Step Into My Time Machine

Back in 1998, my book of business was a smoldering mess, reeling from the 1997 debacle. I had been fired from my previous firm, supplanted from the office I was placed in at my new firm for lack of production, and generally hating life being the sole source of income for my wife and newborn son. In the summer of 1998 the Russian crisis hit, aka “Asian contagion”, and it wreaked havoc on equity markets, sending the Nazzy down a cool 30%+ in a matter of 8 weeks.

Whatever clients I had left were decimated, reduced to rubble, thanks to the ruble. At that point in time, I was looking to switch careers. I never really made any money, so I had nothing to lose and nothing to gain by staying.

After failing to secure “a real job”, I had no choice but to get to work.

bks

Barnes and Noble’s was one of the stocks I was buying, getting smoked daily like a pack of Benson and Hedges. Unlike today, BKS was a hot stock. They were supposed to take on AMZN for online bookstore dominance. They even had a deal with MSFT that led people to believe they’d beat AMZN’s face in.

WRONG.

But the point is, it was a momo stock, lifted more on sentiment than fundamentals. As you can see, when the animal spirits left Wall, the stock lost its floor and crashed 50% in a few months.

Look at today’s momo stocks. Even though the Nazzy is only off 6% from the highs, there are stocks down 30-40% on no news, simply a side effect of cancer infecting the minds of speculators. Clearly, this is overdone. Nothing goes down in a line. Nothing goes up in a line. Nothing lasts forever, except death.

Based on the current numbers, if the Nazzy fell by another 25% (LOL!), FEYE would be down around 80% from the top, sitting at around $15. C’mon son.

Just like 1998, this market isn’t going down on fundies. It’s going down because of fear. When the fear dissipates (look at that chart), we are going to whipsaw around faster than you can shoot your margin clerks in the head.

I built my business in 1998, went from supreme piker to #3 producer at the firm in less than a year. It was a crazy lifestyle change for me, as I was literally sitting at 10% equity at the time we bottomed. Accounts were teetering on zero equity, long internet stocks into the teeth of insanity. Everyone around me was in cash and warned me to stop buying stocks. Stubbornly, I kept calling people, telling them to “buy the blood and drink it like a fucking Vampire in a blood bank.”

When it bottomed, my money line went apeshit to the upside. I even got my office back. Clients sent me their friends, mothers and grandmothers to manage–all setting up for another grande fiasco in 2000. But that’s another story.

Imagine Yourself on the Equator

You’re watching American television, with rabbit ears affixed, trying to glean some American culture from the novelas. You see people with iPhones and wonder what it’s like to own one. After a siesta and subsequent armed robbery, you head out to the market to see what’s for sale.

BEHOLD: The “iFON”!
Verykool_i315_12

What sort of iPhone is it? The clerk shoots back: “it is a Very Kool IFON, señor. Here, take a look. They make it in red now.” Suspicious of the new wares in the local market, you run to the cafe and ask the owner if you could use his computer to view the internet. After dialing up, you see that the Very Kool phone is indeed made in California. It is an authentic “iFON.”

All of you friends and wives are jealous of your new status, as an owner of a luxurious American product. They too run over to their bodegas to buy “the iFon”, with the hopes of being able to look like the rich people on the television. It worked! You are now rich and people respect you, as you walk down the barrio with a brand new “Very Kool” phone, painted cherry red, upon your elaborate ear.

NOTE: I added to my IFON position.

How Much Money Will You Have When You’re Dead?

I’m not sure what the demographics are like on this site, especially since I don’t pay any mind to statistics and have a general disdain for that sort of thing–placing people into neatly fit boxes and the like. But I get the sense that a great many of you are under the tender age of 47.5. As you know, anyone older than 47.5 is strictly prohibited from viewing this blog and shall be executed on site, if caught doing so. Furthermore, it is the age at which “The Fly” will retire from blogging, pass on the crown to a younger, more deserving, trader/investor, who will carry on the traditions of financial debauchery, until he relinquishes said throne at 47.5 years of age.

When I was younger, I used to stuff money into envelopes, budgeting for the months’ expenses. One envelope was for “rent”, another for “electricity” and so on and so forth. I spent all of the money that I had, save my investments in the market, which I smartly spared due to keeping the dream alive, supporting a child and wife. I was in my early 20s and the market was an unforgiving monster. I couldn’t handle the volatility and money was tight for a long time.

I recall one New Year’s, being as happy as a troll inside of the comments section, because I had taken home the enormous sum of $4,250. Back then, I thought it was all the money in the world. Soon after New Year’s, my 8 month old son, wife and myself celebrated over dinner at the local diner. I might’ve ordered a “Romanian steak.” The whole meal had to cost no more than $50. But it was a luxury for me, as I was accustomed to living lean and eating even leaner.

As time went on and the market improved, so did my paychecks. I moved out of the basement apartment, which I rented from a bastard of a landlord, and into a brownstone. It took me a long time to move, since I always felt the good times wouldn’t last. A friend of mine, who started the business the same time as me, used to park his brand new Mercedes in my driveway–right outside my basement apartment. He spent his money as fast as he made it. He achieved success faster than me; but his didn’t last as long.

Soon enough, the checks grew from $4,250 to $10,000 to $50,000 per month and so on and so forth. It’s true when they say “the more you make, the more you spend.” Last month we spent upwards of $3,500 on groceries alone. We didn’t buy anything exotic or elaborate, just ordinary meat and vegetables from the local Whole Foods. We are consumers at heart. I think it has a lot to do with mortality and our desire to live the best with the time that we have here. Only a handful of us are able to save a lot of money. Most of the people I know would be flat broke, if it weren’t for their enormous monthly paychecks. Gone are the days of frugality, when people saved for rainy days and put money aside for their children’s inheritance.

These days, I’m afraid the stock market is used to finance the personal pyramid schemes people have going on. They spend so much money on gratuitous items; but make it all up in a week or two at the races, also known as the stock market.  Either way, this is an unsustainable way to live. Get your lives in order, man, else you’ll be singing the blues when this hit parade ends.

