May 2006

May

May 1, 2006

Everything was cool until the last hour, when Maria Bartiromo of CNBC revealed that Bernanke had said maybe he was not so much a dove after all.  Still, even with the indices down, I made about 1%.

May 2, 2006

I bought ISRG again today, based entirely on the system.  I wish I had never sold.  When they announced earnings a few days ago, the stock went up over 20%.  I hate buying into that, but the earnings look very good as well as the chart.  Still, I worry about that one.

May 5, 2006

So far a good month.  System seems to be working well.

May 10, 2006

The Fed raises rates .25%, as expected, and adds a "yet" to their statement.  People will talk about that for a while.  I have no confidence in the Fed - it always overdoes things.  Will this time be different?  My account was down only slightly.

May 13, 2006

Thursday and Friday were terrible days.  It is not clear if this starts a trend or not.  In any case, I am now 100% cash.  There was a significant sell-off in the areas that had been the strongest.  I was able to get out with a small profit for the month, which is more than I can say for the indices.  Will there be follow-through to the downside on Monday?  Time will tell.  In any case, there may be new leadership, and I will take some time to build a new system to trade.

May 15, 2006

Well, the averages were not so bad today, but my account would have been down over 3% if I had not sold on Friday.  Lots of things need to be sorted out before I go back in.  Earlier people were impatient with the Fed because they kept on raising rates.  Now people are saying that they have not raised them enough.  The talking heads can never stay on the same side of an issue for long.

Ryan Young in Iraq

When we moved to Silver Spring in 1987, Ryan was a young child who lived a few houses down the street.  He and our children and others in the neighborhood grew up together.  Now he is a Marine maintaining aircraft in Iraq.  I hope he survives this thing.  Just looking at the pictures he sends, it is hard to see why anybody wants to live in Iraq, much less fight over it.  Hot, miserable, and with lots of sand storms.

My daughter, Jennifer, did a marathon on May 7 in Ohio.  Now she has moved to this area to work as a vet tech in a local animal hospital.  She seems to love the work.

Jennifer Williams

May 22, 2006

Boring to be in cash, although when the market goes down I feel a certain gleefulness.  Particularly when I see people on the Motley Fool Message Boards saying "It will come back.  It will come back".  Maybe it will, but in the meanwhile why suffer such losses?

May 25, 2006  Guilty!

Ken Lay and Jeffry Skilling Guilty

Now let's hope that they fail on appeal, and go to jail for the rest of their lives.  But probably some lenient judge will think that is too harsh for these jerks.  We really do not punish corporate crime harshly enough.

May 28, 2006

Interesting article on how the media failed completely with Enron.  

One of the answers has to do with inherent limitations the press often is loath to admit. Today, there are an increasing number of stories of great consequence -- such as Enron -- whose complexity too often simply outstrips the competency of many of the reporters assigned to cover them. (When was the last time you read a hard-hitting and comprehensible story on a hedge fund?)

By and large, the people now running major news operations don’t want to take the time or pay the money that it would take to field suitable reporters. It’s also true that some institutions are all but impenetrable to even the most enterprising journalists, who -- unlike prosecutors -- don’t have the subpoena power that batters down doors...

But the media’s failure in the waning months of the go-go ’90s had a deeper, more insidious cause. Not long after Enron’s collapse, the Conference Board published a pseudonymous piece by a “longtime-publishing insider,” who correctly diagnosed the problem this way: “Most of the mainstream business media has been too busy morphing CEOs into celebrities and giving us guided tours of their royal lifestyles. There’s been no time to do reality checks on their balance sheets and business practices. Instead, ‘the press gave us personal information about Ken Lay’s brilliance, his wife’s wonderful taste in furniture, and the glamorous lives of other business executives,’ says Ron Berenbeim, the Conference Board’s expert on business ethics. ‘They didn’t think we were interested in those boring footnotes in the balance sheet and earnings reports.’

”There’s another dilemma .... Many reporters and editors ceased to be journalists in any real sense and began writing what seemed like infomercials and advertising copy .... At first, CEOs were portrayed merely as brilliant business warriors, but during the last five years they have been crowned all-knowing Citizen Kings. After such deification, it’s not easy for business reporters to now fall on their keyboards and declare that the emperors are not simply naked but crooked as well. The late George Reedy, press secretary to Lyndon Johnson and a wily student of media, used to say to me: ‘Every reporter I know has to whore now and then, but damn if I understand those who pimp too.’ “

As Boston University’s Post put it Thursday, ”This was the era of the story, the shtick, the celebrity. Lay and Skilling delighted in that .... They created the model for that kind of super executive CEO.“

They also were masters of something else that was at work in all this -- what might be called ”the mystification factor.“ Enron’s scam, in particular, depended on having self-interested Wall Street analysts and lazy, distracted financial journalists happily buy into the con that the boys from Houston really were ”the smartest guys in the room.“ If you didn’t understand how they were making their money that was your problem, because only they were smart enough to know.

But as I pointed out, some people did know what was going on.  Certainly not Goldman Sachs, of course.  Or if they did know, they were scamming the public.

Well, here are a couple of stories that indicate just how superstitious and uncivilized some people are.  Bad enough here with Pat Robertson claiming that toleration of gays has put America at risk, but in India medical students do not want to mix with lower caste students, and in Indonesia the bird flu is blamed on evil spirits.  Do you really want one of those Indians, when he gets his medical degree, to be reading your X-rays?  And what if the superstitious Indonesians causes the spread of bird flu?  This is part of what we get with globalization.

May 30,2006

Cramer said it tonight, Cash is King.  A little bit late, of course.