Ups and Downs

What a week!

Being employed sucks. I kinda miss being unemployed last year, even though it was only for 3 weeks. Strangely liberating. Time to get back to that.

Just ran an analysis for a new real estate deal one of my partners ran by me. I need to learn some advanced Excel tricks. That might be the only good reason to get an MBA. My valuation model needs some work. I plan to sit down one day and sketch that out. Now if I can find a nice source of valuation information that has a programmable Web services API! That would be sweet. I think I may have found something similar, but I'll have to look at it a bit more. If you have any good resources for learning how to master the power that is Microsoft Excel, please share! I hate Microsoft, but I LOVE Microsoft Excel!

I like this house though. Its already rented and not far from another one we already own. (Our best deal to date, actually.) The numbers are very reasonable and it should be able to cash flow pretty well. My personal goal is to bring in 5 properties to the group this year. I need to ramp up the prospecting.

*sigh*

I know there are some folks out there who want to know more about "The Business". Well, things are coming together now. I FINALLY managed to get my certificate from VeriSign last Friday, 16 February. A better way to end what was generally a crappy week. Then I tried to install the cert, and everything fell apart. Seems for all the fighting I had done to push the thing through, I managed to generate the wrong kind of data for the wrong kind of cert. VeriSign sells Java code signing certs as well as the ubiquitous SSL web server certs. I had generated data for the latter, when what I needed for the former. Thankfully, after a call to VeriSign yesterday (which was returned within 2 hours although the voicemail message told me to expect 24 hour turnaround), I was able to get the confusion cleared up. I was also informed that I could replace the already-issued certificate with a new one for free, since I was still within 30 days of issuance.

Schweet!

So I have a new code signing cert application in and the process is moving, albeit a bit glacial for my tastes. I'll follow up with them after I call my cousin about legal services.

My partner is making GREAT headway it seems. She's too cool, man! Too fuggin' cool.

Anyway, my thoughts are very random and scattered right now. I'm still recovering from Friday night's festivities. As I said, since I couldn't get myself to Trinidad, I brought Trinidad to me (as much as possible). More on that in a later post.

Until next time...

Marketocracy Funds go live

Caught this over at VentureBeat that Marketocracy has finally launched mutual funds based on the picks of its top 4 stock pickers. A nice interview with the top performing guy, Chris Rees, is included with the VentureBeat article. Very cool.

I wonder how much overlap there was/is between his portfolio and the portfolio of Steven A. Cohen. Reportedly, Cohen's returns since 1992 have averaged over 40% annually, although I don't have the exact number handy. It would be cool to compare Rees' portfolio since 1992 with Cohen's. Just an interesting thought exercise.

I have a portfolio over at Marketocracy. I think the last time I looked at it was some time last year. I just don't have the time to focus on stock picking like I would like to (or be able to), especially while trying to hold down a full time job and build a startup, nevermind all the other things I'm doing concurrently.

A nation of water misers

I guess this is how it begins.

Brilliant!

I'll be following the story of the EOP purchase very carefully. Looking for lots more press on Jon Gray.

However, I may be alone on this one, but it seems stupid to be the business trying to achieve "milestones". I'll take the money, please, thank you. The cap rate is sick, and not in a good way. Definitely sounds like a trophy acquisition for Blackstone. Talk about an area to stay away from - any commercial real estate investment, especially those which trade on markets (REITs). I think time will show that Steve Roth at Vornado made the best decision - whether by choice or circumstance - by withdrawing from the EOP bidding.

Until next time...

So Sad

NOTE: This post has little to do with money or alpha, so if you have no interest in such topics, change channels now. And...this bitch is long.

So here I am, back in the house my parents have lived in for the last 18 years, in Maryland. I'm not supposed to be here. I'm supposed to be in Trinidad. The story of why I am here as opposed being in San Fernando, Trinidad is a long, winding and disappointing one. Somehow, I get the feeling that God didn't want me to go to Trinidad, and that saddens me. While I'm still evaluating options, to quote my high school friend Damon, "things look bleak for the home team".

I originally made these reservations in early December, and got a reasonably good deal considering how late in the cycle I did all this. (Thanks American Express Platinum Travel! I love you guys.) $638 round trip to Trinidad 1 week before Ash Wednesday and returning the last day of February. So everything was in order and then...

I remembered that my J.O.B. (Just Over Broke, for anyone not familiar with T. Harv Eker's writings, and boy is that accurate) only gives me 2 weeks of vacation. So I'm looking at burning up all of vacation time on 2 weeks in Trinidad. While I love Trinidad, I can't do what I did last year, when I was unemployed during my time in Trinidad. (Which is why the J.O.B. only gives me 2 weeks instead of the 3 I would have if they had re-instated my seniority when I returned from the failed consulting gig with Unisys. But I'm not bitter.)

I've been weighing this for the last few weeks. Do I go and burn up all the time, or do I stay and piecemeal it out over the course of the year? Fugg me! In mid - late January, I decided to cancel. So I e-mailed the friends I would be staying with and let them know. I justified this decision by saying that I should be here to get things in order with the business, continue pushing forward, all that kind of thing. And I do believe that. But I also promised myself to go to Trinidad Carnival every year from now until I die. This commitment weighed on my conscience; to fail at it so soon was unnerving.

In the last week, however, a few things happened which re-kindled both the hope and the possibility of going to Trini. First, I found out that my friends at Basement Knokers weren't going to throw an event this Saturday night Having been adopted by Trini friends that I went to college with, this was nothing short of sacrilege. No Saturday night fete!?!?!? I was livid. Being reduced to partying only on Friday night, even though I had planned to go with friends and bring Trinidad to DC, was still not "right". Then on Monday I text messaged one of my friends, a real Trini soldier, and asked him when he planned to leave. Friday morning was the answer. So we spoke and he cleared up some things for me. Please allow me to diverge, to provide some context.

Last year, I went to Trinidad very stressed. Stressed due to relationship issues. Stressed due to my job loss, which was the first time in my employed life - 9 years - that I was ever let go from a job when I had avoided it for longer than many other people in my line of work and industries. Stressed just because that's the kind of personality I have. I'm high strung. My original plan was to go for 12 days. Now, people who know me know I'm a nice guy. (People who don't know me seem to fear me, but that's a different story.) So, on the Sunday my girlfriend and I were scheduled to leave, I offered to give up our seats to some people who desperately wanted (needed?) to get back to the US. I mean, I was unemployed anyway. Staying in Trinidad wasn't going to hurt my earnings terribly, even though I had begun the process of returning to my old (and now current) J.O.B. So I gave up the seats, on a promise from Continental Airlines that I would be on *the* next flight that day. Well, airline promises aren't worth a damn, so that fell through. Long story short, I ended up buying first class tickets on BWIA back to DC for that Thursday. I have to admit that, after getting over my initial upset and anger, I enjoyed myself greatly for those remaining 4 days. Enough to determine that I needed to stay at least 2 weeks the next time I came down. That is what I planned for back in December 2006.

So, coming back to the present, after my conversation on Monday morning, it occurred to me that I had created this illusion of a "perfect" trip that had to be at least 2 weeks long. It was completely unrealistic under the circumstances, so I decided to quit instead. (As UGK once said - "ain't no need for me to finish if I ain't comin' out first".) However, the experience - of seeing my friends whom I haven't seen since last year, of going to all the fetes I missed last year (the Sunny Side Up Breakfast Fete and Insomnia being the critical ones), and of just getting away from all the bullschitt at my J.O.B. - was worth the trip, even if only for a week.

The linchpin to this story is that although I had already told people I wasn't going to Trinidad, I had not yet cancelled my tickets. Since my departing flight was scheduled for 9:20 AM EST on Wednesday, 14 February, I figured I would hold off until the 13th "just in case". I'm glad I did, because I was able to make an adjustment to the tickets and - voila! - a one week trip instead of two, with the original departure date intact.

Then nature struck.

(Whew! I told you this would be a long bloody post.)

Maybe I'm not supposed to go to Trinidad. I mean, a huge winter storm mucks up the works on the morning I am flying to Trinidad. I get a call at 4:25 AM from my shuttle company telling me that my 4:55 AM shuttle is canceled. (Damn!) So now that I know I'm not making the 9:20 flight, I go online to check the flight status. Canceled. (Brilliant!) Call American and they are able to get me on the 10:45 AM flight. (This could work after all!) I proceed to call the biggest cab company in my area, and they proceed to tell me that they can't get their cars on the road. Its sooo not happening. (Damn!) I have to drive. I wanted to avoid this because I didn't want to pay the exorbitant parking rates that every airport charges, but it appears unavoidable. Call it an expense, and I am happy to pay it after returning from Trinidad. So I get on the road around 8:30 AM, fighting off a Sickle Cell crisis induced by the overexertion of cleaning off the car compounding my chronically sleep deprived state. (Love Demerol! Don't medicate and drive, kids!) Once I reach National Airport (I'll be damned if I call it Reagan National), I find that every flight from every airline going to Miami (my connecting city) is canceled. (Perfect!) Once inside the terminal, I'm frantically trying to find out about getting my bag checked. I use the TSA approved locks, I'm not worried about that. But dammit, WTF don't the kiosks allow international travelers to check in!?!?!? WTF thought this was a good idea???? WTF!?!?!?

