Epicurean Delight

For me, one of the best parts of any vacation is the food. We certainly ate well on our trip. Here is a taste.


One of the many dishes enjoyed at Kacho.


Dish from L'Uraku


A Fine Dessert - Chocolate Cake and Fruit


Another Fine Dessert - Yuzu Mousse in Raspberry Sauce

Continuation

Well, I'm back from Hawaii. More on that later.

Let me take care of some blogging business first. Enough people have mentioned that a blog without the ability to comment was lame and pretty much useless. So, I've moved my blog from Bloglines to this new location. The old blog has been completely recreated here. Nothing was lost.

A Cool Search Feature

Just today I got to trying a new AskJeeves' search feature. It's very nice, and I think it would make AskJeeves the search engine of choice for certain types of searches. The feature I am talking about is the Binocular Look-ahead feature.

Try it. Go to www.ask.com and do a search. Now, scroll past any paid advertisement links. There should be a binocular icon for each page returned by your search result. Okay... mouse-over the binoculars. Don't click it, just mouse-over. Very useful.

For those searches that might bring you a lot of advertisement links, this feature would surely help. It would help you weed out the advertisement and uninteresting web pages quickly. If they keep coming out with features such as this one, I think they will slowly gain ground in the search battle.

HI, and Good Bye

Well, I'm off to Hawaii today. Market is absolutely on fire. My AMAT short really was all about amateur hour. It's up about 30 cents, but I'm not too worried about it. I'm net long by quite a bit, so market rallies are still very much welcome. That said, at this point I'd still be better off had I not initiated that position.

More poker bonuses lined up. Today, I made my bonus deposits for Pokerroom's DUDE bonus and PartyPoker's May reload. And, I missed the Paradise Poker reload bonus. Cleared the PokerStars bonus last night, which is nice to get out of the way. Clearing Party's bonus will be a bit of a chore, however, since I won't be back until Tuesday.

AMATeur Hour

Quick update... Established a medium-sized short position on Applied Materials (AMAT) today @ 16.30. The stock was actually pretty strong today all things considered. Oil is starting to move back up, and my belief is that the markets will pullback a decent amount as it continues higher. AMAT seems a bit overextended here. This is purely a trade. Won't be holding this short for too long. As of the close, I'm out a dime. We'll see what happens in the next few trading sessions.

Ate the Apple; Left the Core

The big buzz today was about Apple (AAPL) and the possibility that it would be using Intel's chips in place of those provided by IBM. This sparked a substantial rally in the market, and specifically caused AAPL to surge.

I dumped my Apple shares today as a direct result of this surge near the close of the day at 39.78... can't complain about a fairly quick 15% profit. I see this sudden surge as a windfall, since it is a move based purely on a rumor and speculation. I agree that if Apple were to use Intel's chips, this would be a huge positive. Surely, they'd lose some of the most hardcore Mac users, but the Mac price point would decrease enough to make it a clear contender against most x86 boxes. But, if this rumor is found to be nothing more than rumor, then I would suspect that AAPL would give back a good portion of the gains resulting from this specific rumor.

Transforming and porting Apple's OS to work with a different chip architecture would be an incredibly large undertaking. It's just not as easy as flipping a switch, and so the fruits would not be realized for some time to come if an Intel-Apple agreement were to be hammered out.

If AAPL pulls back to its pre-Intel rumor level, I will likely re-enter the position. Also interesting to note is that IBM did not pull back at all on this news. It is widely accepted that losing Apple's business would be viewed quite negatively. I will continue to follow Apple's stock, and I will keep this blog up-to-date.

Missing Something?

Just an update... Well, today I covered my HOTT short position. Took a loss of just over 5%. Time to play a game with y'all. Note that I don't ever utilize that particular contraction. Only Texans or those from most Southern states would utilize it. What is this game? Keep reading.

My audience should hopefully realize that something is clearly missing from this blog entry. Perhaps it isn't quite obvious at this point. However, if I am lucky it will become clear as I write more. This blog is particularly difficult to write, because I am purposely ignoring something. What is it, someone might ponder... that is really something that my blog readers should discover themselves.

Forgive me if my prose sounds slightly awkward. It is challenge enough to limit myself completely in this manner. I doubt I could have made this less awkward than it is currently.

If able to discover what is missing from this blog, congratulate yourself. It might be obvious only to truly keen observers. Or, maybe I am fooling myself... maybe what is missing is actually obvious to everyone.

Okay, as I write more, this game gets easier. Already many hints have been given up to this point. I will stop. Good luck. Enjoy.

