Archive for April, 2008
April 30, 2008 4:25PM
By Cody Willard
1. 25bps after 300? Why Bother?
2. The Fed Is a Pawn of the Status Quo
3. When a Free One Costs Twenty
1. Let’s think about this for a second. They cut rates from 5.25% to 2.25% before today’s 25 bps move. I can only tell you this — that idiot bureaucrat named Ben has NO any idea what a 0.25% cut, which is less than 1/10th of how much the Fed’s ALREADY cut since this network launched, is going to do.
2. By cutting rates, printing money and giving it to bankers in exchange of worthless mortgages, intraday liquidity injections…it’s enough to make a cowboy like me think the Fed’s not actually concerned about the financial system, but it’s concerned about making sure the status quo stays status quo. I thought we embraced creative destruction in this country!
3. Oil, corn, rice, even my once-a-week Snickers Almond is about to jump 20% in price, according my corner bodega. The average American is getting less than 1% of their annual income in the form of those so-called stimulus checks. Ask your politicians to explain how this inflation causing package is going to help American’s with the problems of inflation.
Check it out on YouTube
April 30, 2008 4:12PM
By Cody Willard
Glenn Farris, Biomass, Gas, & Electric C.E.O
John Lehman, Former secretary of the Navy under Ronald Regan
Andrew Okpeha Maclean, Tribeca Filmaker w/ John Lehman
Phil Flynn
Cathy Cone, Delta Retirement Committee Chairperson
Joseph Crowley, Congressman on the Ways and Means Committee
Rescue Ink, Tatoo Animal Rescue
Scott Mccoy, digimeld
Todd Harrison
April 30, 2008 11:53AM
By Cody Willard
Quick, guess what year these lyrics are from:
I’ve been waiting for years to buy a brand new cadillac
But now that I’ve got one I want to send it right back
I can’t afford the gas to fill my luxury limousine
But even if I had the dough no one’s got no gasoline
Who needs a car and a seven-forty-seven
When you can’t buy a gallon of gas
Who needs a highway, an airport or a jet
When you can’t get a gallon of gas
There’s no more left to buy or sell
There’s no more oil left in the well
A gallon of gas can’t be purchased anywhere
For any amount of cash
You can’t buy a gallon of gas — The Kinks
And those words were written in 1979.
One of the main reasons I’ve gotten so outright bearish on oil and have tried to call a top in oil around the $120 range is in large part because I can’t believe all these people who think this ongoing boom part of the energy cycle is somehow “different” and sustainable “this time”. It’s not, and there are so many great anecdotes and stories and histories to look back at as to why this cycle is just like all the others we’ve seen in energy for the last century and a half.
For example, as I walked from Fox HQ to the Waldorf for the show last night, my iPod randomly brought up the song “A Gallon of Gas”. That reminded me of another song I like…so when I got home last night, I pulled it up on the iMac. Wanna guess what year these lyrics were written?
There’s only so much oil on the ground
Sooner or later there won’t be much around
Tell that to your kids while you driving downtown
That there’s only so much oil on the ground
Can’t cut loose without that juice
Can’t cut loose without that juice
If we keep on like we doing things for sure
Will not be cool - It’s a fact
We just ai’t got suffiecient fuel
There’s only so much oil in the ground
Sooner or later there won’t be none around
Alternate sources of power must be found
Cause there’s only so much oil in the ground
Sounds like that “Peak Oil” theory that everybody and their dog can cite to explain how this time, in 2008, we really are running out of oil. I hate to burst all you energy-lovers’ bubbles, but those lyrics about alternative sources of power were written by Tower of Power in the antiquated year of…1975. Yes, the 1975 that happened 32 years ago. Wonder if ToP felt silly singing about peak oil after energy prices collapsed a few years later. Ray Davies recently brought back his lyrics from the Kinks song above.
But really, maybe it REALLY IS DIFFERENT THIS TIME! Or not.
April 29, 2008 11:15PM
By Cody Willard
I wear my sunglasses at night
so I can
so I can
Watch you weave then breath your story lines.
