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Tuesday, April 13, 2010


RIP Freckles

As the last hours of "24" wind down, the character Renee (AKA Freckles, for those who watch on HD) suffered the curse of James T. Kirk, namely that the life expectancy of any woman who sleeps with the show's hero (in this case, Jack Bauer) is mere minutes in TV time (real time on "24"). The show's twists and turns are legendary but this season takes the cake. In a mere 18 hours, Renee had sex twice with two different characters, cut off a terrorist's thumb, accidentally stabbed Jack, seemed to go off the deep end, and rescued who knows how many good guys before being fatally shot by a sniper. What a day! It seems certain that the show's already high body count will substantially increase over the final six episodes. Can Jack survive? Chances are he will since a theatrical production may be in the works.


One person who should definitely NOT survive, at least not in his current post, is hapless Mets manager Jerry Manuel. If the definition of insanity is doing the same thing repeatedly while expecting a different result, keeping Jerry on is clearly just that. This team will never play well as long as good, smart play is not rewarded and bad play is not punished. Early cases in point - the guys who pitched well in spring training are not here. Barajas hits two homers one night - and rides the pine the next day. The young shortstop Tejada looks great as the Mets actually win a game Friday night, but rather than keep him around and give him a chance to play second base (instead of the hopeless retread Castillo) he is optioned when Reyes comes off the disabled list. Instead of keeping young Ike Davis around to play first base with Murphy hurt, we get the aged Mike Jacobs, and Tatis playing out of position. It just goes on and on.

And while we're at it, we might as well send Omar packing too.

We said right here on this blog that the Health Care Reform vote meant the end of at least 50 Democrats on Capitol Hill, and the dominoes are falling even before we get into election season. The latest to drop was Bart Stupak, who gave up his anti-abortion stance in exchange for a meaningless Presidential executive order, and with his followers, assured passage of the bill. Bart says he would win re-election, but the truth is that he would have been an underdog in BOTH the Democratic primary and the general election. If the left thinks one of their guys can win in Bart's district, they must be smoking too much pot. So this is another seat that will flip to the GOP.

This 2010 election is important not only because Republican majorities in either or both houses will stop the Obama Socialist crusade in its tracks, but because control of the state legislatures will determine who gets to gerrymander the Congressional districts for the next decade. And it is setting up very well for a decided shift to the right.

Incidentally, conventional wisdom is that parties need to avoid primaries since they are expensive and since they provide talking points to be used against the winner in the general election. This may be true for incumbents (hence, the Shumer strong arm tactics to prevent any primary opponent emerging to take on Gillibrand) but for challengers, primaries represent an opportunity to increase name recognition and energize party supporters. It also provides a chance to eliminate weak campaigners from contention. So I do not view competitive GOP primaries as disunity or a problem, as the liberal slanted media would have you believe. Challenger primaries are a healthy sign, showing that candidates believe they can flip a seat and want the opportunity to run.

Since so many of us, especially the younger folks, now get their news from the internet rather than the newspapers, I think it is worth noting that the same subtle media bias exists there, or worse than in the print media. A consistent offender is my beloved Yahoo News, where the reports are so often slanted, but where they are presented as being objective. To make matters worse, the once reliable AP has over the years become a subtle (sometimes not so subtle) mouthpiece for the left, and Yahoo and other internet sites are heavily dependent on AP feeds.

A good example was the reporting on Health Care Reform, largely written and/or supervised by my old college news editor Dave Espo. I am sure Dave would tell you he only reported facts, but I know that Dave has a career agenda and that includes advancing liberal causes, though he would say he is communicating about important policy issues. Readers need to be aware of these biases and be careful to separate the fact from the opinions, which belong on the op ed pages.


It's interesting, but little reported, that while insurance is now "mandatory" in Massachusetts, it is nearly impossible to obtain since Governor Patrick (soon to be retired by the voters) turned down rate increase requests by the state's few remaining health insurers (almost all of which are non-profits). The rate increases are needed since it is economical for younger individuals to pay the fine rather than pay for insurance until they get sick. Then they sign up for insurance, incur their needed medical costs at the insurer's expense, then drop the insurance! In short, all the assumptions upon which Obamacare is based are being disproved in Massachusetts. Instead, what is happening is exactly what its critics said would happen - the field is being abandoned for government provided insurance under unaffordable conditions.

With the market in a slow motion, upward trend, many are utilizing the buy/ write strategy of selling call options against their holdings. I will save an elaborate description of the strategy for another post, but would only say that this is not the conservative, almost riskless approach its adherents claim. I did employ this tactic for a while in the early part of the decade, but got burned in all kinds of ways that I will also describe in a future post, including my infamous Enron adventure (how's that for a teaser!). The bottom line - rather than putting a floor under losses, the buy write strategy puts a ceiling on profits. That can lead to a lot of losing decisions made out of frustration.

My own theory was that since most options are losing bets that expire worthless, it might be a winning bet to stay on the sell side. That puts the time decay element of options positions in your favor. What I learned is that in fact, options are a parimutuel bet on either side, with the house keeping too high a takeout (between commissions and spread) to allow anyone consistent performance. That's my position and I've got the stories to prove it.

Earnings season has kicked off, as usual with Alcoa's report, which gets undue attention, something it doesn't need given its indifferent performance. Today Fastenel reported, showing a nice profit, all of which was paid out in its semiannual dividend. Hopefully, it can earn a similar profit next quarter and actually increase shareholder equity. Meanwhile, we've been selling. Last Tuesday, we sold 600 shares of FSI International (FSII) at 3.75. We had bought 100 shares on 9/12/07 at 2.50 and 500 on 10/3/07 at 2.05. On Thursday, we sold 400 shares of Newpark Resources (NR) for 6.01, purchased on 8/25/04 for 5.50. Yesterday, we sold 200 shares of News Corp (NWSA) from the IRA at 15.29 which were purchased on 2/9/09 for 6.97. That's a nice quick double.

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