Below The Crowd

Market Implosion Notes

Well, things continue to implode, or re-implode. I suspect that we found something of a bottom around DOW 7700 last week and would be a cautious buyer of select stocks and funds as we approach it again. Rare to see a re-test quite so soon, but just about everything we've seen lately is rare.

• Dylan Ratigan on FastMoney is straight to the point today. Confidence is not going to come back until the politicians who have created the environment which has failed are taken to task. Sadly, we have the absurd situation where the same politicians and institutions that either directly created or at the very least allowed the situation to develop are being called upon to solve it. Many of them are just broken records, "solving" the problem with more and more debt, which is what caused it in the first place.
• And let's be clear that this is not a Republican or Democrat issue. The difference between the two is where they tried to direct the huge flood of easy money that their common policies created. The Democrats wanted it sprinkled on housing assistance for the poor, on ACORN, and on support for old-line union-heavy employers. Republicans wanted as much of it as possible to head to Wall Street and to incompetent greedy managements. And of course, both sides wanted to spend it on a variety of government programs with the distinction being which programs, not whether the money really existed or could be spent. Nobody stood up and said "40-1 leverage is a bad idea." Nobody asked "why are we allowing trillion-dollar markets to develop with no regulation at all?" The only argument was where to spend the money. That continues to be the only argument. And that is why there is no confidence.
• Of course, all this might have been avoided if the government had allowed even one large institution to fail 10 or 15 or 20 years ago. The message would have been sent. Instead, we find ourselves in a situation where the insitutions have grown so out of control that even a single failure turns into a disaster.
• I continue to believe that the only way out of this is going to be printing money, and am slowly accumulating hard assets, but am mindful of the fact that a global slowdown means that many hard assets will face pricing pressure in the immediate term. Gold and silver, in that order, are my preferences right now. I expect that over time silver will outperform but at present it's getting killed by the fact that it is at least partially perceived as an industrial metal.

The Dell Indicator

I've always had something I've called "The Dell Indicator" for the health and robustness of the computer biz. It's been pretty reliable over time and I just got to check it again this past weekend following the death of my old Precision 360 workstation.

The indicator is simple: If Dell (NasdaqGS:DELL) takes more than one week to complete a custom order on something with the parts fully in stock (per their website), business is pretty good. 4-7 days means business is OK, but not great. 1-3 days and it's pretty weak.

The new T3400 workstation I ordered after-hours on Thursday shipped first thing this morning, meaning it was probably completed sometime over the weekend. Even assuming a worst case, which is that the order wasn't completed until just before it was picked up by FedEx, it's still just under 3 full business days. In reality, I suspect it was finished well before 8:30 this morning.

This is not an off-the-shelf system. I asked for several items to be included that are a bit "weird." They definitely had to custom build it. Which, even with Dell's ongoing improvements in manufacturing times leaves me thinking that demand is a bit weak.

Brief Recovery Notes

I must be recovering, I seem to want to write again. And hopefully a bit more coherently than my first entry today. As I look back on that one, I'm struck by the dissonance and lack of a straight direct point. Maybe my random musings don't make for good posts.

Anyway:

• Just posted this one on Cody's Blog about women's shoes. Not sure it'll get approved, so preserved here for posterity:

  Gotta agree on this one. I think 99% of women’s fashion is just the women showing off to each other. Most of us guys don’t know and don’t care about the differences between the $20 version and the $2000 version. I can't think of any time the guys in the locker room ever talked about her shoes, or noticed them even.

  Hell, most of us are really only familiar with two types of womens’ clothing: The ones she’s wearing, and the ones tossed on the floor somewhere between the living room and the bedroom. The latter, of course, are far more desirable.

  Me, I tend to like a woman who knows how to look good in the environment she’s in. And since my own preferred environment tends to be isolated river canyons and mountaintops, I will rarely if ever find a woman looking good in heels. But a woman whose hair is still wet from washing it in the river, wearing an improvised wraparound sarong, loose t-shirt and Chacos as the sun sets at the end of a long day is possibly the most beatiful thing I’ll ever see.

  Shouldn’t have let her go…

• Wow, now that Tom Brokaw is semi-retired, he actually is asking some tough questions. Why wasn't anybody doing this when the credit bubble was being inflated two or three years ago? Oh, that's right, they were enjoying the increased values of their condos in Manhattan and houses in the Hamptons...

