I got another birthday card from Southwest Airlines. They send me one every year. Last year they also sent me an anniversary card to celebrate my 10th year in their frequent flier program. They are one of the few airlines out there whose behavior is consistent with their stated goals and priorities. The others are lying hypocrites. (I'll have more to say about my experience with Delta's Song over the weekend.)

21 Department Stores to Close in Southland
In a move that will rattle shoppers and alter the complexion of malls throughout Southern California, Federated Department Stores Inc. said Thursday that it intended to close 68 locations — including 21 in the region.
The closures will begin early next year after Federated, the parent of the Macy's chain, completes its $11-billion acquisition of May Department Stores Co., the operator of Robinsons-May.
Rattle Shoppers??? Alter the complexion of malls??? Does anybody really shop at these dinosaurs anymore? Isn't this merger another example of trying to mate two dinosaurs in order to produce an eagle?

Pilgrims flock to image of Jesus on tree
No offense to the believers, but if Jesus, the Virgin Mary, Moses and whoever else really wanted to show themselves to the world in this day and age, wouldn't they be able to come up with something better than stains in cut trees and watermarks under freeway overpasses? And don't people have too much time on their hands???

This is the kind of thing that only a computer geek could come up with. As a former computer programmer myself, I really object to these guys who always make it seem like we're all dorks.

So there's this parrot, and he's got a really filthy mouth. He's always swearing at anybody and everybody. His owner is sick and tired of this and tries to teach him to behave, but has little success. One day, the owner's grandmother is visiting and the parrot goes into one of his foul-mouthed tirades. In a rage, the owner grabs the parrot, tosses him into the freezer and completes the visit with his grandmother. When his grandmother leaves, he opens the freezer and lets the parrot out. The parrot is apologetic and promises he'll never use foul language again. "But tell me," he says, "what did the chicken do?"

Am I really crazy for creating BelowTheCrowd.com business cards?

I have received a letter from the Welk Resort Group. Apparently I have been carefully selected from among 67 families in my area for the unique opportunity to visit the Welk Resort San Diego and hear a sales pitch. They will also throw in a bunch of fun activities, or at least they think they're fun.

Ooops. They apparently have carefully selected a Mrs. BTC, not me. One day, perhaps I'll meet that wonderful woman somewhere...

And while I'm on the topic of wonderful women, it was quite nice to stop by Minyanville HQ while I was in New York. Most of the peeps were out, but I enjoyed a welcome handshake with Toddo, and brief meeting with Farley and Billy, then a longer conversation with the lovely and talented Vanessa, who is putting the final touches on MIM2.

With all the troubles with the space shuttle, I have regrettably come to the decision that America should dump any and all plans for space travel. One could obviously argue that the money is better spent elsewhere, and that "prestige" projects like the shuttle ceased to be relevant in the post-cold war world, but my argument is simpler. America just doesn't have the stomach for the risks that are inherent in space travel. The simple reality is that a commercial aircraft achieves the levels of safety it does only because of billions of hours of flight experience, and hundreds or thousands of carefully controlled test flights before an individual aircraft type is considered worthy of commercial use. By that standard, the entire world's experience in space is pretty much at the same stage the Wright Brothers after their first couple of years of flying. If we are not comfortable with the risks that are inevitable at this stage of the game, then we shouldn't be up there. Not in the shuttle and not in any successor vehicle which -- though more modern -- will inevitably be experimental in its own ways.

At last nights Socal Israel Chamber of Commerce event, one person in particular stood out. Not because he wasn't Israeli, or even Jewish. Not even because he was African American. The invite list was pretty broad and as the topic was digital-media focused (more on that tomorrow) there was pretty good response from outside the groups who would typically populate this organization's events.

This guy stood out because he was walking around offering his mortgage brokering services. As I've noted elsewhere, the trend of mortgage brokers inserting themselves into virtually all events one can go to -- even my local farmer's market -- is almost unprecedented. I last saw it during the late dotcom days, when all these individuals were naturally selling other types of opportunities.

