On My Head

Well, I just had a huge bomb dropped on my head. The CEO of First Marblehead (FMD) resigned today due to gifts he exchanged with a client. Apparently, he spent some $32K of his own money (not corporate money) on gifts for a client. Who knows... maybe it's tied to some sort of romantic involvement. In any case, the stock's going to get pounded tomorrow. This news sure trivializes that 12 cent dividend that I was so looking forward to receiving. Hopefully, the company will be able to continue about its business. Fears about the company's ability to attract new clients and retain old ones have now been officially sparked. Bah.

I don't think there was any way I could have seen this particular matter coming. Bah, again.

Exit Viagra, Enter the Gorilla

Got rid of Pfizer (PFE) at 25.07 after holding it for over two years. I established that losing position in the low 30's, and I'm finally getting rid of it.

With the sale, I used the free cash to pick up one of the stocks I recently added to my watch list... Kongzhong (KONG). First mentioned here. Anyway, I picked up KONG at 12.90. KONG provides wireless interactive services in China. And, my hope is that the new position will perform well enough to remain in my long-term portfolio.

Trade Update

The ever so fickle Rita has led the markets higher with her recent weakening and slight directional change.

In the last two days Goldman has been saying some good things about EBAY, which has really sparked a move. Just minutes ago, I sold the Oct 40's for $1.30, covering two-thirds of my EBAY trading position. This brings my cost basis down to $37.58, but it also caps potential gains past $40 on the covered position. At least if EBAY moves significantly higher in the coming weeks, I'll be able to capture that move on a third of my current position.

Blood on the Street

What a bloodbath. Yes, a lot of that red stuff you see all over... that's my blood. The S&P drops 0.91%, and my holdings fall a whopping 2%. I think I'm going to go puke now. This is not the way to beat the market. This is getting ugly.

So, McDonald's has announced its intention to spin-off Chipotle. If none of you have given it a try yet, do so. It's pretty damn good. My personal favorite is the Carnitas Burrito with the red hot sauce and salsa.

Trading Update

I'm starting to bunch my trades for blogging purposes due to lack of interest. So, here's a quick update. Today was painful. Market didn't like what the Fed did and what they had to say. Anyway, here is the latest update.

EBAY is hurting me a bit. Still have a position averaged at 38.45.

RF Micro Devices (RFMD) - Sold off the last 20% at 6.45 before the recent tumble. At this point I have no position in this stock.

Seagate Technology (STX) - Did a buy-write on this one. Bought at 15.07, and sold the October 15's for 0.70. The goal is to get called away at 15 upon expiration. This would yield close to 4 1/2% for 5 weeks if all goes according to plan. Break-even on this trade would be STX at 14.37.

Combinatorial Diversion

I encountered a real-world problem recently, which turned out to be a fun little problem. In order to make the problem clearer, I've remapped the problem for everyone.

The image below shows two television programs, Red and Blue. We will assume that the starting/ending points of television programs cannot be shared. If that is the case, we have 6 ways to organize the programs relative to each other. We have the first case where Red begins and ends completely before Blue begins and ends. Another case is where Red begins, Blue begins during Red, Red ends during Blue, and Blue ends after Red is over. Yet another case is where Blue begins and ends completely within Red's scheduled block. We have another three relative configurations when we look at the other case where Red and Blue are reversed.



So, the number of relative combinations for 1 television program and 2 television programs are f( 1 ) = 1 and f( 2 ) = 6. In general, what is f( N )?

Here are six different relative combinations for N = 3, just to help get the combinatorial juices flowing. Because I received some questions about the following combinations... let me state that the following is NOT complete for N = 3. There are way more than 6 relative combinations if you have 3 television programs.



When I initially solved this problem, I did so in a rather inefficient manner. I ended up with a recurrence relation. However, the closed form answer is very clean and makes a lot of sense. Give it a try.

