"Papa O’Wily"

For Bernie Madoff & Co. (to the tune of “Baba O’Riley”):

Out here in the fields
I beguile for my meals
I get my jack without misgiving
I won’t even fight
To prove I’m light
I won’t plead to be forgiven

Don’t cry
Don’t raise your eye
It’s only hedge fund wasteland

Booty, take my hand
Travel south crossland
Put out the fire
Don’t look past my shoulder
The exodus is here
The desperate ones are near
Let’s get outta here
Before it gets much colder

Hedge fund wasteland
Its only hedge fund wasteland
Hedge fund wasteland
Oh, oh
Hedge fund wasteland
They’re all wasted!

Baba ORiley – The Who

RIAA Will Stop Suing Audiophiles

The RIAA has finally come around to the idea that bullying it’s biggest fans is probably not good for business. Wired reports:

After suing over 35,000 people since 2003, the RIAA has reached agreements with undisclosed ISPs to throttle or shutter subscribers’ internet connections if they ignore warnings to stop sharing music. The process would replace a “subpoena, settle or sue” process that has been expensive for the RIAA, since it requires the organization to go through the country’s legal system in order to pressure those it suspects of sharing music without permission…

Music fans may feel some relief that sharing music will no longer put them at risk of a lawsuit, assuming their ISP is one of those that has agreed to the plan. However, the biggest beneficiary of the new deal is the RIAA itself, which has seen its investigative techniques questioned and suffered key setbacks in court while paying extensive attorneys’ fees to pursue cases through the normal legal channels…

Yet despite all of this time and money being spent suing file sharers, the RIAA has never successfully sued a single alleged file sharer whose the case went to trial.

Considering the fact that 95% of kids “pirate” music and the RIAA hasn’t been able to bring one successful suit against them, I’d say this is a small, first step in sort of the right direction for the music industry. It still has a long way to go if it intends to succeed in the modern world.

Source:
RIAA Plans to Stop Suing Music Fans
Eliot Van Buskirk
Wired.com
December 19, 2008

The Sincerest Form of Flattery: Cheap Sunglasses

A while back, I added the new profile photo on the left. It’s a picture of me as a kid that I thought would be a nice testament to the title of the blog (“I was so much older then; I’m younger than that now” is the chorus to Dylan’s classic “My Back Pages”).

So I was very interested to discover the most popular video on YouTube currently is Adam Samberg’s latest ditty, “Jizz In My Pants”:

(Click for video)

Love the blue plastic aviators, Adam. Turns out the sincerest form of flattery is nothing more than a pair of cheap sunglasses:

Cheap Sunglasses (Remastered LP Version) – ZZ Top

Keynes Serenades SemGroup

“The market can say irrational longer than you can stay solvent.” -John Maynard Keynes

This quote is one of the most well-known in the world of finance. Alas, the guys at Amaranth and SemGroup must not get out much.

Amaranth Advisers was a hedge fund that blew up because they simply took too large a leveraged position in the Natural Gas market. It is very important to note that the fund didn’t blow up because it took the wrong side of a trade; no, it blew up because it was too levered and couldn’t stay solvent in the face of an increasingly irrational market.

Long story short: Natural Gas prices declined further than the fund managers imagined was possible and they got caught with their pants down. Liquidating their positions pushed the price down even further and ultimately created a multi-year bottom in the price of that particular commodity.

Fast forward to today. The oil market (Natty Gas’ close cousin) rips higher this year, so much so that it’s the talk of the nation. It makes a recent high just under $150 per barrel and then sells off in dramatic fashion.

Now we hear of another quasi-hedge fund blowing up – again not because they took the wrong side of the trade but because they simply could not afford to hang on to the position – they couldn’t “stay solvent.”

SemGroup, an “oil-marketing firm” (whatever that means), was short oil and over-leveraged, of course. When the price continued higher than they imagined possible the company was forced to cover some of their short positions, pushing the price even higher, essentially sealing their own fate. It’s the mirror image of Amaranth and just as its undoing marked the bottom of the Natural Gas market, SemGroup’s undoing may very well mark a multi-year top in the oil market.

He’s no fat lady but Keynes is singing both funds a serenade from the grave:

(Click for video)

A Noble Soul Passes

One of my personal heroes, Sir John Templeton, passed away today. He was well-known in the world of finance as a true investing pioneer.

My favorite Sir John quote is “the four most dangerous words in investing are ‘this time it’s different.’” A close second is “help people. When people are desperately trying to sell, help them and buy. When people are enthusiastically trying to buy, help them and sell.”

He famously recognized the peril of the internet bubble (and its supporters who fully embraced the “this time it’s different” mantra) and heavily profited from the decline of tech stocks after March 2000 by indiscriminately shorting them (“helping” them frantically buy by selling to them).

During the recent real estate boom he again warned of a bubble (while the mantra again surfaced) but was mainly written off as out of touch. Though he would be the last person to ever celebrate at any misfortune, his call was vindicated with the current real estate crash.

But he was probably best known around the world as a philanthropist.

In his book Agape Love, Templeton describes his life goal of “developing [a] divine ability” to love, best expounded in 1 Corinthians 13:4-7:

Love is patient; love is kind; love is not envious or boastful or arrogant or rude. It does not insist on its own way; it is not irritable or resentful; it does not rejoice in wrongdoing, but rejoices in the truth. It bears all things, believes all things, hopes all things, endures all things.

Well done, Sir John. May you rest in peace.

(Click for audio)

Chart of the Day: "Caught in the Crossfire"

This hourly chart of the S&P 500 shows that we are sitting right on the .382 retrace of the move higher since the March lows (support). We’ve also formed a rather clear head and shoulders reversal pattern (bearish). MACD, however, tells us it’s not likely to break down.

Bottom line is traders are currently channeling SRV:

Bye Bye, Bo

(Click through for video)

AP:

Bo Diddley, a founding father of rock ‘n’ roll whose distinctive “shave and a haircut, two bits” rhythm and innovative guitar effects inspired legions of other musicians, died Monday after months of ill health. He was 79.

Bye bye, Bo.

Source:
Rock pioneer Bo Diddley dies at age 79
Ron Word
Associated Press
June 2, 2008

Chart of the Day: Hammer Time!

The stock market lost 3.5% this week.

Break it down. Stop!… Hammer Time:

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My New Theme Song: "Pork and Beans"

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Weezer’s new video for “Pork and Beans” is essentially a YouTube retrospective. It makes for an even cooler video for a song that’s already pretty cool.

I’ve officially decided to make it my new theme song:

“They say I need some Rogaine To put in my hair…”

Stock Market: "Can’t You Hear Me Knockin’?"

The S&P 500 is knocking on the overhead resistance and giving it a good go here. I think it will eventually “break on through” but it may take a little “patience” in the short term.

(Click through for video)