Wednesday, March 31, 2010

Haiku - Oil

The topic of this haiku is inspired by President Obama's decision to allow oil drilling in new areas of the Gulf of Mexico and the Arctic Ocean. Story here. I think the tone of this haiku is a bit liberal, and if you know me, then it doesn't reconcile with what you do know. Or thought you knew. No, just kidding. I apologize for the inconsistency. I only wrote it tongue-in-cheek.

Bye pretty shoreline
Oil drilling now good to go
Onward! For progress!
-JDW

Tuesday, March 30, 2010

Haiku - Money Honey

I've watched a lot of CNBC in my short (ish) life and so I have witnessed the Jeff Van Gundy-like aging transformation of "The Squak Box's" Maria Bartiromo. So when Dealbreaker ran this article, I felt my muse calling me so I wrote a haiku about her. This one has a joker-ish feel to it.
The Money Honey,
Maria Bartiromo,
why not so hot now?
-JDW

Monday, March 29, 2010

4 easy steps to becoming a billionaire

A hilariously tongue-in-cheek archival post from Long or Short Capital:
  1. Take outrageous risks with extremely high upside.
  2. Be the 1 out of 500 million for whom it pans out. This one is key so focus on it.
  3. Attribute your wealth creation to your own hard work, your own genius and the power of your business plan. Be sure to stress how your wealth was singularly made possible by your unique endowment of elbow grease, street smarts, common sense, all of which your competitors obviously lacked (proven by how poor they are compared to you).
  4. Buy a mega yacht and/or athletic team.

Good stuff. I'm with the author, and Nassim Taleb, in viewing the predominance of luck as the most underappreciated factor in determining success.

Friday, March 26, 2010

Haiku - Options Lesson

My gains are plenty
lock them in with a collar
limits the upside.
-JDW

Thursday, March 25, 2010

Haiku - Lehman

I've been stuck writing haiku revolving around topics in the news lately:

Tool to hide losses,
Lehman's use was just exposed,
repo 105.
-JDW

Haiku - $GOOG

Hooray for Google!
I am fully behind you.
Censorship is wrong.
-JDW

Wednesday, March 24, 2010

My periodical reading list

I think it would be fun, for posterity's sake, to catalog the amount of non-book reading that I do daily/weekly/monthly. I'll start with monthly magazines: Wired, Fortune, and a new, online, options-oriented journal Expiring Monthly. Weekly I read the Economist. And on a day to day basis I start off on the train with the Wall Street Journal, then ease into a blog roll that includes: Abnormal Returns, Marginal Revolution, The Reformed Broker, The Big Picture, Felix Salmon, Calculated Risk, Freakonomics, Ben Casnocha, Greg Mankiw, and for fun, Dealbreaker. One important thing that I have learned since I developed this line-up is that it has become easier and faster to read all the blogs that I've listed as I have become accustomed with the authors' writing.
-JDW

Haiku - Line Item

Fav P & L line?
MBAs love EBITDA
For me, gross profit.
-JDW

It's actually net income excluding extraordinary items, but that is twelve syllables and this is a haiku.

Tuesday, March 23, 2010

Haiku - In the News

Today's headline news:
Google defies Chinese state -
no censored searches.
Oh, healthcare reform,
divider of my country,
will you improve things?
-JDW

Friday, March 19, 2010

Goals - the cornerstone of achievement

I would characterize myself as goal-oriented, but I have a bad history of not following through with goals that I haven’t written down. In an effort to expect more accomplishments out of myself, this is my attempt to increase my level of success by not only writing them down but publishing them online. I’ve divided my list of goals into three categories according to the length of time that they segment into. Short represents the upcoming weeks to two years, medium best describes a period of time from two to seven years out, and long term is anything beyond that point.
In no particular order, my short term goals are:
§ Pass the CAIA Level 1 exam (September 2010), pass the Level 2 exam (March 2011).
§ In October, repeat being awarded the largest bonus possible per my grade level.
§ Find and start playing on a 4.0/4.5 tennis team.
§ Read the Intelligent Investor – a book that I have recommended to multiple people but that I have been intimidated to read. Also, I have a reluctance to read substantial books because I don’t want them to be finished and ask, “that was it?”
§ Plan and take my girlfriend on a vacation worthy of her…
§ In May, travel to Omaha for the annual Berkshire shareholder meeting.
§ Pass 10 Twitter followers – I am currently sitting at a very robust 1, which happens to be a New Zealand financial spammer.
§ Write a blog post that 1 person can connect and identify with.
Medium term:
§ Start a family - engagement√†marriage√†children – in that order.
§ Earn the CFA designation - I will not let one failure set an immovable barrier in my path. I will study harder, enroll in a study program, and pass it.
§ Move back to KY/IN/OH to be closer to my family. (This will probably delight my wonderfully supportive grandmother.)
§ Get into a PhD program in finance.
§ Write a finance paper worth of 1 person’s praise or, even better, gratitude. “Thank you for writing this” is one of the highest compliments an author can receive.
Long term:
§ Surpass a $1 million net worth, after that it reevaluates by a factor of 10.
§ Start a business. Currently I want to start either a VC firm in Kentucky that would serve to add jobs to a struggling region or start a value investment company, although they aren’t mutually exclusive.
§ Travel to Oktoberfest, Spain, Egypt, Amsterdam, Munich.
Now that I have completed a list I have one major observation: by the frequency of bullets, it seems my short-term focus dominates my long-term outlook. I think that a proper long-term goal list will require more than just the half an hour that I’ve spent. I will continue to think about this list, refine it, and post updates in the future.

