Thursday, December 29, 2005

Stocks and More

So, it looks like Abercrombie and Fitch (ANF) ran away from me. I'm not going to chase. I did spend some time recently researching other retailers, and from a valuation point of view, it looks like American Eagle Outfitters (AEOS) is undervalued. Yes, there were some recent disappointments, but the stock is trading at low multiples. Also, using the metrics described by Greenblatt in his books, AEOS has strong pre-tax earnings yield as well as excellent return on its capital.

Compare AEOS with a P/E of 12.5 against ANF with a P/E of 25. AEOS operating profit margin over 20% and ANF's at around 18%. AEOS is currently distributing a dividend yielding 1.4% compard to ANF's 1.1%. If we're to assume that analyst earnings projections are accurate (they're often not), AEOS forward P/E is under 11, ANF's is looking to be about 17. So, the growth estimates for ANF are clearly stronger, but if the retail sector moves as a whole, then AEOS should outperform many of its peers in my estimation.

So, I've put in an order to establish a position in AEOS just around the closing market price. Hopefully, the order will be filled. I'll be on the plane during market hours, so I won't know if I am an owner of AEOS or not until I get back.

Also, don't you hate getting out of a losing trading position only to see it rocket back up for substantial profits shortly after? Ugh. Remember the 10% or so loss I took on Under Armour (UARM)? Well, had I still owned it, I would have rung up a more than a 50% gain instead. You win some, and you lose some.

Looks like I'll be beating the S&P this year. With only one more trading day to go, I'm up on it by enough that unless something drastic happens, I should hold my lead. Final year results will be posted up later. A big China post will come soon after my trip as well.

Ok, time to stop rambling, I'm just a bit bored... I have another half hour or so before we catch a cab to the airport.

One final remark... Shanghai people are ridiculously rude and aggressive. Makes New Yorkers seem like the nicest people ever. And, it makes us Californians seem like total wimps.

Tuesday, December 27, 2005


I spent four nights in Fuzhou and one in Xiamen. And, I'm now in Shanghai. The hotel here is nice, but it's a bit small. However, it does have a personal computer with broadband access free of charge.

Lots more about this trip to come...

For now, I'll put up my OK Cupid Politics Test Results. It seems that everyone else is doing it.

You are a

Social Liberal
(68% permissive)

and an...

Economic Conservative
(85% permissive)

You are best described as a:


Link: The Politics Test on Ok Cupid
Also: The OkCupid Dating Persona Test

Wednesday, December 21, 2005

A Shout From The Other Side

Here I am sitting in an internet cafe in Beijing. Everything's been awesome so far. The food has been fantastic, and the sights we've visited have been pretty cool. The only thing that sucks is the bitter cold and the occasional rude local. The hotel we are staying in used to be a house for the Imperial family. It's very old fashioned, but due to a recent renovation, it's quite nice. Not 5-star material, but it's a ton better than the university housing we stayed at during the first couple of nights. Been taking a ton of pictures... we're off to Fuzhou in a couple more days. I'll probably update more then. That's all for now.

Thursday, December 15, 2005

Supreme Court Ruling

I can now rest just a tad bit easier after reading the headline:

Illinois Supreme Court reverses
$10.1 billion Altria verdict

We should see Altria (MO) move much higher as a result. Go Big MO!

In other news... First Marblehead (FMD) took a nasty plunge today as JP Morgan Chase (JPM) decided to buy Collegiate Funding Services Inc. (CFSI). While I see no official news on FMD, I am sure that this is the reason for the drop. With this acquisition, JPM might steer the business it gave FMD in-house.

Wednesday, December 14, 2005

With The Lights Out

Nirvana's box set titled With The Lights Out came out about a year ago. I don't own it, but I probably should. I really did enjoy their music as a teenager.

Tomorrow is a very big day for Altria (MO). The infamous "Lights" case (formally known as Price vs. Philip Morris USA) is going to get a ruling tomorrow morning. If it goes well for MO, then we should expect to hear more from the company about its break-up. If not, well, I'm going to be in for some pain, since MO is currently my largest position.

For those of you who enjoy reading about important legal trials... here's a link to the "Lights" case.

Monday, December 12, 2005

High and Dry

I made a mistake. That's basically it... my assessment of Dryships (DRYS) and its prospects was faulty. So, I've taken the proper step to address this. I sold the DRYS position today in the 12.40's for a nice 26% loss. Not too happy about this, but that's just part of this game. At least I'll be able to claim a capital loss on this sale. The DRYS position made up 2.5% of the long-term portfolio.

After the sale, this brings the cash position of this portfolio to just over 5%. Still eyeing Abercrombie & Fitch (ANF). Would like to see it pull back below 60, but I might nibble at it sooner.

Been reading Joel Greenblatt's books lately. Maybe some of his value-oriented insights will help guide me in my next purchase.

Friday, December 09, 2005

The Reverse Password

There is a ton of internet fraud these days. One way that fraudsters can get a hold of your account information is by spoofing a website. They create a website that looks identical to a legitimate one. When you want to log into the fake site, they basically steal your login information and password.

