Thursday, June 30, 2016

The first 50 rolls

During the commodity boom several years ago, I purchased $1000 worth of nickels as a hard asset hedge. At that time, each nickel contained about 9.5 cents worth of metal, based on the price of nickel and copper. Since that time, the price of all metals has plunged and each nickel now contains less than 3 cents worth of metal.

I reasoned at the time that I had little downside risk since the metal was actual currency and could be returned to the bank at the cost of inflation and whatever transportation costs were involved. Metal prices have been low for a long time so I decided to start returning some. Instead of simply turning in the rolls I had received from the bank, I decided to look through each roll for rare dates. The only dates I planned to save were 1950, a relatively low mintage year, particularly the 1950-D, and any war nickels with silver content. I know this was not a productive use of my time, but as a numismatist, it was kind of fun. I have now returned $100 of nickels to the bank and found several anomalies. Out of what was supposed to be 2000 nickels, I found:

1 penny
1 Mexican 5 centavos piece
1 Canadian nickel
2 dimes

A net loss of 1 penny. There were a lot of old coins in the rolls, as far back as 1939, but the only rare date I kept was a single 1943 war nickel. I'll post another update if anything interesting turns up.

Thursday, June 23, 2016

Pound Strengthens, Yen Weakens as U.K. Seen Remaining in EU

That was the headline on Bloomberg less than 24 hours ago.

The following headline was "Brexit Infects Global Markets as Unprecedented Moves Accumulate". What the status quo pushers fail to appreciate is that things aren't rosy like they've been saying for many years. The unfixed financial system and persistent heavy handed central bank interventions haven't improved the real economy. It has only accelerated wealth upward. It was not good optics for Obama to threaten the British people by telling them they would have to go the back of the line if they left the EU. Score this one for rugged individualism against global bureaucratic control.

I haven't believed the lies for a long time so whatever the so called "markets" do tomorrow won't hurt me. In fact, my treasury bonds and gold are surging. Does this mean the entrenched politicians will face reality? Hardly, the Potemkin village economy will probably continue to be pushed until it literally falls over.

Wednesday, May 11, 2016

Twitter Fritter v.9

Twitter, the business, has been making some progress. Oh, it is still spurting money into oblivion like eighty million broken fire hydrants, but last quarter it was ninety million. Are they still living on the cash fumes of the IPO or are there still suckers buying freshly minted stock despite their proven losing business model?

Here are the updated GAAP net earnings since they went public. For the most recent quarter, a $79.7 million LOSS, but notice the trend line over the last year is up! Do they dare flirt with a break even quarter? That would be unheard of in the history of the company.

Updated fundamentals:
1/8/2013 - twitter IPO stock price $41.65
1/3/2014 - twitter high stock price $69.00
1/13/2016 - twitter closing stock price $18.69, 682.95 million shares outstanding
5/11/2016 - twitter closing stock price $14.59, 694.85 million shares outstanding

Twitter stock change from IPO price: -64%
Twitter stock change from high: -78%

Dividend: 0.00
EPS: -0.79

The number of shares outstanding increased more than 11 million over the last 4 months. About $150 million in stock was given to employees for compensation, meaning Twitter continues the practice of selling toilet paper to the idiot investing public to fund payroll. It looks like that can go on forever, but I am skeptical.

Tuesday, January 19, 2016

Star Wars economy vs Star Trek economy

When Star Wars episode 7 was released, I had a minor epiphany regarding the way the economy worked compared to the Star Trek economy.

In the Star Trek economy, productivity and advanced technology have increased so much that basic human needs are satisfied for everyone. People can replicate food and basic items at effectively no cost. There is at best a small gap in relative wealth. Work has become relatively scarce so people compete for the few jobs available.

In the Star Wars economy, productivity and advanced technology have increased a lot, but wealth is distributed so unevenly that large segments of population, like the protagonist Rey, must scavenge to earn food rations. Wealth is concentrated in a small elite and within governments. Evil maniacs in government spend their wealth on titanic military projects and weapon systems. Corruption, crime, and avarice are endemic at all levels of society. Pirates and gangs thrive. Innocent people are slaughtered on a large scale. It works very much like the real economy.

The stark contrast of the Star Wars and Star Trek economies seemed worthy of a mention.

Wednesday, January 13, 2016

Twitter Fritter v.8

Twitter, as a business, continues to disappoint, which is not disappointing to me since I have called them out on their stock vomit fraud from the beginning. Twitter loves to spend money extravagantly, but they can't figure out how to make money. The only way they can fund their glittering unicorn lifestyle is to continue to issue millions of shares of stock at decreasing prices. Is this a long term business model?

Let's look at some juicy numbers starting with GAAP net earnings since they went public. For the most recent quarter, another $132 million LOSS.

Some fundamentals:
1/8/2013 - twitter IPO stock price $41.65
1/3/2014 - twitter high stock price $69.00
1/13/2016 - twitter closing stock price $18.69

Twitter stock change from IPO price: -55%
Twitter stock change from high: -72%

Dividend: 0.00
EPS: -0.86

All this financial rot is hard to find on their glossy web site, but they are proud to have offices in 35 international cities! See, you need all those offices to send small messages and photos around. Duh. How do they stay in business burning cash with a flamethrower? Easy, issue more worthless stock!! Eyeballing, it looks like they issued about 35 million new shares in 2015. Anyone want some hot dotcom stock? Twitter will sell it you!! HaHaHAHAhaHa.

Thursday, September 24, 2015

Mass layoffs the key to prosperity

2015 has been a banner year for mass layoffs as the Fed gets ready to hike rates to slow down the global economic boom. There is so much demand for waiters, bartenders, and part time workers that we are lucky large corporations are grudgingly freeing up so much labor. Let's take a quick tally for this year, so far:

HP: 55,000
Oil field services: 51,000
Barclay's: 30,000 by 2017
Caterpillar: 10,000 jobs by 2018
Microsoft: 7,800
JP Morgan: 5,000

My only concern is that the layoffs will not come fast enough with the pain spread out until 2018. We need MORE BARISTAS NOW, damnit! Right now, someone is standing in line at Starbucks longer than they should, probably making them late to a big layoff meeting.

Wednesday, September 23, 2015

How do those lies taste?

Rex Nutting wrote a personal anecdote about the VW emissions scandal today.
I’ve been covering the world of business for 20 years, so I’m not shocked when a major multinational corporation is caught cutting corners, lying, cheating and defrauding the very customers who’ve built their brand. Corporations aren’t warm and fuzzy creatures that need our love and forgiveness.

Still, this lie hurts. It always does when it’s your life and your money that have been stolen from you.

As a once-proud VW owner, what do I do? Get rid of the car? And buy what? If I can’t trust VW, can I trust Ford? Or Nissan? Or Tesla? Can I trust the Environmental Protection Agency to uncover the companies’ lies on the cars I’d choose between?
It hurts when your life and your money have been stolen from you??? HAHAHAHAHA!!! Oh, so rich. How old are you again? Have you not been paying attention to the weekly global banking scandals, the rigging of every market, the quantitative ex nihilo credit creation, Chinese economic data, Enron, BP, Catholic priest predators, LIBOR, et al? We live in a Linda Green world where lies and deceit are the coin of the realm. P.T. Barnum runs the financial system, the government, and crony corporations. Honesty and straight dealing are as rare as rhinos. Everything in life is caveat emptor, every transaction, every "vote", every earnings report, and everything you read.

Do I sound a little jaded? I prefer the term streetwise. It's OK, Rex. So you've gone from proud VW owner to dirty polluter. The world will survive. Just wake up and smell the diesel.