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Archive for April, 2010

Last week, I wrote about my then-successes in the stock market.

This week, I write about how my fortunes have completely reversed.  I originally bought Green Mountain Coffee Roasters (GMCR) at the end of January.  It went up slowly for a few weeks and then kind of stalled in early April.  Since then, it has corrected 20% and now stands at a loss so I had to sell it.  All of the massive selling occurred and I had to protect my capital. 

Last week, I similarly said that a stock I was in (CAAS) was up 10%.  Well, it reversed – hard – and I am now sitting on a small loss in it.  I wrote at the time that things could change… and they did.  The frustrating thing is that the overall market is up in this time frame, so the stocks I did have are severely underperforming the market.

It just goes to show how quickly things can change.

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This past week at work, myself and a co-worker were having lunch with my fellow socialist co-worker.  This is the guy who’s wrong about everything when it comes to politics.  He is the one who claimed that the government is allowed to do whatever it wants so long as the Constitution says that it cannot do it (even though this is contradicted by the 10th amendment).  He also made another incorrect claim about impeachment a couple of weeks ago that turned out to be wrong; I forget the exact argument, but he lost that one, too.

Anyhow, another political discussion came up and he made the following claim: In the next session of the Senate, the Democrats are going to move to ban, or severely restrict, the use of the filibuster.

Now, in case you don’t understand what is going on here, the filibuster is a technique where a member of the Senate can get up and talk about about a topic forever.  They do this in order to prevent a vote being done on a bill.  So for example, suppose there was a bill being debated that proposed sending $100 billion in US aid to Canada every year for the next 10 years.  Suppose that the Senate was filled with 75 Canadians who were going to vote “Yes”.  An American senator could get up, talk an eternity and prevent the bill from ever being voted upon.  As long as he keeps going, the bill can never pass because no one can ever vote on it.  That’s a very nut shell summary of the filibuster.

In the current Senate, various members used the technique to stall bill passages, most notably health reform.  However, this is usually the technique of the minority party to stop passages of bills they are against because all that the Senate requires is a simple up-and-down vote.  If you can get 51 votes, then you can get a bill passed.  Obviously, if you are the minority party, you don’t have the votes required to prevent passages of bills.  So, your recourse is the filibuster.  The Democrats used this tactic a lot between the years 2002-2006 before they retook the Senate.

The way around the filibuster is to override it.  You need 60 votes in the Senate (out of 100) to override it.  The Democrats had 60 votes but could never get enough of them to agree to override a filibuster whenever the Republicans used it.  Then, they lost Ted Kennedy’s seat so in the best case, they only get 59 votes (assuming everyone votes down party lines which doesn’t always occur but usually does).  In effect, the Republicans are the minority party but they still have some power.  They do prevent the Democrats from pushing through their platform unchallenged.  Thus, the American system of government has plenty of checks and balances and the filibuster is one of those.

In 2005, when the Republicans were the majority party they talked about using the “nuclear option.”  This is effectively “banning” the use of the filibuster.  At the start of the newest Senate session (which would be November 2010), by a simple up-and-down vote (50+1), the Senate can vote to revoke the filibuster (this is according to my socialist friend, I don’t know if it’s true but let’s pretend that it is) such that either it cannot be used or it can be “voted down” with a simple majority.  This would allow the Democrats to push through their platform because while they are likely to lose seats in the Senate, they are unlikely to lose control and become the minority party.  Since Republicans would be unable to use the filibuster, eventually they would be able to do whatever they wanted to in terms of pushing through their platform.

As I was saying, in 2005 the Republicans talked about invoking the use of the nuclear option, but eventually the idea was discarded.  Back then, a “gang of 14” Senators broke party lines (half Democrats and half Republicans) and worked together to break the impasse back then.  Political commentators observed that even if the Republicans banned it back then at the time, eventually they would be the minority party and then the technique would work against them.  The nuclear option was never invoked.

