The Deipnosophist

Where the science of investing becomes an art of living

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Location: Summerlin, Nevada, United States

A private investor for 20+ years, I manage private portfolios and write about investing. You can read my market musings on three different sites: 1) The Deipnosophist, dedicated to teaching the market's processes and mechanics; 2) Investment Poetry, a subscription site dedicated to real time investment recommendations; and 3) Seeking Alpha, a combination of the other two sites with a mix of reprints from this site and all-original content. See you here, there, or the other site!

30 September 2005

Quark, Strangeness, and Charm

By now, you realize I do not 'recommend' investments that already trend higher; I believe investment opportunities obvious to all in truth offer lessened reward and increased risk. But this comment is disingenuous; I do recommend investments that are obvious, albeit in different time frames. My objective is to note change, and in turn to denote it for you.

Yesterday was such a day [of change], and thus an intriguing day for the markets. I had noted only days ago the preponderance of bases; yesterday brought with it reversals of declining trends, which likely equal an end to each correction (left side of the chart) and entry into the base (middle of the chart). For example...
eBay/EBAY: Failed to achieve even the higher of two bearish objectives, ~$35. (The second, lower objective was ~$30.) Failure to achieve targets is a critical tell; a failure to achieve a bearish objective therefore is bullish. eBay/EBAY also reversed higher yesterday on 150% of average daily volume (adv). This likely means that all the activity this year qualifies as a base rather than a top.

Starbucks/SBUX: Whew, how bearish could investors become on a stock that has declined less than $20 from its $65 all time high? Now it too ends its secondary test, and confirms the action of 2005 as a base.
• The homebuilders got into the bullish act, at least temporarily, rising when they instead should have declined.

I trade for a living, which means I also buy and sell stocks that I will own for only a short time. (Investments increase the net worth, whereas swing profits pay the bills.) So during the 3rd quarter, while everyone else moaned their fears for a summer decline, or a "September Swoon", or a "Fall fall" in the equity markets, I bought. And kept on buying. With the strength yesterday, and the follow-on strength today, that appears to have been a wise decision. I had the opportunity to purchase weakness rather than chase strength; this means, contrary to misperception, that my risk was lessened and my reward increased.

I prefer not to chase stocks, so I monitor the shares of companies I have interest in owning. When the market creates an opportunity to buy with comparatively little (or lessened) risk, then I purchase. Sometimes, an opportunity comes along wherein the decline and base are so shallow that I might as well purchase the high volume breakout, as seems to be transpiring today for Telewest/TLWT (at $23). In truth, I could not care less about this company or its business, but I do see the setup and pattern in the stock. Buying this high volume breakout will pay lots of bills after it hits its bullish objective... and I sell.

Charts have a language all their own, but I find they sing their song to me. I really cannot understand comments from investors who state they have no interest in learning technical analysis. Gosh, that is akin to a cardiologist who dismisses the importance of an EKG in his or her practice. Thank you, but I will consult another doctor!

Each day is a challenge, personally as well as professionally, but I embrace these challenges. And am paid handsomely for my efforts. So, too, could you!

29 September 2005

All the world's a platform

If you add every small business in the world - and Google is thinking that way - you can sum up Google's ambitions as this: the company would like to provide a platform that mediates supply and demand for pretty much the entire world economy. As Schmidt put it: "The sum of [Google's potential] market, if you include the large and small companies throughout the world, is the world's gross domestic product." So Google is angling to become the de facto marketplace for global commerce. That's big, but is it big enough to fulfil the expectations for it?

Read entire article here...

28 September 2005

Point & Counter-point

Not to wax too Hegelian, but these two essays argue well their theses; each is a fine example of the art of the essay.

This first essay has more excellent ideas per paragraph than do entire libraries. It author, James Q Wilson, is consistently engaging and fascinating -- whether you agree or disagree with his thesis.

The second essay is consistently, uproariously funny in a sardonic sort of way. I laughed out loud many, many times.

Of course, the synthesis of the two distinct arguments is up to each of us. What do you think...?

Carnage begets calamity...

In this post, I said, "First arrives the possible support at the fast-approaching 200-day simple moving average (sma) -- and my forecasted initial decline of ~30%. If this specific sma successfully arrests the price decline for each stock, then the decline could be characterized as a "correction" within a continuing bull market for this group. However, there is nothing in the charts that indicate the 200-day sma will be anything other than a speed bump on the way to lower prices."

The 200-day simple moving average (sma) has proved [to be] nothing more than a speed bump. Let the 'shredding' begin. The sad fact is that most investors remain bullish on the group, based on each company's "cheap PE". And quickly becoming cheaper. This is another reason to understand the dynamism of technical analysis.

Continue to stand aside, if interested in purchasing stocks from this group. Lower share prices loom dead ahead. And for more in-depth comments re this group, follow the links back in time. My next update re this group will be, "... begets crisis", a continuation of this subject header.

27 September 2005


In this post, I waxed excitedly for this company, Option Care/OPTN. My concluding remarks were, "At some point, the shares will reverse and begin anew (most likely) another intermediate term base. But having only recently emerged from its last intermediate term (6 months) base at ~$12.50, it is unlikely to do so from the current price." How could I have been both correct and incorrect in the same statement?

OPTN shares hit their high precisely two weeks later ("Way to go, David!"), and then proceeded to retreat into another intermediate term base. That base, however, ended today -- and with an exclamation mark. Note on the weekly basis chart (below), OPTN shares build one base after another, and each on top of the one immediately prior. Also, each base lessens in duration.

For these and other reasons, this opportunity, for as far as it already has come, is far from completing its long term bullish move. Hmm, let me re-phrase that last statement: Option Care/OPTN has farther to rise in price but should require less time to achieve that objective. That is, there will be increasingly more bullish and fewer bearish days, and that the bases will continue to lessen in elapsed time -- all, until the final high. That reversal, when it occurs, should be exceedingly obvious.

I am still long those purchases from April 2005, and adding more yesterday and the immediate future.

On a different topic, general market action being what it (always) is, its recent action and direction tends to confuse many investors. I note a preponderance of bullish bases in individual stocks, despite the market's bearish tone and configuration. The leaders (Apple/AAPL, Altria/MO, Cameco/CCJ, Google/GOOG, et alii) already have spoken (up in trajectory), and as other stocks emerge from their base (such opportunities previously limned as Option Care/OPTN, Pan American Silver/PAAS, Telewest/TLWT, etc), the market broadens and deepens its strength. These breakouts and other lingering bases gather strength in the face of the "obvious" market weakness. Always do the hard thing. The choice is yours: make money investing in specific stocks or predict general market action. (Yes, I know I begin to sound like a broken record, but alas it seems this message still has yet to sink in.)

Managing Google's Idea Factory

The non-parcellated mind in action. And at Google/GOOG, no less. No wonder I am such a fan of this company -- our perceptions and strategies mimic the other!

26 September 2005

One change in this blog's policy, effective immediately

This blog has featured, albeit infrequently, the complete text of an article, because many publication sources render the text of an article as quickly unavailable; some newspapers within 24 hours of publication. When I do post the entire article, I always provide full attribution to the publication and the author; in retrospect, I believe even this detailed attribution is insufficient.

From this post on, I will provide only a snippet of the article and a link. I suggest that, for links to articles recommended in the future, you hastily make your way to the article in question before it becomes unavailable.


Two for the show

What follows are two more articles re...

But first, a prefatory remark:
I find especially interesting the speculation re Google's purchases of dark fiber. I have previously mooted whether Google would be better served as owner or renter of this asset; now, I note the budding bottom-type chart activity in Broadwing/BWNG and especially Level 3/LVLT. It seems Wall St begins to anticipate a change in dynamics in this sector. Obviously a sudden change of heart re dark fiber occurs: to undervalued asset from over-priced albatross. The once capacious bandwidth and data networks suddenly could become bottle-necked. Especially as ever-larger files (such as videos) increasingly squirt up, down, and through the network.