Trading With The Enemy

So, I just finished reading Trading With The Enemy: Seduction and Betrayal on Jim Cramer's Wall Street by Nick Maier. The book is basically a narrative talking about a young inexperienced guy (the author) who, seduced by the money on Wall Street, ends up landing a job with the now-famous Jim Cramer. At the time, Cramer was a big-time hedge fund manager. Anyway, the book goes into detail about what it was like dealing with Cramer on a day-to-day basis as one of his people. There's nothing particularly insightful about the book, but if you've ever seen Cramer on his CNBC show titled Mad Money and enjoyed it for any reason, you might find the book entertaining; I know I did.

If you liked Liar's Poker or Monkey Business, you might find some enjoyment out of the book. At the very least, it's an incredibly fast read, so if you end up hating it, you would not have wasted much time.

Bottom Line is... there's greed and megalomania, and then there's Cramer.

Simple Things

While driving home, I realized that there are a few simple things that really make my life just a little bit better. Here are five of them, maybe you might find that some of them would better your life as well.

1) Motorized UltraSorter
2) Staples One-Touch Stapler
3) Beyond Compare
4) Auto-dimming rear view mirror
5) Sportsman Swiss Army Knife

Hints for What Am I?

Picture A: Belgian, 2 words

Picture B: 6 letters, starts with C, often salted

Picture C: 6 letters, 3 letters twice (i.e. format: ABCABC)

Picture D: Brazilian, lots of caffeine so it packs a punch

What Am I?

Today during lunch, my co-workers and I were talking about random foods, and then someone mentioned a very common food, yet I had no idea what it looked like at certain stages of its existence. So, I thought it would be entertaining to play the What Am I? game. I'm going to put up 4 pictures (only 2 are foods), and your job is to tell me what they are. None of these are easy... hell, some may be damn near impossible to get right if you've never heard of it. Enjoy.

Click on pictures to zoom!

Picture A



Picture B



Picture C



Picture D

Portfolio Update

Just a quick long-term portfolio update. Added First Marblehead (FMD) today at $28 flat. Intended to be a long-term holding. So while I won't worry too much about daily events, I will always be keeping an eye on it. Thanks to GZA and Crestfallen for helping me research it a bit and point out some potential red flags.

Quick Update - EBAY

So, EBAY moved to the mid 39's before pulling back. At 39.30, I couldn't resist the September 40 call premiums, so I sold enough calls to cover my entire position for $0.30 a contract. Hard not to take advantage of over three-quarters percent return for 4 trading days on a contract that is almost 2% out of the money. This effectively brings the cost basis to 38.45 with a cap at 40 over the remainder of this week. So, anyway I now see that EBAY closed below 39, and that the calls I sold are now worth only $0.15 apiece.

EBAY - Skype Deal

Well, looks like I spoke just a few hours too soon. The Financial Times released information on the deal tonight. I guess we'll see tomorrow how the street reacts. On one hand the total cost of the deal is less than rumored, but then again, it's still a large deal.

Here are a couple of excerpts from FT (full story here):

"EBay was in the final stages late Sunday of sealing an agreement to buy Skype, the fast-growing provider of voice calls over the internet, for more than $2.6bn, according to a person close to the situation."

"Under the terms of the potential deal, Ebay is understood to be preparing to pay $1.3bn, in cash, along with another $1.3bn worth of stock. It would also pay $1.5bn in performance-related benefits as part of an earn-out that would keep Skype's managers at the company until 2008."

Hodgepodge

Let me start off by saying that I'm once again back in EBAY at 38.75. While the Skype rumors are a bit scary, I think it's too early to punish the company. There really isn't that much reliable information out regarding this deal.

Looking into McDonald's (MCD) for long-term purchase.

Now that stock talk has been taken care of... so, last night I finally sat in a $30/60 poker game online. It was very very aggressive, but I did okay. I did fine not because of my superior play, but because of what seemed like completely donk play. Here's a hand from last night: Click To View Hand. Honestly, you would think that this type of play wouldn't really be seen, but you'd be wrong.