HOTT or Not?

Well, my Hot Topic (HOTT) short position is underwater a little here. The earnings report was in-line yesterday, and during the conference call, an upward revision to the 2006 earnings guidance was announced. But, the numbers themselves did not look great to me... revenues were higher, which was offset by higher operating costs and a steep discounting of merchandise that was not moving. This caused earnings per share to remain flat Y/Y. Why the EPS was flat at all had to do with a corporate buyback of shares recently. Had it not been for the buyback, then EPS would have shown negative growth. Despite what I think, the market reacted positively to the earnings report and conference call. If HOTT moves higher, I will take a loss. I do not wish to risk more than 5% on this. The trade has shown me a minor loss of 3.5% at this point, a slight move higher and I will be covering.

In better news, RFMD is really skyrocketing. That puppy is up 20% in less than 2 weeks. And, someone pointed out to me that I missed two of my holdings when I disclosed my positions on May 13, 2005. These two holdings: search engine Ask Jeeves and touchpad maker Synaptics.

Ask Jeeves (ASKJ) I've spoken about before. I am going to hold on to the shares and allow them to convert over to IAC/Interactive Corp. shares. The Synaptics (SYNA) position was recently established after their latest earnings report that sent their shares tumbling into the 18 range. This is a much smaller position, but I think that there is definitely potential here for significant share price appreciation in the next 6-12 months. Many of the fears that Apple was going to drop them completely have now been quelled, and they are making headway in the cell phone market.

Altria Group (MO) closed at an all-time high today. It has touched a higher price, but only on an intraday basis. They've pretty much completed their acquisition of Sampoerna, a giant in the Indonesian cigarette market. Asia continues to provide the company with strong growth in tobacco sales. In Asia, there simply isn't the stigma regarding smoking that we have here in the U.S. Also, earlier in the week, the European cigarette maker, Altadis, announced a loss in market share partly due to Phillip Morris' success in their arena.

Let's hope that this rally continues. What a month it's been. So far in the month of May, the Nasdaq has posted a solid gain of just around 6.3%. I'll drink to that... if you are going to drink, try one of the tasty beverages supplied by Constellation Brands (STZ).

Portfolio and Market Update

Today's benign inflation data really sent us skyrocketing. Since my last update, here are some things that have happened regarding my own holdings.

I've sold covered calls on half my EBAY position. My shares are likely to get called away this Friday... I sold the May 35's for 0.80 a contract. This is a nice way to get a little premium (at the time of sale) while exiting part of the position. With EBAY now at 35.88, my sold calls are technically at a loss of 0.08, but at the time they were sold, the premium was a full 1.1% for 4 days.

Hot Topic (HOTT) reports earnings today after the market closes. There have been a slew of upgrades by various investment houses on HOTT. But, based on Same Store Sales data, I just don't see what is so rosy about the business' outlook. And, true to my nature, I'm placing my bets. I've established a medium-sized trading position on the short-side at a price of 21.26. If I'm wrong and it moves higher, I will exit and take a loss. If it moves lower, I will probably remain short for longer.

And, for those tracking Spud's activity... he has reduced his EBAY position a great deal. He has indicated that he will continue to reduce the size of his trading position slowly. Good idea. Nothing can be more damaging psychologically than having an incredibly large profit disintegrate.

That's all for now.

The Move

I spent the day helping a friend with a move. He and his girlfriend have decided to move in together. Since, the destination was a completely new place, it was a double move. Moving his stuff to the new apartment was simple; he just didn't have that much to move. However, moving her belongings proved to be a much more challenging task. Despite the strenuous physical labor, the move was somewhat enjoyable. Got to shoot the shit with some friends, and got a workout on top of that.

But, don't get me wrong... moving is still a pain. I'm sure it's enjoyable maybe once every other year or so. Any more than that, and it is exactly as most envision it.

The really cool news was that I got hooked up with a pair of pre-released Nike shoes. They'll be out in October, I hear. Very cool.

Portfolio and Market Update

Well, this week sure has been choppy. The Dow and S&P both closed lower for the week, but the Nasdaq managed to finish the week in the green. Overall, the major indices have been pretty choppy. The market cannot make up its mind.