Assuming my crazy socialist friend is correct and that you can ban the filibuster at the start of the next session, he said that it was almost guaranteed that the Democrats would, by a simple up-or-down vote, restrict the use of the filibuster.  My friend and I disagreed.  For one, the Democrats doing it would be very short-sighted because eventually they will become the minority party and the technique will be used against them.  Secondly, getting rid of the filibuster would be removing one of the checks and balances built into the American system of government.  Once citizens caught hold of this, you can bet that the Democrats would be accused of being tyrannical, undemocratic, unconstitutional, and so forth.  In other words, it would result in all manner of bad press.  They would be crucified by all of the negative PR.

By my crazy socialist co-worker insisted.  The Democrats for sure would do this even though my other co-worker and I explained to him that he was off his rocker.  He then made a wager – he would be willing to bet $100.

$100!  That’s a good chunk of money!  I thought about it seriously.  Would I be willing to put up that money?  Now, I don’t normally make bets unless I am sure I will win (such as challenging people to a game of mini-golf).  But this is too good an opportunity to pass up.  Sometimes I just want to take his money to prove him wrong at politics since he is under the mistaken impression that he is right about these things.

Would I feel bad about taking money from a hippie?  I think that this is a risk worth taking.

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Quickie show

Yesterday morning, around 9:15 am, I got an email from my booking agency asking me if I could do a show at 2 pm later that day.  Since I had only about an hour upon which to prepare before I had to do something else that morning, and after that when I got home maybe 20 minutes, I really only had two hours to prepare the show.  It was for a kids birthday party.

I can do kids shows, but I’m a bit rusty since I started focusing on mentalism.  Initially I declined because I wasn’t sure I could put on a performance quality show.  I wrote back and said no, but then changed my mind.  I wasn’t sure whether or not I could do a one hour performance, but I decided to give it a shot.  I wrote back again and accepted it.

I made a list of all of the tricks I could conceivably do, and whether or not I could do them “cold”, that is, without prior rehearsal.  That was going to be a heck of a risk because I normally prepare for shows well in advance.  A one-hour kids show would be a bit of pressure since I do not usually work for that long continuously.  I decided I would split it into two different shows.  I spent nearly all of my preparation time writing down the tricks I could do and gathering together all of the props that I would need.

I got there and there was about a dozen kids.  I did my first show, they had cake and ice cream, and then I did my second show.  It seemed to go over very well, I only messed up one trick and it was a card trick (how did that happen?).  But I covered it and kind of blurred it into an immediate follow up effect like it was supposed to be part of the act.  Overall, I think it went well.  And today, I got an email from the lady:

Thank you so much for performing for <so-and-so> and his friends yesterday.  He really had a wonderful time and keeps telling everyone how you were able to take a knot off of a rope.  He even wrote about it in his Kindergarten journal at school.  I volunteer in his class on Mondays and the two other kids in his class who attended the party also wrote about the magic tricks.  They were all very impressed. 

Thanks for providing such a wonderful experience for all of us.

I think that’s something to be proud of.

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As I have explained here on this blog, in Sept/Oct of this year I will be presenting at a conference in Vancouver and at that time, I plan to incorporate some magic into my presentation.

Without giving away too many details, I will give a sneak preview.  I am going to perform an effect involving real physical danger to myself.  If I make a mistake I will require medical attention and will require a trip to the hospital (luckily in Canada they have free health care).  I do this all in the name of education and entertainment.

IMG_0149

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It was almost six months ago when I took a bunch of my money and put it into Terry Zink’s Lazy Portfolio.  In six months time I will have to rebalance my portfolio.  But let’s review where I am at mid-year, exclusive of dividends:

  • EFA (International fund ex-US) – up 3.76%
  • VTI (US fund) – Up 18.8%
  • VNQ (International real estate fund) – Up 33.2%
  • BND (International bond fund) – Down 0.37%

Taking the weighted average of all of these, overall I am up 11.8% in six months.  If I include dividends and interest, then it is 13.0% in six months.  I actually bought more shares in each a few weeks ago but I am excluding those from my calculations.  With them included it lowers my rate of return (obviously, since those positions have not been in the market as long).  I think that a 13% return is respectable until you realize that the SP-500 is up 16.75% over the same time period which means that I am underperforming the market by 3.75%.  Not good.  My diversification has hurt me in this case.

