Sunday, November 30, 2008

College Football

I know this isn't that important in the big scheme of things, but I hope the MESS that has been created this year via the BCS standings will finally, finally encourage the NCAA to move to a playoff system for college football. I will not hold my breath, as there have been several controversies already over the past several years that should have provided enough evidence to the powers that be that the BCS system is just not kosher.

As you may have heard, the Big 12 Championship game matchup was decided today by the 5th tiebreaker, which, unfortunately is the BCS ranking system. In brief, Oklahoma, Texas and Texas Tech all ended with a 7-1 record in the Big 12 South (and 11-1 overall), and were vying to play Missouri, the winner of the Big 12 North division. Texas beat Oklahoma back in October, 45-35, Oklahoma beat Texas Tech 69-21, and Texas Tech beat 39-33. Oklahoma got the nod for the Big 12 Championship because of a 0.9351 average, slightly better than 0.9223 average for Texas.

Personally, I really couldn't care about this, except as a casual football fan. However, there are so many players, coaches, universities and fans that pour so much effort, time, money and their heart and soul into college football that it just seems ridiculous that a computer ranking system (that takes into account "style points") ends up determining the championship, when every other sport in the NCAA and in the world is decided on the field.

Plus, it leads to pathetic pandering and campaigning by the coaches and universities, which just is so uncouth. This is a sport played by strong young men, and should be decided mano a mano rather than some nerdy computer algorithm.

Get rid of the conference championship games and start either a 8 or 16 team playoff from early December and that culminates in early January. It would not lead to global academic underperformance. The players are already receiving tons of help/tutoring and are still practicing football all throughout first semester finals in preparation for the bowl game. Plus, only 2 teams would end up playing in all 3 or 4 games, the rest would be eliminated earlier and the net time spent away from the books would be about the same.

This system simply does not make any sense. All I know is that Texas beat Oklahoma, and that Utah and Boise State are undefeated, yet it is unlikely that any of those teams have any chance at winning the college football crown.

Monday, November 24, 2008

Supply-Demand Economics

This is such a good news-bad news story/concept. The good news? The higher gas prices over the past year led to 11 straight monthly declines in miles driven by Americans. The high fuel prices had everybody salivating on methods and strategies for implementation of alternative energy sources and created the demand for more fuel efficient vehicles. Great, right?

Well, because it's a feeback loop, the decline in demand for fuel (not only by less driving but declining activity of world-wide economies), has led to an ABRUPT reduction in gas prices. This removes the impetus and inherent pressure to innovate, and I fear we will be back to square one. This is why we never learn the lesson. I think we need to implement a carbon tax. There is no other way around this. I know it is messing with free-market relationships, but, please, there is no need to be consuming so much oil, particularly when we get the majority of it for a high cost from not so friendly countries.

The Economy

Obama is doing a pretty good job at putting together his economic team. The free-marketers of Wall Street seem to really like his selections of Geithner as Treasury Secretary and Summers as Top Economic Advisor, as evidenced by the late day rally on Friday (which was really building up on a technical basis in the charts prior to the announcement) and the higher futures this morning. Not only are they centrist, but it's taking away uncertainty in these very uncertain times. Also, overnight, the government announced they will be bailing out Citigroup with a complex deal.

The script for the democrats and Obama can't get much better as far as drama and credit goes. Fairly or unfairly, Bush will go down in history as being the leader of the U.S. as it entered its 2nd greatest recession of all-time. He will also be remembered for socializing most of the banks and investment firms, and potentially for bailing out the automakers. Obama will come out looking as the "savior" as the economy will emerge (with or without his help) much stronger in the next 2-4 years. It's kind of ironic.

Watch the market today. It is an important day. There haven't been 2 big up days in a row in a very long time. If the market can tack on 4-6% today, then it would probably signify that a meaningful intermediate-term rally will take place (could rebound 30-40% from these levels). It actually wouldn't even be bad if the market went into negative territory after the higher futures, as long as it finishes up strong. It's all about the close and the last hour.

Thursday, November 20, 2008


There has been unbelievable price destruction of equities over the past several weeks. A few weeks ago, I posted the long-term chart of the S&P and indicated that a testing of the bear market lows from 2002-2003 would be inevitable. Well, I thought it would happen after some type of oversold rally to relieve some of the selling pressure, especially as we have entered favorable "seasonality" (November and December are typically very strong months).

I don't know what to say or what's going to happen next. Ever indicator that I and every other trader follows had been pointing to a rally. It never occurred and there has been a major price breakdown, below the lows of the previous bear market. The ultra-confusing thing is that the S&P is below, but the Dow and NASDAQ still have a little way to go to get back to those old lows. Will every index fall below? If they do, and there isn't a major rally in the next 1-2 days, S&P 600 and Dow 6000 will be the next stop.

