Wednesday, December 30, 2015

‘Twas the Night After Christmas –or- Santa’s Last Stand-Up Routine v.2015

“Is this thing on?”  [tap tap schreeeee] “Hey Mr. Sound Man – fix this mic wouldya?  Don’t think I don’t know what you did last summer, ‘cause I do.  Well, well, well boys and girls!  I just flew in from Damascus and boy are my arms tired.  [cymbal crash]  How many times you think I’ve used that one? Ho-ho-ho!”  [scattered laughter]  “Whatever.”  [takes a flask out of his pocket]  “A little hair of the dog ya know?  It’s been another back-breaking season.”  [takes a long swig]  “So…what’ll it be tonight?  Sugarplums? Fairy dust? Rudolph?  The old routine gets kinda stale when you have such a limited range of topics.  Hmmm…how about a little game I call “Santa FAQ”?  You ask all the questions you’ve always wanted to ask and I answer ‘em – OK?  Keep in mind that just because I know everything [sing-song voice] (“…he knows when you are sleeping, he knows when you’re awake…”) doesn’t mean I can answer – the Patriot Act and the NSA, ya know.  You there, in the back.” 

“Uh, how do you get to the homes of all the little boys and girls in one night?”  “I have a sweetheart contract with FedEx and now Amazon wants to build me a drone fleet that will darken the sky – no one on earth will see the sun from Dec 20 til Christmas morning!  Next?”  “Do you really eat all the cookies and drink all the milk?”  “Heck no – I’m lactose and gluten intolerant!  Most of it goes in the sleigh to feed the elves at the North Pole.  Boy, do they get sick of cookies and milk.”  “What about the carrots for the reindeer?”  “They eat ‘em – how do you think they see in the dark?”  [takes out the flask and takes another long swig]  “How do the elves make all those toys?”  “Since I instituted the best management plan on earth, they’re afraid not to!  Who do you think Wal-Mart learned from?  You wanna make money in manufacturing or in retail?  Come to “Santa’s Management Workshop” (Ó Santa, Inc., all rights reserved).  Keep ‘em hungry, underpaid and scared of getting fired.  My record speaks for itself.”  “Hey Fatso!  How do you keep your suit clean after going down all those chimneys?”  [raises his hand to his mouth and speaks into a microphone hidden in his sleeve] “Security?”  [points to a man in the third row, stage right.  An elf runs out from backstage and zaps the guy with a cattle prod]  “Oouuuuugh!  Ok, sorry!”  [elf zaps him again before returning back stage]  “Ouuuch!”  [speaks into the hidden mic again]  “Note to self: add that man to the PNL*.” “How do you really know who’s been naughty and who’s been nice?”  “I used to have contracts with all the spy agencies: CIA, FBI, MI6, KGB, Mossad, NSA, but now I just use Facebook - they’re the best – and - “It’s free and always will be”.  Ho-ho-ho: boys and girls, if there’s no charge for the product then YOU are the product.  By the way, 9/11 really helped in that regard – I was able to put over half the world on the PNL*!”
“What about the members of the Miller Family?”  “Whoa.”  [takes out the flask, drains it]  “Let’s see, hmmm…Sean is the top salesman in Oregon for Georgetown Brewing - you can guess what he wished for; Kelly migrated from Italy to France to London trying to gain a ladder hold in the fashion industry, a look-see period in San Francisco is the next rung so you know what she wished for; Andera is happily married to Ray in Connecticut for nearly 12 years now, and was recently promoted at her work to more responsibility with higher pay and more hours – her wish came true; Diane keeps plugging away as an RN with “retirement” on her wish list; and Kim works as a Certified Financial Planner ™ trying to figure out which way is up in the capital markets – heh, heh – you KNOW what he asked for.”  “Yeah, yeah, but have they been Naughty or Nice?”  “Uh, that information is Classified and requires a Top Secret clearance.”  “What about President Obama?”  “Ho, ho, ho – are you kidding?  EVERYone knows which list he’s on – just ask Donald Trump.”  “Uh, who really shot Bin Laden?”  [frowns] “I told you there were some questions I can’t answer.”  [speaks into the hidden mic]  “Security?  You know what to do.”  [elf runs out from backstage and zaps the guy with a Taser.  3 more elves appear and drag the guy out, still twitching].  “Boys and girls, it’s been a pleasure.  I’ll be back next year - same day, same time.  Until then – Merry Christmas!  I’m outta here.”

*PNL = Permanent Naughty List

© Kim Miller 2015, all rights reserved

Tuesday, October 13, 2015

Q3 Commentary

Fast N’ Loose

I love the classic car shows on TV.  More precisely, I love the classic cars on the car shows.  The characters on the car shows I can mostly do without, but to see the cars, you have to buy a ticket to the entire circus.  Someday there will be a box that allows you to fast forward a live broadcast – not only will you be able to skip the commercials, you’ll be able to skip the boring and annoying parts of the programs.  I can hardly wait.