BTCat is happy to see me, but very upset when I go out. Her new friend is due to arrive after my birthday party. Several difficult weeks of adjustmnt are expected.

Not unexpectedly, Sony continues to be in trouble, as the changeover to flat screen TVs continues to be a profitless upgrade cycle for most of the manufacturers. As I've noted before, I believe the only possible way to make money on this is through component makers. AU Optronics (NYSE:AUO) is probably the best pure play on LCDs and has been stuck in a pretty tight range for since the beginning of May.

A lesson I remember from the WFR Course, which the Boy Scouts apparently forgot is simple: heat exhaustion is not a heat problem, it is a water problem! Or more to the point, a problem due to lack of water. This is something anybody going to a Boy Scout Jamboree, or who spends any amount of time in the outdoors should know. It's almost as obvious as being careful about walking around with long metal poles under powerlines.

A good friend who is a former broker with a history of being a good tell, recently called me from downtown L.A. asking for a ride. Turns out he had just cashed out a bunch of his holdings and purchased silver coin from a dealer in the Jewelry District. He's also gotten out of brokerage completely and is back in school working on a new career in healthcare. Definitely not advice, but worthy of consideration.

Finally, I found my old copy of Extraordinary Popular Delusions on the shelf at mom's place. Always worth re-reading this classic, if for no better reason than to remind yourself of the need for continuous risk assessment and management, and to point out once again that the crowd frequently doesn't understand or consider the inevitable fallout of its irrational behavior.

Well, there is apparently a benefit to hedonic adjustments. I am getting younger.

This weekend, I will celebrate a birthday. According to calculations based on the very same formulas used by the Bureau of Labor Statistics (BLS), the Fed, and the Bureau of Economic Analysis (BEA), I will be only 33 years old.

In order to determine this, I have established a baseline, using my weight and age in 1994. I have chosen 1994 because it was the year of the infamous OJ chase, as well as of my graduation from business school. (The two events happened almost simultaneously, and ended about a mile apart, making for a rather memorable graduation ceremony.) In any case, OJ is about as good a reason as any for picking a baseline year so the choice will remain, at least until such a time as I decide that it no longer serves my methods, at which point it might change, just like the government's.

In that baseline year, I was 29 years old and my weight was approximately 185 lbs. This translates into 0.1568 years per pound of me.

Eleven years later -- and allowing for a really bad couple of years, health-wise -- I weigh 210 lbs. Applying the same "baseline ratio" of .1568 years per pound of me, I have determined that my size-adjusted age on Sunday will be just about 33.

This makes exemplary sense. After all, much of me didn't even exist back in 1994. A full 25 lbs of "new me" has been added over those years, which obviously should pull down the average age of the "total me."

Maintaining the baseline ratio thus makes great sense.

I have discovered only one problem with this calculation. While the necessary hedonic adjustments to my age should theoretically make me appear younger and more desirable to members of the opposite sex, the factors that go into the adjustment (notably weight) tend to have the opposite effect on their interest. If I make efforts (currently underway) to adjust the weight problem, it will result in an increase in my adjusted age.

But I think I've found a solution, again using the methods of government statisticians. When my weight is decreased to approximately 200 lbs, I will establish a new baseline and formula, designed to ensure consistency with previous numbers (which is to say, no change in age should occur at the time of the formula change). When I get back to my optimal weight I will again establish a new baseline.

Finally, all this will be irrelevant for the immediate future, because I will only calculate the number once each year. That means I have until the end of July next year to come up with a new data series and adjustment formula as necessary to justify whatever age claims I want make at that time.

I'm new to this government-style calculation process and in many ways it's still unclear how this will all work out. The only thing that is certain is that during the year that passes between birthday celebrations, my actual unadjusted cost of living will go up a whole lot more than the government says it does.