Wednesday, March 17, 2010

Haiku - Exec Buyout


Executive Buyout

You are terrible!!

But we think you deserve this -

golden parachute.

-JDW

Shorting Berkshire?

The short argument on Berkshire Hathaway (Greenbackd)
-I don't find this gentleman's argument persuading in the least.
First and foremost, Buffett has publicly said that returns are likely to be much less than were realized in the past. Make no mistake about that. Then again, he did say the same thing in 1969.
Secondly, hypocrisy is no stranger to Warren Buffett. His career has been filled with them. Jeff Matthews does an excellent job explaining them in detail in his book Pilgrimage to Warren Buffett's Omaha, e.g. railing on hedge fund managers despite the fact that he ran a hedge fund in the '50s/'60s and lambasting the estate tax while hawking Berkshire as an excellent vehicle for avoiding it!
He is right that there has been a huge spike in volume, but I doubt his conclusion that it is retail investors. Rather, I would say the significant driver of that change in volume is institutional buying of a large, new component of the S&P 500. The fact that Berkshire is so large also means that the capitalization-weighted S&P 500 index contains more of it so passive AND active fund managers are forced to buy more of it to rebalance to the index.
The main point that I feel he fails to raise (and I'm stealing from Jeff Mattews) is the fact that Buffett doesn't reinvest in his family of businesses as much as he could. Perhaps this is just a fact of life in living with the world's greatest investor. But if Nebraska Furniture Mart were allowed to grow on the wings of its own profits there is no doubt in my mind that it would be the dominant force in furniture retail.
I don't disagree with Mr. Rajagopal's conclusion, only his arguments. At its current valuation, Berkshire is probably overvalued, despite its continuous and deep stream of cash flows. Despite this view, I'm not selling yet because I was persuaded by Jeff Matthews to make my trek to Omaha to see the man, the Oracle, in person this May.

Full disclosure: Long BRK.B

Tuesday, March 16, 2010

Chart of the Day - Aid

What does this chart say to me? Well, apparently all your country needs to do to hit the foreign aid jackpot is to start a war/be war-ravaged. The more stable yet poor countries get much less of the pie. The lesson here, kids, is that if you're country is poor you need to find a gun and start a militant movement (handgun or AK; it depends on your style). Then you can sit back and watch the UN trucks drive in big mountains of aid. When they arrive, you already have an organization in place to steal their goods and sell them back to your people on the black market. If they're poor enough, they'll pay...instant profits!
Chart courtesy of Aid Watchers.

Haiku - "3-6-3 Rule"

The 3-6-3 Rule
Pay out three percent
Lend to borrowers at six
By 3, at the links.
-JDW

Friday, March 12, 2010

Haiku - Research

Whether you're a virgin amateur or a lifelong career analyst, the importance of doing equity research can never be overemphasized enough. Research cannot entirely eliminate bad investment decisions, but by investigating a company's financials and prospects you can certainly reduce the probability that you will lose money.
Beyond that, don't take someone else's word for it. You can't pawn someone else's work as your own. Never bite on whisper stocks.
With this in mind, a haiku:

Profit from research:
dig into the financials
call the company.
-JDW

Haiku - Howard Hughes

I watched the Aviator this week and it inspired this haiku:

Howard Hughes
Industrialist
produced the Spruce Goose failure
tried war profiteer.
-JDW

links of the day - 03-12-10

An awesome presentation on why the rebound is fake and the case for a double dip (TBI)

A 4-point breakdown of Jim Chanos's bearish stance on China (Wall St. Cheat Sheet)

A place where you can bet on box office returns (NYT)

Thursday, March 11, 2010

Haiku - LT Wealth

Steady dividends
compounding your capital
path to long term wealth.
-JDW

Haiku - Options

Options have gone Greek.
Delta, gamma, theta, rho -
all parts quantified.
-JDW

Wednesday, March 10, 2010

Haiku - Efficient Markets Hypothesis

I have a real disdain for the efficient markets hypothesis. I always have. And, unfortunately, I shared that opinion openly with my professors in graduate school. Unfortunate for me, because I had one professor who prayed at the altar of Eugene Fama. We didn't get along. I thought it was ironic that a classroom full of students who were going to stake their careers on the existence of market inefficiencies were being lectured by someone who believed that none existed. Well, I pick up free money (change) on the street.
Anyway, here is a haiku inspired by my EMH-touting prof:

I can't make money
so I doubt it's possible...
...efficient markets.
-JDW

Friday, March 5, 2010

Haiku - Black Monday '87

I apologize that I haven't been posting more, but it has been a hell of a week. I haven't forgotten you, my scores of adulating fans.

This haiku takes us all the way back to October 19, 1987, Black Monday, when the Dow lost 508 points (22%), dropping it to 1,739. Look how far we've come my baby...

Precipitous drop

portfolio insurance

mass wealth destruction.

-JDW

Thursday, March 4, 2010

Haiku - Benjamin Gramam

Stock pick whiz, Ben Graham,
Intelligent Investor
taught Warren Buffett.
-JDW