I feel badly for everybody that has lost so much money in this market. It just doesn't seem fair that people can slowly put away money month by month in their 401K or investment accounts and have 5-10 years of gains disappear in a matter of weeks. No one ever said that the market wasn't risky, but still, it's just a travesty.

P.S. Ford hit $1 per share today and Citigroup fell below $5.

Tuesday, November 18, 2008

Five bucks with change to spare

Five dollars. That's not much money. You can barely get a good lunch these days for $5. But, do you know what you can get? One share each of GM and Ford stock, and you'd have 23 cents left over. It's unbelievable. The CEOs of the 3 U.S. automakers were on Capitol Hill today and took a grilling from the Senate. They stammered on their defense of why they need a $25 billion dollar bail-out. Chris Dodd pretty much summarized the sentiment many including myself are feeling about this issue:

The industry is "seeking treatments for wounds that I believe to a large extent were self-inflicted, but at a time like this, when our economic future is so tenuous, we must do all we can to ensure stability."

I watched some of the testimony. They had a PhD economist, Peter Morici, testify as well, and it was somewhat amusing to watch him directly rebut the promises that the CEOs were making in regards in becoming profitable in the very near future and being able to pay back the "loan". He cited that only Chrysler was even close to meeting the quality and efficiency standards that Honda and Toyota have in place, as rated by an independent quality assessment firm. Plus, he stated even with major job cuts in an attempt to improve their bottom line, the amount in pension benefits (about $105,000 per employee) that would need to be paid out will cripple their profit margins.

I don't have the annual balance sheets of these automakers (nor do I want them), but I will say that during the whole bull market run from 2003-2007, Ford and GM shares were flat/declining throughout. That implies terrible management. Here's what I would do: While these companies dug their own graves, the ripple effects throughout the whole economy would be horrific if they went under. Therefore, I would give the companies the $25 billion, with the conditions that all 3 CEOs are fired, and new CEOs are hired with proven track records of running profitable companies that produced quality products.

Our economy, bailout or no bailout, is in big trouble. Even Harvard's endowment investments are getting pummeled, as their account has lost 30% of its value this year.

At least health care is safe right?


Read this article: Twenty percent of primary care doctors said they will cut back on patients seen, 10% said they will work only part-time, 11% plan to retire, and 13% are planning on finding jobs that don't involve patient care. Why is this bad? Because there is already a shortage of primary care doctors, and 67% of physicians surveys said they are working at full capacity or are overextended and overworked as it is. Oh, and 60% said they would not recommend medicine as a career. This is troubling, but understandable given what is going on in medicine these days. The demands for keeping up on the latest medical information, trying to manage elderly patients with multiple comorbidities, doing paperwork and fighting claims with insurance companies, and so on are just too much to handle for primary care physicians. That's why a job at a VA hospital is the way to go!

At least rich people in Santa Barbara are doing well. WRONG! More than 210 homes, including many multi-million dollar mansions have been destroyed by the wildfires. Worse yet, evidence is pointing to a bonfire started by 10 college students as the culprit. It's ashame, not only for the homeowners who probably lost priceless memorabilia in the fires, but also because of the added economic stress. California has already spent $305 million on emergency firefighting since July 1st, only $236 million more than was budgeted, and the state has a deficit of $11.2 billion.

Ok, that's enough of this Debbie Downer session. Have a good night!

Saturday, November 15, 2008


Bear Grylls on Man vs. Wild tonight, stranded on a desert island, said "No matter how tempted, never drink seawater, your kidneys will collapse". Perhaps they need a nephrologist consultant for the show! Also, in an episode from "Siberia", the locals sliced the neck of a yak, and he placed his mouth directly on its severed jugular vein and drank about a quart of blood. Even though it was nasty, at least the blood is isotonic and won't "collapse his kidneys".

I don't know who's a more talented and funny impressionist.

1. Frank Caliendo (watch this clip of him on the Tonight Show....his Leno, Bush, and John Madden impressions are awesome).

2. Rob Bartlett as the Godfather and Hulk Hogan. I love when he seamlessly breaks into Italian which pausing.

Has anyone ever been troubled by the Silversonic XL commerical? I think it is a little freaky. It's not really marketed for people with poor hearing, but instead seems to encourage eavesdropping. Watch this video.

Thursday, November 13, 2008

Nuts and Bolts

Don't think we need to do something about the environment? Read this....brown clouds over Asia, decreasing the amount of sun to major cities there by about 25%.

This is cool...CSI meets Con-spiracy regarding the JFK shooting. There was NOT a second shooter.

This is ridiculous....what happened to separation of church and state?

A good argument for "taxes"....sorry Don! But it saves lives! I would also love to see similar studies on the effect of higher taxes on tobacco products.

This article, including the title, show why you cannot trade the stock market based on fundamentals alone. Expanding national deficit and unemployment were the two key economic numbers reported today. The market rocketed up in the 2nd half of the day. Technical analysis must be a huge part of the equation. In fact, now that I've learned about this stuff, it is hilarious that most of the newscasters, including those on CNBC and Bloomberg still try to explain daily moves on the news (e.g., "stocks plunge today based on credit fears, higher oil"'s all crap). See my market update to the right. Today was an important day.