• The old Dell Desktop finally died. Still able to do a bit of work on it but it dies about every 15 minutes. I suspect one of the two striped/RAID disks in there is physically damaged. Ordered a new one, which is supposed to ship later this week, but if Dell is able to get it out as quickly as they usually do, it should be here pretty shortly. Avoided doing any RAID type stuff this time, just two big disks, plus (I suspect) one leftover from the current system once I pull it apart and run diagnostics on them. And I guess I'll have to finally figure out Vista.

  Hopefully this will also solve some of the weird video issues on the old one.

• One of the weird things about buying this computer is that Dell (actually CIT (NYSE:CIT) offered me $10,000 in credit on the spot towards this $1,200 purchase. I thought we were in a credit crunch? And it's not like my company has done much in a couple of years. Yes, the corporate structure is still there and I still have a credit card with $5,000 in available credit on it, but I would have expected a bit more investigation.

Something A Little Different

I've been a bit sick for better than a week, trying to work through it. I find that as I get older, some of my youthful abilities, including the ability to keep a completely clear head and work through illness, are diminished. Unfortunately, even this heavy cold/light flu or whatever it is has impaired me sufficiently that I can't do much

Not only that, but I'm unable to get out an exercise. As those who know me well realize, I'm not much of a "stay indoors" kind of person. Even when I work, I try to find the excuses to get out as much as possible. I once described "my ideal work environent" to a career coach as "a place where the windows aren't welded shut and I can actually feel the breeze everyday." Needless to say, that coaching session didn't go much of anywhere.

So, here I am inside. Though obviously with all the windows open and a nice breeze.

Thankfully, I've been sleeping more than usual, which kills some of the time, but otherwise the frustration about everything has been building, as is probably obvious in my last post. I'm feeling a little better today, but don't want to push it, so I'm giving myself one more to recuperate. I have another job discussion tomorrow afternoon, so want to be in good shape for it, even though it's on the phone.

There have been some other frustrations recently. Seriously blew a job interview last Monday. In part, I suspect, because I was already beginning to crash and didn't quite realize it. In part though it's because the IT world has changed and I'm just not a great fit for it anymore. For better or worse, "traditional" IT has become more and more focused on controls rather than on innovation and serious business improvement. I'm a notorious "break all the rules to meet the strategic objectives" guy, so those kinds of roles don't work very well for me, even if I could get somebody to hire me for one of them, which I doubt. My resume is too long a history of "damn the torpedoes, full speed ahead" kind of stuff.

While it was all successful, it's not the kind of stuff that gives me much to say to anybody when asked what methodology, or approach, or other management mumbo-jumbo I favor. I try to answer truthfully: I know lots of ways to get things done. I try to always pick the one that's most appropriate for the circumstances. "Situational Project Management" as I call it. I try to make it sounds better than "I figure out how to deliver and if I leave flattened bodies in my wake, then it's too bad they got in the way," but I don't think I convince anybody that I'm a good fit for most of todays Sarb-Oxed, control-freaked IT environments.

The innovations that are happenning in technology tend to be in areas related to media, which I have almost no understanding of and frankly no interest in. (The little media I actually see tends to be the CNBC stuff I watch during the day, usually with the sound off, mostly because I like having some material to use when making fun of Cramer and friends in this space.)

So I find myself thinking that it's really time to do something different. The question, as always, is "what?"

Certainly, moving out of media-town may be a good idea. And I'm certainly looking elsewhere.

But as noted above, my brain just doesn't do quite as well at certain things as it did when I was younger. Even if I found a cool company that wasn't media related, was doing some interesting stuff with IT, and I could figure out what in the world I might do for them, I'm just not sure I'm up to the task of doing it. And I'm sure that my interest level is at or close to zero. In large part, because I find that most of the energy going into technology at most companies is completely wasted.

Brief Notes

No big developments today.

• Well, more and more evidence that nobody trusts government. We all know that the Fed's machinations are designed to bail out multimillionaire bankers while destroying our purchasing power, and we don't trust them. Now there's plenty of evidence that we don't trust politically motivated pandering like the Clinton/McCain "gas tax holiday" which would only make more money for gas companies while not benefitting consumers at all.

  This, I think, is a positive development. We need to be thoroughly disgusted with all these guys before we toss them out. Sadly, we'll all be hurt by waiting so long.

  As I've noted before, I think it'll be the next generation -- the generation raised on interactivity rather than passive TV watching -- that will finally take control from the people in the middle who forget who they work for.

