Year: 2010

FACTS DON’T MATTER

Or so this important Boston Globe piece concludes. Talk about your root problems! How can democracy succeed if, confronted by facts that prove them wrong, voters just become more intransigent?

“The general idea is that it’s absolutely threatening to admit you’re wrong,” says political scientist Brendan Nyhan, the lead researcher on the Michigan study. The phenomenon — known as “backfire” — is “a natural defense mechanism to avoid that cognitive dissonance.”

. . . it appears that misinformed people often have some of the strongest political opinions . . .

. . . if you feel good about yourself, you’ll listen — and if you feel insecure or threatened, you won’t. This would also explain why demagogues benefit from keeping people agitated. The more threatened people feel, the less likely they are to listen to dissenting opinions, and the more easily controlled they are.

☞ Go get ‘em, Sarah!

Not that I may be entirely immune myself:

. . . politically sophisticated thinkers were even less open to new information than less sophisticated types. These people may be factually right about 90 percent of things, but their confidence makes it nearly impossible to correct the 10 percent on which they’re totally wrong.

PRECHTER

Steven Schatz: “With regard to your posts on Robert Prechter, I have followed him for many years, having been a subscriber to his newsletter since 1983, and subsequently studying with his personal trading guru (via his referral). I retain the deepest respect for his brilliance, insights and compassion. Bob didn’t get the kind of reputation that would enable an interview in the New York Times by being a kook. Far from it. Although he’s outside the mainstream of conventional market analysts, his work retains a following in even the most conventional of Wall Street enclaves. He called the Bull Market of the Eighties perfectly. Then 1987 dawned. I remember vividly his declaration in early September, 1987 that Wave 3 (huge upwave) was complete and we were heading directly into Wave 4 (a short sharp down wave or a shallow, prolonged sideways movement). Here I’m paraphrasing terribly but the gist of his advice at this point (September, 1987) was, ‘The stock market’s powerful rise is over for now. Those who are long term investors will want to hold on to all investments since Wave 5 is still ahead and will likely result in further upside; those who are intermediate term investors will want to get into cash and on the sidelines; those who are short term speculators can consider short positions.’ So far so good. Then things got Interesting…

“By Friday, October 16, 1987, the Dow had suffered a serious move to the downside. That afternoon his short term trading service suggested purchasing calls. Yes long calls – which would benefit from a movement upwards in the markets. The next trading day was Monday, October 19, 1987, now known as Black Monday. By the end of that infamous day, the Dow was down 507.99 points or 22.6%, the largest one day move down in history on a percentage basis. The stocks comprising the Dow lost approximately 500 billion dollars that day. Even today, that’s an eye popping number. The shock of the Crash propelled Bob Prechter to make an unprecedented re-evaluation of his wave count. What was previously considered Wave 3 was now labeled as Wave 5 (the last of the series) and therefore Black Monday was an “A” wave, the beginning of the End of the Road. He expected an imminent sharp rise (a “B” Wave) and then a massive collapse (“C” Wave), not just in the markets, but in the economy and in society in general. Subsequently, he completely and totally missed the massive Bull Market of the 1990’s. Mind you, his short term service still provided a respectable return on investment through the Nineties. Despite his profoundly bearish stance, Prechter’s brilliance and clarity allowed him to retain a grip on reality and in the face of his overarching perspective, he was able to steer with the winds. Nevertheless, he fought the bull market every step of the way.

“Lots more to say about his work. Being an original thinker, he has contributed a huge amount to our understanding of the markets and economy, and continues to provide meaningful analysis and perspective. The field he is developing, ‘Socionomics,’ lends a unique approach to the link between social mood and the markets. His team of analysts is outstanding. He is not a lone wolf, nor is he anything even close to a crank. He is a deep, thoughtful, compassionate and engaging individual. And, I am inclined to say, his bearish perspective, scary as it is, may prove out in the years ahead. Although I disagree with his ‘it’s all bleak and downhill from here’ outlook and believe we will witness and benefit from some incredibly positive discoveries and events in the years ahead, these may take place along with dissolution, decay and possibly even chaos. All and all, whether the Dow truly does dip under 1,000, with both important and subtle differences Prechter’s exceedingly bearish outlook may end up being on the right track after all.”

☞ Or not. The only two points I’d make (other than thanks for that very thoughtful recap) are: (1) the future is way too complex to predict in this way; (2) we’d be wiser to take Prechter’s prediction not as what will happen, but rather as motivation to make sure – even if it requires doing unpopular but necessary things, like weatherizing our homes rather than making them bigger – it does not.