(This is why I fly JetBlue to California! I hate the major airlines with a passion. Of course, I didn't sit on the tarmac in NYC for 8 hours either.)

Now I'm waiting in a line that LITERALLY did not move for 45 minutes. I'm standing in the self-service line on the off chance that I can get someone's attention long enough to plead my case to check my bag. I'm doing anything I can think of short of throwing shit. (They still shoot Black people in DC, and enjoy it.) I finally get some modicum of a response from this one agent, obviously overworked and harried, around 10:15 AM. (Reminder the flight time. Scroll back if you need a refresher.) After about 10 - 15 minutes of silence, she says she's going on her break. HELLO? WTF about me? You did say you would see what you could do to help me? How does taking a break help me? Can you at least hand me off to someone else? Fugg me! Another agent, this time a guy, starts working with me but when the exercise ends in defeat, he gives me the obligatory phone number to call to make the impossible changes to my itinerary.

At this point, the memories kind of fade into a blur. I'm sure you're all happy, because this is a long ass post and I need to wrap it up soon. Hell, I'm getting tired of typing. Once I finally get back into the line, it speeds up, taking only 30+ minutes to an agent instead of 45+. So I start telling my story, keeping in mind that I have listened in on or overheard every DC -> Miami cancellation story American has to offer. (Why the hell did they fly the 10:45 but not the 12:20? Huh?) So I'm asking for a flight - any flight, on any airline - to Miami. Nothing. While standing in line, I call the phone number the previous agent gave me and start trying to find something. No go. I call Platinum Travel and they scrounge something together through the Bahamas leaving at 2 something PM. (Should have written that flight number down, because the Bahamian woman in front of me in line was starting the Milton routine. Boy was she unhappy.) For various reasons, I found none of the options too appealing so I wrote them all off except one, which I put on hold. American gives me a voucher made from the remains of my ticket. (Do NOT loose not a single hair off the heads of all 4 tickets, otherwise the whole deal is null and void. Great! That's the same reason I didn't get through Intro to Programming back in 2005.) The woman behind me, heading to a second honeymoon in the Keys with her husband, starts breaking down - badly. Its just ugly.

After getting out of the line, walking through the terminal, I call Platinum Travel and put on hold a flight through the Bahamas on Thursday. (That would be today for everyone who hasn't kept up). Schweet! Now I just need a co-signer in the form of my partner who is opening his house to me. Call him up, and although he sounds upset about it, he signs on. Nice. Progress is being made. I call Platinum Travel back and confirm. We're on! So I make my way back to my parent's house in PG County, so I can be *that* much closer to the airport. After a nap and more crisis pain, I call AmEx back with the intention of locking in the new itinerary. At this point, the agent reads it back, and its missing a leg. Huh? What happened to my flight to Nassau. Oh, it was canceled. Fugg me! Ok, lets put a new one together. After however long, she comes up with a flight through Nassau on Friday. All the same details as the previous itinerary, except the ONLY seat on the plane is first class. Now, I love first class, so its not like she's got to sell me on that bit. Just get me onto the bloody island and I'm happy. But what's the cost? $2064, including the return flight on Delta which carried over from the failed itinerary.

He're's where the trouble starts. See, I don't mind paying the money. That 2K gets me to Trinidad in time for some nice fetes. I've done it before, I'll do it again. If I have a choice of burning time or money, money will win almost every time. But how much is it really worth? I start calling my partner from Monday back, and once I finally get him on the phone, it gets clearer. The 2K buys me 2 nights of parties, but since I'm not in a band for Monday and Tuesday, I end up being a spectator. Fair enough. There's always Jouvert, right? But if I go with the available flight on Sunday, I miss all the hot parties and only have access to the jump up, which I'm only going to watch anyway. But I save 2K. Hmmm. Ain't this a bitch? After some consultation, and another sad story of a failed connection to Miami by another Trini solider who was unfortunate enough to buy ALL his tickets in advance, I decide against the Friday flight.

So here I am. Its 3:13 AM on Thursday, 15 February. I'm at my parents house in Maryland, not San Fernando. Its cold in this bitch. There's black ice outside. The power went out for an hour earlier. Every so often, you hear the ice-laden branches being whipped up (down) by the winds gusting to 40 miles per hour. I wouldn't have to turn the heat up to 80 degrees F if I were in Trinidad right now.

*sigh*

But on the upside, I received e-mail from one of my favorite bloggers tonight. How cool! Already replied. He asked about "the business". We'll see how things go.

And now I think I'm ready for bed. It's been real.

Until next time...stay warm...think Trinidad..."Jumbie" for Road March!

Carbon Credit Markets

Looks like this market is starting to take off in the US, just as it did in Europe. It will be interesting to watch the developments.

I love this kind of stuff!

Update on the Biz

I'll take a moment to update anyone who might be interested on how things are coming.

There isn't a whole lot to report. Just the usual - fighting with vendors, waiting for mail, that kind of thing.

The vendor this time is Verisign. Good lord, it shouldn't be this fuggin' difficult! WTF is the problem with VeriSign!?!?!?! For the love of God, I have tried for 2 weeks to get them a document and every time they receive it, they have a problem with it. Anyone who holds an aversion to cursing should skip the next paragraph.

You know, if you're a startup, you might not be listed in the bloody phone book. We're a fucking startup! Its called stealth, you dumbasses! Just get the damn form, approve it, and give me my friggin' certificate. I don't see what's so difficult here. I'm willing to give you my money and you don't want to exchange it for something of value to me??? WTF?

I feel much better now.

On the other hand, my partner has been making some nice progress. Hopefully, by this Friday, we'll have even more supported platforms for our software. Now its time to find an attorney. I hope to have one locked up by now, but both of the people I wanted to work with have disappeared off the face of the planet. Sounds like a conspiracy to me. I mean, I'm willing to pay - and if I can't pay, compensate on some level, a mix of equity and cash - and still can't get people I know and trust. Very disheartening. Looks like I'll have to turn in the one direction I had least expected to turn, and had most avoided - family.

*sigh*

I swear there's probably something else to say, but my brain is slowly decaying in my skull. More tax forms to complete, a letter to FedEx to VeriSign (since faxes seem so difficult for them to handle, and don't get me started on e-mail), and other random shite.

Until next time....avoid VeriSign if you can...

Review of T. Harv Eker's "SpeedWealth"

I said I'd get it up here, and finally, here it is - my review of T. Harv Eker's "SpeedWealth - How To Make a Million in Your Own Business in 3 Years or Less".

First, its a simple book. Nothing at all complex about it. Less than 100 pages. While the advice is not unreasonable, I'm sure some will consider it too simple, just based on page count, to be worth any money. However, I tend to believe that good things need not be complex, and just because something is conceptually simple doesn't mean it is easy to execute in the real world. (Consistent trading strategies and discipline, anyone?)

The book talks about the 8 SpeedWealth principles. In order, these principles are [1] develop a SpeedWealth mindset, [2] deliver massive value, [3] timing - choosing the right business at the right time, [4] systemize, [5] duplicate, [6] leverage, [7] cashing out and [8] do it now! Like I said, simple. Having gone through various failed ventures over the last 10 years or so, I'd definitely agree that all of these are important. Admittedly, number 4 is my favorite just because it is the one I've had the most problems with in the past. I also think these principles hold value at the individual level, and I am all about automating things like investments and financial management (as much as reasonable, anyway).

Now, as for whether I would recommend this book. The answer is yes. Its not a long or difficult read. I read it the first time in about 90 minutes, and I read slowly. I know someone out there is complaining right now about something - either because Harv is the author, or they read it and didn't like it, or some other reason. I don't have anything to tell them. I don't think good knowledge or wisdom MUST be complex. Generally, I find complexity is used as a coverup by people who are extremely insecure. I can only speak for myself, and I am seriously considering buying as many copies of the book as make sense so I can give them away to people I know. Simple things which, if applied, can have huge impact in one's life. I like that.

Anyway, I think I rambled again. Fugg it, I'm done. I liked it. If you stumble across a copy, take a read. Hopefully, if you're working on building a business, the book will help you to find ways to address problems and build that business more quickly, effectively and to a larger scale. Or maybe you'll find applicability of the principles in your personal life.

Until next time...

The challenge of a financial product with religious dimension

I've heard a bit about sukuk in the past but I haven't kept up with it. Interesting concept. Sounds like preferred stock to me. Maybe I'm oversimplifying a bit, but structured like a bond except for the interest payment (which is disallowed under Islam). Instead, the company pays out profits.

Riiiiiiight. A preferred.