I often get my car fix watching “Fast N’ Loud” on the Discovery Channel but I also spend time with the Count on the History Channel’s “Counting Cars” as well as Discovery’s “Rusted Development” which is a combination of a lower-key “Fast N’ Loud” and “Hoarders”.  The latest entry in the genre is a Discovery Channel show about cars in Cuba: “Cuban Chrome”.  Predictably, it seems to revolve around the problem of obtaining the parts they will need to fix up their latest find – Yay Communism!  This one will likely die as the trade embargo comes down – there will be a fully-stocked Auto Zone store on the corner across the street from an O’Reilly’s – no more suspense.

Regardless of the premise or the theme, all of these shows feature scenes of “The Deal”.  You know, that moment when Desire and Greed meet Money, sometimes with a voice-over soliloquy featuring the characters’ thoughts or a cut-in of their thoughts as the deal goes down on camera.  The Bid and the Ask.  It always reminds me of a used car lot – since that’s what it is.  Often, the buyer and seller are far apart on their price, but as the back and forth goes on, a price somewhere in the middle is usually agreed upon, they shake on it and it’s on to the next deal.  Like a used car lot, the information asymmetry favors the seller – he knows what he has and knows his bottom line price, and I always hope he knows the real value.  I have to think that having the camera crew present puts extra pressure on the sellers in these situations – kind of like having your mom and dad observing in your 1st Grade classroom.  You want to be on your best behavior and don’t want anyone getting the impression that you’re not nice or you’re hard to deal with.  This pressure on the sellers sometimes leads them to accept less than they really wanted – sometimes a LOT less for the privilege of “Making a Deal” on TV.  They can tell their friends about it! They’re famous! It’s their “15 minutes”!  I wonder how they feel about it after they see the final, edited show featuring their trading acumen.  Films and TV shows (and political ads) are all about editing – anyone can be made to look like a genius, a rube or a liar from the same live footage – it’s all in the editing.  When you are watching, it is easy to forget that what you’re watching didn’t happen in real time, but in a series of live action scenes captured from different angles and at different times and then edited into a dramatic, coherent whole.

A recent episode of “Fast N’ Loud” had me pondering all of this and caused me to think about those archaic terms “honesty” (and especially) “integrity”.

The star of “Fast N’ Loud” is Richard Rawlings, the owner of Gas Monkey Garage - a classic car restoration and customizing shop in Dallas TX.  He is described in the show opening as a “Hot Rod Hunter” and is shown traveling around the country looking at old cars for sale, often what are called “barn finds” – a car that has been sitting in storage for a long time, sometimes in a true barn, but more often in a garage or storage facility.  They are invariably dusty, dirty diamonds in the rough.  His job is to buy it (or them) for the lowest possible price for resale at the highest possible profit margin.  Nothing wrong with that.

This episode featured a barn find full of classic Chevrolet Camaros and enough parts to assemble another barn full.  It was the kind of find all us tire kickers dream about (not that we want to buy it, just that we want to witness the discovery, kind of like archeologists).  The collection had been amassed by the seller and his wife over a period of 40 years or so – it was their shared passion.  He had recently been widowed and decided that it was time to sell.  Enter Richard Rawlings and the camera crew.

The seller wanted to sell everything – it was all or nothing – all the parts and all the cars.  His asking price was $225,000.  Rawlings’ counter bid was $150,000, and he said (off-camera) he knew someone who might be interested in the parts.  The seller countered, asking $175,000.  Somehow they ended up at $150,000 and shook on it (I did a double take right there on the couch – “Did I just see what I think I saw?”).  I can only think the seller didn’t really have it in him to stick to his guns and gave in.  But wait – it gets better – or worse, depending on one’s point of view.

The “guy who might want the parts” came on the scene – and right there in the seller’s garage (nothing had been moved) - said he’d take the whole deal and would pay Rawlings $200,000.  So Rawlings hem-hawed once and said “done”.  He re-sold something he’d owned for all of maybe 30 minutes (hard to know exactly) for a $50,000 profit without even lifting a finger.  And of course, they had the obligatory “brag shot” where he celebrates his wheeling and dealing.

So you might say “Where’s the problem? Ain’t this America – the land of Caveat Venditor* and Caveat Emptor?”  So here it is:

IF Mr. Rawlings was an honest dealer and had integrity, he would’ve done something like introducing the seller to his new buyer and letting the seller receive a better price, a 2/3rds retracement of what he had given up ($50k divided by $75k = 2/3).  He could’ve asked the seller to pay him a finder’s fee for his efforts, 5% ($10,000) would’ve been generous.  He did none of these.  Instead, we are treated to the brag shot.  I doubt that seller will be doing any bragging about the deal he made.

Another trader loses his shirt in the Market.

*Caveat Venditor: Latin for “let the seller beware” – it is the opposite of the more oft-quoted Caveat Emptor – “let the buyer beware”

Thursday, August 13, 2015

Q2 Commentary


I recently attended a televised auto auction – tire kicking for us tire kickers at its best.  It’s like a neighborhood auto show but with money.  There is some kind of perverse thrill in seeing a car you could’ve owned in your high school days for a mere $700 (used) go for $300,000 when paraded across the stage under bright lights with an auctioneer encouraging the bidding crowd in the bar area right up front.  Makes one want to buy a bidder’s ticket just to hang out with the moneyed crowd.  The psychology of these events is as fascinating as that demonstrated daily in the capital markets.