Today, one of my core holdings, Constellation Brands (STZ), moved a step closer to making a formal bid on Allied Domecq. Allied Domecq is not a household name, but one of their products, Maker's Mark, is a favorite of mine. If you haven't had Maker's, give it a try. It's not overly expensive, and it's nice. Constellation Brands also might not be a familiar name. Not only is it a big player in the wine market, but it is also a major importer of beers. They are importers of popular brands such as Corona, St. Pauli Girl, and Tsingtao. I am currently unsure what I think about Constellation and its possible bid on Allied Domecq. But, Constellation has been a core holding of mine for quite some time now, and I am not ready to exit the position. Also, Constellation's stock should split some time next week. Theoretically, this should have no effect on the stock, but as we are all aware, people are sometimes driven by psychology and not rationality.

Maybe now would be the best time to give a rundown of my current holdings.

Current core holdings in my portfolio (holding time 1 year or more):

Altria Group (MO)
Amgen (AMGN)
Constellation Brands (STZ)
Equity Office Properties (EOP)
General Electric (GE)
Harrah's Entertainment (HET)
Hibernia Corp. (HIB) -- soon to be converted to Capital One (COF) due to buyout
North Fork Bancorp (NFB) -- initial position was Greenpoint Financial
Pfizer (PFE)
Student Loan Corp. (STU)

Recent additions (may or may not become core holdings):

Apple Computer (AAPL) -- bought after recent drop
Eastman Kodak (EK) -- looking for major turnaround; recent earnings report was below my expectations, but I will give it a few quarters to see if progress is being made
International Gaming Technology (IGT) -- recent approval for Singapore and Macau casinos is a catalyst; also, anecdotal evidence that their machines dominate the newly opened Wynn resort
Linear Technology (LLTC) -- generic position, looking for general improvement in semiconductor industry
Solectron (SLR) -- contract manufacturing might be nearing a cyclical bottom; should track Sanmina also
St. Jude Medical (STJ) -- future buyout candidate; refer to J&J's recent purchase of Guidant

Recent deletions from the core:

Clorox (CLX) -- was a core holding for some time, exited position at 59.50 after the dissappointing earnings report on May 5, 2005.

Position/Swing Trades [Short(er)-term positions]:

eBay (EBAY) -- entry 31.40s
RF Micro Devices -- entry 3.90

On the radar:

Cryptologic (CRYP)
Elizabeth Arden (RDEN)
Fiserv (FISV)
Form Factor (FORM)
Hot Topic (HOTT) -- as a short candidate
Wynn Resorts (WYNN) -- as a short candidate

I guess that's all for now. Pretty dry blog entry, but my plan is to be very honest with myself when it comes to the markets. I figured the best way to do this is to post my thoughts and actions every so often.

Everyone's Favorite Color

Some of you may have heard about this theory of mine. I think that it is an interesting speculation, and it'd be really hard to know if it were true anyway.

So, let's say that everyone has a favorite color. Some like red; others like black. Everyone says that favorite color is really based on individual choice and is highly subjective. Say some person told you that Black cannot be your favorite color, and if you were to claim it was, then you were believing in a falsity. You'd likely call that person crazy. But, my theory is that there is no subjectivity at all when it comes to favorite colors.

Let's simplify the world. Say the world has exactly 5000 discernable colors. Now, let's say that there exists an Absolute Truth Color Ordering. We now have a list of 5000 colors, labeled 1 (for best) to 5000 (for worst). No matter what, Color 1 is the best color... it is the absolute truth.

So, take your favorite color. That color is Color 1 in this absolute list. Your favorite color might be Blue, but you only call it that because that's the name you learned for it. My favorite color is Black, but it, too, is Color 1 in this absolute list. I just happened to learn it under a different name. If you were somehow able to jump into my body and utilize my brain, you would see that objects you know to be Blue now look Black to you. Why? Because, we live in a paint by number world. Every single color is simply some wavelength that gets converted to a color. But, what if the wavelength-to-color mapping function were different for all people? This would mean that every single person really could in fact have the same favorite color. And, if your favorite color was not Color 1, then you have been led to believe a lie. Note that this can happen if Color 1 in the Absolute Truth sense was a color that you have not yet been exposed to in your life.

Maybe none of us has much choice at all. We can generalize this theory and consider texture, sound, etc. in a similar manner. What if painted art was not a subjective subject after all? Painted art is merely a mixing of colors in different ways. What if a painting can be broken down into WxH pixels like a Windows BMP? What if the artistic value of the painting was simply the result of a function that took in WxH color values as inputs? Now, since everyone's color values are identical via the Absolute Truth Color Ordering list, everyone's appreciation of paintings is actually identical. There's nothing subjective about it at all. We just happen to have different mapping functions for converting real-world traits into our perceived colors.