Better position in the capital structure, some guaranteed yield, but a preferred it is. No matter, as long as it works.

However, what struck me the MOST was this quote from the trader profiled in the article, Chris Steer:

"It's quite simple really. What people don't know, they either don't like or mistrust. The more you find out about something, the more you understand it. It makes you more sympathetic to other religions and cultures."

I love it! Financial engineering actually uniting people, for once? Could it be, really??? Who'd have thunk!?!?

Lies I Tell You!

I have to take some serious issue with this article at the NY Post. The Ritz-Carlton Laguna Niguel is not terribly swanky! Its very unfortunate, too. Just because it shares the name, do not be confused. It was a disappointment compared to the other Ritzes I've stayed in. (I'm building a collection.) I do, however, like the beach front location. Even in March, a walk on the beach was a bit too cool for me, and I live in DC!

Oh well.

*sigh*

Water Redux

This cover story at CFO.com makes a nice complement to my earlier post about investing in water. While that post postulates about water futures as an investment vehicle (if they existed), this CFO article looks at it from public company perspectice. I'm not sure the model is exactly what I would choose, but the general investment thesis is solid. Definitely a space to keep watching.

Blog Recommendation - The Housing Bubble Blog

This one is almost as much a comedy entry as a serious business entry. You gotta love some of the comments re-posted on this blog. Classic! Such as this:

"'If you are paying the negative amortization amount, you are looking at a small light at the end of a tunnel,' Smith said. 'It's connected to a locomotive that is going to smack you in the face.'"

Hilarious!

And this:

"'Didn't you read the newspapers? Property values are going down!'"

I love this blog. A nice quick daily overview of the overall, ground level state of the real estate market, from all over the world (but obviously with a US bent).

Until next time...which shouldn't be too long from now...

The Risks of Betting Big on ETFs

I'll have more to say about the risks of this strategy in a future post, inspired by some of Veryan Allen's musings on diversification and All About Alpha's thoughts on portable alpha.

Trading in Disaster

Fascinating stuff!

If only I was a player...

*sniffle*

Sounds like yields haven't compressed too much in one corner of the investment world. I wonder what the chance is that my PIMCO funds invest in cat bonds and similar? Hmmm. Probably very low. How disappointing. I'll have to go take a closer look at the portfolios in the near future.

Corporate Progress

Things are coming together slowly. I expect to receive the physical copies of the incorporation documents sometime this weekend, as well as getting some verification information notarized. By next week, I expect that this software will be running in its full glory without the restrictions that have plagued us so far. I'm sooo excited! I can't wait to see it actually work!

Shortly, I plan to have that long ago discussed review of T. Harv Eker's "Speedwealth". I'll start by briefly saying that it is a very quick read. I think it took me 60 - 90 minutes while I was waiting for a contractor to arrive at one of my real estate prospect sites. I read it so fast that I immediately knew I would need to re-read it to lock in the concepts. While they are fundamentally simple, they make a lot of sense and appear to be very powerful. I hope to implement many of them in building my software company. Anyway, please bear with me. Its coming after finish my re-read.

More to come...

Taking an L on Corn Ethanol

G'day, all.

So I ran across this article on Bloomberg.com the other day which had me seriously thinking about the near term future of corn ethanol, and the long term prospects for cellulosic ethanol.

Basically, the corn folks may have it all wrong in the long term. Of course, I couldn't help but be frustrated that I don't live in the Caribbean, where there are ample supplies of sugarcane. But I digress.

The economics don't even make sense, in the intermediate term. While in the short term I would expect to continue seeing a bid, corn ethanol looks to be the natural gas of biofuels due to the volatility of the market. Corn demand up due to ethanol production (nevermind feeding people and animals), then substitution kicks in (yes, it can work both ways!) OR demand destruction. So the price drops again, until the ethanol producers back off, and the yo yo continues. (Market forces at work, baby!) Then there is the Sanford Bernstein estimate that corn ethanol is only profitable with oil above $70 per barrel!?!? Add to that the fact that, right now, a gallon of corn ethanol costs almost as much as as gallon of gasoline, with only 70% of the energy density of gasoline, and you have a pipe dream.

"To limit supplies and bolster prices, a 54 cent-a-gallon U.S. tariff on imports blocks shipments from countries outside the Caribbean and Central America."

One day, the market will be allowed to work instead of being manipulated in such daft ways. Clearly the American consumer isn't being protected here. Who thinks this shite up?

We can choose between corn for energy (which it doesn't appear to be good at) or corn for food (which it is good at). Hmmm. I wonder which use will win. On second thought, maybe I know already, unfortunately.

My question becomes "who is doing the research on making cellulosic ethanol viable?" Find that gem and, well, I think you can add some nice alpha to your portfolio. I think I'll start looking now.

After my con call...and after I check my commodities account.

Goodnight. Maybe.

Quote of the Day

"Rich people have the option of acting poor. Poor people do NOT have the option of acting rich." - Khyron (e.g. me)

Grudge Match: PE vs. Tech

Umm, the answer is "no".

The question is whether private equity "gets" technology enough to make a successful go at buyouts in that arena.

I think the article lays out the reasons more clearly than I could. Now, why has Silver Lake been successful? I'd attribute it to Roger McNamee's background as a technology analyst and technology venture capitalist gave him above average knowledge of the industry. Now, that's not to say that the big name PE shops couldn't bring on specialists to help manage these investments. But I doubt they are likely to, because (and this is just my opinion/observation), they seem to be very ego driven. Each new buyout becomes another trophy, not an actual business problem to (re)solve. Add to that the fact that few PE shops these days are interested in the bread-and-butter work of corporate restructuring that was the original foundation of the industry, and I don't see how they would make a tech buyout work. They'd be too interested in levering the company, extracting dividends from the proceeds and re-IPO'ing the operation, to actually FIX it. Of course, as the article also points out, given the requirement to maintain cash flows to service the debt, and notorious advance of technology which seeks to stem those cash flows, that kind of shortsighted strategy can only end poorly.

I vote tech. PE will never figure out how to make these situations work, until they become dedicated to it like Silver Lake or Platinum Equity are. Tech is fundamentally a business, like any other, but one with very different requirements from the ones typical taken on by PE investors.

Alpha in University Endowments

While I'm sure most of my readers have already devoured this piece at The Economist, I want to take it from a different angle. (Thanks to Abnormal Returns for the lead in analysis that started me down this path.)

First, I have to say that I love this line:

"Perhaps they can stay solvent longer than the market can stay irrational."

We shall see.

Anyway, we all know the story of the big endowments. The Economist article throws out a few stats to help support that story - the big funds have the best returns from employing the best, most swashbuckling managers and occasionally even paying them well. (I'm sure Jack Meyer might disagree with that assessment, which is the cause of the "occasionally" in that sentence.)

But what about the smaller endowments, the ones not blessed with the girth of Harvard, Yale, Stanford, Duke or MIT? How are they looking on the alpha generation front? I imagine the picture is not as pretty.

I stumbled across this link while doing a search on the topic of the endowment of the university I attended (Howard University in Washington, DC). A few hundred million in your endowment does not provide access to the best resources, the best talent, or the best vehicles, clearly. So how does a small endowment go about generating returns even approaching those of the the largest endowments? Is it even possible? I mean, if Meyer's guys could take enough flak to make it more worthwhile to leave Harvard, how is a small private university, or an HBCU, supposed to attract the talent necessary to drive the returns of its endowment?

Now, of course, the answer is probably "it isn't supposed to". That leaves these institutions even more beholden to the well known public markets - equities, bonds (maybe, especially Treasuries), and the other usual suspects. However, participation in true alternative investment markets remains sorely lacking, I'm sure.

A small university endowment (< $1B) should have some flexibility to generate better absolute, risk adjusted returns, however, even if not being able to exploit the same level of alpha generation as the big boys. There are (unfortunately?) hedge funds in this size range. Maybe the optimal approach is the application of so-called "portable alpha" strategies? Maybe its about shelling out the extra compensation for the proper talent, even if it is a small group of individuals (ex-Amaranth traders, maybe)? Of course, the numbers could get big quickly, and if Harvard alumni had the temerity to protest the compensation of one of the best (THE best?) manager in the endowment universe, how can a small liberal arts school or HBCU even fathom hiring a team of such people. How much risk is there for a college or university president, at this level, of such a move?

Anyway, this is something that bothers me on a personal level. Although it fundamentally has little to do with alternative investments and access to them, that is a symptom of a much more pervasive problem. I don't believe it to even be a "race" issue (in the case of HBCUs). It is really a class and size issue. But I still don't like it.

Whew! Finally done. Until next time, gentle readers...

The Creative Pursuit of Alpha

I like this strategy for its inventiveness. Makes me wonder if there are any cases I can bring on behalf of the U.S. government. Of course, once you factor in the legal fees, Mr. Brickman's cut, and whatever other expenses I'm forgetting to mention, the take probably won't be too huge. But since this looks like an activist role - from the other direction - it should still end up being a win for Greenlight. We'll see how it plays out. Very interesting, though.