[For futher reading, both John Succo and Laurie McGuirk have commented extensively about the impact of hedonic adjustments on the CPI, GDP, PPI, Trade and other "economic indicators." Their writings may be found by searching Minyanville, which remains one of the most essential daily reads out there and well worth the price of admission.]

Leaving in the morning, which means I'll either have nothing to say for the next few days, or quite a bit. Hoping to catch up with Toddo and the Minyanville crew while I'm there, and possibly meet up with Cody and get that dinner he owes me...

-btc

I haven't been posting all that much lately, because there's really not all that much to say. Some, like CNBC, Jim Cramer and others who are paid to fill space, have tried to get people excited, but that's my style.

The markets aren't presenting many opportunities and in keeping with my lesson from early June, I'm not trying to force anything.

I didn't have any major comments related to anything I've heard out of Semicon, and get the feeling that Intel's awaited numbers will be a yawner.

In the lack of any real stimulus in either direction, I suspect markets could start to float up again and tomorrow I expect to start positioning a bit longer after taking my exposure pretty flat recently. This, somewhat in keeping with the thesis I pointed out on Friday.

In the meantime, I've cleaned the place up, shredded several years worth of stuff that was overdue for destruction, destroyed one shredder in the process, and possibly found a housemate for BelowTheCat.

-btc

When I moved into the current Chez BTC, I received a new phone number. Within days, I was being deluged with calls. A large number were from local mortgage brokers who wanted to "check on the terms of my mortgage" and show me how I could already extract money from my new home. (That would be a nice trick, considering that I'm a renter.) Then there were calls from every local rag, including the ones that are given away for free in coffeehouses in the neighborhood, asking me to subscribe for home delivery. I also got calls from all sorts of charities and "local grassroots" organizations. The police, highway patrol, firefighters, junior police academy, teachers and all sorts of local public-employee groups were particularly active in asking me for help to support their programs.

(It's a sad commentary that in a state with some of the highest taxes around, there isn't enough money for this stuff, but that's besides the point.)

I quickly did a couple of things: I blocked all "caller ID unavailable" numbers and stopped answering calls from odd out of area numbers or toll-free numbers. I also put myself on the FTC's no call list.

This has stopped a lot of the calls from mortgage brokers and subscription-sellers. But the "public service" organizations and occasional political candidates continue. These days we have an election every few months in California, so they always have reasons to do this. Those organizations are exempted from using the do not call registry.

I am uniformly rude to the callers, most of whom sound like they're in India. I generally hate to be rude, but in this case I feel justified.

You see, they are being rude to me first!

These organizations can get copies of the do not call list and they can choose to use it if they want to. The law doesn't require them to do this, but it doesn't stop them either. Common courtesy as well as good business sense would suggest that it's not a great idea to call somebody who has explicitly requested that you don't. If you do anyway, then you're being rude.

And if you and your organization are being rude to me, don't be surprised that I treat you exactly the same way.

Every now and then I read something that's really worth passing along. Sadly, in this case, it's a subscriber-only item, but I've got to say it's worth at least taking the trial RealMoney subscription, and occasional pieces like this can almost justify a full year's cost.

This morning, Barry Rithotz, has a brilliant piece called The Fundamentals Stink: Buy Stocks. I don't always agree with Barry, but this column's brilliant, and not just because he talks of "the crowd" in much the same way as I do.

I'll quote briefly:

Your job as investors is to first figure out what the economic reality is, despite the blatherings of the pom-pom crowd. But that's only the first step. The really tricky part is figuring out when the crowd will discover it as well.

That means being proactive about investing. Planning an exit strategy. Continually watching for signs of a major sentiment shift. If you do not have a capital preservation strategy in place, this can be a very expensive game to play.

Barry also suggests a couple of things that I agree with: Employment and inflation -- despite the government statisticians best efforts to spin them otherwise -- actually really suck. The reality beneath the surface, the one that the crowd fails to recognize, is not all that good and justifies long term bearishness. But, so long as the crowd is happy to listen to Jim Cramer, Maria Bartiromo and (heaven help us) their real estate agents to guage the quality of the economy, stocks can still move up and "knowing better" just won't matter.