And I wear my sunglasses at night — Corey Heart
Did I really just quote Corey Heart to start off a blog post? A stretch to connect the lyrics at that…
With the 5% hit to the stock today, Altria’s now yielding almost 6%. The stock, that is. I mean, I gotta ask you something — all these idiots who levered 3 and 4% bonds up multiple times to get up to almost 6% yield and now are writing off almost a trillion dollars as a result….well, why didn’t they just buy Verizon when it was at 20-something and yielding nearly 6%. Or buy Altria with that 6% yield right now? With no leverage, that’s GOTTA be a safer trade than 3 to 1 leverage on 3 to 1 leverage on 2 to leverage on a 3% money market…
At any rate, the reason any of this is on my mind tonight is because as I walked through the neighborhood on my way home, I had to weave around and between a quite a few smokers out on the sidewalk in front of bars and restaurants. These same streets are devoid of any smokers during the day. So I wondered to myself — I wonder what percentage of cigarettes in this country are smoked after the workday is over, say, 5pm. I bet it’s about 2 to 1 that more cigarettes are smoked at night than during the day.
And to Flip It, of course — I wonder what percentage of sunglasses are worn during the day. I’d bet it’s about 10 to 1.
PS. This is also my roundabout way of saying I like Altria for a trade/investment here.
April 29, 2008 7:28PM
By Cody Willard
1. Inflating the Inflation of Inflation
2. Buy Softee For a Hard Fight
3. Flip It: GTA4 reduces violence!
1. I ran through the BS, ER BLS data of beef, electricity, bananas, and other essentials for the last decade and came out with a roughly 3% inflation rate. The question is what it’ll look like ten years from now…and we better hope the guys in charge of our dollar start thinking about that.
2. On CodyWillard.com today, I issued a hard buy on Microsoft. Stock’s down manly cuz this Yahoo fight, but I think the stock’ll head back into the $30’s in coming weeks regardless of who scores the TKO in this fight.
3. Today’s Flip It: Grand Theft Auto makes this country safer. Plato always argued that violent and tragic entertainment was key to keeping a society safe since it reminds people why peace is good. Buy your angst-ridden teen a copy of GTA4 today…it’s his money we’re borrowing for this stimulus package anyway
April 29, 2008 12:35PM
By Cody Willard
Softee’s been getting killed of late as the weekend passed and everybody was shocked that Yahoo and Softee haven’t resolved anything yet.
MSFT’s down from almost 30% from its highs late last year, and down about 20% from its more recent highs. Meanwhile, earnings and revenues have been steadily growing faster than the street’s modeled and the report last week was another pretty darn good one. But it’s all about the Yahoo courtship right now. And that’s got the stock acting like punk.
You want to buy “punk”. Later you can sell “rock” if the stock does indeed rock. Vista’s been a disappoint in many ways and Apple’s going to continue to kill Microsoft among consumers. Eventually, Apple might finally break into some enterprise market share, but they’ll never have much more than 2 or 3% in business computer market share — at least for another decade or so. There’s also Zune of course — as if that matters to the stock or the company. Xbox is indeed an important franchise and it is Microsoft’s own Trojan Horse in the living room / to stay relevant to the consumer.
Xbox kids are going to be increasingly watching movies, shows, talking and playing on the XBox networks over the next few years. And it’ll be very profitable for Softee along the way. Content and content distribution models come with high margins, as evidenced by media companies and cable/telco models. Xbox is as important to the future of Softee as search is.
At any rate, I think Softee’s a good trade to the long side here around $28. I might use a little bit of common stock, but I’d also look at using some slightly-in or slightly-out of the money calls dated a couple months out. Say the August 27.50s or September 30s or something.
To be clear, I’m not saying MSFT’s a great stock to buy and load up on here…as for example I’d been saying when I’d pounded the table on Softee back in summer of 06 when it was in the low $20s, I used a lot of common and long-dated as well as short-dated calls and I even shorted some puts (which means I borrowed some MSFT put options and sold them for market price. As the stock went up, the puts became worthless and I pocketed the money from the sell as gains for the P&L, see?). I wouldn’t advocate that approach now at all.
I’d probably just put a little bit of capital into some calls.
April 29, 2008 12:01AM
By Cody Willard
…Beyond a wholesome discipline,
be gentle with yourself.
You are a child of the universe
no less than the trees and the stars;
you have a right to be here.