Schweet! It has been a very alpha newsworthy start to the week.

Alright, I'm (almost) off to bed...

Now You, Too, Can Enter the World of 007 Finance

I can!?!? Fuggin' cool!

Ok, this is getting a bit ridiculous. Is it me or have "alpha-centric investing strategies" become the topic du jour of the MSFM? This worries me.

Spot the Investment Thesis!

Trends worth consideration. 1, 5, 7 and 8 are the most relevant to me.

1 is an indictment of the current U.S. government and the people who allowed it to remain in place. Uh. Oh. Yeah. Nevermind.

*sigh*

Moving on, 5 and 8 are purely investment theses. Hmmm.

As for 7, well, Dubai gets it. See what happens when emerging economies can't fall back on oil to corrupt their politicians and sell to the U.S.?

Thanks to Uncle Jack for this one.

Is real estate the asset class most prone to bubbles?

Interesting question over at The Housing Bubble Blog. Food for thought.

Blood in the streets, baby, that's what I'm waiting for.

Incorporation Process Started

I FINALLY got around to completing my application with BizFilings for the startup. Feels good to have it out of the way. I look forward to getting the paperwork in hand because there are some things that I need to get done which require proof of the corporation's existence. I love progress!

More to come...

Pushing

Almost time for bed. I've just been trying to get a few last items worked out, sending e-mail to my real estate partners and financing thoughts to my software partner. Sometimes it feels like there is too much stuff going on.

*sigh*

On Friday's agenda is to finish up the new corporate registration materials, finish some posts that I've been working on for this site, cancel my trip to Trinidad, and do more reading.

And get more sleep.

Until next time...

Thinking about risk premiums

I was perusing this post at All About Alpha again when it occurred to me that if long only large cap mutual funds, and long only strategies in general, depend on risk premium (e.g. that's what encompasses the majority of their returns and thus should be used as the basis for compensating their managers). If that IS the case, markets would appear to be in for a bumpy ride in the near future. Risk premiums have been compressing and are fairly low among a range of asset classes these days (leading to levering up of bets and further afield searches for untapped asset classes). So if the risk premiums are dropping while the risks themselves are staying constant or increasing, at some point, the music has to stop and the situation normalizes. That sounds like a fairly painful event for someone. (Maybe you? Maybe me? Maybe we?)

Now, maybe I'm just thinking about this too simplistically. This just happened upon me while I was catching up on my reading. Fascinating stuff to consider though, and simultaneously very scary. I'll be mulling this over for a little while longer.

Risk Appetites

Can't say there hasn't been ample warning.

The question is really who is going to take it up the a-- when and just how badly.

Should Have Seen This Coming

Damn!

I had completely taken my eyes off SUNW while I've been working on this startup situation then they go and do this. And on the schedule that I was expecting too. I haven't even finished my options app yet! So much for buying any SUNW $6 calls in the near future. We'll see if they hang above that tomorrow during the day, because those calls are definitely in the money right now.

Damn!

Lesson Learned: Don't procrastinate on a good idea!

Lesson Learned: Thorough, thoughtful analysis can pay off. Do more of it.

It has been sort of like watching a public company that might otherwise be a CANSLIM candidate find its way to profitability. Granted, SUNW has been public for some time, but if I remember correctly, the "C" in CANSLIM means current earnings per share. Until now, SUNW hadn't had any of those for about 5 years. You could see them creeping closer though, especially after the "N" in CANSLIM - new CEO - took root. I was just a bit early, but the makings were there. So in that regard, I'm ecstatic. Now I just need to do more of that more regularly.

Until next time...

PLUS and minus

Found this short bit at MarketWatch, courtesy of Fierce Finance, about a new structured product for retail investors from Morgan Stanley called "Performance Leveraged Upside Securities". All I can say is "Wow!" I wonder who would buy one of these anyway? Who gets pitched this stuff? Sheesh!

Casinos Divide to Conquer

Interesting bit in today's WSJ (subscription req'd) about breaking casino companies into essentially their constituent parts - land companies and gaming companies, ala the hotel breakups of the recent past that turned Marriott and Hilton into managment companies as opposed to being necessarily operating companies. It started me thinking about why this may (or may not) work. These proposals seem to be based around the soaring property values on the Las Vegas Strip. However, I don't see how separating real estate from relationships is as easy as separating alpha from beta, at least in this business.

For one, and maybe I'm being the spoil sport here, but doesn't this create more overhead for the casino management companies? Say, for example, if MGM Mirage were to break off its real estate operations into a separate company which owned the actual physical land. MGM now has to pay reasonable, if not market, rates to the real estate company so that the real estate company can cover its costs. It gets worse if the debt stays with the real estate, as mentioned in the article, because the REIT, or whatever form the real estate operations take, has to have the cash flow for debt service.

Another point of concern is the licensing. This may not be as big of an issue, but it still something that needs to be considered. The hotel and resort operations are one piece, but the proper people have to be licensed to run the actual physical casinos. Presumably that is what the casino operating company would handle. Of course, I could be off base.

On the whole, I'd say that this kind of model doesn't seem to fit the casino business all that well. That's not to say some PE shop might not try it. However, the casino business is much more a relationship management business these days, as the article points out about the Harrah's buyout. Getting the regulars to come in and continue spending is the backbone, and the glitz and big spenders is an add-on. Separating the relationships from the facilities might look good on paper, but it sounds like a losing proposition to me.

Also, what happens when the leases come up for renegotiation? What if the REIT or whatever decides that it can get a better deal from a rival or startup operator? Would you feel the same about your favorite resort (mine is The Venetian, right now anyway) if it had to move to another location, a location that most likely would be off The Strip given the relative dearth of available land ON The Strip these days? What does that do to the hotel/casino operator's numbers when they get this kind of deal foisted upon them? I'm not saying its likely, and I'm sure (I hope) the leases are long enough to make it profitable during the term of the lease and provides options after the expiration of said lease. But the REIT could also decide to develop condos or apartments or something non-casino, and it would be well within its rights to do so. It just doesn't look like a winner to me.

But then, what do I know?

Back in the Game

Apologies for the lag. The last week has seen me sick, busy, traveling and generally all over the map. Now I'm again ready to play.

So far, things are pretty disappointing on the investment front. Just looking at the wheat charts puts me in tears. I've got 1 month before my March call expires. So far, I'm down. I'm not going to get into how much I'm down, just being down is bad enough. Might have to close this one out. This would appear to be my punishment for chasing performance. We'll see how much value I can salvage on that one.

*sigh*

Anyway, the trip to Cali was a success. I was able to sit down with one of my key advisors and get some good input on writing the business plan, putting together the financials, and other business related topics. On the technology side, I was able to procure some hardware to actually conduct testing of the product my partner is building. I feel good. We're working to have a running demo (that actually does something; at the moment the code runs but doesn't work through no fault of our own) by month's end.

Anyway, for those who are interested, Bill Gross has his January commentary posted over on the PIMCO website. Always worth a read, I think. On the same site, Paul McCulley has a convo with Morgan le Fay about the direction of the Fed Funds. As always, good stuff from the PIMCO crew.

Now that I'm getting back to my reading, I have to wonder how I missed this one over at FT.com (courtesy of Barry Ritholtz at TBP). Dollar decline, anyone? Yeah, I see a great future in this currency. Its never a problem until it is.

Anyway, coming soon will be a piece about alpha in the university endowment world, after I get a chance to read this in full.

Until next time...

Blog Recommendation - Footnoted.org

Ok, I know I've been out of the loop but I've been trying to recover from my trip. Maybe I'll go into some detail about it later.

Right now, I'd like to introduce the unfamiliar to Footnoted.org, where they relish in exposing the hidden tidbits buried in the footnotes of corporate SEC filings. I find it a useful source when I am scouting investment ideas too, to see if anything has appeared in the dark, unexplored crevices of the financial statements. A handy resource! Thanks, Michelle.

As for me, I've been very busy with the usual stuff this week. I promise I'll return to my normal schedule of blogging now that things are starting to calm down a bit.

Until next time...I'm off to run some numbers on properties through the spreadsheet.

Quattrone's Next Move?

I apologize for the lag in posting. I'm out here in California yet again, sitting down with one of my advisors for this new venture when I can get some of his time. I'll be back in DC on Sunday, so things will start returning to full-on normal then.

This is something I look forward to seeing - the next act of Frank Quattrone. While I never dealt with the man, his reputation is, of course, legendary. So if a man such as Frank Quattrone goes into private equity or builds a hedge fund, as is being widely (mistakenly?) speculated, what does this do for the world of technology finance? Silver Lake was the first really tech-focused PE shop (at least, on a large scale, that I can think of). Roger McNamee's Elevation Partners has garnered a bit of a name in this arena as well, even though they seem to be more media oriented, along the lines of Steve Ratner's Quandrangle Group or Allen & Co. So Silver Lake is kind of the big tech PE name.