We talk about making money a lot here and have plenty of talented traders present to help you make more money. But no one tells you to ease up on the drunken spending sprees. You’re gonna regret it one day, as I’ve once regretted my debaucherous ways. It took a second wind to give my boat another go around, something I am grateful for. It’s not often that people are given a second chance at success. Most of the time you’re given that chance, through hard work or luck; and if you blow it, it’s gone forever. My grandfather comes to mind when thinking about that subject, a story for another day.

The moral of the story is: set up trust accounts, SEP IRA’s, invest in property before you buy that new Benz.  Be smart and try not to live your whole life now, for it’s going to last a long time and you’ll need some of that worthless fiat cash to get you through the latter years.

A Gentleman’s Guide to Valentine’s Day

Valentine’s day was designed to allow a gentleman the opportunity to lavish his loved one(s) with concern (love), in order to demonstrate his magnanimous demeanor. It is a day to ennoble her with a high end affair, so that–she too–might enjoy a fleeting sense of entitlement before having to fetch the water and bathe the children.

I am going to reveal to you, in no uncertain terms, how a gentleman should behave on this illustrious day of love and decadence.

First, have your secretary send her two dozen, long stemmed, roses. If you err and send her just one dozen, you risk looking cheap and/or cliche. Also, should you send her short stemmed roses, you might as well couple the delivery with divorce papers–because that’s the type of signal you’d be sending.

DO NOT send her chocolate or any other gifts for that matter. Remind her that the unwashed stuff their fat faces with sugary treats on this fine day. Explain to her that “we’re better than them,” while offering a small kiss upon her forehead. The reason to avoid buying her gifts is simply a matter of manners. It would be rude of her to expect extravagant gifts on a day as sensual as Valentine’s Day. Reserve the diamonds and the shoes for her birthday.

Next, make reservations for the most expensive restaurant within 20 miles of your home. If it’s too far, you risk ruining the mood because of “gratuitous traffic.” The very best food is NOT important, only the most expensive.

At dinner, make sure to order for her. Do not humor her with the notion that she could make her own decisions. Real gentlemen always know what’s best for their ladies and provide for them. Marriage isn’t a democracy, but a benevolent dictatorship. To that end, be sure you watch her waist when you order. Too many calories could spell catastrophe for the longevity of your union.

Skip dessert, as it is the meal of gluttons. Anyone who relishes in dessert are underserving of being a gentleman and cast a terrible shadow over the longevity of his marriage. To embrace dessert is also to embrace obesity and assured death. Never forget that.

After dinner, take her to theatre, regardless of how she might feel about it. You know best and civilized society are patrons of the arts. It is your shared responsibility to attend theatre on this day.

After theatre, have your driver take you to the nearest 4 star hotel, reserved by your secretary at your behest. The details of this part of the instruction shall be excluded, in order to preserve the decency of the message, which is also part and parcel of being a gentleman.

Upon arriving home, bid her a good night and retire to the library, where you might read a good book, whilst smoking a nice pipe. Ask her to serve you some tea and to tend to the children.

Is this the Top?

Certainly not.

After each new high comes renewed cat-calls of “blow-off tops” supported by one weak stock or another. The dialogue might sound something like this:

Bob: Did you read Zerohedge today? Boy, I’ll tell ya, this market is really due for a correction. All of that margin is bound to really cut some penises off.

Frank: What the hell are you talking about Bob? Why don’t you go stuff your head inside of a musket and pull the trigger. I’m busy making money in stocks. Leave me the hell alone.

Bob: Hey, what’s up your ass, permabull. I’m just trying to help you out. After all, I know you since we were like sperm cells and don’t want to see you lose money.

Frank: Shut the hell up Bob. The next word out of your mouth, I am going to take this computer and break your skull with it.

Bob: I’ll just leave you with one word, jackass: NETFLIX.

Frank: What the hell is that supposed to mean? (busy smoking cigarette while executing trades)

Bob: Well, duh, it’s down 5% today and that has been the bulls’ number one momentum stock.

Frank: Hey, tell me this Bob, does your wife stay with you because she feels sorry that you lost all of your money shorting the market or is she just stupid and has nowhere else to go? She is a pretty girl, after all.

Bob: Make jokes all you want, Frank. I am going to be dancing on your grave soon enough. And I won’t stop there. I am going to dig up your grave, rip your skeleton out from the coffin and skull fuck you as the market tanks.

Frank: Blow me. Now go fetch me a coffee.

Bob: I’m heading out to lunch now. I just bought some VIX options. It’s a layup here. I am telling you.

Frank: You know what’s a layup here Bob?

Bob: What Frank? Tell me something clever.

Frank: Your wife Bob. Your wife is a layup here.

Bob: (fist pumps as he executes another $2,000 order in TZA)

Frank: Are you buying that TZA again? You’re better off taking a nice bubble bath and then dropping a toaster in it, than messing around with that thing.

Bob: You will see.

Frank: Didn’t you lose like $500,000 in that thing back in 2009?

Bob: It wasn’t that much, but close.

Frank: I’m telling you Frank, your wife is definitely a lay up here. She’s just waiting for a reason to leave your dumbass.

Bob: (fist pumps with excitement as NFLX ticks lower)

Frank: Jesus Christ you need help. You don’t even own puts on the darn thing. Come, let’s go to lunch. It’s on me.

Bob: Thanks. They’re having a special at the diner downstairs.

Are You Prepared to Die?

My grandfather made a lot of money when he was young. He spent it as fast as he made it, never bothered to buy a house, and didn’t believe in saving for a rainy day. After all, he was a living ATM machine, an artist of sorts, refinisher of furniture at a time when people cared about craftsmanship. He had famous clients, such as “Mr. Progresso” and wore a yamaka whenever a jewish client walked into his shoppe. He knew how to make money and provided for his family for decades, until he woke up one morning without the ability to see.

High blood pressure was always an issue; but he never imagined it would take his vision and part of his hearing to boot. He could see a little bit, but not enough to cross a street, drive a car and definitely not enough to refinish furniture for Mr. Progresso.