Wednesday, November 12, 2008

TF on the Detroit Bailout

Love Tom Friedman. He hits the nail right on the head again with a Scathing report on GM and the others. He has an excellent idea for what should be done IF the government decides to bail out the pathetic US automakers.

The devil inside me (or maybe just the free market capitalist) says let them fail, and use the taxpayer money instead to send the unemployed autoworkers to school, whether it be trade school or academic school. Or, better yet, let them fail, do nothing, and teach them all a lesson. The government cannot bail out every failed business and every unemployed worker in this economic cycle. It will probably be best for us to emerge from this recession (and ALL recessions eventually end) with true innovation and grit by both strong companies with innovative leaders and by resiliant and adaptable workforces. If we keep printing money for more and more bailouts, we are going to end up with massive inflation over the next several years. Remember we had inflation of 15-18% at the end of the 1970s. That's where we will be headed.

Tuesday, November 11, 2008


Some great articles on the current state and future of conservatism:

1. Mark Sanford, governor of South Carolina, blames the Republicans, not conservative ideology for losing the presidential election. I completely concur. I have been recently arguing with Bush/GOP supporters who hold conservative viewpoints. Haven't these Republican leaders failed in almost every facet??? (massive spending, huge deficit, bailouts, 2 endless wars and nation building in the Middle East, etc).

2. David Brooks on the Traditionalists vs. Reformers in the GOP. Regardless, as mentioned above, Conservatism is dying in the U.S., and that has happened with Bush at the helm. Now that Obama will be taking over, the conservatives are going to have to hunker down (as it appears they are already doing on a cruise). The Republicans used to be able to state their mantra in 8 words: Smaller government, lower taxes, strong defense, personal responsibility. One can argue that all but the "lower taxes" themes have been violated (budget/deficit huge, military forces stretched, bailouts galore), and the lower taxes will likely give way as we will face the "bills" for all of the spending, bailouts and unfunded mandates (social security and Medicare) over the next several years.

3. Are we really going to bail out the auto industry as well? I'm torn on this, because collapse of GM and or Ford will be devastating for the work force, but these corporations have been so uninsprining and run so poorly, that I kind of think survival of the fittest should be the principle to adhere to in this case. Who will the government bail-out next, Circuit City? Give me a break. GM continued to build gas-guzzling vehicles for years, while Toyota and Honda continued to produce better and more fuel-efficient vehicles.

4. Bush is going to publish his memoirs and admits he has made some mistakes, including "Mission Accomplished". Thanks, W.

5. Palin, on the concession speech she wanted to give on election night. She hints she wants to run for Pres in 2012. At least she will have 4 years to study up for the "gotcha" questions.

6. A new study, reported at the American Heart Association meeting, finds that 10-year old obese children had arteries equivalent to 45-year olds. One-third of American children are overweight. Get out there and exercise kids!! At least play Wii Fitness!!

7. This map is scary: depicts where homes are worth less than the mortgage.

Tuesday, November 4, 2008


Wow! Not even close! A historic moment for sure.

I'm glad the campaigning is over. President-elect Obama will now have monumental tasks ahead of him: trying to steady the economy (less will be more), presiding over the two wars, dealing with other global threats (Iran, Pakistan, etc), the need to reform health care and social security, and the need bring a real energy policy to the U.S.

We will be watching closely....remember "the night is darkest before the dawn".

Monday, November 3, 2008


Chris Berman interviewed Obama and McCain at halftime of the Steelers-Redskins game. He asked what one thing they would each change about sports.

Obama said he would add a playoff system involving the top 8 teams to college football. He is "tired of computer models" deciding the champion. I agree. College football is the only NCAA sport that does not always have its champion crowned on the field. The college basketball is just as long as college football. Thus, the argument that the playoff games would interfere with the studies of the athletes is bunk.

McCain said he would aggressively pursue users of performance enhancing drugs in sports. He has been an advocate of this in his time as Senator, so no real suprise. The actual surprise was that McCain was pretty funny and used not one, but TWO Chris Berman catch-phrases and made Berman, as well as me, laugh pretty hard. And, I was all alone...did you ever notice that you laugh with less intensity when you are alone?? Anway, McCain said that he "could go all the way (staccato) the White House", and even though he is not being given much of a chance tomorrow by the pundits, "That's why they play the games". Berman fans know that these are two of his favs. Good job!

Election Eve

Don't forget to vote tomorrow! It will be a big day and probably a long evening.

There isn't much left to be said about the candidates and their platforms.

Instead, I will leave you will one final comedic-political sketch. This from radio pranksters from Canada who pretend to be Nickolas Sarkozy and Sarah Palin completely falls for it. Here's the audio.