Maybe this is why certain people like lizards, and others prefer the company of kittens. Maybe the furry feel of kitten fur is equivalent (in the Absolute Truth sense) to the feel of scaly reptile skin. How about foods? Some prefer spicy foods, and others cannot take even the slightest amount of heat. This theory explains why people often have their own "types" when it comes to attraction to the opposite sex.

There exists an Absolute Truth to everything. Nothing is subjective.

Take Care in What You Say

Here is part of a dialogue held by two people.

Person A: I don't think you'd be on her level intellectually.
Person B: Unless this person is a Nobel Prize candidate, that's pretty damn unlikely.

What is interesting here is the following question... Does B imply anything about his own level of intellect in his statement?

After taking a quick survey about this, the consensus says yes. Person B implies that his level of intellect is very likely to be a notch below that of a Nobel Prize candidate. But, some have argued that the terms in the above dialogue are subjective. This is true, so let us make things very clear by removing much of the subjectivity.

So, let's replace the phrase, "pretty damn unlikely" with "true with probability P." Let us start with an extreme case... what if P was 0.00?

Now, we have the following.

Person A: I don't think you'd be on her level intellectually.
Person B: Unless this person is a Nobel Prize candidate, that statement is true 0% of the time.

Now, with the subjectivity gone, this particular dialogue is quite clear. Person B is saying that at worst his intellect is the tiniest shade below that of a Nobel Prize candidate.

Let us move onto a more interesting case... what if P was 0.05? This value for P is a reasonable fit for the phrase, "pretty damn unlikely."

Now, let's re-examine the dialogue.

Person A: I don't think you'd be on her level intellectually.
Person B: Unless this person is a Nobel Prize candidate, that statement is true 5% of the time.

From the above dialogue, it is clear that if the person in question is not of Nobel Prize candidate intellect, then there is a 95% chance that Person B is of equal or higher intellect. So, given the above, we can conclude that there is a 95% chance that Person B is claiming his own intellect to be at worst the tiniest shade below that of a Nobel Prize candidate. Where does the remaining 5% go?

Logically, the remaining 5% must be distributed from the lowest possible level of intellect (that of a vegetable) all the way to two (tiniest) shades below the intellect of a Nobel Prize candidate. However, the distribution of the remaining 5% is unknown. It is possible that the remaining 5% is uniformly distributed, but this would certainly be quite odd given that 95% of the distribution's density is at the very high end range of intellect. Perhaps a more reasonable distribution of the remaining 5% would resemble the tailing off of a normal distribution. If this were the case, while Person B does not state outright that his intellect is a notch below that of a Nobel Prize candidate or better, he certainly implies that his level intellect is quite close. In this context, "close" is based on a rough notion of standard deviation.

You be the judge. Or maybe Person B was just being, and I quote a German colleague, "an arrogant prick."

Market Update

Will be brief here...

Duke Energy buying Cinergy in a huge deal. Nothing too exciting about this really.

OPEC report says that they overproduced recently, but in the same report there was a statement that said there was no need to cut back. This really gave some mixed messages.

E*Trade's takeover bid of Ameritrade... consolidation in the online brokerage space was very much expected. The recent price war has really hurt some of the names out there. For example, one of the brokerages I use, HarrisDirect, has decreased their online commissions to $8.95 from $19.95 recently. Will also be interesting to watch Schwab to see if they also decide to participate in this consolidation.

ChevronTexaco is now just Chevron. And, they'll be sporting a new look in the upcoming months.

And, for you online poker people, Cryptologic (CRYP) has secured rights to the Bejeweled slot machine concept as they expand their casino game portfolio.

Market has rebounded a bit in the last hour, let's see if it continues.

A Gay Proposal

So, I'm at the mall today to pick up a few things for the upcoming trip to Hawaii when a young gentleman reaches and feels the cloth of my shirt. I give him the WTF? look, but this man was undeterred. Apparently, he saw what he thought was a good shot. Much like how guys will strike when the iron is hot if they see a favorable opportunity with a fine lady..

"What a unique color you have on."
"Uhh... thanks," as I walk away.
"Where did you get it, it really does look nice on you."

I turn around give a quick glance back... "I can't remember, probably New York."

"Are you from around here?"

I hurry off to seek my girlfriend's protection. This is very strange, indeed. The shirt I had on was a very normal color (a pale blue). I don't see why he think that I batted for the other team. I'll try to be straight with all of you (pun intended)... this situation was pretty funny overall.

Bonuses Galore!