Since he didn’t save any money and his business was 100% reliant upon his craftsmanship, he was thrusted into poverty, almost overnight. For years, until his death, he agonized over his missteps, almost daydreaming about “all of the money” he blew on bullshit. He had cars, clothes and rubbed elbows with the Sinatras and other unsavory characters, and then nothing. Total and absolute dependence on social security checks that amounted to no more than $1,000 per mo, because he was creative with his accounting when he was making money, if you know what I mean.

Seeing him struggle like that always motivated me to do something with my life. I didn’t want to just make a bunch of money, blow it on cocaine parties, then end up grilling a swordfish over a flaming barrel of garbage. Some men are like peacocks, dressing themselves up in flamboyant clothes, tattoos, and creative hairstyles, in order to attract the female species. These people have not evolved in over 400,000 years, base instincts on display like savage beasts.

Life has to be more than that. Happiness must derive from accomplishments and then using said accomplishments to make the world a better place. The world doesn’t have to be “the world” per se, but your sphere of influence.

I’m rambling a bit here. But the point is this: if you’re banking coin now, save for a rainy day. Live within your means and make sure you continue to grow as a person. Read things you wouldn’t normally read. Be curious and always adapt to change. As an advisor for people with a lot of money, the biggest mistake I see people making, aside from tax planning, is retirement planning.

Own your house. Build equity. Invest in stocks. Bank the coin. Build Orbital Space Cannon. That’s my life strategy. What’s yours?

How to Comport Oneself as a Guest at a Thanksgiving Dinner Party

Last year we dove into the etiquette required to host a Thanksgiving Dinner party.  Now we will address the important matter of comporting oneself as a guest, during the great holiday of Thanksgiving.

Upon arrival, hand the footman answering the door the sweets in your possession, as a gift to the host. You bring them in abundance, whether or not they are diabetic, on strict diets, or allergic to wheat. You bring them, nonetheless.

Example: “Hello Jeffrey (the name of the footman), please take this chocolate cake to the kitchen as a gift for my diabetic mother-in-law.”

After entering the home, be sure to exchange pleasantries with the hosts, both husband and wife. However, feel free to snub everyone else in a sudden act of aloofness.

Example: “Thank you so much for having us in your home (shaking the hand of the male, then kissing the right cheek of the female, keeping a 6 inch distance at all times). Immediately after being received, walk briskly and with purpose to the rear of the house, making believe everyone else were insignificant peasants of an underclass– invisible.

During refreshments, take up some casual conversation with the older looking men. They tend to harbor a great deal of vitriolic hate, since they’re markedly closer to death. It makes for great cocktail entertainement.

Example: “Hello Bill, have you been seeing all of those elderly people getting punched in the face by hyper-active urban students? I believe they call the game ‘knock-out.’ I read somewhere that Obamacare was going to issue free steel masks for the elderly to pre-empt expensive  surgeries. Would you wear one?”

When dinner is announced, be sure to avoid sitting across from attractive ladies, as it might get you in unnecessary trouble with your wife during dinner. When the host requests that everyone donate to his charity of choice, due to some sympathetic cause, excuse yourself to the lavatory until after donations are taken.

Example: After hearing the request, call over one of the footmen and ask him to show you where the bathroom is located. “Excuse me William, would you be a sport and show me where you keep the bathroom hidden. I must relieve myself.”

Just before grace is said, ask the host if you could do the honors of offering a few words of thanks. During your brief speech, be sure to plug your company and/or services in a clever way that might appeal to the affluent gents in attendance.

Example: “Dear Lord, please bless these turkeys before they head into our mouths and stomachs.Thank you for allowing my firm (name of company) to excel this year with 30% gains in the stock market for the fifth consecutive year. I am sure we all have things to be thankful for and I felt it would be selfish of me if I didn’t speak my mind on this joyous occasion to let you know how pleased I am with the talents you’ve bestowed upon me. Omen.” (be sure to say “Omen” and not “Amen”, as it suggests better breeding.)

Following dinner, when the females are introduced to the aprons and the men retire to the antechamber for port and cigars, be sure to ally yourself with most aggressive debater, as it will allow you to vanquish the other males without breaking a sweat.

Example: “Bob is right. All of the evidence points towards CNBC being run by a homosexual mafia. Anyone who suggests otherwise, like Bob said, must have something to hide. QED.” (break the ash from your cigar, inadvertently onto the persian rugs below.) “I’m so sorry about that.”

When the ladies have cleaned up and are re-invited into the drawing room, feel free to establish small talk.

Example: “I really feel that if a mother doesn’t nurse a newborn with her own milk, such a mother is failing at her duties and should be replaced. Any father in his right mind knows this goes against the laws of nature and should prevent this abuse from occurring with all of his will.” Other gents chime in “HEAR! HEAR!” rattling their canes onto the floors below.

After several ladies complain about your remarks in disgust, pardon yourself and blame it on the excessive alcohol being served.

Example: “I am very sorry Mrs. Thompson. I believe Bill here has given me too much to drink, as I am not my usual self. TEN THOUSAND APOLOGIES.”

Shortly after, excuse yourself to the restroom and feign sickness. This will allow you to leave early, and avoid boredom.

Example: After coming back from the bathroom, holding your stomach, say “I am very sorry but Margaret and I must be going now, I am feeling rather ill. Perhaps the turkey or the port didn’t agree with me. Thank you so much for this lovely dinner.” Try to add a slight bit of sarcasm towards the end of the last sentence, but not overtly. You do not want to come off as rude.

When the hosts walk with you to the door to see you out, just before kissing the female host goodbye, make believe you’re about to vomit on her–but catch yourself with a clenched fist to the mouth.

Example: “Bill and Diane, I wish we could stay longer. This was lovely. (lean in to kiss Diane goodbye, then let the faux nausea begin!) Oh, my, I am really feeling rather ill and should depart at once.  I bid you goodbye.” (tips hat, pushes open door with cane, exits).

Fly’s Tale of a Debt Ceiling Breach

As the Tea Party caucus in Congress sang “Amazing Grace“, mezzo-soprano, the debt ceiling was breached and the Unites States of America missed its first interest payment.

Back at the office de Fly, stocks were drowning like pigs in quicksand. Using his new powers of brute strength, “The Fly” punched a giant hole in his computer, ripped the tower from his stupid desk, and proceeded to smash it to the smallest of pieces, slowed down only by his knuckles breaking under the pressure of his thrusts.