As I suggested before, it is cheaper for Google, if this is their intent, to build an optical fiber network via buying the assets on Wall St for pennies on the dollar rather than building from scratch. Always playing their cards close to their (corporate) vest, the going gets interesting. But I already said that.


Google builds an empire to rival Microsoft
By Elinor Mills

Google's one-of-a-kind computer network gives it a chance to surpass Microsoft to become the most dominant company in tech, according to the author of a recently published book on the search giant.

Google already has plenty of influence. It handles nearly half of the world's Web searches. It's hiring some of the biggest names in the industry, from the controversial Kai-Fu Lee of Microsoft to the legendary Vint Cerf, an early Internet pioneer. And it has become such the topic du jour in Silicon Valley that its search for a new corporate chef warrants significant local news coverage.

But what's next? Author Stephen Arnold has closely analyzed Google patents, engineering documents and technology and has concluded that Google has a grand ambition--to push the information age off the desktop and onto the Internet. Google, he argues, is aiming to be the network computer platform for delivering so-called "virtual" applications, or software that allows a user to perform a task on any device with an Internet connection.

"Google is this era's transformational computing platform and could be about to unseat Microsoft from its throne," Arnold writes in a summary of his book, "The Google Legacy: How Google's Internet Search is Transforming Application Software," published this month.

For all of its wild success, about 99 percent of Google's revenue still comes from advertising, mostly from Internet keyword searches. Certainly, it has built on the core business, adding everything from the Gmail free Web-based e-mail service to Google Earth, a satellite mapping service. And it has plenty of cash to spend on new technology--nearly $7 billion in cash, $4 billion alone from a secondary stock offering on Sept. 14.

The big question, of course, is what exactly CEO Eric Schmidt & Co. plan to do with that war chest.

In his book, which is available in electronic PDF form only, Arnold concludes that Google has created a supercomputer ready to deliver a host of applications to anyone with a Web browser.

"Google is setting itself up to be an application delivery system for any type of device," said Arnold, who has been a technology and financial analyst for 30 years. He has helped build the technology management practice at Booz Allen & Hamilton, served as a technology strategy officer at Ziff Communications, and worked on US West's electronic yellow pages and personalization tools used by @Home. "That is a different type of paradigm from Microsoft's" desktop-centric world, he said.

Arnold's research goes well beyond speculation that Google will buy Chinese portal, in which it already owns a small stake, or move further into the soon-to-explode voice over Internet Protocol market, beyond its voice chat-enabled Google Talk instant-messaging service.

The notion of a network computer isn't new. Sun Microsystems CEO Scott McNealy has for years been saying "the network is the computer." Oracle CEO Larry Ellison formed a company around the idea. It was called the "New Internet Computer Company," and it sold Web surfing devices before shuttering two years ago.

But unlike Sun and Oracle, Google's timing could be impeccable, Arnold argues. "Sun defined it. Ellison tried to build it. But Google owns it," he said.

The secret sauce
In short, from early on, Google founders Sergey Brin and Larry Page resourcefully figured out how to cluster lots of cheap servers and open-source software, configured to act like individual light bulbs on a Christmas tree that can be added or replaced without making the whole tree go dark, according to Arnold.

Indeed, Google representatives proudly display the company's unique rack-mounted server system to visitors to the Mountain View, Calif., campus.

"Google's architecture can scale. Using commodity hardware, Google can deploy more capacity at a lower cost and more quickly than a competitor relying on a system built with brand-name hardware," Arnold writes in his book.

Google's move into Web services--its Desktop Search and Sidebar products, for example--has prompted Microsoft to reorganize and combine MSN with its platform products group to help the software giant fight off Google's encroachment on its turf, said Frank Gillett, an analyst at Forrester Research.

Dark fiber, wireless
The reports of Google's interest in unused fiber optic, also known as "dark fiber," seems to support Arnold's theory.

"Dark fiber will enable greater dependency on what I call virtual applications," he said. "Once those high-speed connections link the dozen or so Google data centers, they will do stuff better, enable much more than telephony, media delivery."

Joe Kraus, a founder of the portal that merged with Internet service provider @Home before filing for Chapter 11 bankruptcy in 2001, agreed that Google executives are likely thinking big, although he acknowledged he "doesn't have the slightest clue" what they are doing.

"They've been buying dark fiber for a good five years. It allows them to have such cheap communications between all their data centers," said Kraus, chief executive of online start-up JotSpot.

"A lot of people have talked about Google's core ability to host thousands of applications and being your desktop in the sky," he said. "They certainly never fail to take advantage of it when launching new products."

Google also has invested in Current Communications Group, a provider of broadband-over-power-line technology. In addition, there are rumors that Google is eyeing satellite, technology that drives its 3D Google Earth application.

"They said, back when they invested in the Internet-over-power-lines company, that part of their corporate mission is 'promoting universal access to the Internet for users,'" said Danny Sullivan, editor of Search Engine Watch. "They seem to think they need to make sure everybody can get online, and running your own network certainly makes that a lot easier."

This week, Google quietly launched Google Secure Access, a beta version of a downloadable client application that allows users to establish a secure, encrypted network connection while using a Wi-Fi wireless network. The program can be downloaded at certain Google Wi-Fi locations in the San Francisco Bay Area, Google said, without stating exactly where those locations are.

The company also has been working with San Francisco company Feeva on Wi-Fi access since earlier this year, Feeva spokesman Keith Kamisugi confirmed Tuesday. He declined to elaborate, except to say that Feeva and Google offer a free Wi-Fi hot spot at the trendy Union Square shopping area in downtown San Francisco. People who connect to the network see a Google Search splash page, Kamisugi said.

"(Google seems) to think they need to make sure everybody can get online, and running your own network certainly makes that a lot easier." --Danny Sullivan, editor, Search Engine Watch

Google spokesman Nate Tyler told Reuters that it was running a limited test of a free wireless Internet service, called Google Wi-Fi, with hot spots in a pizza parlor and a gym located near the company's headquarters.

Google also recently purchased Android, a wireless software start-up, and was looking to hire a global infrastructure strategic negotiator to ink dark fiber contracts as part of a "global backbone network."

Offering Internet access gets more potential Google users online and gives the company another way to target consumers with ads, particularly location-based advertisements for wireless users.

Google, which tends to keep long-term plans under wraps, did not return an e-mail seeking comment for this story. (Google representatives have instituted a policy of not talking with CNET reporters until July 2006 in response to privacy issues raised by a previous story.)

Some people speculate the company will use the dark fiber to build a massive nationwide network that would rival those of some of the largest Internet backbone providers such as MCI and AT&T. As that theory goes, Google would use this network to shuttle traffic across the country between its data centers. Then it would use a wireless network to distribute the content locally to end users.

Voice, video
Voice over Internet communications is also a likely target, analysts said.

"If the traffic is flowing across the Internet, you have no idea how many routers the traffic has gone through, which can impact the quality of the call," said Michael Howard, an analyst at Infonetics Research. "But if the traffic travels on your own network, you can control the quality. That could be reason enough to build a network."

Video is another possibility. Google hosts people's downloaded video for free and indexes and searches it.

"It's pretty evident that they will have some play in video distribution. How that's going to come out is still a mystery," said Vamsi Sistla, director of broadband and digital home/media at ABI Research.

Like many other large companies with high bandwidth needs, Google could be building its own network simply to be saving money.

"I would imagine that Google must be paying someone a lot of money to keep its data centers running and in sync," Howard said. "So it makes perfect sense for them to build a network themselves to connect their data centers."