Just got word of two new poker bonuses: Empire Poker's Super Tuesday $100 bonus and Poker Stars $120 bonus.

In terms of frequency, bonus money is still easy to come by. However, there are many more restrictions. For example, Empire's bonus requirement is 10 raked hands for every dollar in bonus received within 10 days. Just last year many of these bonuses would come with a much less stringent raked hand requirement and a month before expiry.

Pay attention to the jobs data tomorrow... 5:30AM PST.

Spud's Big Day

There really isn’t much to report since yesterday. So, I figure I’d give an update on Spud. He was first introduced to you all a week ago on April 26. He had an unusually large position in EBAY with a cost basis in the mid-31s. Initially, the position’s size alone was affecting his life outside of investing/trading. For example, he could not sleep well and he was too nervous to take his eyes off the screen to relieve himself. Fast forward one week.

EBAY has rebounded and as I write, it is now printing a new High of Day (HOD) at 33.50. Spud took on an incredible amount of risk. While the risk he took was likely imprudent and borderline foolish, it is paying off huge right now. Some may call Spud crazy, others might call him a gambler. But, like me, he puts money where his mouth is. I think there is a lot to be said about this quality. Put up or shut up, as the common idiom goes.

On Wall Street, when an analyst discloses that they have a position in a company, and that same analyst provides reasons why the company is a “Buy,” many dismiss the recommendation as self-serving. This is counter-intuitive to me, especially if the position is established very recently (around the time of the initial recommendation). Of course, if the analyst were trying to flip the shares for small jumps in price due to his hype, that’s a different story. But, if it were shown that his typical holding period for a stock was say, 2 years, then I think his recommendation should really hold more weight.

In other news… IAC Interactive reported very solid numbers in their latest earnings report. As a result, Ask Jeeves moved strongly to the upside. Go Butler. Also, Kerkorian (that ridiculously shrewd value-investing billionaire) has offered to pick up another 5% of GM for $31. While he’s not an analyst, he just gave GM a buy recommendation. Remember, action should be watched and followed a lot more than talk.

Bonus Update.

Party Poker bonus has been cleared. So, instead of wasting my time playing Pirates!, I spent 4 hours tonight clearing the Party bonus. I finally ran well tonight. I had been on a rather flat run for some time, but tonight was quite different. It's nice to have a change of pace when you've been idling.

Premium hands actually held up tonight for the most part. A sampling of premium hands from tonight follows.

AA : 4 / 4
KK : 3 / 3
QQ : 2 / 3
JJ : 1 / 1
AKs: 0 / 0
AKo: 1 / 3
AQs: 2 / 3
AQo: 2 / 6

The largest loss I had in a single hand tonight was my 99. Flop came J92 with a flush draw. Flush came on turn. River paired the turn. I was up against JJ. That's poker for you. As they say, if you don't lose a ton when you flop a set, you probably didn't play it correctly.

Anyway, off to bed. Don't forget tomorrow is FOMC meeting. Market is expecting a 25bp interest rate hike. The Fed's wording in its announcement will once again be of utmost importance. Inflation data and the current "soft patch" that we keep hearing about are at odds with one another. This adds to the uncertainty that the market faces. We'll see what happens soon enough.

Pirates!

Well, I just entered into a huge time sucking endeavor. This black hole for time is Sid Meier's Pirates! game. It was a really old game that I spent many hours playing in my youth. Late last year they completely redid the game to catch it up to speed with today's games. Well... I just spent 8 hours playing it.

This is bad news. Very bad for two reasons.

1) I have to go to work, and I'm very tired.
2) I have not one, but THREE poker bonuses to clear. PokerRoom, PartyPoker, and now PokerNow. And, now I'm way behind, which is very bad because these bonuses expire if not completed by their expiration dates.

But, the game is incredibly fun and full of adventure. Try it some time (if you have time!). Oh, just to make things really clear... no, I did not pirate Pirates!, I actually bought it on Amazon.

Looks like oil has fallen to $49 a barrel. And, the panic level of many of my peers has increased dramatically in the last week and a half. This bodes well for the markets, generally. The masses are often incorrect, and the point of greatest fear and panic often denotes a (near-term) bottom. Think of the well-known put/call ratio, and why a high ratio is a bullish indicator and why a low one is considered bearish.

In other market news, Altria decided not to buy the Croatian tobacco factory, Tvornica Duhana Rovinj. They don't need them anyway. They have some control over Serbian tobacco, which gives them enough exposure in that region.

Ok, start of a new week. Hope everyone's having fun. That's all for now.