Panic gripped Wall Street, 1929 style, with traders and investors alike sky-diving out from their office windows, sans parachute.

The news channels were very busy, very busy indeud. In the midst of all the fuss, Charles Gasparino, from the Fox Business news channel, was caught on camera masturbating to the carnage. James Cramer knocked out Bob Pisani on live teevee and David Faber broadcasted the news completely in the nude.

Dennis Kneale was killed by an errant rocking chair.

The internet was rampant with schadenfreude, spearheaded by the bitCoiners and Gold bugs. Zerohedge revealed his true identity in a live webcast in front of the NYSE, as it burned to the ground–lit aflame by angry TSLA shareholders crashing their trendy cars into the complex.

Back at the office de Fly, the masked man took to the streets to incite riot, burn people alive at the tip of his stick over flaming barrels of garbage, like marshmallows at a camp fire. The transition from gentleman investor to revolutionary cannibal was complete–all in a day.

The White House was eerily quiet, with The Obama clan, gingerly and quietly, enjoying a match of bowling, over large bowls of fried rice and chicken wings.

Rick Santelli was so happy over the ensuing tragedies, he cried on teevee, then died of a massive stroke.

By the end of the trading session, miraculously, stocks recovered all of its losses, following a surprise telecast from Benjamin Bernanke.

In a dimly lit room, sitting with his legs crossed in a Victorian era chair, whilst smoking a large philly blunt brimming with Jamaican marijuna, Dr. Bernanke said: “I got you bitches again. I bought that shit, motherfuckers, all of it.”

Poltergeist.

GO HOME

This market isn’t worth buying.

Any of you fine gents trade during the “Asian Contagion” markets of 1998? I built my business off of that crash. My CEO was running in the halls at 11 am, forcing brokers to cover margin calls right away, instead of the traditional 3 pm deadline. There was a panic in the boardroom, one that I haven’t seen since post 9/11 and 2008.

Stocks just got cheaper and cheaper.

I had just moved firms and only had 1 client, brand new to the business, young and fearless. I called people up and told them to buy internet stocks into the weakness. I was buying BYND in size. Well, “size” then was a minor  sub 7 figure position. But it meant a lot to me then. The shares got crushed and I was down to 25% equity on the accounts I assembled.

I stopped going to work because I couldn’t afford the expense of traveling on the subway and eating lunch, as well as dry cleaning. I was washing my shirts in the sink and my wife would iron them at night. That’s how poor I was, unable to pay my bills, living off credit cards.

I got lucky. The market turned because the panic ended. It lasted far longer than anyone expected. BYND went from $8ish to $13 almost overnight. I had small accounts go from $3k to $15k. I was the definition of piker, but tried to change that by building on the momentum the market turn had created.

I’ve told this story here several times over the past 5 years. You know how it ends. I built up a new client base and leveraged myself to the hilt on high beta internet stocks that just worked. The market never looked back and before long I was making over $100k per month.

My life changed, but the good times wouldn’t last very long.

Since I’ve been in this business, the market has melted down on a regular basis. In a way, I am an expert on market crashes and calamities. The one thing that I’ve learned, and could hopefully pass on to some of the younger traders out there, is dislocations tend to last longer than anyone could ever imagine, save Zerohedge. There are significant credit disruptions in the muni and corporate debt markets, as well as government.

Just look at my Risk Appetite Index and cringe, then think, then go home.

RAI

The Important Matter of Easter Sunday

Two thousand years ago today, the son of God became a zombie.

Jesus

Zombie Jesus was pissed off because some greasy Italians had tortured and killed him. Being the son of God and all, he came back as “Zombie Jesus” to exact revenge on his enemies. Rumor has it, Zombie Jesus liked to catch his prey when they least expected it, on fishing boats, hot air balloons and even in outerspace.

One time he parted the sea and ate a Roman solider, who was scuba diving, looking at the pretty fish.

About 1,000 years after Zombie Jesus exacted revenge on the people who tortured and killed him, while in heaven, he created a man-sized rabbit to descend upon his enemies and dubbed it “The Easter Bunny.” Back in the old days, before the Easter Bunny was gentrified, doling out chocolates to well behaved Christian boys and girls, he’d bite off the heads (like a carrot) of the descendants of the original Roman soldiers who killed him.

A long time ago, every Easter, the city of Rome was wrapped in fear, as no one really knew who was related to those original Roman soldiers. They’d hide themselves inside cupboards, amphoras and sewers, to escape the Easter wrath.  For Italian citizens, it was like playing the Wheel of Fortune, with the grande prize being a hideous bunny rabbit gnawing away at your head, like a carrot, until you dropped dead. This went on for many centuries until chocolate was invented.

Jesus loved chocolate so much, he became addicted to it. God would always tell him “to lay off that stuff. It will rot your teeth.” Jesus ignored his Father’s wishes and kept eating chocolate, until one day God snatched away his chocolate cows and sent him to his room to do penance for disobeying him. When it was time for the annual Easter killings to commence, Jesus was nowhere to be found. The Easter Bunny searched for him high and low; but God hid him well.

The Easter Bunny became panicked and started to spaz out in heaven, punching angels in the face and what not. Then he spotted Jesus’ chocolate cow, which was hidden behind the tablets of the 10 commandments. It was at that point that he knew Jesus had been punished by God and this pissed him off. He took the chocolate cow and made millions of pieces of chocolate, in his likeness, with it. After all, it was Jesus’ favorite food.

He then delivered the chocolate to millions of human children, God’s favorite form of human.

When God found out about this, he was pissed off- but could do nothing to stop The Easter Bunny, for he was hidden in Jesus’ old hiding spot, unknown by God. The Easter Bunny sent a letter to God, saying “release Jesus, or else every Easter I will deliver the chocolate cow pieces to millions of human boys and girls, much to your chagrin.”

God replied by making rabbit the preferred protein for the country of France.

To this day, Jesus is tucked away in his room, doing penance and The Easter Bunny is running amok, dropping off chocolate cow pieces to children all across the globe.

Now you know the true definition of Easter.