And whether or not it is clear to you,
no doubt the universe is unfolding as it should.
Therefore be at peace with God,
whatever you conceive Him to be.
And whatever your labors and aspirations,
in the noisy confusion of life,
keep peace in your soul.
With all its sham, drudgery, and broken dreams,
it is still a beautiful world.
Be cheerful. Strive to be happy. - Desiderata
I’d pondered during my UNM speech if our brains have a balance sheet. The more I spend thoughts thinking about it, I am convinced they do.
Opportunity cost is defined by Wikipedia the cost (sacrifice) incurred by choosing one option over an alternative one that may be equally (or more) desired. Thus, opportunity cost is the cost of pursuing one choice instead of another. Every action has an opportunity cost.
It’s not just actions, that have an opportunity cost. Thoughts have opportunity costs too. In other words, the opportunity cost is the cost (sacrifice) incurred by thinking one thought over an alternative one that may be equally or more desired.
Take for example, and yes, irony self-fulfilling, that this will be my last post about my the recent trashing I just went through in my personal life. I mean, the opportunity cost of all this pain that I’ve also been processing over the last couple months is not insignificant if I’m to be honest with myself. It’s not just that I’ve not felt much like dating or getting out there and seeing what else might come to fruition in my personal life. More to the point, those nights I spent thinking of her, reviewing the facades in my head…those mornings I awoke with my heart in my stomach and thoughts of resentment and anger in my head…those are moments that my brain’s not thinking about my job, my businesses, about the economy, the market, about how to make money, how to best plan my career. Even as I’ve been as laser-focused on my career and my job in my actions, I know my brain could be processing much more were it not paying opportunity costs of heart distraction.
Maybe that’s exactly what bad karma is. It’s when bad thoughts and feelings build on themselves, creating vicious cycles that undercut real-life productivity. Not to mention undercutting real-life trust.
And you know, the very instant she began to tell me all the ways she’d be dishonest in the beginning, I instantly saw the karma build. Her actions and then her subsequent choices of building a relationship with me on facade made my pain fait accompli. And I knew that I’d be spending weeks feeling awful and dealing with the low self-esteem issues that come when someone you’re intimate with lies. And I knew that mindset and heartset wouldn’t be conducive to my being at my best. Bad karma indeed.
And how did I bring that bad karma into my life, I might wonder. Does the fact that I’d thought from the first time I met this girl that she’d be too…wild… for me? Then why did I later go forward? Oh, perhaps it’s all just 20/20 in hindsight, but I sure feel like I foresaw almost all of exactly what then played out when we finally gave it a shot. I’m an idiot.
Really then, from the decisions I made about taking actions to get into that relationship at all to the thoughts that I’ve wasted in pain, I, as the fund manager of my life, career and mind, am accountable for these losses on my brain’s P&L. Hoohah, like I’ve said many times before — managing money is for idiots. So is managing thoughts.
Then again, maybe I outta just be gentle with myself, re-read the Desirata and go to bed.
PS. I think most economic text books would agree with the Wikipedia definition of “opportunity cost”. At least the general accuraciosness of the description of what it mostly is in truthiness, if I may Colbertitize this post at the top. In high Colbertity, I added the italicized (or more). I think it’s more accurate that way and maybe we can get Bloomberg or Reuters to poll the same economists they ask about even more benign questions like “What do you think this month’s housing starts will look like?”
April 28, 2008 11:55AM
By Cody Willard
With all the pessimism and fear in the midst of all this artificial stimulation, this market has been a pretty good set up for the long side and being bullish. After leaving the business entirely myself and having my Mom take 30% of her savings out of the stock market back on air late last year, I got bullish in March after the markets had dropped 20% and had my mom put 1/3 of that money back into the markets. But as I hinted on my Big 3 during Happy Hour Friday, we’re getting closer to needing to be sellers rather than buyers of stocks again.
It’s not exactly been straight up, but the markets have indeed put on some meaningful gains since the Bear Stearns Bailout Bottom created enough panic to get real capitulation in the markets. And that capitulation did indeed put in what we now know is a meaningful bottom, as I’d thought it might at the time.
