Playing the Financials

While it's tempting to try to pick stocks among the financials which are so terrible now : BX MER UBS JF GE WFC LEH BAC ETFC JPM etc. why take the chance when you can buy them all in a ProShare ETF : UYG which would give you twice the performance; there is also the the XLF. I started a position in UYG on Friday.

the ever increasing cost to discover oil

Daniel Yergin said on Charlie Rose the other night that 4 years ago it would cost you $125K per day to rent a drilling ship. Today, however, that same ship would cost you $450K per day.

Some more on predicting . . . using a model

The issue is not whether any specific model might be wrong: ALL MODELS ARE BY DEFINITION WRONG. They are approximations, a numerical depiction of a small portion of universe. The true question for interested statisticians, mathematicians and economists is "just how wrong are they?" This is not, as some have implied, a question of nefarious cabals or governmental conspiracies. It is simply a mathematical reality.

Taking responsibility for one's self

Our activities and successes are based on our inner strength and wholeness. To grow, it is necessary for us to recognize and correct our own faults. Yet, it is difficult to do this since we hide our shortcomings not only from others but from ourselves. When we gain the ability to recognize and correct our own bad habits, we begin to make rapid strides toward greater happiness and success in all spheres of life. Only by learning to admit our own faults can we become more tolerant and loving to our fellow man and to his shortcomings.

attributed to Moses

How bad are the wildfires in California??

Organizers of the 2008 Western States Endurance Run, the Squaw Valley-to-Auburn cross-country race that has become one of the premier ultrarunning competitions in the U.S., announced Wednesday that next week's scheduled running was canceled due to the unprecedented number of California wildfires and deteriorating air quality. Organizers said two fires burning within two miles of the race course as well as air pollution levels in Auburn registering 10 times levels deemed highly polluted prompted the decision. "Although there will be no race for the first time in our 35-year history, we still wish to make this experience as meaningful as possible for our runners," the letter stated.

Western States 100 homepage

Mastercard bad boys . . .

In a huge settlement today, MasterCard will pay as much as $1.8 billion in quarterly payments over three years to settle the complaint that it blocked banks from issuing American Express cards. But MasterCard isn't the only bad boy . . Visa settled in November for $2.25 billion!

Lake Tahoe evaporates

1,400,000 tons of water evaporates everyday from Lake Tahoe, that's enough to satisfy 3,500,000 people.

Remember when ?????

It used to be said that so goes General Motors so goes the economy . . . . well, let's check here a little . . . back in October, 2007 GM was trading around $42/sh . . . . last check $13.79. OK, let's check on another big auto company, Ford . . . . last October it was trading at $9.75 . . . . drum roll, update . . . . closing today at $5.81.

Wow, that's some pain for the "buy and holders" of big auto.

Masdar City you ask????

How about this for an environmentally conscious social experiment, a mini-burg called Masdar City, a place with no cars, full solar power, advanced water-saving systems, complete energy independence, 100 percent walkability, zero carbon emissions, zero waste, full of so many radical enviro-friendly ideas it seems almost impossible, considering it's also being built on one of the least hospitable hunks of land anywhere. It's being built by the folks from Abu Dhabi, the richest city in the world (Average net worth of every one of Abu Dhabi's 420,000 citizens? Seventeen million dollars).

and the price tag you ask . . . $22 BILLION . . . that's a lot of zeros.

Whoah!

Happy Father's Day

To all my friends and relatives who are fathers . . . . . have a great day and thanks for raising the next generation.

More on jobs data from NY

The Floyd Norris at the NY Times notes that the 12-month change in private sector jobs is down 125,000 jobs from may 2007 to May 2008. Since 1953, this indicator has a perfect record, identifying 9 out of 9 recessions. When it flips negative (year over year), the economy is already in recession each and every time.

You can read about it here

Another interesting piece of data on jobs

Many people consider the temporary job market an important barometer of the economy . . . .

