly created words. An everyday word that has yet to be promoted is Realtor. This is not a standard word, despite its frequent use. It is a proper noun, thus it would be grammatically incorrect to use it in a non-capitalized form. Other words that are still awaiting their emancipation include Jacobian, Gaussian, Keynesian, and Faustian.

Then, there are some words that make up the bourgeois. These are the words that are really flirting with the final promotion to total acceptance. These words include Johnathan Swift's creations, Brobdingnagian and Lilliputian. They exist in both lower and upper case states. Society has not yet made up its mind on them. Others, such as Boolean, Diophantine, and Draconian, also fall into this same category. There are clearly sub-classes in this class of words. It could be argued that Draconian is seen without the capitalization much more often than Boolean, which is a relative newcomer to this social status.

Finally, there are the elite. These are the noble words that command the most respect and have gained the most acceptance by society. They announce their status through their lack of capitalization. Some of these words are pasteurize, warfarin (named after the institute that patented it), newton, and algorithm (coming from the bastardization of the Arabic mathematician's name).

Words live in a world where being prominent is a sign of social rejection. In our world, prominence is welcomed by society and distinguishes the powerful individuals from the commonfolk. But, in the end, the story is the same. The ones that are unlike the rest are looked upon differently. Perhaps, Webster needs to initiate an affirmative action program to help the Hamiltonians, Euclideans, and Reaganomics of the world.

Poker Vacation

It has been a while since I've forced myself to take a vacation from poker. I basically had a pretty sick run of beats tonight in the Party Poker 15/30. I guess this is the world that my friend, the Marquis, lives in. Half of my beats came in the form of being outdrawn, often times by holdings with slim chances. The other half of the time I was simply outflopped and got hurt. I cannot remember the last session of poker where I encountered what seemed like a neverending stream of the following: flopped sets against my flopped two pair, flopped two pairs against my top pair top kicker, or flopped straights versus my sets. All in all, it was grueling. I might not play until I head out to Vegas at the end of the month.

My friend, PetDander, is going to be there along with the Marquis, who lives there. Should be fun. Hopefully, I'll be fresh and ready to take advantage of the juicy games there when I go.

Tuesday, June 07, 2005

Brazen Etymology

Today, I learned something new about the phrase bold-faced lie. What I learned was that it's not a bold-faced lie, but a bald-faced lie. Being the stubborn individual that I am, especially when it comes to my command of the English language and my lexical arsenal, I did some digging into the origins of that phrase.

I found out that bold-faced lie is actually an acceptable modern variant. In this day and age, bold-face can refer to the boldness of type. Back then, this really had no meaning. The more surprising thing that I found out, however, was that bald-faced lie wasn't the original phrase. In fact, the earliest version of this was actually bare-faced lie. As you can imagine, this referred to being clean-shaven with nothing to hide. It follows that bald-faced grew from bare-faced. And, the rest is history.

So, we have a happy ending. I'm happy to know that I haven't been using a non-existent phrase. And, I'm just as happy to have learned of the phrase's evolution.

Sunday, June 05, 2005

Little Havana and a Bit of Fruit

Yesterday, I was in Little Havana smack in the middle of Palo Alto. The Executive Ranch of Ridiculousness (www.executiveranch.net) threw another monster party. This one had a Cuban theme and started early around 2pm and went till who knows when. The party was a blast, plenty of food, beers, cocktails, and even a variety of cigars. I overindulged, and today I paid for it. Being hung over for most of Sunday afternoon is not my idea of fun.

Now that I've fully recovered, let's talk a bit about Apple. Frankly, I'm surprised that the Intel rumors turned out to be true. The Wall Street Journal reports that Jobs will be announcing the news officially on Monday. I see this as a long-term good move, but in the short-term, there will be some serious obstacles. I guess for right now, I'll be keeping an eye on how the market will take the news. Not sure if I want to re-establish a position or not. And, if I do, I'm not sure at what price. Futures look strong right now... looks like that AMAT position of mine will continue to bring the pain. Boo!

Friday, June 03, 2005

Yet Another Portfolio Update

Today's job report was not so good. The latest numbers show sluggish job growth. The market responded negatively, as it should.