So what does happen if Quattrone builds a hedge fund? Of course you'll see lots of people who worked with/for the man in their past lives move into his firm. From the sound of things, I don't think Frank is a hedge fund type of guy. IB is very relationship focused, and Quattrone was the quintessential tech banker. Private equity would appear to be more up his alley.

So how does this affect the world of technology finance? More competition for technology deals seems obvious. A worthy competitor for Silver Lake is pretty much a wrap too. Increased deal sizes. These (generally, if you can stomach the thought of leverage) seem to be good things. On the startup side of the technology equation, I don't think we see much change at all. It'll be the established companies that worry or cheer because Frank is back in the game. The rest of us will just keep on movin' forward.

The Real Goldilocks

I was just checking in over at Minyanville the other day and found "The Real Goldilocks" by Kevin Depew. Classic!

Alpha in the Movie Biz?

This one should make Equity Private proud! Bloomberg has a front page piece on Ben Waisbren and his cohort Ryan Kavanaugh (subject of her poison pen here and here and probably a few other places too). While the article focuses on Waisbren's efforts to crack the Hollywood financing code, my Spidey sense went off shortly into the read. Sure enough, if you get deep enough in, you find the Kavanaugh name.

Wow. You really have to wonder why people think they can find some magic quant model to apply to the entertainment business. I imagine that smarter people than these guys have already run the numbers and thats why the major PE players have stayed out of the business. Bright lights, big city, I guess.

Delicious!

Viva EP!

-K

Marc Faber on Asset Mispricing

Am I a pessimist?

Nah! More like a realist, I think.

Okie, I go now. I have some reading to do, and hopefully a lunch meeting with an old boss. Startup fever, man!

(Maybe I'll sleep in there somewhere too.)

Until next time...

Global Warming Causing Oil Volatility?

Hmmm. No need to guess what I think.

Anyway, a warm winter drives down heating oil and possibly even natural gas demand. Doesn't that become a segue for a warmer summer, with increased natural gas demand? Of course, the geopolitical risks are everpresent. A weaker US economy (again, no need to guess how I feel about that one) helps power down petroleum pricing too. I can see that.

So the question is - what's missing?

I think we see higher oil prices by year end, but what happens in the middle?

If demand dries up in the US, I expect to see OPEC cut their quotas. We still have yet to see the impact of the 1 February quota cut. Demand doesn't seem to be decreasing anywhere generally, especially not in this country. (Whip out the H2s! Its springtime in January!)

So while the short term trend may be down, clearly the long term is up. Natural gas for May delivery, anyone?

Blog Recommendation - Accrued Interest

Ok, I just finished reading a lengthy post and comment and I have to say that although (because?) the commentary is HEAVILY steeped in bond market lingo, I can feel my brain growing. I love it! So take a look at Accrued Interest, where a professional bond guy named Tom G. explains his take on the world. Delicious!

More to come...

China Raises Reserve Requirements

I just noticed this headline roll across on the Bloomberg website. Damn fractional reserve banking. But I can't help but to wonder what effect this will have on China's growth. I mean, from 11% annualized to, say - guessing here - maybe 8-9%? Just a thought that ran through my head. But better consistent, stable growth than a giant flameout on overzealous credit creation. Right?

I wonder if anyone has ever tried to determine, quantitatively, how much of an increase in reserve requirements is equivalent to a 100 bp increase in lending rates in any country's economy (China, US, Euroland, anywhere)? Hmmm.

BGI Builds Hedge Fund Giant Internally

This is the kind of stuff I love! I guess I'm a history geek too.

(Damn! I just noticed that they shortened the story from the version I read. WTF?)

Anyway, those books are going on my reading list though, including this one which was mentioned in the text cut from the original article. I do have 100 to get through before 31 December 2007.

Update: Looks like All About Alpha has a piece about this as well. Nice read. Do great minds think alike? I like to think so.

Lookin' Up

Or not.

I just looked at my Morningstar.com portfolio update report and EVERYTHING was down. Ok, fair enough. It has been a rough week, not that I've been paying the closest attention. But damn! And still, my taxable portfolio is just a shade under $11,000. Now, I don't consider that too bad because I've ridden it up very well, and I'm overweight Japanese equities. Seriously overweight. I wonder how far it went before coming down to this level? Oh well.

My lunch meeting was cancelled, but I was able to slide in another one with a friend of mine who I've asked to advise on certain aspects of the business. Hopefully, the re-scheduled meeting will go through as planned on Monday. Now its time to spend some money. More investment in the business, but I will self-fund for as long as I possibly can. I'm seriously considering taking out a personal loan to avoid F&F or angel money. At some point, I anticipate bringing in "professional" investors, but I want to move that as far out into the future as possible.

At least the commodities rebounded today. Program buying, anyone?

And my laptop had returned from the dead. Whew! I thought I'd lost it once and for all. Thank you, God! So I guess I can say it was a good day after all.

Grindin'

My apologies for the recent delays. All this excitement around my startup is taking its toll, along with sleep deprivation. The most interesting part is that we haven't (yet) filed the incorporation papers. That probably won't happen until the end of the month, with all the travel and other things. Before I can get to bed tonight I have to finish some real estate valuations. (Of course, this is looking worse and worse by the second since my laptop's backlight refuses to come on. Guess I'll be replacing my trusty PowerBook G4 sooner than I hoped.)

I've got a lunch meeting tomorrow with a former colleague about this venture, so this will be brief.

So let's do a general recap of all the in-progress projects.

There's the skunkworks project which has been progressing at a generous rate. I'm starting to wonder if it is contributing to my health right now. I know I need to keep on top of that, but there's just this intoxication I have with building this company. I haven't felt this way since early in my tech career. I'd say its even stronger than the feelings I had about the startup I worked for in 2000 - 2002. Its indescribable, so all I can say is "go do it yourself!" You'll understand once you start seeing the first inkling of fruits. A complete natural high. I recommend that everyone try it at least once, if only for the thrill of doing so.

Still doing the real estate. Real estate is an easy grind, conceptually, but it definitely requires time. I went to Baltimore this past Saturday to look at a house that had been offered to me and my partners by the owners. Nice little house, in traditional Baltimore fashion. But the drive is beast. 100 properties to get 10 offers to get 1 deal. No joke. But I can't complain. The deal of the century is always right around the corner. 5 houses - that's my goal. Contributing 5 houses to our portfolio. Need to start cranking on this. I think this year there will be even better opportunities to add to the portfolio on a cash flow basis. So much promise!

Wheat. What to say about wheat? I don't know. I'm checking the quotes much less frequently. I'm not sure if that is due to being so busy or so disappointed. Maybe the correction is coming right now. While there seem to be pockets of strength in certain markets, most of them seem to be trending down, commodities included. Now, I do not believe the commodity situation is bad in the long term. But to paraphrase Keynes, markets can stay irrational longer than you can stay solvent. Man, have I been taught that lesson. I guess the best thing to say about the wheat spreads and call I have is that it is money I can afford to lose. But I sure don't want to! And a quick chart check looks like we broke some support around 480 on the May contract. Damn! (Maybe that means people don't plan to eat as much cereal this year!?!?) Looks like I'll be calling my broker on Friday.

Consulting. I think this will have to go away completely this year. I love my friends and all, but given how they seem to misunderstand the role technology should play in their businesses, its time to cut my losses. I need the time anyway for this software gig. I hate leaving friends in the lurch like that, but something will change in this arena and soon. The opportunity cost here is just too great.

I think that covers everything. I didn't include my J.O.B. because...well...you know. It serves its purpose and thats it. I wonder if there are any projects that I should take on just to be "well rounded"?

Anyway, I'm off, either back to the grind or sleep. At this point, sleep is winning. But I'll be back soon with another great blog and hopefully more stories of investment success. (No matter what the investment, we've got you covered.)

Until next time...

Blog Recommendation - Hedge Fund Blog

Original title, eh?

Nevermind that. I found this a little while back, I think late in the Christmas vacation cycle, but hadn't yet a chance to evaluate it. Well, the review is in and besides some interesting posts that raise thought provoking questions, how can you pass on the Hedge Fund Aptitude Test?

Pure comedy. I love it!

Anyway, a quick start to the new year. I know, its not glamorous. But hey, there's been no market action in this country for the last few days. But I'll be back for more real soon, especially once I get some more time to digest the "Portable alpha and diversification" post. That one really struck me for a some reason. I like it, and I hope to be able to articulate why.

Anyway, back to the grind. Until next time...

You've Gotta Be Kidding!!!

So I posted my Final Net Worth Update for 2006, which I actually started writing on 15 December, a few moments ago. Once I hit publish, I expected it to show up as the most recent post. Apparently, Blogger is not *quite* that intelligent. Fuggg man! Anyway, go check it out through the above link and comment (if you want).

Damn!