 

Step Into My Time Machine

Back in 1998, my book of business was a smoldering mess, reeling from the 1997 debacle. I had been fired from my previous firm, supplanted from the office I was placed in at my new firm for lack of production, and generally hating life being the sole source of income for my wife and newborn son. In the summer of 1998 the Russian crisis hit, aka “Asian contagion”, and it wreaked havoc on equity markets, sending the Nazzy down a cool 30%+ in a matter of 8 weeks.

Whatever clients I had left were decimated, reduced to rubble, thanks to the ruble. At that point in time, I was looking to switch careers. I never really made any money, so I had nothing to lose and nothing to gain by staying.

After failing to secure “a real job”, I had no choice but to get to work.

bks

Barnes and Noble’s was one of the stocks I was buying, getting smoked daily like a pack of Benson and Hedges. Unlike today, BKS was a hot stock. They were supposed to take on AMZN for online bookstore dominance. They even had a deal with MSFT that led people to believe they’d beat AMZN’s face in.

WRONG.

But the point is, it was a momo stock, lifted more on sentiment than fundamentals. As you can see, when the animal spirits left Wall, the stock lost its floor and crashed 50% in a few months.

Look at today’s momo stocks. Even though the Nazzy is only off 6% from the highs, there are stocks down 30-40% on no news, simply a side effect of cancer infecting the minds of speculators. Clearly, this is overdone. Nothing goes down in a line. Nothing goes up in a line. Nothing lasts forever, except death.

Based on the current numbers, if the Nazzy fell by another 25% (LOL!), FEYE would be down around 80% from the top, sitting at around $15. C’mon son.

Just like 1998, this market isn’t going down on fundies. It’s going down because of fear. When the fear dissipates (look at that chart), we are going to whipsaw around faster than you can shoot your margin clerks in the head.

I built my business in 1998, went from supreme piker to #3 producer at the firm in less than a year. It was a crazy lifestyle change for me, as I was literally sitting at 10% equity at the time we bottomed. Accounts were teetering on zero equity, long internet stocks into the teeth of insanity. Everyone around me was in cash and warned me to stop buying stocks. Stubbornly, I kept calling people, telling them to “buy the blood and drink it like a fucking Vampire in a blood bank.”

When it bottomed, my money line went apeshit to the upside. I even got my office back. Clients sent me their friends, mothers and grandmothers to manage–all setting up for another grande fiasco in 2000. But that’s another story.

Imagine Yourself on the Equator

You’re watching American television, with rabbit ears affixed, trying to glean some American culture from the novelas. You see people with iPhones and wonder what it’s like to own one. After a siesta and subsequent armed robbery, you head out to the market to see what’s for sale.

BEHOLD: The “iFON”!
Verykool_i315_12

What sort of iPhone is it? The clerk shoots back: “it is a Very Kool IFON, señor. Here, take a look. They make it in red now.” Suspicious of the new wares in the local market, you run to the cafe and ask the owner if you could use his computer to view the internet. After dialing up, you see that the Very Kool phone is indeed made in California. It is an authentic “iFON.”

All of you friends and wives are jealous of your new status, as an owner of a luxurious American product. They too run over to their bodegas to buy “the iFon”, with the hopes of being able to look like the rich people on the television. It worked! You are now rich and people respect you, as you walk down the barrio with a brand new “Very Kool” phone, painted cherry red, upon your elaborate ear.

NOTE: I added to my IFON position.

How Much Money Will You Have When You’re Dead?

I’m not sure what the demographics are like on this site, especially since I don’t pay any mind to statistics and have a general disdain for that sort of thing–placing people into neatly fit boxes and the like. But I get the sense that a great many of you are under the tender age of 47.5. As you know, anyone older than 47.5 is strictly prohibited from viewing this blog and shall be executed on site, if caught doing so. Furthermore, it is the age at which “The Fly” will retire from blogging, pass on the crown to a younger, more deserving, trader/investor, who will carry on the traditions of financial debauchery, until he relinquishes said throne at 47.5 years of age.

When I was younger, I used to stuff money into envelopes, budgeting for the months’ expenses. One envelope was for “rent”, another for “electricity” and so on and so forth. I spent all of the money that I had, save my investments in the market, which I smartly spared due to keeping the dream alive, supporting a child and wife. I was in my early 20s and the market was an unforgiving monster. I couldn’t handle the volatility and money was tight for a long time.

I recall one New Year’s, being as happy as a troll inside of the comments section, because I had taken home the enormous sum of $4,250. Back then, I thought it was all the money in the world. Soon after New Year’s, my 8 month old son, wife and myself celebrated over dinner at the local diner. I might’ve ordered a “Romanian steak.” The whole meal had to cost no more than $50. But it was a luxury for me, as I was accustomed to living lean and eating even leaner.

As time went on and the market improved, so did my paychecks. I moved out of the basement apartment, which I rented from a bastard of a landlord, and into a brownstone. It took me a long time to move, since I always felt the good times wouldn’t last. A friend of mine, who started the business the same time as me, used to park his brand new Mercedes in my driveway–right outside my basement apartment. He spent his money as fast as he made it. He achieved success faster than me; but his didn’t last as long.

Soon enough, the checks grew from $4,250 to $10,000 to $50,000 per month and so on and so forth. It’s true when they say “the more you make, the more you spend.” Last month we spent upwards of $3,500 on groceries alone. We didn’t buy anything exotic or elaborate, just ordinary meat and vegetables from the local Whole Foods. We are consumers at heart. I think it has a lot to do with mortality and our desire to live the best with the time that we have here. Only a handful of us are able to save a lot of money. Most of the people I know would be flat broke, if it weren’t for their enormous monthly paychecks. Gone are the days of frugality, when people saved for rainy days and put money aside for their children’s inheritance.

These days, I’m afraid the stock market is used to finance the personal pyramid schemes people have going on. They spend so much money on gratuitous items; but make it all up in a week or two at the races, also known as the stock market.  Either way, this is an unsustainable way to live. Get your lives in order, man, else you’ll be singing the blues when this hit parade ends.