Yeah, since the Republicans and Democrats in power teamed up with the Fed to print $30 billion of dollars and give them for free to the richest people on the planet, including $1 billion exclusively for Bear Stearns’ shareholders (what their equity has to do with making sure our financial markets are functioning, which is the reasoning the Repubs, Dems and bankers have used to rationalize the theft…which in my mind undermines any of their credibility in claiming all these hundreds of billions that the government’s giving to Wall Street has anything at all to do with maintaining functional financial markets — but I digress a bit), the markets are now up double digits. The Nasdaq’s up 12% since then!
I’d been saying and writing that we’d want to be long until about May 15 when those checks from our grandchildren’s savings start arriving from the Republicans and Democrats in power who want to buy your vote with your kids’ money.
Well, as President Bush and his cronies all sing in unison about how these checks start arriving today to help poor people deal with the very inflation that the checks themselves actually cause, we have to start to “taking the trade”. The playbook’s been fast-forwarded and we’ve got a 12% move to call victory on.
You can’t go broke taking profits. And I’m gonna have my mom take that 10% back out of the market until the next panic. She’s not in any rush and we’ll be leaving about 70% of her funds exposed to the world’s more volatile markets via a well-diversified approach in mutual funds, real estate and treasuries and more.
As usual, the money trade was simply a matter of “flipping it’. If you bought the panic, you’ll now want to sell the relief. Flip it, indeed.
April 25, 2008 11:59AM
By Cody Willard
I miss writing for the FT, and was happy when I knew I’d get to see some of the people there at the fifth annual “Meet the FT” party. It was a great set up — at the top of 30 Rock. As I walked in with my Jedi Master, James Altucher, we passed NBC Universal CEO, Jeffrey Zucker, coming out of the building. I got a kick out of telling James that Zucker had eyed me as we passed because he knew who I was. LOL
But the whole evening did feel rather surreal. I mean, I already do TV for a living, and I’ve been dealing with the idea that I now live in four realities in which I have to somewhat keep track of what I’ve done where, when, and how.
That is, I have my real life. My on TV life. My off-air, but still wired up and being heard by dozens of people whom I don’t know life. And my writing life.
Is that four? I’ve lost track. And I’ve lost track partly because taking a car service to go to a party for the FT at the top of 30 Rock, where I remember seeing my first NYC-celeb sighting as Billy Crystal came out of 30 Rock during my first week working at Oppenheimer back in 1996, was indeed rather surreal.
And I’m always still feeling a bit out of place in the city — any city — because I really did spend my whole life in the country, far far away from apartment buildings and subways and skyscrapers. Further, it’s a trip hanging with all these incredibly powerful, smart, and successful businesspeople and media people. I turned to a friend of mine who used to run PR at FT (that’s exactly my point, btw — How and when did I end up in a place of calling someone who runs PR at FT a “friend” of mine!) and said, “How the heck have I gotten here?”
And that’s just about the time one of me got asked, “How you doing on the show, Cody?”… and the writer/real-life Codies tried to answer for that TV life Cody in as honest a way as I could. And now I see one of (all of???) the Codies’ names in headlines all of the blogosphere. And this writing life Cody now asks, “How the heck have I gotten here?!”
Cody Willard: “I Don’t Have Any Idea What I’m Doing” Huffington Post | Rachel Sklar | April 24, 2008 02:32 PM
And I’m now Catholic? When did that happen:
Apr 24 2008 2:05PM EDT
Maybe I’ve been thinking this line of thinking about my life (lives) lately because UNM had asked me to come home and talk about what it took for a naive, native New Mexico kid to survive a dozen years in NYC. After the FT event, I’d been bumming that I’d forgotten my Flip Camera to record some of the night for the upcoming music video I’m making off the song I wrote as I wrote that speech for UNM about dreaming big and never letting go (name of song, coincidentally enough: Dream Big and Never Let It Go)…
But seeing this headline and layout…pretty much made my week. There’s even a picture of the Empire State Building in the background…I’m just gonna record some footage of the site itself and that Cody guy’s name in the headline.
You do gotta love it, no? Right, Cody? Cody? Any of you?
PS. Had more than one strangely competitive conversations with execs and producers from that competing biz network at the event too. Is this actually my life? I mean, these are actually my lives. How the heck did I get here?