• One story I haven't seen mentioned in may places is the upcoming leadership transition in Saudi Arabia. (Thanks to Stratfor for pointing this one out.) If Crown Prince Mishal, the most powerful member of the royal family who is currently in Geneva for "medical tests" were to die, a lot of uncertainty would enter the system even though the nominal king still lives. That situation could make oil at $150 a barrel a reality very quickly even if the new and untested Saudi succession planning actually works. I would not be short oil right here. Not long it either, but this is just another reason you can't short.
• So, Warner Music Group (NYSE:WMG) is losing money and has to cut its dividend? I guess that says a lot about the strategy of suing your customers while simultaneously screwing virtually all the artists that you sign. I continue to be amazed at how self-serving the managements of these companies are. They will destroy their businesses rather than concede that their personal ego-gratifying empires are no longer sustainable.
• Does anybody still believe government numbers? If so, could somebody please let me know why?
• And more government lies. But a note at the end that I ultimately believe is positive, for the reasons specified above. A time is coming rapidly when people will be less inclined to believe any number that they can't touch, manipulate, react to and comment on. Imagine when the goverment has to simply publish the raw data in a framework that allows you to easily pull it apart yourself. Today the government can lie with impunity because the overall attitude is of the TV viewer: passive. But passivity is dying. By the time today's four year-olds can vote, it'll be dead completely. And so will the government's ability to lie to us.

-btc

Brief End of Ski Season Notes

It was a really nice end to the ski season, a great Sunday for the last tram at Snowbird. Now the tram is down for 40 days of major maintenance, a few chairs remain running on the weekends and my knees are ready to move on to something less damaging. It was the first time in many years that conditions were good enough for me to stick around until the last tram day and forgot the fun involved: Gaming the last tram boarding, the ride up, the "reception committee" with snowballs on the peak, the peak party, the party on "The Beach" above Lone Pine with Mt. Superior in the background, and the follow-on parties in the valley after finally making our way to the bottom.

The last tram of the season was received with a traditional fusillade of snowballs on the top of Hidden Peak at Snowbird

After everybody was kicked off the peak, the party continued out on "The Beach" at the end of the traverse. At least until the ski patrol kicked us out of there too. And somehow I missed my flight home

Now it's truly back to reality.

• I did get a call from the manager of the Walgreens (NYSE:WAG) store that I complained to on Sunday. She said the problem had been related to training and she went over things with the employee. Good enough for me, and a pretty good indication that this company does still care about their reputation. For better or worse, the labor market in Salt Lake is such that she probably doesn't have the greatest material to work with. More on that later
• I just got an invitation to the Anderson School's John Wooden Global Leadership Award ceremony (formerly known as the Exemplary Leadership in Management Award). I've commented on this one in the past, suggesting that this award tends to be really good at picking guys who are either peaking or past their peak. So it's no great surprise that this year's award goes to Howard Schultz of Starbucks (NasdaqGS:SBUX). His getting this award certainly would not give me the warm and fuzzies about owning the stock.

Bye Chuck!

Just put in a wire request at Charles Schwab (NasdaqGS:SCHW), where I've had the bulk of my money. The request was to transfer out about half my cash, or a third of the account value. It's going to my E*Trade (NasdaqGS:ETFC)account, which has always been smaller and a place where I've tended to keep long-term investments that I don't look at much.

As a project manager, I tolerate a lot. Fuck ups are part of the territory.

But I don't tolerate incompetence, especially not in mission critical stuff.

So when Charles Schwab exhibited extreme incompetence this morning, it was the last straw. I've been increasingly uneasy for the past several weeks and with even money funds turning out to own all sorts of mortgage junk, I've felt like maybe splitting my money between institutions was a good idea. And Schwab's trading interface has gotten increasingly clunky compared to newer competition.

Quote of the Day

"The best place for Palm to hide a software glitch so it can't be found is in one of their wireless devices, because nobody's buying them..."

- Jeff Macke on CNBC, commenting on today's announcement by Palm
that it was again withdrawing firmware updates for Treo devices
because of real-world upgrade problems

The Customer is Sometimes Wrong

Somebody is finally taking my advice.

About eight years ago I was working for a major PC manufacturer, doing analysis on customer support patterns and costs. The results I came up with were not surprising. 80% of our support costs were due to about 20% of our customers. And worst 1% were almost 30% of the total cost. For the most part, these were not people whose PCs were not working properly. Many of them were people who just did not want to be bothered with learning, who would call in to ask the same questions about basic operations day after day. Some of them felt that our customer service people were there to provide free tutorials for hours each week. A few of them -- like a priest in a remote parish who called us 3-4 times a day -- were clearly just lonely and looking for somebody to talk to.