Gartner analyst Allen Weiner, who predicts Google will eventually develop a Google phone, said becoming an application delivery platform would be "part of (Google's) intellectual property DNA."

"If they built out a hosting platform for people to upload all kinds of content that could be searched by Google and monetized by Google, like video and takes money to do, and with the search capabilities as their strong suit it could be something they could do," Weiner said. "Google could say, 'We'll host it for you; you point to us.' That could be huge."

CNET's Marguerite Reardon and Martin LaMonica contributed to this report.
Copyright ©1995-2005 CNET Networks, Inc. All rights reserved.

September 22, 2005


Google's move to lease a huge space in Chelsea is part of the technology giant's plan to build its own fiber optic network and become a bigger player in the booming Internet telephone and wireless businesses.

The company is reportedly in talks to lease a whopping 270,000 square feet in the former Port Authority Commerce Building at 111 Eighth Ave. at W. 15th Street.

The massive building is one of New York's most important so-called telecom carrier hotels — home to thousands of Web servers and other critical technology infrastructure.

"111 Eighth Avenue is the premier telecom and data facility in the United States," said Neal McGraw, the chief financial officer of NYC Connect LLC, which operates a facility in the building that allows tenants to connect their networks efficiently and at a low cost.

A spokesman for Taconic Investments, the building's owner, would not comment on the Google report.

In recent months, Google has been actively shopping for miles of "dark fiber," the unused fiber optic cable that has laid dormant since the telecom bubble burst five years ago.

Thousands of miles of dark fiber are available throughout the U.S., but the high cost of making it operational has left much of it unused. Cash-rich Google is perfectly poised to begin snapping it up.

"They are building a network," said Hunter Newby, chief strategy officer with telecom specialist firm Telx. "None of us have ever seen any type of network buildup on this scale before."

In a tantalizing hint at its plans for the future, the company has posted a job opening for a "Strategic Negotiator, Global Infrastructure," who will be charged with "identification, selection, and negotiation of dark fiber contracts both in metropolitan areas and over long distances as part of development of a global backbone network."

"If Google owned the backbone, it could provide optimal data paths for its voice and data customers," said Rob Enderle of technology consulting firm The Enderle Group. "It would give Google a sustainable advantage."

111 Eighth Ave.'s concentration of interconnected networks would allow Google to offer its new voice-over-Internet service, Google Talk, more efficiently and at lower cost because it would be able to connect directly to the networks of many of the world's leading telecom firms that are also housed there.

A Google spokesperson said the company had no announcements to make about new facilities.

The building already houses server farms for dozens of leading phone, cable and Internet companies, such as BellSouth, MCI, Qwest, and Sprint.

Allen Weiner, research director with tech consulting firm Gartner, said a fiber optic network would allow Google to create Wi-Fi networks that would allow users to make calls using Google Talk from their laptops and other mobile devices.

25 September 2005

Open Mike

I have had many offline conversations as to why it has been so difficult for this blog to grow its readership. One reader has just offered this specific recommendation...

"The [other] potential limiting factor is the mix of eclectic topics with market analysis. The eclectic topics deserve to be appreciated, but by definition can only be appreciated by some. The average Joe however is busy with the daily grind, and when he gets home, he needs market information and fast. In other words, your site reflects your interests and passions (nothing wrong with that), but if you want the average investor to visit your site, it should reflect their interests."

Naturally, I disagree, but am willing to be proved wrong. I disbelieve in the "parcellated mind", especially when it comes to consistently successful investing; I argue a
holistic view of the gestalt helps determine a beneficial investment opportunity. If we each fail to factor in everything, including the humanities, then our perceptions, determinations, and conclusions (and perception of potential investment opportunities), are suspect. Yes, we could still invest, but never consistently successfully. Moreover, there already are plenty of websites of the precise type this reader suggests; who needs another?

This post, then, is an open mike to air your thoughts re this topic. Who knows -- change might come about from your comments! I look forward to reading them all.

David has us all in stitches

One objective for this blog is one new post each day, especially during market days. During the weekends, I venture forth with items either literary or arts-related. But alas I have been missing in action the past few days simply because I cannot type...

What you view (with bandage temporarily removed) is only one finger of my left hand that I managed to slice and dice; fortunately, I missed the tendons. Unfortunately, this finger is critical to my typing efforts! My right arm also is incapcitated by the tetanus and diptheria shot! (Whine, moan, whine!) So my posts might be infrequent for the next several days to week.

But I definitely wanted to mention this site. Stunning photographs in a pleasurably easy site to navigate. Check 'em out!

O by Damien Rice

This CD is simply phenomanal. I have been enjoying it for the past ~18 months, and I never tire of it. The following is the review from

"Magnificently packaged in a CD-sized hardcover book filled with personal artwork, lyrics, and photos, Damien Rice's debut full-length, O, is nothing less than a work of genius, a perfect cross between Ryan Adams and David Gray and a true contender for one of the best albums of 2003. This Irish singer/songwriter works with impassioned folk songs that move from stripped-down to grandly orchestrated in a heartbeat. The production is reminiscent of Songs of Leonard Cohen — simple guitars, vocals, and then those swelling strings, all of which sound like they were recorded right in the same room. Rice is master of what critic/ranter Richard Meltzer called "the unknown tongue" — basically the musical equivalent of the "punctum" in photos, it's that thing that grabs a hold of you, the detail that makes it happen. For example, on "Delicate" the strings lift the spare folk song to the heavens at just the moment that makes the song soar — Meltzer might call it the "folk tongue" or maybe even the "epic tongue." The magnificent, melancholy, optimistic, longing, almost magical "The Blower's Daughter" comes in immediately as the previous song, "Volcano," ends — same thing with the song that follows — which gives the album a broad, operatic quality. The gentle "Cannonball," the bright strumming and surreal feedback on "Amie," the distant piano and oceanic harmonies (not to mention drowning, backwards vocals) on the duet, Cold Water" — the entire record makes the empty highway less lonely, the sunshine a little warmer, and life a little more poetic. Then there's the actual opera singer doing backup vocal duties on "Eskimo" — a song of redemption that is Syd Barrett, is Skip Spence, is Grandaddy and is Mercury Rev and everything that implies. What a metaphor for Rice's entire hopelessly beautiful record — one long angelic hymn for an insane world with the intimacy of a friend playing guitar in your living room and the grandeur of Sigur Rós."

You will find in the sidebar a link to, if interested in purchasing for your listening enjoyment...

22 September 2005

Mobile Offshore Rig Fleet

This map is a good rendering of the rigs that stand in the way of Hurricane Rita and her wrath.

Steve Jobs sallies forth

Thursday September 22, 2005

The coolest player in town
Apple's chief executive Steve Jobs, the man behind the iPod phenomenon, gives an exclusive interview to Bobbie Johnson about his drive to make technology simple

In a parallel world, Steve Jobs could have been a poker player with a reputation as a cool hand. After three decades at the top table of technology, all the required skills are there: patience, self-belief, bravado - and, most importantly, the ability to ride a streak of luck.

"Some people thought we got really lucky with the iPod, and we did," says Jobs. But, he adds, real winners don't just enjoy the breaks, they exploit them. It is necessary to stay on top, especially when everybody's out to get you. As he puts it: "We have world-class competitors trying to kill us."

So far, the competition is not doing a great job. Apple's hand in the home computer market might be weak, but it holds all the cards in digital music. Thanks to phenomenal sales of the iPod over the past few years, the company is at an all-time high and its dominance of music downloading is almost total. More than 6m iPods were shipped in the past three months, underpinned by a pervasive marketing campaign and growing consumer awareness. No wonder, then, that Jobs is in confident mood.