Regarding active trading, I have had some winners and some losers:

  • GMCR – up 1.98% (this was 12% two weeks ago)
  • SQM – down 16.5%
  • NEU – up 20.90% (lucky timing)
  • RSW – down 6.10%
  • CAAS – up 8.54%

My trade in SQM has no redeeming quality.  The stock had a decent pattern, broke out and reversed.  It’s still trading at a loss today (but now closed).  RSW was an attempt to make money against an overbought market.  As was true the last 4 times I bought it, I lost money (you’d have thought I would have learned by now, but no).  Finally, GMCR was a slow, boring trade but it sold off over the past two weeks.  It’s still above water, but barely.  My active trading is not doing well at all.

And then there’s the one got away.  I bought Netflix on paper on January 19.  Had I actually bought it, I would be up 95% in it today.  That’s amazing.  And I can only watch.

So my overall performance is lagging the market by a significant amount.  I’m not losing money but I’m not taking more than my fair share, either.  Stupid international stocks…

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Last Thursday, April 15, I bought a few shares in China Automotive Systems (CAAS).  The stock looked like it was in a good risk/reward position so I figured the risk was low.  The next day, the SEC charged Goldman Sachs with securities fraud and the entire market sold off, including CAAS.  At one point I was down 8% in two days.  I thought that was horrible timing on my part and even updated my Facebook status indicating so.

Yet the market has shown amazing resiliency, somehow.  People keep saying that this market should go lower and there is no reason for it to go higher.  Yet higher it goes.  And my position in CAAS has done the same thing.  It is now a week later and I am actually up 6%.  A 6% gain in a week.  That is unusual for me to make that much in so small a time frame, but there it is.  When I saw what it was trading at this morning, I cheered.  Now, I know that it could be shortlived and there is a very good chance it could sell off and I will feel terrible.  Yet right now, I feel good and so I shall enjoy it.

Oh, one more thing – when I saw when it was up for me this morning, not only did I cheer, but I started humming the Final Fantasy victory music.  I literally did that out loud.  It was very amusing if you would have seen me do it in person.

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A new life goal

One of my hobbies, something that I do regularly, is take various friends out for coffee.  I rotate through a group of six or so and either do breakfast (for the ones at work) or evening coffee or breakfast coffee.  It’s a tradition I started in 2009 and have carried into this year.  I have to be deliberate about it otherwise it won’t happen.  These 1-on-1 times are occasions when I will reveal stuff about myself that I will not share in a group setting.  I know that some people feel comfortable sharing more intimate details about themselves in group contexts, but not me.  I prefer to pick and choose to whom I reveal stuff to, that is, not all at once but instead in a 1-on-1 setting.  That’s just the way I am.

The thing is that one of my friends is someone I have gone out to lunch with but he has never seen me drink coffee in 2 and a half years.  I actually don’t like coffee.  When I go to a coffee place I have to get one that’s loaded down with sugar otherwise I can’t drink it.  That’s why I don’t drink coffee, because the amount of sugar I need to consume it is something I do not drink a lot of (I rarely consume abundances of sugar and have been like this for 2005).  So he challenged me that he’s one day going to catch me drinking it.  I accepted that challenge.  He will never see me drink a cup of coffee in his presence.  But in order to do this challenge, there had to be ground rules:

  1. Seeing me drink coffee counts as two consecutive swigs.  It can’t be a sip, it’s got to be a swig.
  2. Pictures do not count.  He either has to see me do it live or via streaming web cam.
  3. Every year that he does not see me drink coffee earns me a “swig credit.”  Five swig credits earns me the right to drink one cup of coffee in his presence and it doesn’t count against me.
  4. Coffee loaded down with sugar, like a caramel macchiato or cinnamon dolce latte, counts.
  5. If I lose the bet, I have to buy him a cup of coffee.  If I win, he has to buy me one.

I’m looking forward to this challenge.

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