We talk about making money a lot here and have plenty of talented traders present to help you make more money. But no one tells you to ease up on the drunken spending sprees. You’re gonna regret it one day, as I’ve once regretted my debaucherous ways. It took a second wind to give my boat another go around, something I am grateful for. It’s not often that people are given a second chance at success. Most of the time you’re given that chance, through hard work or luck; and if you blow it, it’s gone forever. My grandfather comes to mind when thinking about that subject, a story for another day.

The moral of the story is: set up trust accounts, SEP IRA’s, invest in property before you buy that new Benz.  Be smart and try not to live your whole life now, for it’s going to last a long time and you’ll need some of that worthless fiat cash to get you through the latter years.

A Gentleman’s Guide to Valentine’s Day

Valentine’s day was designed to allow a gentleman the opportunity to lavish his loved one(s) with concern (love), in order to demonstrate his magnanimous demeanor. It is a day to ennoble her with a high end affair, so that–she too–might enjoy a fleeting sense of entitlement before having to fetch the water and bathe the children.

I am going to reveal to you, in no uncertain terms, how a gentleman should behave on this illustrious day of love and decadence.

First, have your secretary send her two dozen, long stemmed, roses. If you err and send her just one dozen, you risk looking cheap and/or cliche. Also, should you send her short stemmed roses, you might as well couple the delivery with divorce papers–because that’s the type of signal you’d be sending.

DO NOT send her chocolate or any other gifts for that matter. Remind her that the unwashed stuff their fat faces with sugary treats on this fine day. Explain to her that “we’re better than them,” while offering a small kiss upon her forehead. The reason to avoid buying her gifts is simply a matter of manners. It would be rude of her to expect extravagant gifts on a day as sensual as Valentine’s Day. Reserve the diamonds and the shoes for her birthday.

Next, make reservations for the most expensive restaurant within 20 miles of your home. If it’s too far, you risk ruining the mood because of “gratuitous traffic.” The very best food is NOT important, only the most expensive.

At dinner, make sure to order for her. Do not humor her with the notion that she could make her own decisions. Real gentlemen always know what’s best for their ladies and provide for them. Marriage isn’t a democracy, but a benevolent dictatorship. To that end, be sure you watch her waist when you order. Too many calories could spell catastrophe for the longevity of your union.

Skip dessert, as it is the meal of gluttons. Anyone who relishes in dessert are underserving of being a gentleman and cast a terrible shadow over the longevity of his marriage. To embrace dessert is also to embrace obesity and assured death. Never forget that.

After dinner, take her to theatre, regardless of how she might feel about it. You know best and civilized society are patrons of the arts. It is your shared responsibility to attend theatre on this day.

After theatre, have your driver take you to the nearest 4 star hotel, reserved by your secretary at your behest. The details of this part of the instruction shall be excluded, in order to preserve the decency of the message, which is also part and parcel of being a gentleman.

Upon arriving home, bid her a good night and retire to the library, where you might read a good book, whilst smoking a nice pipe. Ask her to serve you some tea and to tend to the children.

Is this the Top?

Certainly not.

After each new high comes renewed cat-calls of “blow-off tops” supported by one weak stock or another. The dialogue might sound something like this:

Bob: Did you read Zerohedge today? Boy, I’ll tell ya, this market is really due for a correction. All of that margin is bound to really cut some penises off.

Frank: What the hell are you talking about Bob? Why don’t you go stuff your head inside of a musket and pull the trigger. I’m busy making money in stocks. Leave me the hell alone.

Bob: Hey, what’s up your ass, permabull. I’m just trying to help you out. After all, I know you since we were like sperm cells and don’t want to see you lose money.

Frank: Shut the hell up Bob. The next word out of your mouth, I am going to take this computer and break your skull with it.

Bob: I’ll just leave you with one word, jackass: NETFLIX.

Frank: What the hell is that supposed to mean? (busy smoking cigarette while executing trades)

Bob: Well, duh, it’s down 5% today and that has been the bulls’ number one momentum stock.

Frank: Hey, tell me this Bob, does your wife stay with you because she feels sorry that you lost all of your money shorting the market or is she just stupid and has nowhere else to go? She is a pretty girl, after all.

Bob: Make jokes all you want, Frank. I am going to be dancing on your grave soon enough. And I won’t stop there. I am going to dig up your grave, rip your skeleton out from the coffin and skull fuck you as the market tanks.

Frank: Blow me. Now go fetch me a coffee.

Bob: I’m heading out to lunch now. I just bought some VIX options. It’s a layup here. I am telling you.

Frank: You know what’s a layup here Bob?

Bob: What Frank? Tell me something clever.

Frank: Your wife Bob. Your wife is a layup here.

Bob: (fist pumps as he executes another $2,000 order in TZA)

Frank: Are you buying that TZA again? You’re better off taking a nice bubble bath and then dropping a toaster in it, than messing around with that thing.

Bob: You will see.

Frank: Didn’t you lose like $500,000 in that thing back in 2009?

Bob: It wasn’t that much, but close.

Frank: I’m telling you Frank, your wife is definitely a lay up here. She’s just waiting for a reason to leave your dumbass.

Bob: (fist pumps with excitement as NFLX ticks lower)

Frank: Jesus Christ you need help. You don’t even own puts on the darn thing. Come, let’s go to lunch. It’s on me.

Bob: Thanks. They’re having a special at the diner downstairs.

Are You Prepared to Die?

My grandfather made a lot of money when he was young. He spent it as fast as he made it, never bothered to buy a house, and didn’t believe in saving for a rainy day. After all, he was a living ATM machine, an artist of sorts, refinisher of furniture at a time when people cared about craftsmanship. He had famous clients, such as “Mr. Progresso” and wore a yamaka whenever a jewish client walked into his shoppe. He knew how to make money and provided for his family for decades, until he woke up one morning without the ability to see.

High blood pressure was always an issue; but he never imagined it would take his vision and part of his hearing to boot. He could see a little bit, but not enough to cross a street, drive a car and definitely not enough to refinish furniture for Mr. Progresso.