Dressed in the regulation outfit of a Californian intellectual - black, black and more black - he is upbeat about the future of Apple, the company he founded almost 30 years ago in his parents' garage. He believes that central to the company's success is Apple's vision - his vision - of making technology simple.

"There's a very strong DNA within Apple, and that's about taking state-of-the-art technology and making it easy for people," he says. Jobs's targets are busy, modern consumers; "people who don't want to read manuals, people who live very busy lives".

Ultimate salesman
There are certainly a large number who buy into that concept. But while many are drawn in by the slick advertising and fashionable branding, those who stick around are often motivated by the man himself. On stage, and with an audience to play with, Jobs is the ultimate salesman. His speeches are famous for generating the "reality distortion field", a sense of devotion to the cause that most rival technology bosses would kill for. Some fans will go wild for each new product that Jobs delivers, and his enthusiasm and charisma pour out across the stage.

In person, though, he is quiet, determined and relatively inscrutable. It is as if the qualities that make him a great showman turn inside out when put under the magnifying glass; a bluff worthy of any hardened Las Vegas gambler.

Despite his value on stage, Jobs did not make a keynote speech at Apple's annual Paris expo earlier this week, and for one simple reason: there was nothing new to announce. The company had unveiled its autumn product, the iPod nano, two weeks before. The other big news, the iTunes-compatible ROKR phone from Motorola, is being re-aligned as little more than a test run. Jobs blames speculative media interest for imagining it was anything more than "dipping our toes in the water".

Apart from nano - which, as a replacement for the best-selling iPod mini, is a major move for the company - Apple's cupboard is fairly bare. It is a low point in the product cycle, with much of the behind-the-scenes work focusing on the Intel-based computers due next summer. But new iPods are on the way, and Jobs promises "a lot of new things in the pipeline".

This relative downtime is giving Jobs a chance to promote Apple itself, and the company's wider beliefs. It is an important time: while the long-standing computer business remains just as important as the newer focus on music - he wonders whether anyone would ask which of his children was more important to him - it is clear that Apple is changing.

Lifestyle brand
At the centre of it all, Apple is now a lifestyle brand, rather than a technology company. Each iPod comes inscribed with the words "designed in California", a seemingly throwaway statement that gives a fundamental insight into the company's outlook. The message is straightforward: we are innovators, we are cool, we are friendly. It's an extended new age mantra that betrays Apple's west coast roots and has proved crucial to its image - both good and bad - over the years.

Remaining friendly in the eyes of consumers is at the heart of Apple's motivations. Green issues, for example, are becoming a real concern. With so many units being shifted across the world, like many other computer firms, Apple has come under increasing scrutiny about its environmental policies. Jobs is clear that reducing the footprint of products is important, but it should, he feels, be put into context.

"One automobile is, I'm sure, greater in impact than 100,000 iPods," he says. "The one part of consumer electronics that you have to worry about is the battery. I'm glad we got rid of cathode ray tubes, because they were horrible, full of lead. Flat displays are much better. The batteries ... you have to watch. But you can bring your iPod into an Apple store and get it recycled, and we run a battery replacement scheme.

"Even our packaging reflects these concerns. It is dramatically smaller these days, and we have removed styrofoam and such things."

The image might be soft, but it is clear that nobody gets to be the chief executive of such a large company without a killer instinct. Part of the Jobs mystique is that he simply doesn't give up. He bounced back from a boardroom fight that saw him leave the firm in 1985, returning triumphantly in 1997.

He also bounced back from a financial and commercial precipice, launching a series of iconic products including the iMac and iPod. And he even bounced back from death, beating a rare form of pancreatic cancer last year. Ease of use might be in Apple's DNA, but there is grit and determination in there as well.

There is a cruelty, too, about the dismissive way in which the company treats its fresh lineup of competitors, or the way Jobs relates to those he disagrees with. Part of it is executive braggadocio, of course, but there are clearly subjects - and people - he doesn't like.

Questions about his feelings on hackers attempting to "improve" Apple's operating system, for example, are batted away with a wide-eyed stare. "You're asking me whether theft is a good idea?" he responds, incredulously. "If people want to change our software, then they should come to work at Apple ... We might choose to give it away, but it should be our choice to make."

Shrewd politician
It's clear that ownership is important to Jobs. He might not own Apple, but as the public face of the company he does lay claim to the firm's image, and understands the necessity of being seen as "the good guy". For instance, when it is suggested that record labels might look to increase their income by bumping up the price of iTunes downloads, he brings in the spectre of illegal downloading.

"Music companies make more money when they sell a song on iTunes than when they sell a CD," Jobs says. "If they want to raise prices, it's because they're greedy. If the price goes up, people turn back to piracy - and everybody loses."

This is how things work: with a swift shuffle, he asserts Apple's ownership of the music download market, and distances it from the messy decisions. It is clear, he says, that a price bump will be a terrible move made by a music industry only interested in short-term profits.

It is the kind of subtle statement that suggests Jobs would be a shrewd politician - something that has been suggested, and his links to the Democrat party in the US are good: last year he offered himself as an advisor to the campaign to elect John Kerry as president, while former vice president Al Gore is on Apple's board.

But even if Apple's stereotypical users - young, fashionable and metropolitan - are sympathetic to his personal views, he insists that his politics aren't important to the company's strategy. "We're not trying to sell belief - we're just who we are. Apple has values we care about; Apple cares about tolerance. We are not a political company, but a company with a set of values."

And over the years, Apple has had the perfect foil for those values, in the guise of the unfriendly giant Microsoft. It is something that has benefited the Californian firm, even if it would be loathe to admit it. As the perennial underdog in a round of high-stakes poker, it has learned how to play its cards with enough skill to survive. Now, entering into new markets, Apple has discovered that it's a much better player than it ever realised.

Not even Jobs would claim that this was winning a 30-year-long bet. But it is a gamble which is paying off, for now at least.

Highs and lows
1976 Apple Computer formed by Steve Jobs and Steve Wozniak
1984 Apple Macintosh launches, using a graphical interface that becomes standard on home computers
1985 Jobs forced out of Apple after a power struggle with John Sculley
1997 Re-installed as chief executive
1998 Apple releases the iMac
2001 iPod is launched - 20m sold in four years
2004 Jobs recovers from pancreatic cancer after surgery

Pause celebre

"Pause celebre looks delicious. I may have gotten here too late, as the "rest" of the article is only for FT subscribers. Alas"

I provided below the link, but if the article is unavailable this quickly...

Published: September 16 2005 17:48

Pause celebre
By Trevor Butterworth

"The sea spat like a thug into the back garden; fitful clouds unleashed volley after volley of rain; and all around the wind howled as if a ghostly cavalry charge had borne down upon Termon House, an 18th-century architectural curiosity perched above a narrow, stone-wracked beach. It was New Year's Eve on the turbulent coast of Donegal, and inside the kitchen of this lonely guesthouse, the gaggle of celebrants - refugees from the forced gaiety of Dublin and London - were girding themselves for literary battle. Sort of.

”You’re kidding,” said Ann Keatings, an applied linguist, as she absorbed the news I had brought from the US, where I have lived for the past 12 years: Americans see the semicolon as punctuation’s axis of evil. Or at least many of them do. “But I like semicolons,” she protested, “they allow a writer to go further.” Trevor McGuinness, a business manager, was equally incredulous. “Hazlitt,” he said, smacking the table indignantly, “look at Hazlitt!” Had midnight been closer and the bottle emptier, we might have taken him literally; but the point still floated within the grasp of sober minds: if so great a prose stylist as William Hazlitt had embraced the semicolon, then surely we could too?