Neuroplasticity

Neuroplasticity is the ability of the brain to reorganize itself. Although in the last five years there have been some impressive demonstrations of brain reorganization that used to be thought impossible, the amount of reorganization that can occur in most adults is vastly less than can occur in children and adolescents.

Let's vote next week on the President

The Monterey Herald had a great op-ed piece yesterday which said "what more can we learn from the candidates in the next 5 months?" and I agree . . . . . let's have the election next week and save ourselves from 5 more months of campaigning and fund raising . . . . like the idea, send me an email.

32 years later

32 years ago (at precisely this time of day) Toni and I exchanged our vows overlooking the Pacific Ocean from a vacant lot on a cliff in Palos Verdes, California. We had our family with us with Judge Murphy presiding and the future Judge Tynan (Toni's brother) and Martha smiling on as Toni's mom Helen, Stephani (Toni's sister and maid of honor), Gay (my mom), Grandad CRT, Grandmother Betty, Aunt Sherry, my cousin Carla (pregnant with Nikki), my cousin Sandy and Rob, Rob (my best man and little brother) and Peggy, brother Andy and Lisa (pregnant with Kelly), sister Sarah, Toni's sister Kathy and Tom, Toni's sister Sharon and Peter and our two friends Dan and Susie witnessing the event.

During the last 32 years we've moved twice in Manhattan Beach then to Fair Oaks and now to San Luis Obispo. I created a business called Kincaid Hardwood Company and Toni taught elementary at Riverview Elementary. We traveled to Europe and around the United States seeing national parks and great golf courses and acclaimed art museums. We skied in the Rockies and the Sierras. We rafting in Idaho and Colorado. We've thrown Super Bowl parties, birthday parties, New Years Eve parties, fun parties. We've been to thousands of concerts and through it all we love each other more today than ever.

here's to my dear Toni . . . I love you. Let's keeping it rocking and a rolling.

Do you know what a QSPE is?

Banks have been using QSPEs to effectively boost their leverage and hence, their return on capital. Without the balance sheet constraints of the old days, banks were encouraged to create assets -- by making lots of loans they shouldn't have -- that could, in theory, be sold off later. It hasn't quite worked out that way.

QSPEs can have legitimate purposes -- but they also can obfuscate the true financial condition of a bank or broker. The purpose is not to simply hide losses off balance sheet, but to get those assets off balance sheet so leverage/Tier 1 capital ratios look better. Essentially you can be much more leveraged than you appear, so that ratios like ROA and ROE look stronger than they would if they weren’t employed.

Some financial gurus wonder if "The migration of exotics to the balance sheet may be inevitable." If he's correct, it bodes poorly a quick recovery for the financials. They have years worth of leveraged derivatives on their books, and writing them down won't be quick or painless.

9th inning? Hardly.

More on the financial crisis

To really understand how affected everyone is by the financial meltdown attributed to subprime mortgages (hear my cynism) you have to hear about what's going on in Europe . . . . how about this, from the Bloomberg wire . . . .

Bradford and Bingley, the U.K. lender struggling to raise cash in a rights offering, must honor a 2006 deal to buy about 2.1 billion pounds ($4.1 billion) of mortgages by the end of next year from GMC LLC.

Customer payments are more than three months late on 5 percent of loans already purchased from Detroit-based GMAC, trying to avert bankruptcy for its residential mortgage unit. That's more than double the average rate for mortgages held by the Bingley, England-based bank, it said yesterday in a statement.

the Science of Sound and Music

I've been reading "This is Your Brain on Music" by Daniel Levitin . . . . fascinating and very educational for anyone interested in What is Music? Where does it come from? Why do some sequences of sounds move us so, while others - such as dogs barking or cars screeching - make people uncomfortable? Levitin is a neuro-scientist.

Here's one interesting fact . . . "A Day in the Life" from the Beatles Sargeant Pepper LP has a 15 Hz for a few seconds at the end of the song, it's inaudible to most people over 40 years old but reportedly, Lennon wanted to make peoples dogs perk up.