Since he didn’t save any money and his business was 100% reliant upon his craftsmanship, he was thrusted into poverty, almost overnight. For years, until his death, he agonized over his missteps, almost daydreaming about “all of the money” he blew on bullshit. He had cars, clothes and rubbed elbows with the Sinatras and other unsavory characters, and then nothing. Total and absolute dependence on social security checks that amounted to no more than $1,000 per mo, because he was creative with his accounting when he was making money, if you know what I mean.

Seeing him struggle like that always motivated me to do something with my life. I didn’t want to just make a bunch of money, blow it on cocaine parties, then end up grilling a swordfish over a flaming barrel of garbage. Some men are like peacocks, dressing themselves up in flamboyant clothes, tattoos, and creative hairstyles, in order to attract the female species. These people have not evolved in over 400,000 years, base instincts on display like savage beasts.

Life has to be more than that. Happiness must derive from accomplishments and then using said accomplishments to make the world a better place. The world doesn’t have to be “the world” per se, but your sphere of influence.

I’m rambling a bit here. But the point is this: if you’re banking coin now, save for a rainy day. Live within your means and make sure you continue to grow as a person. Read things you wouldn’t normally read. Be curious and always adapt to change. As an advisor for people with a lot of money, the biggest mistake I see people making, aside from tax planning, is retirement planning.

Own your house. Build equity. Invest in stocks. Bank the coin. Build Orbital Space Cannon. That’s my life strategy. What’s yours?

How to Comport Oneself as a Guest at a Thanksgiving Dinner Party

Last year we dove into the etiquette required to host a Thanksgiving Dinner party.  Now we will address the important matter of comporting oneself as a guest, during the great holiday of Thanksgiving.

Upon arrival, hand the footman answering the door the sweets in your possession, as a gift to the host. You bring them in abundance, whether or not they are diabetic, on strict diets, or allergic to wheat. You bring them, nonetheless.

Example: “Hello Jeffrey (the name of the footman), please take this chocolate cake to the kitchen as a gift for my diabetic mother-in-law.”

After entering the home, be sure to exchange pleasantries with the hosts, both husband and wife. However, feel free to snub everyone else in a sudden act of aloofness.

Example: “Thank you so much for having us in your home (shaking the hand of the male, then kissing the right cheek of the female, keeping a 6 inch distance at all times). Immediately after being received, walk briskly and with purpose to the rear of the house, making believe everyone else were insignificant peasants of an underclass– invisible.

During refreshments, take up some casual conversation with the older looking men. They tend to harbor a great deal of vitriolic hate, since they’re markedly closer to death. It makes for great cocktail entertainement.

Example: “Hello Bill, have you been seeing all of those elderly people getting punched in the face by hyper-active urban students? I believe they call the game ‘knock-out.’ I read somewhere that Obamacare was going to issue free steel masks for the elderly to pre-empt expensive  surgeries. Would you wear one?”

When dinner is announced, be sure to avoid sitting across from attractive ladies, as it might get you in unnecessary trouble with your wife during dinner. When the host requests that everyone donate to his charity of choice, due to some sympathetic cause, excuse yourself to the lavatory until after donations are taken.

Example: After hearing the request, call over one of the footmen and ask him to show you where the bathroom is located. “Excuse me William, would you be a sport and show me where you keep the bathroom hidden. I must relieve myself.”

Just before grace is said, ask the host if you could do the honors of offering a few words of thanks. During your brief speech, be sure to plug your company and/or services in a clever way that might appeal to the affluent gents in attendance.

Example: “Dear Lord, please bless these turkeys before they head into our mouths and stomachs.Thank you for allowing my firm (name of company) to excel this year with 30% gains in the stock market for the fifth consecutive year. I am sure we all have things to be thankful for and I felt it would be selfish of me if I didn’t speak my mind on this joyous occasion to let you know how pleased I am with the talents you’ve bestowed upon me. Omen.” (be sure to say “Omen” and not “Amen”, as it suggests better breeding.)

Following dinner, when the females are introduced to the aprons and the men retire to the antechamber for port and cigars, be sure to ally yourself with most aggressive debater, as it will allow you to vanquish the other males without breaking a sweat.

Example: “Bob is right. All of the evidence points towards CNBC being run by a homosexual mafia. Anyone who suggests otherwise, like Bob said, must have something to hide. QED.” (break the ash from your cigar, inadvertently onto the persian rugs below.) “I’m so sorry about that.”

When the ladies have cleaned up and are re-invited into the drawing room, feel free to establish small talk.

Example: “I really feel that if a mother doesn’t nurse a newborn with her own milk, such a mother is failing at her duties and should be replaced. Any father in his right mind knows this goes against the laws of nature and should prevent this abuse from occurring with all of his will.” Other gents chime in “HEAR! HEAR!” rattling their canes onto the floors below.

After several ladies complain about your remarks in disgust, pardon yourself and blame it on the excessive alcohol being served.

Example: “I am very sorry Mrs. Thompson. I believe Bill here has given me too much to drink, as I am not my usual self. TEN THOUSAND APOLOGIES.”

Shortly after, excuse yourself to the restroom and feign sickness. This will allow you to leave early, and avoid boredom.

Example: After coming back from the bathroom, holding your stomach, say “I am very sorry but Margaret and I must be going now, I am feeling rather ill. Perhaps the turkey or the port didn’t agree with me. Thank you so much for this lovely dinner.” Try to add a slight bit of sarcasm towards the end of the last sentence, but not overtly. You do not want to come off as rude.

When the hosts walk with you to the door to see you out, just before kissing the female host goodbye, make believe you’re about to vomit on her–but catch yourself with a clenched fist to the mouth.

Example: “Bill and Diane, I wish we could stay longer. This was lovely. (lean in to kiss Diane goodbye, then let the faux nausea begin!) Oh, my, I am really feeling rather ill and should depart at once.  I bid you goodbye.” (tips hat, pushes open door with cane, exits).

Fly’s Tale of a Debt Ceiling Breach

As the Tea Party caucus in Congress sang “Amazing Grace“, mezzo-soprano, the debt ceiling was breached and the Unites States of America missed its first interest payment.

Back at the office de Fly, stocks were drowning like pigs in quicksand. Using his new powers of brute strength, “The Fly” punched a giant hole in his computer, ripped the tower from his stupid desk, and proceeded to smash it to the smallest of pieces, slowed down only by his knuckles breaking under the pressure of his thrusts.