Now, you may be thinking of a more pertinent question: why, of all the possible topics that might have stirred passions on New Year’s Eve, the semicolon? But why not? Punctuation is hot: Lynne Truss’s Eats, Shoots Leaves is to this decade what The Joy of Sex was to the 1970s - a guide for those of us fumbling over what should come naturally. And we fumblers are legion. In America, the book occupied a place on The New York Times top-10 bestseller list for 38 weeks, selling more than 1.2 million copies.

What accounts for this sudden surge in punctophilia? Perhaps the general loss of old-school learning - memorised historical dates, multiplication tables, the odd stanza or sonnet - has sent a frisson of intellectual status anxiety through the newly middle-aged middle classes. And what could be more unnerving than a slipshod grasp of punctuation?

Indeed, part of the semicolon’s mystique is the way that it wantonly gives itself to great writing without offering a clear rule for lesser writers to follow. This has perturbed pedants everywhere English is written, leading to the widespread conviction that the semicolon should, on principle, be avoided. In fact, one attempt to quash San Francisco’s gay marriage law last year was dismissed on the grounds that the plaintiff had used a semicolon instead of a conjunction. A conservative group had asked the court to order the city to “cease and desist issuing marriage licenses to and/or solemnising marriages of same-sex couples; to show cause before the court.” As the San Francisco Superior Court Judge James Warren explained, the word “or” should have been used instead of the semicolon. “I am not trying to be petty here,” he told reporters, “but it is a big deal... That semicolon is a big deal.”

Big deal or not, there is really only one use of the semicolon that is “more or less mandated”, says Ben Yagoda, professor of English at the University of Delaware and author of About Town, a monumental account of The New Yorker magazine (whose history is marked by fractious debates over the placement of commas). And that is to separate series elements containing commas (for example, “The cities represented were Albany, New York; Wilmington, Delaware; and Selma, Alabama). The other principal uses, says Yagoda, are discretionary: “That is I might, with total grammatical correctness and without changing my meaning in the slightest, choose any one of the following: 1. ‘The book under review is utter hogwash; and that is why it is worth examining.’ 2. ‘The book under review is utter hogwash, and that is why it is worth examining.’ 3. ‘The book under review is utter hogwash; that is why it is worth examining.’ 4. ‘The book under review is utter hogwash. That is why it is worth examining.’” Deciding which of the four to choose is strictly a matter of sound and rhythm, says Yagoda - that is to say, personal style. “Writers who like (consciously or unconsciously) to stop and pause, and/or who are under the influence of Hemingway, choose 4. Those who like balanced rhythms might choose 3. Those aiming for a ‘transparent’ style might choose 2. And those who are a little bit enamoured with the sound of their own voice might choose 1.”

This sounds all very liberal, doesn’t it? But writing is a peevish vocation, and when it comes to “style”, discretion is the mother of ink-stained feuds and rabid factionalism. The semicolon doesn’t just divide sentences into two separate but related clauses; it divides prose writers into two mutually antagonistic camps.

To the semicolonic, the case for is as compelling as a cocktail on a first date: you want to be relaxed, convivial, elegant - and neither a hectoring preacher nor a mumbling maniac. You want to woo with words. As the brothers Fowler wrote in their classic guide, The King’s English, “A style that groups several complete sentences together by the use of semicolons, because they are more closely connected in thought, is far more restful and easy - for the reader, that is - than the style that leaves him to do the grouping for himself; and yet it is free of the formality of the period... “ Or, as the great Cambridge literary critic F.L. Lucas advised in his masterful (and sadly out-of-print) Style, “ ...a writer should be able to vary his length; like a bowler.”

Take, as an example, the opening lines to “Et in Arcadia Ego” in Evelyn Waugh’s Brideshead Revisited:

”’I have been here before,’ I said; I had been there before; first with Sebastian more than twenty years ago on a cloudless day in June, when the ditches were white with fool’s parsley and meadowsweet and the air heavy with all the scents of summer; it was a day of peculiar splendour such as our climate affords once or twice a year, when leaf and flower and bird and sun-lit stone and shadow seem all to proclaim the glory of God; and though I had been there so often, in so many moods, it was to that first visit that my heart returned on this, my latest.”

Strike out those semicolons, administer an unyielding regimen of commas and fullstops, and the scene is more manic than wistful: instead of reverie, poor Charles Ryder has a case of the jitters.

Now, one may dispute the merits of Brideshead Revisited until the last classical facade crumbles and falls, but it would be capricious to deny Waugh’s prose its allure. And this is the point, whether by sensuous cadence slow or karmically balanced meter, semicolons are weapons of mass seduction. Of course, they can be deployed meretriciously, but eye the well-thumbed passages of great British writing anew and you’ll see them lolling around like mischievous putti, nudging us into nuance, winking ironically, taking us further - further than we might have ever thought we wanted to go.

American writers, however, are not so easily seduced. “Let me be plain: the semicolon is ugly, ugly as a tick on a dog’s belly, I pinch them out of my prose,” says the American postmodern writer Donald Barthelme in his essay Not-Knowing.

Ditto for Bill Walsh, a top copy-editor at The Washington Post with a sardonic take on matters of style: “The semicolon is an ugly bastard, and I try to avoid it,” he writes in Lapsing into a Comma: A Curmudgeon’s Guide to the Many Things That Can Go Wrong in Print - and How to Avoid Them. And in the August issue of Vanity Fair, readers are warned not to get the punctuation-shy, tough-guy novelist Cormac McCarthy “started on the ‘idiocy’ of semicolons”.

Though I had long noticed a curious lack of semicolons in American print, with the exception of publications such as The New Yorker, and writers such as Tom Wolfe (who seems to nurture every symbol on the keyboard as one would one’s children), it wasn’t until the start of the war on terror that I realised that the absence was deliberate.

”They should be turned into periods,” explained Fred Barnes one day, after I had appeared on his radio show to discuss media coverage of the war in Afghanistan. He explained that this made for shorter sentences and that brevity was the soul of clarity. It seemed to make sense that Barnes, who as the editor of The Weekly Standard is one of America’s most influential conservative writers, should value muscular, declarative prose; politics may require the art of compromise, but political writing should be adamantine in conviction. No orotund stateliness, no “on the one hand but on the other” vacillation, no - as President George W. Bush infamously decried - nuance. And sure enough, Barnes’ prose has the pummelling ferocity of a Maxim gun.

But it was rather surprising to discover that he had joined the coalition of the unwilling to use the semicolon under the tutelage of one of America’s most influential liberal journalists. “That was Michael Kinsley’s rule when I worked at The New Republic,” said Barnes, “and you know Michael’s very smart and has thought very deeply about these things.”

Kinsley is one of the most gifted editors and writers of his generation in the US, having edited The New Republic and Harper’s and launched the online magazine Slate among other accomplishments. Yet Kinsley had what one might call an Oxonian conversion on his way to the stentorian heights of American journalism: he was seduced by the wit and irony of British political writing while on a Rhodes scholarship in the 1970s. Hadn’t he noticed the semicolons?

”I use semicolons and I never really enforced a hard-and-fast rule,” Kinsley responded recently by e-mail from the West Coast, where he has been running The Los Angeles Times’ opinion pages for the past year. “But if abuse is going to be common,” he continued, “it’s simpler and safer to have a flat-out rule. It’s like drug regulation. Drugs are banned sometimes because a minority of users will have negative side effects, or because taking them correctly is complicated, although many people could get it right and would find them helpful. Actually, I’m opposed to that kind of thinking re drugs, but I am OK with it regarding punctuation. Punctuation can’t save your life.”

So how then does the semicolon endanger writing? “The most common abuse of the semicolon, at least in journalism,” explains Kinsley, “is to imply a relationship between two statements without having to make clear what that relationship is. I suppose there are worse crimes in the world. (I don’t know if Osama bin Laden uses semicolons or not.) But Fred did have it right.”