There's nothing wrong with joining the crowd at times, even when they're running towards the edge of a cliff. What's important is recognizing that they may be missing something and having a plan to deal with it so that you don't risk being swept into the abyss along with everybody else.

While I'm borrowing stuff from Cody, let me say I agree with his take on AU Optronics (NYSE:AUO). It's the only pure play that I can find on flat-panel TVs and LCD monitors. I expect that large LCDs will overtake Plasma screens in all but the very largest sizes within 12-18 months. AU Optronics is well positioned to take advantage of this, even as the actual setmakers, ranging from Sony (NYSE:SNE) to Dell (NasdaqNM:DELL) beat each other down to the point of no margin at all on the final product.

Gov. to Be Paid $8 Million by Fitness Magazines
Two days before he was sworn into office, Gov. Arnold Schwarzenegger accepted a consulting job paying an estimated $8 million over five years to "further the business objectives" of a national publisher of health and bodybuilding magazines.
The contract pays Schwarzenegger 1% of the magazines' advertising revenue, much of which comes from makers of nutritional supplements. Last year, the governor vetoed legislation that would have imposed government regulations on the supplement industry.
And is anybody really surprised that the "outsider" who was going to "clean things up" turns to be just as much of a self-serving crook as everybody else who enters politics?

And I've got to say it again. Sadly, I've said it so often I used to have a form letter to say it with:
Dear applicant,
Thank you for your resume.
I am a strong believer in letting people rise to the top, fill in for others when appropriate and ultimately receive full credit for their ideas. Those who work for me can expect to have many opportunities to showcase their talents to others.
As such, I can only hire people who are presentable to others in the organization, including the upper management. Applications from individuals who are not capable of expressing themselves using concise, grammatically correct and properly spelled businesslike language cannot be considered. I strongly suggest that if you plan to be successful in business you make greater effort to improve your written communication skills.

I have been known to return resumes and cover letters with the errors circled in red.

Last night's Scarborough Country on MSNBC featured a segment questioning whether the networks really needed to resort to the most lurid possible sexual content in order to compete with offerings like The Sopranos and Entourage on HBO. The answer is no, they don't. What's appealing about those shows is that they're well written, have compelling characters and great plotlines. The violence and sex is perhaps a necessary element given the subject matter, but it isn't what makes those shows great. What the networks need to do is encourage strong shows, not to do schedule lineup by committee.

And on that note, much the same is true of movie theaters. During last week's hand-wringing over declining movie attendance, it occured to me that I'm probably spending more on the movies now than I was a few years ago. I'm happy to spend fourteen bucks a ticket to go to the Arclight in Hollywood where I get an assigned seat, a bar in the lobby, a well-appointed theater, no discounted/free infant tickets (and thus, no crying babies) and convenient parking. Oh yeah, also a membership club that works kind of like a frequent-flyer program and also offers special deals and screenings. Without that stuff, one of those big new AU Optronics screens and a cheap home theater setup seem really compelling.

Bottom Line: Great technology, increasing competition, not cheap. Overall neutral, but would consider it if the market gives me lower levels. Probably would not be selling if I already owned it.

Details: I generally comment mostly on companies that I have had direct contact with, but Cody asked me to look at F5 (NasdaqNM:FFIV) a while back, so I thought I'd have a quick peek and see what's there.

F5 is in the business of Application Traffic Management, which is a relatively new piece of the networking world. The general idea is that you can use their products to direct and prioritize the traffic through your network depending on your business needs. For example, you might give the highest priority to two-way, real-time applications like VOIP, lower priority to a real-time, but one-way business intelligence application, and lowest priority to something that has inherent delays anyway like email.

It gets more complex than that, of course. You may have a large corporate application that runs on multiple machines in multiple locations. The ATM product could help to balance the overall load on your various servers as well as the network pipes connecting users to them. And it would adjust things in real time to keep things running as efficiently as possible.