As always at these events, there were all kinds of cars and trucks – some in fully-restored show room condition, but many not - in the room.  There were even several examples that are euphemistically called “20 footers” – i.e., “it looks pretty good from 20 feet away”.  My fellow car nut companion and I enjoy playing “which one would you buy” – predicated on the idea that there would be no hindrance in wiring the required payment to the seller.  The rules of the game are somewhat vague, as they’ve never actually been codified as Hammurabi or Parker Brothers might have, but we’ve winnowed it down to “if you could only pick one, which one would it be?”.  There are inevitable comparisons drawn between years, makes, models, features, condition and other arcane minutiae such as “would I actually allow myself to drive it on the street?”.  Many tire kicker types have a “the past must be preserved at all costs – including my own enjoyment – attitude” but we’re more practical.  Why spend the money if you won’t let yourself enjoy it?  This often leads to a discussion about drivability.  Many of the cars we covet were built when doing 50 was considered fast.  My daily commute requires 65+ just to stay out of the way – not a good environment for a classic mid-60’s Corvette with a 4 speed and a 4.10 read end gear ratio.  Your fellow travelers on the freeway don’t care if you can smoke the tires for a block – but can you go fast enough to get out of their way – and stop in time when they do something stupid?

In contrast to the capital markets as currently conducted, the bidding at these car auctions is conducted live, in real time.  An auctioneer with a classic auctioneer’s cadence which is barely intelligible except the price at the end of each phrase, cajoles the crowd to step up.  Naturally, there is an emphasis on the “ask” – the next highest increment above the current “bid” or offer price.  Sometimes you will see what looks like a perfectly good example of its kind stall out at well under what might be fair value and it rolls off the block unsold.  The car didn’t sell because the seller’s reserve (minimum price) wasn’t met.  At times, the seller is present in the crowd and the auctioneer will get him/her to drop the reserve: “the reserve is off!”.  This sometimes results in another round of bidding as the buyers anticipate a “deal”.  Here’s the kicker though: only the seller (and the auction house) knows what the reserve is (or was)!  Car auctions are about as opaque as it gets when it comes to the seller’s asymmetrical information advantage.  Even buying from a new car dealer nowadays is a fairly level playing field for an informed consumer who does his homework.

In contrast, the auction model in the capital markets is dead – people push buttons to activate computer programs to buy and sell with virtually no human intervention.  Here’s a comparison of some of the salient elements:

Car Auctions

Capital Markets




Bar service:

Drink while you bid – make a mistake?  What the hell – it was fun!

Only after markets close – make a mistake?  You’re fired!


Live - though largely unintelligible

Silent - though the occasional epithet can be heard

Bid/Ask spreads:

Wide - enough to drive a Corvette through

Narrow – often less than a penny

Seller’s information advantage:



Entertainment value:

High – view nice cars, watch someone else mess up

Low - try to avoid messing up

The capital markets aren’t the place to shoot the breeze while downing a few cocktails – save the fun stuff for a car auction.

Friday, May 29, 2015

Q1 Commentary

Death and Taxes

“The only difference between death and taxes is that death doesn't get worse every time Congress meets.”
-      Will Rogers

I’ll try to not get creepy with this, but Death has visited my family twice this year.  My mother died in February at the end of a long decline due to Alzheimer’s.  Her death was a blessing for her and the family and as near as I can tell, we’re all at or working towards peace.  My father in law died in April following surgery he had in late February.  The surgery was elective and his death thus preventable and unexpected.  His family is at various stages in their struggle to come to terms.

Both of these people had once led vibrant, fulfilled lives.  They had plans.  They were going to “do things”.  My father in law told me in the pre-op room of his plans “once I get out of here”.

I met an old friend of my mother in laws at a family memorial gathering last weekend.  He said he was 86 and was looking forward to a trip he had planned to ride a jet boat down the Snake River – “it’s on my bucket list” he said.  He went on to describe some of the other men who lived in the same assisted living facility as he and how they didn’t want to join him for a beer down the street because it wasn’t “on their diet”.  He expressed amazement – “These guys are older than me!  What else are they gonna do?”

By now you are probably getting the drift of where I’m going with this:

1.   Life is short (shorter than you think).
2.   Make peace with your family members.  They love you in spite of yourself.
3.   Do what you want, but do it.
4.   Hell is full of regrets but there are no regrets in Heaven - they make you check them at the gate.

Now to business:

1.   Consolidate your financial accounts to the minimum number needed.
2.   Make sure your legal documents express your wishes.  If they don’t, make a new set.
3.   If your attorney tells you to make a list of your personal property with directions as to whom it is to be left, do it.  (In all my years as an adviser I’ve yet to see one of these completed).

You thought I was going to say something about taxes didn’t you? :>