”It’s true that American writers tend to scorn and spurn the semicolon,” says James Wolcott, Vanity Fair’s artfully acerbic critic. “But those with more Anglophile tastes in literature and journalism, such as Gore Vidal or the editors of The New Yorker under William Shawn, sprinkled it liberally. It may be a fear of being thought pretentious, even poncy. The semicolon adds a note of formality, and informality has been all the rage for decades. ‘Real’ writing is butch and cinematic, so emphatic and declarative that it has no need of these rest stops or hinges between phrases.”

And yet at the same time it’s hard to find anyone who doesn’t admire Gore Vidal’s prose, or crave to work at The New Yorker. Mention Anthony Lane, the magazine’s film critic, at any gathering of younger American writers and there’s a collective swoon, as if Elvis’s hips had suddenly taken on textual form. When, at one such gathering, I mentioned that Lane was something of a semicolonist, one journalist said her editor excised every single semicolon she attempted to smuggle into her prose.

Clearly there had to be something deeply cultural to this aversion. So I spoke to the scourge of Lynne Truss, Louis Menand, a Pulitzer-winning critic at The New Yorker who took a blue pencil to the errors in Truss’s book in a manner suggesting Tony Soprano had taken up copy-editing. Menand, who also teaches English at Harvard, has no problem with semicolons, but acknowledges that this is not the case with American journalism in general. “There’s an animus against the semicolon because it adds nuance,” he says. “It makes the reader think that the relationship between two independent clauses is more complex.”

The semicolon “signals that you’re not expressing a singular thought”, explains the prolific cultural critic, Chris Lehmann. “It signals that there’s tension, that there is some contradictory evidence - and you [have to] sort of trust readers to be able to deal with that, which most editors don’t and many writers don’t.” Menand locates this fear of complexity in the idea that language should do no more than hold up a mirror to the world. “If you subscribe to linguistic transparency, there’s a bias in favour of simplicity,” he says. And the thing is, millions of Americans do subscribe to linguistic transparency having studied The Elements of Style, by William Strunk, a professor of English at Cornell, and The New Yorker writer E.B. White. As Yagoda notes in The Sound on the Page, Strunk and White’s “implicit and sometimes explicit goal is a transparent prose, where the writing exists solely to serve the meaning, and no trace of the author - no mannerisms, no voice, no individual style - should remain.”

Lehmann connects this impulse to realism, “the most stolid literary innovation that Americans can claim in modern fiction, which is all about the faithful representation of reality without ambivalence, self-doubt, without writerly flourishes really of any kind”.

”It’s more a distrust of ornament,” says Thomas Frank, author of What’s the Matter with Kansas? - How Conservatives Won the Heart of America. “[The Victorian] period is so discredited and the semicolon is an automatic marker of a disgraced genteel style.”

It may seem bizarre to read so much into a stop on the page, but the semicolon is a pause for ambiguity, amusement, complexity, doubt, and nuance. If writing lacks these “genteel” qualities, can we be all that surprised if it is either as dull as a computer manual, or as demagogic as a soapbox on Hyde Park Corner? Perhaps it is not a surprise that stylish writing now has the whiff of radicalism - or, more aptly, that radical writing, in a stunning rebuff to the theory-bearing academic left, is now self-consciously stylish. Thomas Frank’s book has sold more than 500,000 copies in hardback - an astonishing feat for a progressive political screed that was mocked in the dourly mainstream New York Times. For his muse, Frank turned to the sumptuous prose of Thomas Carlyle’s The French Revolution.

”If I were linguistic emperor,” says Michael Tomasky, who recently took over as editor of the unabashedly liberal The American Prospect, “not only would semicolons be mandatory, but we’d all be writing like Carlyle: massive 130-word sentences that were mad concatenations of em dashes, colons, semicolons, parentheticals, asides; reading one of those Carlyle sentences can sweep me along in its mighty wake and make me feel as if I’m on some sort of drug. What writing today does that? Some, maybe even a lot, in the realm of literature; but not much in non-fiction, alas.”

Style, as F.L. Lucas observed through pages larded with semicolons, “is a means by which a human being gains contact with others; it is personality clothed in words, character embodied in speech.” And surely there is something brutish in being assaulted by wave after wave of fact through prose that has the unyielding rhythm and cadence of a machine gun. That, in the end, is what rattled everyone in Termon House on New Year’s Eve: the storm rolling in from the west was figurative; the hyperpower at the gate was full of passionate intensity, and it did not do nuance.

Trevor Butterworth is an Irish writer based in Washington DC.

21 September 2005

Earth updates...

Google regularly updates Google Earth. The most recent update is simply phenomenal. According to Google, it takes you...

"Across Africa, you will see the familiar yellow National Geographic logo. Zoom in to see the title of each feature article or photograph. Click the icon and a pop-up balloon shows a photo and description along with links to the content. Follow those links to read the entire story right where it happened. Not only will you learn about Jane Goodall's Fifi, you'll see her home. Joining the stories and images are layers for National Geographic Sights & Sounds multimedia resources, a live WildCam in Botswana, and a collection of Mike Fay's Megaflyover images.

"The Megaflyover images are stunning. Mike spent more than a year taking 92,000 high resolution photographs of the continent. That project is described in Tracing the Human Footprint, an article in the September 2005 National Geographic. He selected 500 of his favorite scenes of people, animals, geological formations, and signs of human presence and annotated them in Google Earth. Look for the red airplane icons as you fly over Africa. Each of these marks a spot where a high resolution image awaits your own personal voyage."

It helps to update Google Earth to v.0616. Get it here.

Dorsey, Wright talks up Google

"Were you aware that Google/GOOG just saw its weekly momentum turn back to positive after having been negative for twelve (12) weeks? This ever-popular stock is a member of the still favored Internet sector. To boot, the INET sector has the best field position, with respect to its sector bullish percent, of all favored groups. For those more aggressive in nature, this could well present a trading opportunity."

"Google/GOOG ($308.510) is a member of the favored Internet sector. This is a sector that not only is favored, but also has still very attractive field position with respect to its sector bullish percent chart. GOOG itself is a 5 for 5'er, thereby being in an overall uptrend with excellent relative strength (RS), both near term and longer term. The stock had recently pulled back to 298, but then (on its 2-point chart) has reversed up to make a higher bottom. It will test old highs at 314-316, but above that level there is no resistance. While the top of the trading band is 324, the longer term price objective is 396. GOOG has just seen its weekly momentum turn back to positive after having been negative for 12 weeks. This suggests the stock is ready to resume its strong uptrend after working back and forth for a few months. For those more aggressive in nature who are looking for tech/internet exposure, you can consider trading GOOG here (306-310 range). We will use 296 as the initial stop loss point as that would break a double bottom bottom on the 2 point chart."

You likely now breathe a heavy sigh of relief, DW, as you place your clients (and yourself) finally on the right side of this trade -- even though your "longer term price objective of $396" is deficient of GOOG's final high by a wide margin. Of course, you buy the shares for a trade (as you note) rather than as an investment. Nonetheless, welcome aboard the express train -- there are plenty of seats available!

20 September 2005

Technical analysis: tool or crutch?

It seems funny, in a sad sort of way, the Bedouin-like nature of most stock market participants; that is, they wander about (mostly) alone in the desert of investing.

I have stated repeatedly that leaders lead, irrespective of what transpires in the market-at-large. That is, strong stocks tend to beget a general market rally rather than weak markets beget broken patterns in strong stocks; in the latter, the best patterns merely base, not decline. For example, the negative setup for the market should not have constrained the bullish setup and pattern for Apple/AAPL from fulfilling itself. And the passage of time shows it has not. So it surprises me not at all to read abecedarian-type remarks that AAPL shares were "surprisingly strong [yesterday] in the face of a weak market." Oh, brother.