This is important stuff, and it grows more important by the day, because networked applications like VOIP depend on an efficient network to work well. A VOIP system running over an overloaded, unbalanced or inefficient network will sound a lot like the early digital cellphones: dropped words, phrases, sudden delays and a general "jerkiness" to the sound that makes it bad news for you and your customers. And VOIP is only one of the many real-time and bidirectional applications coming along right now.

A letter a friend of mine received from a job applicant, with her comments in italics.

Dear Ms. Potential Employer:

okay, good start

You told me to drop you a line when I was in town. Here then is that line.

oh good!

Is there someone able to speak with me, via email or in person, about those capacites in which I might be able to help?

try "I am available to meet with you at your convenience," dipshit

(For more on that score, see my attached resume.)

oooh! oh boy! for more on that score! how witty! how frickin' creative! you're hired!

I have a goodly amount of time to dedicate to you.

goodly? GOODLY? DIE DIE DIE!!!!

yrs.,

goodly guy

Time to go a bit below the crowd again, this time to look at electronics retail. It’s a topic that’s been on my mind as I spent most of the holiday weekend setting up my home theater equipment after six months of procrastination and delays. In the process, I discovered lots of little bits and pieces I was missing or which were ready for any upgrade and I’ve had the opportunity to visit numerous electronics stores ranging from my local Radio Shack to Best Buy, a smaller regional chain, and a couple of “high end” stores.

Electronics merchandising is sort of in my blood. My great uncle all but invented it, when he along with my grandfather founded a chain of stores back in the 20s that grew and ultimately became a successful regional chain called Lafayette Radio Electronics. It’s gone now, largely destroyed by the same manic genius that my great uncle used to great success in building it. Just about all my older relatives worked there at some point. I used to visit my grandfather in his office before he retired, and my father managed their highest volume store for many years. I saw the good and bad of this business long before it came to be dominated by Best Buy and large national discounters.

But in many ways, electronics hasn’t changed much in the past few decades. My uncle realized long ago that the secret to doing well was in merchandising. Simply stated, the art of combining products so as to make more money than you would have if the products were promoted and pushed separately.

On Friday, Doug Kass posted a simple question over at RealMoney Pro/Street Insight, asking what the impact of products like Slingbox would be on Cable TV and other media providers. His question was whether such a device, which allows you to transmit signals from your cable TV box to a PC anywhere in the world using the internet, would perhaps allow people to avoid having multiple cable TV accounts – say one for the home and one for a second home, or perhaps an office.

My answer was that while the product works, there are key issues in the consumer internet infrastructure that would place roadblocks in the face of that kind of use. I listed four issues I could see. Mr. Kass replied that he thought it was just the first generation of the product and that improvements could come quickly.

I was going to reply to him directly but I thought this would be a good issue to explore further here. It’s a great illustration of how a great product also needs to fit well into it’s environment, both in terms of the technology and the business sense. This is a problem that is often overlooked by people developing or investing in new technologies.

Many of the inventors and investors of the internet bubble period failed to take such issues into account. George Gilder -- who was regarded by many as a prophet of those gilded years -– made this mistake for himself and the investors who followed his every word and prediction. When it was all over and he had lost everything for himself and his followers, his excuse was that he failed to anticipate that legislators, regulators and all sorts of other “obstructionists” had artificially slowed the spread of broadband internet and that his visions of a future “telecosm” had been predicated on the presumption that the technology would spread as quickly as possible. To this day, Gilder and his followers still blame others for the failure of things to work out as they “should have.”

The fact is that Gilder didn’t live in the real world. In the real world, technologies don’t spread as quickly as they might. All those other business interests tend to get in the way when a new and disruptive technology comes along. That Gilder failed to anticipate such things is a reflection on his naivete, not on the evil state of the world.

So let’s look at Slingbox in that context.