Most of the time God,Pratt & Whitney or General Electric, will give you another turn in the Barrel.

These are my opinions and my opinions only they do not reflect the opinions of any of my family members or their employer. Note we NOW have NO employers.

Back from a 5.5 Year PCS from the confines of the far Southwest corner of Bundesrepublik Deutschland. The Federal Republic of Germany and Retired.

Tuesday, February 21, 2017

Nacht und Nebel

The Department of Homeland Security is revising “guidelines” on immigration I guess that we can expect their version of the “Nacht and Nebel” decree to be issued within the next few weeks.
The question in this writers mind is how long until the Justice Department will issue their version of “Terror and Sabotage” decree?
On a side note.  Who would have guessed that Mar-a-Lago would be the new Bertchtesgaden?  It is also a very excusive enclave.  No mountains, the mountains are so rest full and they do not have the funky Back Bay semi stagnant smell.  Which some of my friends tell me only occurs on the weekends.
Some have suggested the smell gets stronger in the summer.

Thursday, February 9, 2017

Possession is Nine Tenths

It seems at least to this article
The Deutsche Bundesbank, aka “Buba” with the tacit approval of Chancellor Merkle, and Finance Minister Schauble has decided to accelerate the repatriation of the Bundesrepublik Deutschland gold being held in the vault of the New York branch of the Federal Reserve.
The timing of the acceleration in the repatriation schedule is curious to say the least.  One could suspect that the German government is currently having some serious trust issues with the current administration in light of the fact that this repatriation process was not scheduled to be completed until mid 2020.
Could it be a Fear of Executive Orders?  After all possession is nine tenth of the law, aka all your gold in our vaults is our gold.
Things are just starting to get good.

Sunday, February 5, 2017

Eggs in One Basket

A few mornings ago I read a quaint story about one Mr. Johnny Depp.  It is a cautionary tale and how it will end is anyone guesses in fact it might be the guess of twelve individuals.  From the very limited data at hand I suspect that both sides have a hand in the blame, the question is who has the preponderance of the blame?
Now we learn that the Department of Labor page on Fiduciary Standards is restricted.  This writer is not upset about this last turn of events he however is concerned.  Long before there was talk much less legislation or rules about fiduciary standard and the adherence to these standard by “Investment Professional” (Does this creature actual exist to any significant number?).  We (our family office) always operated under a set of rules in which those who were the repositories of our funds were in no way shape or form connected with those individual that we might use from time to time as sources for advice on our funds.  We did not nor do we believe in “Chinese Walls” to us it is a myth.  The “Chinese Wall” is nothing more than the fox watching the hen house.
Our family office are and have been considered for some time by the SEC to be a “Qualified Investors” which according to SEC sort of kind of means that we are big boys and therefore are allowed to invest in more sophisticated investment.  Just because I can sleep alone does mean that I want to and in the same vain just because we can invest in “sophisticated investments” does not mean that we have to or that we do.  We do not stray into this deep territory of Buyer Beware.
We are not large by many measurement standards but we not insignificant either.  We have been quite precocious in that we have a habit of changing who are the repository of our funds and more importantly those who we seek advice from on our funds.  We continue to be precocious.   When we seek advice we use an Oracle process for outside advisers.  Our driving motto is  “WE TRUST NO ONE WHEN IT COMES TO OUR MONEY”.  We up front with these advisors in that we tell them that we are not soliciting specific advice, and we have no intention of placing any funds in their trust.  We are looking for a “Big Picture” report.
We have been using less and less of these adviser in recent times.  They are not very good at predicting the future.  Note it is easier to change advisor, which we do much more often then we switch repositories. Even with NDA when need to supply numbers to these advisers we will only allow the advisers to see “Normalized Data”.  Range of values is between 0 and 1.  Names of the Herds are coded.  Yes we are paranoid.  But a little paranoia can be quite healthy for your investments.
We have NO LOYALTY other than to ourselves, get use to it.  One of our repositories decided that they were going to change their fee structure associated with some investments.  Granted they were charging a very low fee but they said that they were going to have increase their fees, in this case it was to double, but even after the doubling of their fees their fees would still be lower than 75 percent of their competitors.  The result was that we moved our funds to one of those competitors who charged lower fees.  We got a call from the account representative and at least 1 Vice President asking us to reconsider.  WE did reconsider and still moved the funds to another institution, because “A Buck in Your Pocket is not a Buck in My Pocket”.  We would rather pay the tax on increased dividends than the commission or the fee.  At least according to theory the tax goes to the public good versus and individuals good.
Recently we received a call from an account manager at one of the institution where some of funds are being held.  They had “great news”, they were now offering to certain class of customers “Free as in Beer” investment advise.  We thanked them for the offer and informed them that our internal operating procedures precluded us from accepting this generous offer.  The question from them was what would it take for us to use this new service.  Our answer was that they could either be the holder of the funds or they could be the investment adviser, but that they could not be both.  So what did they want to be, pick one.  They decided to continue to be the holder of some of our investments.
Even if there are requirements for “Investment Professional” to adhere to some Fiduciary Standards we will continue to operate as we have for the last 40 Years when there were no such requirements.  We will continue “Not To Trust Anyone When It Comes To Our Money”.
A second condition that we use in our management of our portfolio is “We Do Not Believe Your Number”.  To Quote Greg House “Everybody Lies”.  We discount your books, even if they conform to GAAP.  We will not even entertain Non-GAAP reports or that old bugaboo proforma reporting.  We do not believe your earnings reports.  We do believe your dividend, which is actual cold hard cash in our pockets.  In particular we do not believe a great deal of your accounting and in particular it’s that “Goodwill” item that is carried in the Books, that we consider being a most bogus number.  We normally discount your books by at least 20 percent.
We were quants before quants were a thing.  For most of our existences we have been and continue to be in the mode where we were buy a herds of stocks, we do not buy individual stocks or as we call them cows.  Our overall allocation is derived from Kelly Criterion.  At the highest level we are aiming for 80 percent Stock and 20 percent Bonds.  We call are tool “Elroy” (Name after the son of one George Jetson of Spacely Sprockets).  We are now at version 6.01.  Elroy 7.0 is in the works at this time.  We are firm believers in evolution rather than revolution.  Elroy is designed to take the percentage shot if and when it is presented. We have gone fairly long periods where Elroy says wait, so we wait.
We do not believe that one can consistently really beat the market, but we do believe that we can have a very robust return on our investments.  We sacrifice some up side gain to reduce our down side losses.  What typically happens is that we are buying what is “out of favor” or we are buying when there is a lot of selling going on in the market.  We know that Mr. Market has no soul and act accordingly.  We are patient, very patient.
We have gone for extremely long periods where we just pace the market.  We call this process “HYNAB” Hold Your Nose And Buy.  During this phase of the market we make a monthly minimum purchase across all of our herds.  It lets the croupier know that we are still in the game.  When things get interesting we will switch to ASMS (Aim Small Miss Small) program.  Here we add monies to the various herds that are down and out at a measured rate.  We will not get in a hurry.  Some have said that what we do is akin to throwing spaghetti at the wall and see what sticks.  Funny thing is that it all seems to stick.
Elroy keeps us from getting emotional.  Elroy keeps us from using our gut.  Elroy keeps us from acting on “Hot Tips”.  Elroy is designed to minimize revenue-recognizing events on our part.  We have been using Elroy for almost 4 decades.  Elroy has produced an IRR of 8.50 Percent for the nearly 40 years that we have been using a version of him.  We are quite satisfied with his performance.  Our last big sustained foray into the market was from 14 August 2015 to 11 May of 2016, we call it going into burners.