I have made seemingly disparaging comments re technical analysis. In doing so, I have confused some readers.
("You seem to present conflicting views with regard to fundamental analysis vs. technical analysis. While acknowledging the need for FA, you seem to finally gravitate back to a soley TA perspective. Maybe that's not correct...")
I believe both fundamental and technical analysis to be at minimum equally important. However, I consider fundamental analysis be a snapshot whereas technical analysis is dynamic. I prefer to emphasize that dynamic 'motion picture' rather than the snapshot.

Moreover, I rail against the practitioners of technical analysis, not the art itself. There are too few who 'read' the charts able to 'predict' future bars; I could count those few on the fingers of both hands. (And I am not Inigo Montoya!) For most investors, technical analysis proves to be a crutch rather than a tool, as it provides a reason to avoid making investments or even selling too early. I always suggest knowing your limitations ("Know thyself!"); once complete, you can work around these limitations.

Most investors who believe they understand technical analysis only fool themselves. They might know the rules of the various studies (Elliot Wave, Fibonacci retracments, stochastics, moving averages, etc) but lack the ability to integrate that understanding into a coherent whole that says, "This is the low; buy now!" (Or vice versa.) So instead they bob about like a buoy on storm-tossed seas; many times under water.

Their understanding is limited to perceiving only what has occurred, not what will occur; they tilt at the windmill of circumscribing past action (as if the ability to draw a trendline over past action is somehow meaningful) rather than invest today to make money tomorrow. Perhaps, in a personally truthful moment of self-analysis, they might recognize in the charts below some similarity to their investing character. Does either chart resonate for you...?

UPDATED: [click to enlarge]

And yet, I am a very visual person, so I rely very much on chart action, and my perception of setups and patterns. But then I have done the work necessary to perceiving the big picture. You might recall, among others, my in-depth remarks re Apple/AAPL (nailing the low, and coaxing you into the postion for the past 4 months) and the homebuilders (nailing the high, and then screaming for you to sell before the carnage set in).

This blog is my attempt to show that each analysis -- technical, fundamental, valuation, and sentiment -- is critical. And that perceiving opportunity when viewing the charts is not only possible, but probable. Never forget that your greatest reward (easiest money) is made in the best opportunities wherein the preponderance of the evidence in all the analytical disciplines agree.

19 September 2005

Two items literary

I love articles such as this one; if you ever happen across others, please alert me!
And could this online dictionary be my new favorite? Its ease-of-use is based on Ajax, the rapidly becoming standard language for application services on the Internet.

16 September 2005

Your 3 minutes are up

"Your comment exceeded 3000 characters so your message may be truncated."


For a secondary offering, the 'clean up' bid represents the final lot of shares to sell. Seeking a buyer, the investment bank (or company, if a shelf offering) will offer them at a concession, or price discount to the other offering shares. This is not done as often as it once was.


The trading activity today (yesterday, by the time this note posts) was incredibly bullish for Google/GOOG. What else to make of it when 14.2 million shares are offered at a discount ($295 vs. a $303 close on Wednesday) -- and then trades only ~150% of average daily volume. Where were the 'flippers'? Arguably, the total shares traded should (could) have been 2x, 3x, 10x average daily volume. (Especially when one aggregates the potential ripe for market-makers to double- and triple-count the trades.) It seems to me (at least) that even with the quick short term profit in hand, investors see higher prices ahead and will not let go.

Moreover, I cannot stress how brilliantly insightful Allan's comment is. Whereas most investors see only risk in today's price (whether for GOOG or another stock). Allan sees opportunity. The difference is one of perspective: either
A) We stand on the plateau of today's price and look back to see the readily perceptible canyon of lower prices that the stock traversed to get here, or
B) We stand at this same plateau, turn to the obverse direction and gaze into the unknown and uncertain future of a possibly higher share price.

Not to belabor this, but the choice is to look to the past and see risk or look to the future and see reward (opportunity). I always choose opportunity. Embrace uncertainty.


Interesting article, although silly. It surprises me that the WSJ betrays so little understanding of the IPO process itself. Moreover, if GOOG shares instead had declined, the author would find and interview a different set of investors ready to moan their sour grapes.


Once again, you share interesting insights. Thank you. However... (Admit it, you knew there would be a "however"! ;-)

I know a fellow in Vegas who does programming (Python, etc) and web page building, etc; iow, a geek. The first time we met, I asked what brought him to Vegas. He said something like, "Well, I saw this explosion occurring in wireless connections. I lived in LA at the time and perceived that market to be tapped out already. I looked around, and felt Vegas to be virgin territory. So I moved both my business plan and me here." I asked about business -- was it good? His answer, paraphrased, "No, it has been a slog. It has taken a long time to achieve 'critical mass', and even now business remains slow. I should have remained in LA, where business continues to explode..."

I had to ask, "When did you move here?" His answer was a startling, "1995".

My point is when you perceive life from its leading edge, know that the vast populace is way behind. Many people do not have a computer, many who do have a computer do not necessarily know how to use it fully or correctly, many people still suffer with dial-up connections, many people have never heard of Google let alone how to use it, etc. Just because we know of something, does not mean everyone knows the same thing.

The Internet will prove a HUGE medium for everyone that wants to be connected. There will be plenty of room for everyone. Yes, Google will be beset by challenges, one after another; it remains for now, however, the crème de la crème. As such, its shares will decline begrudgingly and rise with alacrity. I admit its day of stock market judgment is out there; the true question is when. I argue it is farther out than you fear and I hope. (Two emotions perfect for investing!)

You remind me of two friends. One is an executive at eBay and the other at YHOO. Both were business majors (one at Stanford, the other at UCLA) and have their MBAs, etc. Repeatedly, they tell me they never
, not once, learned at school the difference between a company and its stock. The real world proved a revelation for them. Their schooling is long-past for them... well, except for Wall St University, which is open 5 days/week, 6 1/2 hours each day. Stocks are not companies; it is rare when the fortunes of each align.

Really, this is an unfair comparison; you obviously understand the equity markets. Moreover, I do not know you, although I look forward to the opportunity to meet up
. Until then, I am happy you are here and offering your insights. By the way, what do you mean you added to your Google/GOOG position? "But, but, but (he stammers), you're a bear on Google!" :-)

14 September 2005

Google/GOOG begins secondary offering today

Bloomberg reports that Google/GOOG will price its secondary share offering after the markets close today. Watch for the amount of concession, if any. I know I would accept the clean-up bid, and trade the expected pop from the offering price. There is a possibility for an interesting swing in price (the range of the high and low) for today and tomorrow; the narrower the range -- especially if the shares trade down -- the more bullish that action is. The sooner the shares trade up to yesterday's high trade ($315.53) and the all time high ($317.80), the more bullish. And, of course, volume should expand tomorrow.

Assuming the offering is priced today for release tomorrow, then the more interesting action will occur tomorrow. I will watch individual trades -- yes, tick by tick -- looking for signs of additional accumulation or distribution. (What else is a sale of shares from the company, but distribution from the company and accumulation by the Street.)

Lots to see and learn today, tomorrow, and this week --, if interested to understand how stocks trade. Of course, all of this is of little value when measured against the big picture: an ever increasing share price into all time highs.

13 September 2005

"A medley of extemporanea"

I remember at one of your Shindigs (yessss, those were GREAT!) you explained the action behind the charts; e.g., what was actually happening, what kind of buying/selling was going on. You made the charts come to life. Would it be possible to go over that again? Also, how can you tell that the base requires more work before it completes itself?