At the time I had other suggestions too. It was pretty easy to identify that the biggest problem customers tended to have purchased their products from certain retailers, and usually at certain times of the year. So I recommendded, among other thing, that we reconsider doing things like day-after-Thanksgiving specials at Wal-Mart, or at the very least do some further analysis, to attempt to determine if the long-term value of the new customers acquired could ever justify the cost of getting them up to speed on their intitial purchases, and whether in fact they ever would come up to speed and be satisfied with the product.

For those people who were truly at the extreme -- the ones who were five or six standard deviations away from the norm -- my recommendation was simple: Repurchase their PCs and all accessories from them at the original MSRP (probably less than they paid at retail), and even provide them an extra $100 gift card which they could use to buy a competing product. Getting rid of that small number of people would be worth the money.

So yesterday's news about Sprint Wireless did not surprise me in the least.

Brief Notes

Wrath of the RHIGF

I spent my day snaking hairballs out of my shower drain.

The drain has become progressively worse and worse since my Raven Haired Italian Girl Friend (RHITF) stayed here a while back.

I believe I have now completely cleaned out all the long strands of raven-colored hair from the drain, and I can shower without quickly standing in dirty water up to my ankles.

Still, sort of miss having her here, though a recent shorter-haired visitor of Czech origin has made up for the company. Too bad she's returned home too.

Israel Passport Update

Well, I got the document as discussed the other day. But apparently only good for one year. It seems that the US government has been concerned about foreign nationals arriving here, "losing" their passports, and then getting new ones in an effort to avoid anybody noticing that they stayed far longer than their tourist visas permitted. This avoids their being blacklisted for future travel. In most cases passports are not even renewed: the person is usually given a one-way transit document good for only a few months and allowing the holder to go home.

I was allowed to get an actual passport because my old one which was issued in 1973 was "lost" so long ago and because there's no question of my legal status in the US. Still, at the US government's insistence, I can only get a 1 year document after reporting a loss. In six months I can go back and request that it be extended out for an additional nine years, upon proof of being here legally, which I already provided.

Yet another example of our Department of Homeland Security generating lots of rules and "action" with no real results.

Weekend Cat Update

The RHIGF is the source of only one type of problem hair this week. With the recent increase in temps, shedding activity has increased significantly. Time for some serious grooming.

Panorama Photo Update

Got myself this neat little device from Really Right Stuff, who make some of the coolest camera-support equipment available. I've calibrated it and did some experiments, and it's pretty fantastic. Don't have any really worthy images, but look for some soon. My 20mm lens seems to be just about perfect for panoramas on the digital Nikon.

iPhone Mania

My own take on this is that it'll open up the smartphone market for consumers in a way that it has never been open before. That said, as Kevin Wassong notes, it's not a device for my mom, and in truth is overkill for my needs too.

But it's not going to displace the BlackBerries in the business market until things like integration with enterprise email servers are worked out, and possibly not even then. I have not had good results with touch-screen keyboards of any size in the past and am somewhat skeptical of the reviews claiming that it's not an issue. Maybe not for casual consumer web surfing, but has a real crackberry addict tried it and liked it?

The Death of Biotech and Pharma

David Miller of Biotech Stock Research points out in this month's newsletter that it is quite possible that biotech and pharma, along with much of health care, is likely to become uninvestible in the coming years. Copyrighted stuff, so can only give tidbits here. Justifications for this are mostly political: in addition to the liklihood of more regulation and price controls, the FDA has come under so much political pressure to avoid approving drugs with risks, that the liklihood of approval has been signficiantly reduced, the liklihood of approval subject to ongoing re-evaluation much increased, and thus the costs of bringing something to market increased signficantly. At this point a drug that experiences significant side-effects in only 1% of the people who take it is being questioned. That type of scrutiny would have kept lots of current drugs off the market. It is a big deal.

He forecasts that in coming years, we'll see a move away from drugs that work for everybody and towards solutions that integrate genetic testing of the potential patient, with a selection of drugs that are uniquely suited to that patient. From my perspective, the problems with this will continue to be political. What if you come up with a drug that works well only with people whose "genetic identifier" includes the gene for blue eyes or low-skin pigmentation? Think the polticians won't intervene against a "racist" cure, even if grounded in good science?

Summer Travel

It looks like this summer's travel will be mostly related to my mom's upcoming move. While my brother and I are happy to finally see this happen, an August move in Manhattan is not sounding like fun.

Perhaps I'll manage to squeeze in a quick birthday trip to the mountains.

-btc