Friday, January 27, 2017

I casted an “illegal ballot”

Yes, my dear Orange worship, I cast one of the tens of million “illegal ballots”.  It was Illegal only in the sense that I did not cast a vote for you and your running mate.
Now that I have purged my soul and have come clean about this High Crime and Misdemeanor that I committed against the you (my dear orange worship) and the state.  I can now sleep better at night.
I will wait patiently for your lord high sheriff and their appointed constables to come and roust me out of my house in the dead of night, to be incarcerated in a Re-education camp of their choice and for period of their choice.  After all most if not all of us (those who did not vote for you and therefore cast illegal ballots) are Dachau bound.  We will sing that old favorite travelling song “My Heart is full of Joy” as we are transported there.
I am willing, able and ready to voluntarily add my name to your growing list of Muslims, after all “I am Spartacus”.
On a completely different tack why did you not have “Zadok the Priest” performed at your coronation inauguration?
I await patiently your obedient servant

Monday, January 23, 2017

Salute the Rank Not the Man

“If you cannot salute the man then by God you will salute the rank.  If he is a man he will know the difference and it will mean something if he not a man he will not know the difference and it will mean nothing.”
Those were words given to me by a man who I still hold in high regard some 30 years after his early death.
So to the current POTUS I salute the rank.  Enough said.

What I will not be doing 5 Feb 2017

What I will not be doing 5 February 2017 is watching the coverage of Super Bowl 51.  Or Suffer Bowl 51 as my wife calls it.
For that matter I will not be partaking of the hours on endless pre game hype that will take place between now and then.  Nor will I be partaking of the hours of endless post game hype that will take place after the game.
It is just not that interesting and I am just not that interested.
Every year Professional Football to me appears to more and more like paint drying, the constant hype pre game, the constant hype during the game, and the constant hype post game.  The coverage appears to be program to keep retired players on some type of post career partial employment program.
The down side is that it appears to me that it is taking longer and longer to watch the paint dry.  WE all know that the paint will dry it is just how long will it take to accomplish this fact.

Sunday, January 22, 2017

Day 3 in the “Make America Great Again Campaign

Visible skirmishes continue between various low-level administration (appointed but not required to be confirmed) (hence easy to flush out through the scuppers if required) operatives and numerous NGO.  The campaign at this point can be best characterized as extremely asymmetric and in the initial contact phase with a very ill defined FEBA (Forward Edge Battle Area).
It is expected that this campaign will remain for the most part asymmetric in nature, with public displays of satire and ridicule being the main thrust of the opposition.  It is expected that the current administration via their current modus operandi will provide more than enough ammunition that will allow the opposition to effectively operate.  The opposition will not have to invent and or cite “Alternate Facts” to make their cases, the actual facts will be damming enough.
So my question to POTUS is this “Is America Great Again?” at this point in time.  If it is not when does POTUS expect that “America will be Great Again”?  How will we know if and when “America is Great Again”?  Because when it is I know that it will be “Huge”.