Hi, Sheila,

Unfortunately, I do not recall my comments at that long-ago Shindig. Nonetheless, chart action, to me, is more than mere x and y coordinates on a Cartesian plane; it is a living, breathing thing. As such, I am often agog with wonder. Perhaps I was successful at communicating this sense of wonder and excitement. My remarks to follow will likely develop as a meandering mess, but it will be my best attempt at communicating some of what I feel, see, and do in the markets.

I believe investment ideas, as opposed to opportunities (the first is internal, the second external), follow an almost natural progression; its direction might invert for some but the path remains the same. All investors progress from using solely fundamental or technical analysis to using both, and then finally allowing the market to create the specific opportunities to buy and sell. The problem for most investors is the inability to perceive the melismatic and syllabic textures of the chart (although they believe they do!), and instead repeatedly sing the same one note in the same key and tone. An organic, holistic approach includes both fundamental and technical analysis, as well as an appreciation of the aforementioned melismatic and syllabic textures. Do not forget that Cartesian space includes a z coordinate.

The sad truth is that most investors ‘practice’ technical analysis, but alas their perceptions are suspect, bad. I could count on the fingers of both hands the number of technical analysts who I respect because they understand chart action and can use it to know the shape of future bars. Most people who trade stocks think they offer some level of differential advantage over the returns generated by the market itself. Really, they trade intra-day volatility gussied up as analysis. Yawn.

My email inbox is inundated by a diluvian flood of requests to parse this chart please, that pattern, and "how about that stock over there…?” I do not mean to be rude, but if anyone knows the future, it is not me! My business is not to offer predictions... with the exception of those stocks and markets I already monitor. I track these because they represent low risk and compelling opportunity, and I know what to expect from a given and building setup or pattern; call it a prediction, if you prefer.

Not to demean fundamental analysis, which is important, but technical analysis is critical; it is better to be in the wrong stock at the right time than the right stock at the wrong time. My holy four: price, volume, pattern, and trend; the continuum, as I term it. To me, patterns build symmetrically and repetitively. If an investor learns these patterns, then he or she also learns what to expect. What compelled me, for example, to warn of the top in Apple/AAPL, admonish to buy on the turn up from the low trade 4 months ago, and repeatedly emphasize it as a “buy”, appropriate for the portfolios of all investors, irrespective of time frame. Yet readers ignored me. Another opportunity — a singular opportunity™— is Google/GOOG. I received today another emailed question re Google/GOOG

What do you think? Is Google still basing…or is it hard to know at this point? I wanted to buy more but was waiting for it to go down again. Will I never learn?

One wondrous day does not equal a violation of the base, so yes, Google/GOOG remains in its base. At least until it trades above $318. But measure the short term oscillations against its long term potential. Unfortunately, the letter writer waits “for it to go down again.” Not to recount war stories, which I detest, but back in June amid all the hoopla I warned of the decline (which occurred) into a new intermediate term base, I indicated that base would be shallow (which it has been), and finally suggested the base would be brief, either three or six months in duration (so far, ~2 months). So why wait when Google/GOOG had declined to the top end of my projected range ($275-250), and subsequently reversed up? (In fact, I took care to isolate an upside reversal day that occurred on 18 August. This reversal is especially critical, if you recall the notion I have shared re the inability for stocks to achieve objectives…) Moreover, why wait for it to decline again? Arguably, you worry that the stock has risen from $275 to $310, and you missed an opportunity; but how high is its final high? If you believe that final high to be close to $300, then yes, perhaps you missed another opportunity. If, however, you believe that final high to be remote, then this bullish action is a shot over the bow, and the bells are ringing… The higher your objective, the more a 10% oscillation resembles nothing other than noise. Recall the Cartesian coordinates: price moves to an objective at some point in time. However, sometimes time moves to meet price. So remain flexible.

There are a million ways to skin the market cat. I, therefore, intend none of my comments that follow to indicate there is only one correct way. To each his own. Please do not interpret the comments as critical of another investor's methodology; they are only what work for me. Nonetheless, I

Do not traffic in options, nor do I trade futures. I monitor both closely, however, as my analysis of the futures and options markets is one building block of my market strategy. Albeit, not one that is foundational.
Do not buy penny stocks. The misperception that occurs here revolves tightly on the assumed levels of assumed risk (yes, I intend the dual usage of “assumed”) and poor money management.
Do not sell short.
Do not impose arbitrary rules on a living thing. The stories I could share!

An investment for me can be measured in weeks and months; rarely does the holding period exceed six months. There are exceptions; the current exception is Google/GOOG, which I foresaw as a holding for many years. (So far, only one year has elapsed.) Therefore, I embrace the periods of dead money my Google/GOOG holding will sometimes represent. As Google/GOOG trades sideways in this base (and bases yet to occur), I continue to hold the position, while accumulating other stocks that emerge from their intermediate term base to provide the necessary thrust to maintain my portfolio's value in a constant upward trajectory. That is, Google/GOOG is one booster rocket I will not eject.

To provide an update, I will reveal alphabetically my current holdings: Altria/MO, Apple/AAPL, Cameco/CCJ, Coca-Cola/KO, Google/GOOG, Option Care/OPTN, Qualcomm/QCOM, Research in Motion/RIMM, and Whole Foods Markets/WFMI. I gaze fondly upon the following opportunities, awaiting the near completion of their bases and my imminent purchases: Dress Barn/DBRN, eBay/EBAY, Coach/COH, Starbucks/SBUX, and Yahoo/YHOO. (Thank you, ‘AP’!) Each of these opportunities provides a look at a different type of pattern with different rules; to perceive them as all of a piece means you continue to sing the same one note... The fact is, I purchase during the creation of an intermediate term base, and then sell at the excessive moments of the intermediate term uptrend. Anyone can achieve this; the availability of time to commit to the task changes only the periodicity in which you find your opportunities. The set-up and pattern remain the same.

Each investor can caterwaul to his or her heart’s content with predictions re market direction, or fret over this or that, and devote the time to learn… the wrong stuff. The right stuff, arguably, is to go about the business of creating and accumulating wealth; the market merely facilitates this endeavor. Leave behind with the hatcheck girl your pre-dispositions, pre-conceptions, surety, and ego. Let’s together go and make some money.

Any questions? (I know I did a piss-poor job of explaining this topic, so there must be many, many questions...!)

09 September 2005

Commodity prices move broadly higher

Scott Grannis, Economist at Western Asset Management, pips up re commodity prices...

"This week the Journal of Commerce index of commodity prices reached a new, all-time high. And it's not just because energy prices are sky-high. All of its four sub-indices have moved substantially higher in recent weeks. The "miscellaneous" index (hides, rubber, tallow, plywood, red oak) has moved up 16% since the end of July (so this is not just a Katrina phenomenon either). Industrial metals are up 12% and the petroleum index is up 19% in the same period. Agricultural commodities, particularly the grains, look to be the softest--most grains are down over the past month or so.

"The commodity story is actually a two-sided tale. Most of the increase in commodity prices that we observe here in the U.S. since they bottomed in November 2001 is due to the weakness of the dollar, and only part of the rise in commodity prices is therefore due to a fundamental supply-demand imbalance (i.e., strong growth).

"The chart (above) illustrates this story. Commodity prices are up the most in yen and dollar terms, mainly because those are the only two currencies with central banks that have been actively pursuing accommodative policy in recent years. Commodity prices are only up modestly in Euro and Australian dollar terms. The Reserve Bank of Australia has been for the most part pursuing restrictive policy in recent years, culminating in a strong currency, 5% short-term rates, a flat yield curve, and a weakening property market. The AUD has been stable against gold throughout this same period that commodities have been rallying. That further underscores how commodities are sending an inflationary signal in the U.S.

"The most recent surge in commodity prices began in early August, and is reflected in all currencies. This suggests that global demand for commodities is picking up, with the further implication that the global economy is reasonably healthy."

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