I mentioned that I would be adding to the portfolio after selling off the EBAY position. Yesterday, I initiated a position in DRYS in the 17.90s. Today, at the weak market open, I initiated a small position in Dow Chemical (DOW) at 45.24. Dow Chemical is the largest chemical company in the US. Based on my own research and the analysis provided by the S&P, its earnings are set to grow well. They are cutting costs while increasing their sales amid an uptick in their industry. Their plastics business (largest component of their sales) looks to have gotten past its slump, and the same goes for their chemicals business. The lesser sales components, including agricultural science products and energy-related products also have not given us any reason to question earnings growth projections.

Given all of this, I established this position despite the recent Merrill downgrades on chemical companies. For what it's worth, Credit Suisse First Boston has an Outperform rating on the stock with a $67 price target. This taken from their research report released on May 8, 2005 after their analyst met with the DOW management at a company visit. Additonally, DOW sports a nice 2.95% dividend yield and commands a very reasonable trailing price-to-earnings ratio under 10.

But, I'll tell you what's killing me... AMAT. In today's very negative market, AMAT simply held its own. That by itself scares me. I'm not too close to my breaking point, so I'm still holding short. But, I just might throw in the towel early on this one. It is simply not behaving like I expected.

In other news... STU is once again smoking. And, new worries concerning the iPod have sent Apple shares down quite a bit. If Apple continues to fall, I will take a closer look, re-evaluate, and then decide whether or not I want to re-establish the position I disposed of recently.

Thursday, June 02, 2005

Portfolio Update

As I said I probably would last night... I've exited EBAY completely. The last chunk of my trading position has been sold off in the 38.50s. Unfortunately, my fill was near the lows of the day thus far. It looks like I may have jumped the gun a bit, as it is now trading 30 cents or so from the intraday lows.

I need to do some serious searching, as there is now a good amount of cash to deploy.

AMAT trading up a dime this morning is not feeling so good. Markets are fairly flat to negative. I certainly believe that the weaker stocks should fall back during these sessions. Increasing my level of worry on the short position, but we're still very much near the entry point, so I am not planning on doing anything with it right now.

In Edit Mode (7:03AM): Just picked up some Dryships (DRYS) below $18 a share. This particular company is in the dry bulk shipping business, and it had an IPO price of $18 not long ago. I have been following the company ever since its debut. I had intended to purchase IPO shares, but missed my small window of opportunity when they delayed final pricing and the window for confirming final IPO participation was shortened. It has some pretty sick profit margins and is priced cheaply in terms of earnings multiples. Any earnings growth acceleration, and it should really command a stronger price to earnings multiplier. In addition to its relatively cheap valuation , it has informed the world of its intention to pay a quarterly dividend of 20 cents. At 80 cents a share, we're looking at a sizeable yield of almost 4.5%. In any case, the position is small. Bottom line is that I'm not looking for a quick trade in DRYS; I'll keep this one in the portfolio until I sense real danger.

Some Flowers

Just some close-up shots of flowers seen at the Dole Plantation.



Wednesday, June 01, 2005

Market Update

Well, what's new today in the financial world? The Institute of Supply Management (ISM) index showed that while the manufacturing sector expanded in the latest month, growth has really slowed down. So, why did the stock market rally? Well, the sector's unexpected weakness gives the Federal Reserve more reason to slow down the monetary tightening.

If the Fed is really nearing the end of its tightening phase, then I am once again ready to pounce at a few select stocks in the financial sector. Maybe I'll start nibbling at Washington Mutual. Really not sure right now... will need to do some research. Also, I have a decision to make about one of my core holdings, Hibernia (HIB). They're being acquired by Capital One (COF), partly for cash and the rest in stock. I was big on HIB partly due to its sweet dividend. COF's dividend isn't so hot, so I'm trying to find reasons to exit.

eBay announced that they were buying Shopping.com (SHOP) for a hefty $620MM in cash. This is a full 20% premium over today's closing price. Again, not sure what to think of this. SHOP isn't profitable currently, and beyond that, I really don't know much about the company. As with most buyouts, the buyer's st will face near-term pressure. This might be my cue to exit the last leg of a very profitable EBAY trade.

Still short AMAT. Not too worried... yet.

Gaming is once again on the up and up. Harrah's (HET) closed above the $72 mark for the first time. And, all the other gaming stocks were up solidly today.

STU is also regaining its recent lost ground. It's been smoking in the last week or so. That company continues to generate some serious cashflow.

That's all for now.
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