Blog Recommendation - All About Alpha

Considering that this blog is about a regular guy in search of alpha, how better to end the year than with a recommendation for a blog that is All About Alpha. I'm sure many of my readers are familiar with this one. For those who aren't, go check it out now! A very research oriented blog, almost academic even, except for the real world experience of the host, the aptly named Alpha Male. As he describes the site, its not just a blog but also a portal for dedicated to "alpha-centric investing strategies". Man, does it ever fulfill that role! I'll be increasing my reading over here over the course of the coming months, no doubt!

I've got a few more queued up, because I realized I hadn't actually written any recos in recent memory. As I find them and find value in them, I'll bring them to you.

Until next time, gentle readers...

Alpha and Wealth Preservation

I can't help but laugh when looking at the ads that Google serves alongside these posts. Its not their fault. But still - the billionaire's secret? Ha! Like the average billionaire became a billionaire because of hedge funds.

And that is what I want to talk about in this post.

It seems to me that most alternative investments are tools of wealth preservation as opposed to wealth creation. Now, that is not to say there is anything wrong with wealth preservation. If you have it, you probably intend to pass it down to your progeny, or their heirs, or your favorite charity or whomever. That's all good and fine. Most people want to preserve their wealth, no matter how much or little they have. But the notion that hedge funds serve to make the wealthy extremely wealthier is lost on me. With the possible exception of hedge fund managers, I just don't see it.

Most of the billionaires that I can think of became wealthy from a business of some sort, an observation pointed out by John Mauldin recently. Not all, but most. That business served as the vehicle which led these people to alternative investment strategies/managers as well as asset protection systems, among other things.

I often get the feeling that people think that finding the right investment will automagically catapault one into the pantheon of the high net worth. For most people, however, it is is a slog. That slog may take more or less time for various reasons, but it is still work. Although I like investing as much as the next guy (hopefully, the next guy agrees), I remember stating early on that my portfolio is built on a somewhat aggressive asset allocation model that I follow rather strictly. No real science behind it, and not an exorbitant amount of trading. (But more than the average bear's portfolio, eh Boo-Boo.)

Now, when I am trading, I do seek alpha. Isn't that what we all would like from our investments - absolute, positive, risk- and inflation-adjusted returns as measured against a relevant benchmark? Most of the time, I don't hit it. I'm still learning. But that's where money management comes in. I'm playing with amounts that will sting, but not kill, me if they disappear. Sometimes I make the numbers, sometimes I don't. But real wealth won't come from this, not as things stand now. I don't consider a few million to be wealth - apologies to the millionaires I may offend with that remark. I personally want wealth - as in, *stupid* amounts of money. Enough to swim in like Scrooge McDuck! Enough that American Express gives me a card more exclusive than the Centurion, because I'm the only person on the planet with it! And I'm willing to work really hard for a few years to get there. I see it coming in fits and starts. A few million here, a few more millions there. Then a billion, then more billions. That's ok.

Here's something else to think about. For your average hedgie, isn't trading a job? I mean, I would hope they enjoy their job and that compels them to be outstanding at it, but it is a job. They report to their investment committees, investors, LPs or whomever. Its work. Its just work using OPM to generate the returns, and with a helluva compensation schedule. (Come on, how can you not like the idea of 2 and 20 or better?) But it is still a job.

I'm done with jobs, personally. I've committed myself to working my last job. While the alpha that hedge fund and private equity generate is nice, for me, its not the end all be all. I'm after real wealth. And for that, real work is involved. Seems pretty straightforward to me.

I think I might have been rambling. Hopefully, enough of a point comes through to make sense to someone. If not, that's what comments are for.

Until next time...

The Specter of Deflation

Just received the latest "Bull! Not bull" from Michael Nystrom. This one is better than average (where average is pretty damn good) and is entitled "The Specter of Deflation". Some very good points and references are included, more than usual, and the piece is a bit meatier. All in all, an excellent read.

So now I am thinking about the role of the Federal Reserve in credit expansion, and how one can prepare for "the next leg down". This would be the time to have plenty of cash on hand. Gold and silver benefit from inflationary pressures moreso than deflationary ones, but in the long term, I think they are solid holdings. I plan to acquire some of both in the near future, along with balancing my portfolio holdings for more emerging market and international exposure (un-hedged). I think dollar denominated assets are far riskier than international assets, at least to my untrained eye. While the US will take a significant hit, I think many other markets will shake it off, or at least weather the storm better. (Think commodity based economies.) As liquidity (can I use that word?) drains out of US assets, I expect some of it to find a home overseas. Maybe even in Thailand. (Ha ha ha!)

Anyway, I'll have a last net worth update for the year in the next few days. It should come in around 84K, maybe 85K but that is seriously pushing it. I may also have a few thoughts about wealth preservation and the role of alpha in achieving it; we'll see if I can get that one to gel.

Until next time...

Water futures?

After my diatribe the other day, I started thinking seriously about the future of obtaining water on this planet. I'm curious how come we haven't yet seen a futures contract on the delivery of water come into existence. I imagine that someone in the wonderful world of derivatives has considered or maybe even tested such a concept. Maybe water is still too plentiful for this to work now? However, I have the distinct feeling that such a futures contract is not too far off on the horizon, say within 10 years. As water becomes scarcer, Wall Street will inevitably find a way to monetize and hedge that scarcity. Financial engineering at its best!

The man who saw the futures

Cool.

I really am a history junkie.

Oil futures prices dropping on warm weather

Well, of course the oil futures are getting kicked in the nuts - blame global warming. Look, whether you believe in it or not really isn't important. Its happening. Maybe you'll believe in it after your beach house washes away into the ocean. Ha ha! I won't have any remorse for your loss. (That's my Capricorn ascendant speaking, but that's how we feel.)

Anyway, checking out this piece over at Bloomberg and I got to thinking about this. The other week I watched "An Inconvenient Truth". Powerful stuff, indeed.

My questions for all the people who don't believe in global warming are [1] why don't you believe it and [2] if it just happens to be even a little bit true, on what other planet do you and your progeny expect to live? Friggin' morons.

Honestly, I figure most Republicans could give a shit about the condition of the planet since they won't have to live here after they die, right? Fuck it, its their children's and grandchildren's problem. (The whole baby boomer generation so entirely fucked up this country, IMO. But I swear there is a special circle of hell for Republicans, the vanguard of Satan's army.) But hey, I still live here and I don't have a weekend getaway spot on Mars. If you fall into the same category (which I imagine is most everyone on this planet), then you have a responsibility to be a steward of the planet.

My personal experience this winter has shown that some unnatural shit is happening. I live in an OLD apartment complex. Its convenient to work, its inexpensive, but damn is it old. So old that it has a real problem with spider infestation. I've killed an average of 1 spider per week, and sometimes 2 - 3 per day. Now, by this point in the seasonal cycle, I figure that most of these little bastards should have died off in the cold. Unfortunately, I don't think the temperature has been cold enough to kill off the eggs, the baby spiders, and most importantly their *food*, to restrain their breeding. So even 1 week before Christmas, in the northern Maryland suburbs of Washington, DC, I'm killing spiders. And not small spiders, but spiders 1 - 1.5 inches tip-to-tip. That's a bloody big ass spider for the middle of winter. Nevermind walking through swarms of gnats in the middle of December. WTF?

Anyway, whether you believe Al Gore's position in "An Inconvenient Truth", or not, is irrelevant. If you haven't noticed that things are changing, and not for the better, then you're either blind and stupid, or irresponsible at best and evil at worst. There clearly is not a lot of time to affect change on this matter.

I didn't mean to turn this into a screed, political or otherwise. I'm just commenting on my experience, which is my reality. And I know I'm not the only one. While investing in futures is all good, think about something...the reason wheat futures have had the kind of action they have had this year is because of a drought. As in, the lack of water. Heat causes water to evaporate (if you didn't know). So if the temperature of the planet rises, then water evaporates, and there is less water available for purposes that are near and dear to all of our hearts (for those in possession of one). Uses such as DRINKING water. Expect the water wars to come soon. Military conflicts for oil were nothing. And the funny part is, the US is so beholden to oil (which we are able to get reliably in declining quantities) that with the inevitable price increases in petroleum goods, we won't even be able to afford to fight for the most important resource on the planet - WATER! What a dumbass trade to make.

No global warming, my ass.

Okie, I go now.