Panic gripped Wall Street, 1929 style, with traders and investors alike sky-diving out from their office windows, sans parachute.

The news channels were very busy, very busy indeud. In the midst of all the fuss, Charles Gasparino, from the Fox Business news channel, was caught on camera masturbating to the carnage. James Cramer knocked out Bob Pisani on live teevee and David Faber broadcasted the news completely in the nude.

Dennis Kneale was killed by an errant rocking chair.

The internet was rampant with schadenfreude, spearheaded by the bitCoiners and Gold bugs. Zerohedge revealed his true identity in a live webcast in front of the NYSE, as it burned to the ground–lit aflame by angry TSLA shareholders crashing their trendy cars into the complex.

Back at the office de Fly, the masked man took to the streets to incite riot, burn people alive at the tip of his stick over flaming barrels of garbage, like marshmallows at a camp fire. The transition from gentleman investor to revolutionary cannibal was complete–all in a day.

The White House was eerily quiet, with The Obama clan, gingerly and quietly, enjoying a match of bowling, over large bowls of fried rice and chicken wings.

Rick Santelli was so happy over the ensuing tragedies, he cried on teevee, then died of a massive stroke.

By the end of the trading session, miraculously, stocks recovered all of its losses, following a surprise telecast from Benjamin Bernanke.

In a dimly lit room, sitting with his legs crossed in a Victorian era chair, whilst smoking a large philly blunt brimming with Jamaican marijuna, Dr. Bernanke said: “I got you bitches again. I bought that shit, motherfuckers, all of it.”

Poltergeist.

GO HOME

This market isn’t worth buying.

Any of you fine gents trade during the “Asian Contagion” markets of 1998? I built my business off of that crash. My CEO was running in the halls at 11 am, forcing brokers to cover margin calls right away, instead of the traditional 3 pm deadline. There was a panic in the boardroom, one that I haven’t seen since post 9/11 and 2008.

Stocks just got cheaper and cheaper.

I had just moved firms and only had 1 client, brand new to the business, young and fearless. I called people up and told them to buy internet stocks into the weakness. I was buying BYND in size. Well, “size” then was a minor  sub 7 figure position. But it meant a lot to me then. The shares got crushed and I was down to 25% equity on the accounts I assembled.

I stopped going to work because I couldn’t afford the expense of traveling on the subway and eating lunch, as well as dry cleaning. I was washing my shirts in the sink and my wife would iron them at night. That’s how poor I was, unable to pay my bills, living off credit cards.

I got lucky. The market turned because the panic ended. It lasted far longer than anyone expected. BYND went from $8ish to $13 almost overnight. I had small accounts go from $3k to $15k. I was the definition of piker, but tried to change that by building on the momentum the market turn had created.

I’ve told this story here several times over the past 5 years. You know how it ends. I built up a new client base and leveraged myself to the hilt on high beta internet stocks that just worked. The market never looked back and before long I was making over $100k per month.

My life changed, but the good times wouldn’t last very long.

Since I’ve been in this business, the market has melted down on a regular basis. In a way, I am an expert on market crashes and calamities. The one thing that I’ve learned, and could hopefully pass on to some of the younger traders out there, is dislocations tend to last longer than anyone could ever imagine, save Zerohedge. There are significant credit disruptions in the muni and corporate debt markets, as well as government.

Just look at my Risk Appetite Index and cringe, then think, then go home.

RAI

The Important Matter of Easter Sunday

Two thousand years ago today, the son of God became a zombie.

Jesus

Zombie Jesus was pissed off because some greasy Italians had tortured and killed him. Being the son of God and all, he came back as “Zombie Jesus” to exact revenge on his enemies. Rumor has it, Zombie Jesus liked to catch his prey when they least expected it, on fishing boats, hot air balloons and even in outerspace.

One time he parted the sea and ate a Roman solider, who was scuba diving, looking at the pretty fish.

About 1,000 years after Zombie Jesus exacted revenge on the people who tortured and killed him, while in heaven, he created a man-sized rabbit to descend upon his enemies and dubbed it “The Easter Bunny.” Back in the old days, before the Easter Bunny was gentrified, doling out chocolates to well behaved Christian boys and girls, he’d bite off the heads (like a carrot) of the descendants of the original Roman soldiers who killed him.

A long time ago, every Easter, the city of Rome was wrapped in fear, as no one really knew who was related to those original Roman soldiers. They’d hide themselves inside cupboards, amphoras and sewers, to escape the Easter wrath.  For Italian citizens, it was like playing the Wheel of Fortune, with the grande prize being a hideous bunny rabbit gnawing away at your head, like a carrot, until you dropped dead. This went on for many centuries until chocolate was invented.

Jesus loved chocolate so much, he became addicted to it. God would always tell him “to lay off that stuff. It will rot your teeth.” Jesus ignored his Father’s wishes and kept eating chocolate, until one day God snatched away his chocolate cows and sent him to his room to do penance for disobeying him. When it was time for the annual Easter killings to commence, Jesus was nowhere to be found. The Easter Bunny searched for him high and low; but God hid him well.

The Easter Bunny became panicked and started to spaz out in heaven, punching angels in the face and what not. Then he spotted Jesus’ chocolate cow, which was hidden behind the tablets of the 10 commandments. It was at that point that he knew Jesus had been punished by God and this pissed him off. He took the chocolate cow and made millions of pieces of chocolate, in his likeness, with it. After all, it was Jesus’ favorite food.

He then delivered the chocolate to millions of human children, God’s favorite form of human.

When God found out about this, he was pissed off- but could do nothing to stop The Easter Bunny, for he was hidden in Jesus’ old hiding spot, unknown by God. The Easter Bunny sent a letter to God, saying “release Jesus, or else every Easter I will deliver the chocolate cow pieces to millions of human boys and girls, much to your chagrin.”

God replied by making rabbit the preferred protein for the country of France.

To this day, Jesus is tucked away in his room, doing penance and The Easter Bunny is running amok, dropping off chocolate cow pieces to children all across the globe.

Now you know the true definition of Easter.

 

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