April 24, 2008 12:17PM
By Cody Willard
Even though it’s not a game and the repercussions of it aren’t fun, let’s start a new game on Happy Hour and here on The Cody Word called “The Food Shortage Blame Game”. (Is Chuck Woolery avail?)
I’ve been doing a lot of thinking about all this “Going green” by buying “Green guitars”, or “Green luxury bags” and we’ve all been hearing/seeing all the hype and outsized consensus about how channeling all this time, energy and money into these types of things is supposed to do good for the world’s citizens and the planet at large.
What if conventional wisdom is just dead wrong about all of it?! Flip it, man. What if all these resources that we’re channeling into these concepts that we think make the planet and its people healthier and cleaner are doing exactly opposite of their intent? Come on, that wouldn’t really shock you would it? I mean, how often is conventional wisdom and the mainstream actually RIGHT? Not often, which is exactly why we should think about Flipping It.
It’s just been in the last handful of years that these concepts that people have determined are “green” have become mainstream. And what’s happened to prices of food and all other commodities during these last handful of years as we buy further and further into these “green” concepts. It certainly seems that the result of all these policies and social movements around the developed world’s consumption habits hasn’t been very helpful to the poor in Africa that we’re supposedly trying to help with much of this “green” movement.
Are bamboo guitars actually GOOD for the environment? No, we’re still depleting the world’s resources with our consumer culture, including consuming guitars. Further, while the bamboo might grow back more quickly than oak, it’s not as if bamboo doesn’t have some downside to it. It’s an aggressive plant, man, for one thing! And $800 designer “green” bags? Gimme a break - you’re not doing anything good for the planet buying something like that. Get a potato sack bag if you want a “green” purse.
You realize it’s sorta the same logic that these “green” marketing scammers use that the “carbon-trading” marketing scammers use. “Buy this and even though you’re destroying the world, you’re paying someone to do a little bit less world-destruction to get you this product.” That’s not exactly what I call “green”.
I’m already convinced that recycling — yes, all this paper, aluminum, glass RECYCLING — is more damaging to our environment than any other hairbrained mafia scam the government and its cronies have come up with the last couple decades. You can’t tell me all the manpower and logistics that go into “recycling” garbage wouldn’t be better served re-using and re-training us to consume less packaging and waste. And you can’t tell me that the 20-plus garbage/recycling trucks that rumble along my brick street in Soho EVERY NIGHT aren’t putting more bad gases into the atmosphere and wasting more resources than if we just conserved better and buried the junk we waste. Who directly benefits from all this “recycling”? They who run the garbage business in this country. Ever watched the Sopranos…Tony and his boys in the garbage business used to chuckle at the outsized margins in their recycling scams. Yes, recycling is totally a scam and its bad for the environment. And, no, I’m not just trying to be coy in Flipping It.
And then there’s the organic movement.
It’s widely cited that the market share of organic foods in this world is about 2 or 3%. I just Googled “organic food market share” without the quotes and randomly clicked on several of the links/research reports from the results. One report talked about 25% market share for organic fruits and vegetables, while another talked about organic food market share ranges from 0% (especially for pork,it says) in some places in Europe to about 15% in Austria (one of my favorite cities in Europe is Salzburg, btw).
Regardless of whether it’s 3% or 5% of the food that we eat on this planet is organic or not, we all know that organic is a secularly growing industry within the slightly-cyclical food industry. And the yields from organic crops vs. non-organic crops? They’re not as high, that’s why the stuff is more expensive. So we’re constricting the supply per square unit on this planet just as we’re running into a possible food shortage.
Okay, so here’s where this line of Flipping It logic leaves us then, if I’m not mistaken. To help the environment, the poor and even Africa, we all should cut consumption of expensive new goods, wear potato sack shirts, fight carbon-trading, NEVER EVER recycle, and eat foods full of chemicals and pesticides.
Makes about as much sense to me as most any social/governmental movements, doesn’t it? I mean, they’ve convinced us already of the idea that stealing from the working man to “save” the investment banker is somehow good for the working man.
Here’s hoping there are winners in this game, because feeding the world isn’t really a game at all.
More on this with Environmental Capital Partner (and former NHL star) Michael Richter tonight on Happy Hour, btw.