2007 Goals

I was looking around the blogosphere to see who, if anyone, has updated their blogs recently. Over at Blueprint for Financial Prosperity, I found a post for Jim's 2007 goals. Now, part of me says that this is a bit ridiculous, and part of me says that the information is too private. However, you can't be held accountable if no one knows what you are supposed to be held accountable FOR. So no matter how absurd doing this might seem to my ego, I'm going to do it anyway. In following with Jim's thoughts, I added "stretch" goals, and boy, do they *ever* seem to be stretches. But hey, to paraphrase T. Harv Eker, your bank account can only grow to the extent that you do. (Actually, that may be a direct quote, but I don't have the book here with me. *shrug*)

Regular Goals –

Personal: Accumulate $50,000 in emergency funds (31 Dec 2007)
Personal: Achieve net worth of $150,000 (31 Dec 2007)
Personal: Have saved $15,000 for house down payment (31 Dec 2007)
Personal: Obtain Certified System Administrator for Solaris 10 (31 Mar 2007)
Business: Achieve $50,000 in revenue in my new venture (31 Dec 2007)
Business: Be directly responsible for acquiring 5 properties for my real estate partnership (31 Dec 2007)

Stretch Goals –

Personal: Read 100 books (31 Dec 2007)
Personal: Learn to drive a manual transmission (30 Jun 2007)
Personal: Attend Skip Barber driving school (31 Dec 2007)
Personal: Obtain Oracle Certified Administrator certification for Oracle 10g (30 Jun 2007)
Business: Purchase 1 multi-unit rental property w/ a monthly cash flow in excess of $1000 (31 Dec 2007)
Business: Achieve $100,000 in revenue in my new venture (31 Dec 2007)

Elevator Pitch

On Christmas day, I finally started talking about my new venture. Not widely, mind you, and I won't go into details on this blog, but I will discuss certain aspects of the business as openly as I can.

I spent most of my time pitching to my aunts and uncles. I figure that at some point in the not-too-distant future, my partner and I will need some level of outside financing. While discussing this with one of my advisors, it made more sense to start with friends and family investment as opposed to institutional (read: venture capital) financing. So I began giving impromptu demos of the current state of the software with my uncles and cousin. We're not ready yet but I figure I should start working on these skills to be ready when the point in time comes to really start pitching. I did get some questions that I was a bit unprepared for, and while I feel I navigated them well, I need to be less "on my feet" and more "ahead of time". I need to be able to present my answers and rebuttals quickly after having prepared for those questions instead of improvising. Its funny because I don't think well "on my feet" anyway, and I never have. But I think this idea, this business, has consumed me so much over the last few weeks that these answers are becoming second nature. Now I need to cement them and make them automatic.

Clearly, this preparation could become a full time job. But as the brother of a friend of mine said to me as a freshman in college, "if you want something you've never had before, you have to do something you've never done before." So I'll start practicing my pitch along with working out the business plan details.

As for the product, it is coming along nicely. My partner has been very productive in the last few weeks. She's great! This is moving so much faster than I imagined. 9 figures, here we come!!!

So until next time...

Getting Back Up to Speed

As you can probably imagine, my posting will be spotty over the next few days. I meant to kick this one out earlier, but I spent the vast majority of the day sleeping.

Anyway, Michael Nystrom has posted his "predictions" for 2007, which was an interesting read. Mauldin also sent out his latest newsletters, but I can't link to his site from this crappy BellSouth DSL line.

(Man, why can't these cock knockers get their game together? Can't someone steal the "high speed" connectivity game from these fools, PLEASE!?!?!?!? This is soooo painful. Is it even possible to make a living in any online business living in the southest U.S.? Fugggg, man! But I digress.)

After waking from my deep slumber this afternoon, I started catching up on all of my blog reading. Some interesting stuff to be found, but mostly...well, let's just say that you can tell this is the slow part of the year. Personally, I'll be glad once the holidays come to a close. I need some action, something happening. But I do welcome the downtime to get back up to speed on all facets of my life.

Right now, I'm taking a break from hacking away on my business plan. Ugggghhhh! I really can't stand writing these things, no matter how necessary they are. But I plan to do this startup RIGHT, and that means I have to suck up the pain. The sooner I get this fashioned, the better. I have some database schemas to start designing. Software architecture has been on my mind recently too.

So I think I was surfing around Going Private the other day when I found, via some other site (Abnormal Returns, IIRC, but maybe not), this blog named Accrued Interest. Very cool! A bond market blog written by a professional bond market trader. Me like bond blog! I haven't yet crawled through the archives, but I plan to get to that sometime before I leave Atlanta on Wednesday morning.

So it looks like wheat performed very nicely this past week, ending up strongly. We'll see if that continues after Christmas. The chart for the May contract looks very good though. This is one area, along with equity options, that I intend to increase my investment in during the course of 2007.

So now its time to continue my business plan writing. I have to keep this venture moving forward, as I fully expect to bring in some outside capital in the next year. Maybe not full fledged VC, but either friends and family or a small angel round of financing would be useful. I think the potential is GINORMOUS so right now, it is back to writing for the K.

Until next time, good people...Merry Christmas. (Just in case I don't post between now and then.) May the Alpha be with you!

Last Check

Woo hoo!

I made my final payment of $4750 into my RE investment group today. (Actually yesterday, since it is almost 2 AM EST on Wednesday, 20 December.) That brings my total investment to the $11,200 required for all the members. Just under the wire, baby!

Now I will focus on rebuilding my emergency savings. Although not depressed too terribly, and I have a good 3 months worth of expenses saved, I'm working to double that by June. I put just over 1/3 of every paycheck into an HSBC Direct Online Savings account, so it shouldn't take too long to rebuild the funds. I just need to be ready for Trinidad Carnival!

From here on, I'll spend a lot more time crafting the business plan for my new venture and watching my wheat investment. Go global warming, destroying crops worldwide!

Until next...thought?

Hands Off Hedge Funds

By way of Going Private, I came across this very nice piece of writing at Foreign Affairs by Sebastian Mallaby. All very good points. At least, they make sense to me.

Just working on catching up on some reading. Monday sucked ass. Why won't people just let me sleep? Damn!

Anyway, it looks like wheat got hit hard again today. Not that I noticed until tonight, but we'll see how things progress. Its a marathon, not a sprint, at least right now.

So I was just doing some scratching around my favorite equity basket case, SUNW, and found this linked from the WSJ site (of course, referring to another Dow Jones site, but still). Mind you, I have no position in SUNW; I just have been keeping tabs on them for a little while. I may or may not take a position in the future. That is TBD. However, I do think SUNW is poised to make some really positive upward moves in the near future. That is just my feeling and observation. It is going slowly, but the trend is positive.

Anyway, until the next time...which should be after my Christmas shopping is done.

The Ramifications of Twilight

I finally completed "Twilight in the Desert" while working out earlier today, and all I can say is "Wow!". If that book doesn't make you re-think your relationship to oil, and the relationship of oil producing nations to the US, you're hopeless. There really is nothing else that can be said.

Matthew Simmons lays out an awesome, and logical, case for the impending end of the Saudi Arabian "Oil Miracle". Whether you're convinced is up to you but the arguments are compelling in my opinion. Once you know something, you have the choice to act on your newly found knowledge, or to ignore it, but you do the latter at your own peril.

While the book clearly states that there is no way to know with certainty when the "Oil Miracle" (whether Saudi Arabia's or any other oil producer's) will end, it is clear the end is coming. Faster than you think. A lot faster.

I plan to share this book with as many people as I can, starting with my students. If you haven't read it, you need to. Today. There are so many investment theses that I can see coming out of it, starting with investing in scarce natural resources like oil. However, the scale of the consequences of Matt Simmon's assertions is planetary. As is this. Scary stuff man.

Wow!

Now, on to the next book, "Speedwealth" by T. Harv Eker. Until next time...

Final Net Worth Update for 2006

I spent a little time recently rebalancing my 401(k). Not that there was a lot to do, but a little, just to make sure things were within the parameters I have set. I use the aggressive portfolio allocation recommended at www.401khelp.com. If you are an employee of a sizable US company, you should check the site out. They probably have a model portfolio for you!

Anyway, the net worth stands like this...$85,083.19 as of the end of 2006.

For comparison purposes, my net worth was $66,727.49 at the end of 2005. The YoY increase is $18,355.51, for a 27.508% increase. Not quite where I wanted to go, but a win is a win. I had hoped to get to 100K net worth by the end of this year but a lot of recreational travel and a job flip-flop in February worked against me. The travel thing I can fix (although I like to travel and I plan to keep doing it). The job thing was unavoidable. As I said in an earlier post, avoid working for Unisys if you can. I gave up all my seniority, including my 3 weeks of vacation (which is the same amount of time I had the job), to take that spot, and 6 weeks worth of 401(k) contributions as well. Ouch!

Rat bastids!

Anyway, we shall move on. I've got better things going than a low 6 figure contracting opp anyway.

Until next time...Happy New Year to all my readers. Hope its a prosperous and joyful one from beginning to end, for everyone!

130/30 on My Mind

This one will be short. I know its not Friday anymore (barely) on the east coast. However, this server is in California! Ha! :)

So it looks like there's been more positive movement in what. I am very happy and thankful to God for this. Take a look at this chart. See this one too. Its hard to believe I originally got into wheat in the 420 - 430 area then sold off once I had a profit. Had I let that winner run.... Let this be a lesson in not culling your winners too quickly. Let them run and use trailing stops as much as possible. Oh well. You live and you learn.