The NFL season is in full swing now. I'm in this NFL Pick'em game with a few friends. The two people in our game who know the least about football are basically winning. It's pretty funny... up to this point, here are the scores:

Crestfallen 81
Marquis 71
Brute Force 65
JDot 61
GZA 56

Finally, here's a congratulations to JDot for winning a $50 tournament, winning a seat in a $1050 buy-in tournament, and following through with an in-the-money finish. Talk about a score.

Logic Pattern Puzzles

Here are a few logical pattern-based puzzles that I have come across recently. I'll provide four of them here (you can click on the images to load them up in larger size). Each puzzle is multiple choice, and so 5 possible answers are provided. I was able to figure out the first two. But, the other two, I'm really unsure about despite having some ideas on how they work. So, if you can explain the last two, please let me know. Have fun.

Puzzle 1











Puzzle 2













Puzzle 3













Puzzle 4

The Weekend and a General Update

Over the holiday weekend, we headed down to SoCal. Our first stop was Marina Del Rey, where we crashed for a night in a 3-bedroom corner apartment at the Azzurra. Talk about lavish urban living. Though we arrived late (close to midnight), we still managed to have a few drinks with my friend, the Cam Man, and another old high school buddy of mine, Alex. And, I also got to meet Cam Man's new girlfriend and Alex's new wife.

The next day, we hit up Sushi of Naples in Long Beach. The sushi there was okay, and nothing special. But, it was far from great. We were really hoping to go to Kotobuki, where Hiro, the best sushi guy ever, would have whipped up some tasty pieces. Unfortunately, Kotobuki is closed for lunch on weekends. After a quick lunch, we headed out to where I used to live in Laguna Beach, and walked along the ocean admiring the beautiful scenery (and bodies). Next was a quick stop at the Irvine Spectrum just to see how much it had changed... and it has, a lot. Of all the stores that I would have expected to be around still, I did not expect Houdini's Magic Shop to be one of them.

Finally, we made it to Huntington Beach where the GZA and his lovely wife reside. We would be staying here for the rest of the weekend. The first night, we caught an Angels game with the Barber, and watched helplessly as their relievers were ripped to shreds. The nachos were damn good, and the jalapenos were pretty hot. After the game, the GZA was a bit bummed out by the loss, and so we all had to drink with him to ease the pain. But, it was a good thing, as we would be preparing for tomorrow's BBQ and drinkfest.

Sunday came, and the place had a fresh new infusion of guests: Grambrero and his brother, Shaolin Vin, and of course, the Barber. Grambrero brought with him a portable breathalyzer, which added a ton of fun to this party. It's pretty amazing how much high a BAC you can have and still be conscious. At one of his drunkest moments, Grambrero registered a solid 0.31. Now that's impressive. But what was even more impressive were the hamburgers that the GZA and his wife prepared with onions and spices. They were simply amazing. If the two of them ever decided to quit their jobs... err, if *she* ever decided to quit her job and start a burger joint, they'd do quite well.

After saying our good-byes on Monday, we had a late lunch at Mi Piace in Old Town Pasadena. The food there was excellent. I had the Linguine con Capesante, and she had the Calamari e Gamberi Fra' Diavolo. What's even better were the prices, which were quite reasonable for that quality of food. The only downer was the service was slow, since they were understaffed for this Labor Day holiday.

Now, onto some stock talk...

Hibernia (HIB) was hit hard by Katrina, which caused a delay in closing the deal with capital One (COF). This led to an eventual 9% cut in the terms of the deal. So, that stings slightly, but it could have been worse, I suppose.

Synaptics (SYNA) hit the low-end of my price target ($18) today. And, I dumped my shares at 18.05. But, this was only half of my original position. I believe I failed to mention that I had dumped the other half in the 16.70s... just around the time I mentioned my increased nervousness with respect to the market. And, now I see it peaked in the mid-19s, but came back down a bit.

New on the radar: First Marblehead (FMD).

Been playing some EBAY today long and short, just for fun. But, nothing really worth going into detail about. That's all for now.