Why don't we see more use of the Reverse Password? Some sites have already begun doing this, but it's really quite rare from what I've seen. The Reverse Password is a simple scheme... when you first enroll or create an account, you specify a login name, a primary password, a secondary password, and also a reverse password of your choosing. The secondary password can be as simple as an answer to one of the standard "identify yourself" questions (e.g. What is your mother's maiden name?, What is your favorite hobby?, etc).

Now, when you log into the site, you enter your username and primary password. You are then shown the reverse password, which ensures that the site is the same one that you think it is. Finally, you are asked to enter a secondary password to gain access to your account. One benefit is that if you are ever given an incorrect reverse password, you can immediately get in touch with the site you are trying to access to let them know of a potential security breach.

Maybe the reason this hasn't gotten too popular is that it is too complicated a process, but I feel that it makes sense. Recently, Bank of America has implemented a Reverse Password scheme. It isn't exactly like the one I described, but it more or less accomplishes the same thing in a similar fashion. A quick description of how their system works can be found by clicking here.

What do you think? Have any sites you frequent begun using a Reverse Password?

Thursday, December 08, 2005

Conservation of Joy

Totally wack thought I had recently... when a new child is born a lot of joy is brought into the world. Most of the joy is shared by the parents, and then some is shared by the grandparents and other relatives. Also, there is the residual joy that is gobbled up by their friends and acquantances who were simply happy for them.

When someone dies a lot of sadness is brought to the world. People are touched and are saddened by the loss. Direct and indirect sadness is released, similar to the case of joy in the event of a birth.

Assuming sadness is loss of joy, is Joy more or less conserved in the world? So we have Joy Inflow and Joy Outflow. It seems that more Joy is lost when someone passes than is brought when they are born. If this is the case, then is the world doomed to grow sadder and sadder each day?

So, I just spoke with Ms. Mt. Fuji (MMF) a little bit. MMF brought up the fact that a person continues to bring joy during his or her lifetime, but that new joy is somewhat reduced by the new sadness that is created due to their lives, too. So, the Flow of Joy is ongoing and the sharp loss of Joy due to death is a one-time event. In the case of a bad person the Joy Flow during life and death are negated, but the Joy from birth likely remains a positive.

What do we have here... for the typical person, we have Net_Joy = Joy_Birth + Joy_Life + Joy_Death. Joy_Birth is positive, Joy_Death is negative, and Joy_Life is slightly positive/negative depending how they lived their lives. Anyway, this brings me to the same question... is Joy (in this new view) conserved? Is the world growing sadder, happier, or maintaining an equilibrium?

Okay, more rambling here. There exists a National Joy Index (NJI)... the Rwandan NJI is obviously very low. America's is substantially higher. Now, we also have a World Joy Index (WJI) that is a weighted average of all the NJIs. What happens when the WJI drops too low? Will the world enter into a seriously disruptive state? Can there be serious consequences for the other extreme if the WJI spikes way up?

Tuesday, December 06, 2005

Trading Update

Quick update... sold enough January 47.50 calls to cover the entire EBAY position at $1.75. I sold the January and not the December calls for tax reasons. Speaking of taxes, I had better start looking at my losers list and prepare to sell them off and claim the tax losses.

Still got my eye on Abercrombie and Fitch (ANF). I might make a move on it soon.

Saturday, December 03, 2005

Dream Logging -- Part 2

This is a continuation of the original Dream Logging post.

I guess now is a better time than any to add a few more dreams that I jotted down notes about.

Dream #4

1) Satellite Tourney -- win to move on, but forgot to play anyway
2) Jetpack away with compressed air
3) Migs chasing
4) Crash and burn

Dream #5

1) 115mph cops speeding standing in cars
2) No ticket - lights flashing
3) Geographic landmark natural disaster.
4) Escaped hamsters
5) Water everywhere

Dream # 6

1) Dirty homemade movies in a box
2) Stranded in Lake Tahoe at end of a parade
3) Call Joey for help
4) Arby's -- 2 new ones open their doors

No idea what any of this means really... I vaguely remember them. I tend to forget my dreams as the day goes on. So these notes are the only lasting memories.

Thursday, December 01, 2005

Portfolio and Market Update

Just a quick update here... I picked up some of the Sun Bancorp (SNBC) yesterday at 19.95 for the Long Term portfolio. Moved a bit today, along with the entire market. All the majors exploded today... a great start to this December. Maybe the Santa Claus Rally will materialize and take the markets to the next level.

Remember Finish Line (FINL)? That dud of a stock pick has managed to make a terrific comeback. Their latest numbers were strong enough to warrant a change in their Q3 earnings guidance from a loss of 1 to 3 cents a share to a gain of 1 to 3 cents a share. My shares are no longer in the red, and it looks like their business is picking up. Now, if only Dryships (DRYS), which is currently my largest percentage loser at -19%, can mount a similar comeback... sigh.