Just catching up on some reading. There will be more tomorrow night. I'll have to wait until then for the latest issue of Barron's.

Something over at Institutional Investor did catch my eye though. The 130/30 fund. I need to look into this a bit more. Its an interesting concept, but I can't work the mechanics in my head as yet. Is anyone out there reading this familiar with or knowledgeable about these? How much leverage does it take to setup a fund like this? 1.5 - 2 times? A 30% short position coupled to a 130% long. Very intriguing. I see I'm going to have to look at the cost of subscriptions to II and Alpha Magazine. I love learning new stuff, and its even better when it deals with a subject so close to my own heart!

Anyway, time to get out of this lab and get some sleep. I was up until 6:30 AM this morning hacking away on my systems. I've now got my SPARCstation 20 and Ultra 2 running, and I'll probably install NetBSD on the SS20 tonight. I do also plan to get caught up on sleep, as the coming week will be quite long.

Until next time...may the Alpha be with you!

Movin' On Up

That heating oil is on the move, if ever so slightly. Not that it matters to me anymore right now, but I'll continue watching the energies. Its a long term play, IMO.

Meanwhile, wheat is looking good so far today. Nice movement. Nothing special. We'll continue to monitor.

And for anyone thinking of starting any kind of business, be sure before you do. This stuff is killer. Be prepared for long nights with little to no sleep, lots of reading and document preparation, and other minutiae. Just came back from a meeting with my title company in Baltimore, and I was supposed to meet one of my partners to go take a look at a house but he was too tired from working overnight. I understand. Working the same kind of shift and trying to do anything else during the day will drain you quickly. So I guess I'll have to cancel and re-schedule to inspect that house. But right now, my feeling is that it won't get added to the portfolio. The owner looks like he has one of Kiyosaki's "alligators", and that's between him and his bank account. I don't want to take on anyone else's problems, at least not without an appropriate reduction in the price. This is a business after all.

Anyway, I'm off. Gotta finish configuring this Subversion repository for my coder and put in a little bit of work on my software business plan. And I still have some configuration work to complete on this HPC cluster and to see my doctor.

Oh, and if it seems like I'm rambling...welcome to my mind. :)

I'll follow up on things later today. Until next time...

Goldman's ART

I can think of no good reason for Goldman Sachs to launch a product like the Absolute Return Tracker (ART). They already have a fairly successful internal hedge fund operation, even if Global Alpha did get eviscerated recently. But this smacks of being a pure market share grab. I don't know, maybe to me it seems like they are imitating the wrong bank. I mean, because Merrill created a similar product means that Goldman has to do the same?

Oh well.

I guess this really means that the bloom is off the rose for hedge funds. It was bound to happen, right? Everybody and their grandmother runs a hedge fund nowadays. YOU too can invest in one. (And unbeknownest to you, you may just be doing that. Which is fine until it isn't.)

I wonder how far back the data will go that they get from this third party? And whether any of said historical data is coming out of the remains of PlusFunds, via the Refco implosion? (WSJ.com subscription req'd)

Hmmmm.

Getting All Misty

So while traipsing around the blogosphere tonight (from the comfort of my cubicle), I decided to check out Going Private to get caught up for the day. Lo and behold, what do I see but a post indicating that my beloved PE blog may or may not survive much beyond the end of the year. How saddening!

Well, things change. Of course, that won't stop me from continue to soak up Equity Private's extremely well written posts for as long as possible. (Reading the archives of Going Private was one of the most enjoyable experiences of my blog-reading life. Mildly erotic, in a certain way, but I'm kooky like that.)

Anyway, get on over to Going Private before it should disappear. (Not saying it will, but just in case.)

EP, I love you! Viva Going Private!

Taking a New Course with this Site

I'm going to work on doing something different with this blog from here on. I plan to start posting daily. Even if it is short (and most likely, in many cases, it will be), I will post SOMETHING every day. I'd like your help, dear readers, in determining the things to talk about in this space. If you want more details about my portfolio or its construction, let me know. If you want different topics than what I have typically written about, let me know. If you would like longer and deeper posts, say that. Tell me what you would like to read. I write this for you as much as for myself. I may even be able to share a bit about my new startup.

Anyway, I find myself fairly successful with regard to today's goals. I've got some money in motion that will top of my investment with my real estate partnership. Each of us was to put $10,000 into this group for an equal share of the business. I didn't have $10,000 up front so I've been on a $750/month payment schedule. However, for tax reasons, I want to get all of the funds in before the end of the year. This will also allow me to save money in my emergency account more quickly, as I won't keep draining it for various reasons (including the monthly payment into the RE business).

So taking a look at the grain futures action, I see wheat is down again. Bad, bad wheat. I decided to put on 2 call spreads on May wheat along with an outright March 550 call. From what I have seen, wheat looks like it still has some room to run.

Now, I know some of you are thinking that I'm fuggin' nuts to continue with the commodities trading. And you could be right. But considering that I save about 28% of my gross income, once you consider my 401(k) and monthly savings into an HSBC Online Savings account, I feel that I can take these kinds of risks without doing too much damage. I've worked to automate as much of my financial life as possible. Factoring in the real estate, which has grown slowly but more profitably than not, I think there is room to pursue more aggressive strategies for realizing returns. Obviously, this is not for everyone. I still have some learning to do, and I understand that. But I don't see this, even if you call it "gambling", as being completely reckless.

Okay, my pain medication is starting to kick in and its getting harder to think, nevermind type. So until next time...which will be tomorrow. :)

Peace!

Playing Catch Up

So I just spent the last few hours reading some of the many blogs on my usual reading list. Not all of them, not even close. There's just sooo much stuff out there. But it must be done. Thankfully, I have some free time at work.

Anyway, time for a quick reco on a web site and then I'll delve into some other random shite.

I know there are some Information Arbitrage readers out there...somewhere...hopefully. If not, then you should check it out. The posts tend to be long, the kind of posts I hope to write one day. (Hmmm. "Whatever happened to that post about the similarities between investing and good driving, K?" K: "Good question. I'll get back to you.")

Anyway, IA has some really awesome, thought provoking posts. They're not all necessarily investing related, but more so about applying intelligence to companies and markets, from which we can then discern possible investment theses, particularly in the Internet and technology spaces. At least, that's how I view it. Whether or not that's the intent of the author, Roger Ehrenberg, I find it useful just from a big, broad stroke perspective. I'm always looking for new ideas and new ways of looking at existing ideas. Needless to say, I love this site though I haven't yet used, and likely wouldn't exclusively use, it to generate investment ideas.

Anyway, go check it out.

So I finally closed out that bum heating oil trade. How sad. Literally, the front month heating oil contract go to within 1 cent of where I needed it to be for the trade to be (slightly) positive before retreating. I guess winter in Siberia hasn't been quite cold enough.

*weep*

At least my options application FINALLY arrived. It seems that my broker had the wrong address on file even though it was one of the first addresses I changed when I moved. So they sent the same stuff to the same bum address twice. Whatever happened to mail being returned undeliverable? Sheesh! Things like this make me think the USPS should be privatized (however bad a move I think that might ultimately be). It shouldn't be that bloody difficult, especially when you have a mail forward in place.

I'll spend the rest of today working on that and waiting for a response back about the house I made a verbal offer on yesterday. Yes, it was that time of the month again. I am a member of one of the larger and better known real estate investor groups in the DC area. I haven't been to a meeting since late summer however, just due to conflicting commitments. But I did manage to drag myself out of bed for Saturday's meeting, and hopefully it will result in a successful close of another investment property. We'll see how that rolls.

Anyway, more to come but its starting to get hectic here. Until next time...

Not enough time in the day

Have I ever mentioned that consulting sucks? Or maybe to be more accurate, consulting for friends sucks. Don't get me wrong, I like my friends. Maybe I'm just too nice. I give a reasonably large discounts for my consulting time to my friends, because the ones I do work for aren't in a position to pay for too many hours of my time at my full $60 per hour rate. I don't think its unreasonable. But it would sure be nice if they would listen to my advice so they don't NEED me so damn much in the first place. We'd probably all be much happier.

Anyway, I was browsing around the Bloomberg site and found a video snippet of an interview with Peter Thiel. For those who weren't paying attention (or didn't care to pay attention) to PayPal, Thiel was the co-founder and CEO of the company. He now runs a hedge fund/think tank called Clarium Capital. Anyway, I think I can get with his investment thesis. You can find the video here. Let me what you think. They also have an article about his hedge fund returns of the last few years. How's that for alpha generation!

I just want to sleep dammit! The last few days are starting to take a physical toll, with my body literally breaking down. Why won't people just let me rest? So annoying.

Anyway, I'm off to do some more reading. Lots of Bill Gross to catch up on, and an economic report about the city in which I purchased that rental property. That one is getting long in the tooth, so I need to finish it quick. And I haven't read blogs for days. This could take a while.

Until next time (as he deposits his $500 consulting check)...