ARIZONA

You know all that unprecedented violence on the border? According to the Washington Post’s Dana Milbank, it’s pretty wildly overblown:

. . . the entire premise of the Arizona immigration law is a fallacy. . . .

Last year gave us death panels and granny killings, but compared with the nonsense justifying the immigration crackdown, the health-care debate was an evening at the Oxford Union Society.

Two months ago, the Arizona Republic published an exhaustive report that found that, according to statistics from the FBI and Arizona police agencies, crime in Arizona border towns has been “essentially flat for the past decade.” For example, “In 2000, there were 23 rapes, robberies and murders in Nogales, Ariz. Last year, despite nearly a decade of population growth, there were 19 such crimes.” The Pima County sheriff reported that “the border has never been more secure.”

FBI statistics show violent crime rates in all of the border states are lower than they were a decade ago — yet Sen. John McCain (R-Ariz.) reports that the violence is “the worst I have ever seen.” President Obama justifiably asserted last week that “the southern border is more secure today than any time in the past 20 years,” yet Rush Limbaugh judged the president to be “fit for the psycho ward” on the basis of that remark.

. . . there is McCain — second only to [Governor Jan] Brewer in wrecking Arizona tourism — telling NBC, ABC and CNN that Phoenix is the “No. 2 kidnapping capital of the world,” behind only Mexico City. “False,” judged Politifact . . .

Next, there’s Brewer’s claim that “the majority” of people immigrating illegally “are coming here and they’re bringing drugs, and they’re doing drop houses and they’re extorting people and they’re terrorizing the families. That is the truth.” No, it isn’t. The Border Patrol’s Tucson Sector has apprehended more than 170,000 undocumented immigrants since Oct. 1, but only about 1,100 drug prosecutions have been filed in Arizona in that time.

. . . Brewer . . . should screw her head back on and start telling Americans the truth.

MASSACHUSETTS

You’ve doubtless seen that Judge Joseph Tauro, a 79-year-old Nixon appointee, could find no rational basis for the Federal government to deny married gay couples the same benefits as any other couples. “Equal rights under the law,” and all that fundamental American stuff.

The implications of his ruling on actual flesh-and-blood people?

Herb Burtis lost his spouse, John, after 60 years together [reports GLAD]. Now, his already limited income is severely reduced because the federal government denies him the $700 a month that would come with Social Security survivor benefits.

Judge Tauro saw that getting rid of DOMA will make a real difference in Herb’s life, and in the lives of so many families.

“An end to DOMA would mean I could add my spouse to the family health plan I’m already paying for,” says plaintiff Nancy Gill. “The extra cost of Marcelle’s health insurance is money we could really use in raising our two children. I’m gratified that Judge Tauro understood that, and also saw that it’s not right for the federal government to tell us – and our children – that we aren’t equal.”

☞ It’s fine for religious orders to discriminate – as they widely did in supporting slavery, in supporting the miscegenation laws under which Justice and Mrs. Clarence Thomas would not have been permitted to marry, and in supporting the subjugation of women. Separation of church and state is also fundamentally American. But the government? The government should not discriminate.

Democrats overwhelmingly get that. (Here’s one – making a speech not to be missed.)

Republicans eventually will.

Some, like Laura Bush, Cindy McCain, and – Lord help us – Dick Cheney, already do.

THE MILKY WAY

Dick Theriault: “Skeptical Matt from Friday’s column can rest easy. The pictures are real, gleaned from many sources (not all from Hubble). The suspect Slide #28 is a composite, derived from hundreds, maybe thousands of other pictures that helped define the structure of our galaxy. Hubble doesn’t ‘fly out and shoot back at the galaxy.’ We’re pretty far out toward the edge of one arm of the galaxy, so it’s able to get pretty complete pictures of the whole as seen from the edge. What Hubble DOES do is get pictures of other complete galaxies, which help us understand the structure of our own. Matt might get some understanding of pictures of the Milky Way from this. (Number 29 is a graphic representation, not a photo, of a black hole; and #30 is an actual photo of a very distant galaxy structured like ours. The slide show contains photos and graphics, and needs to be viewed with understanding, not expectation of literal accuracy.) Richard Vroman is right about the Astronomy Picture of the Day. It is always awesome, whether from Hubble or some other source, and though Matt may find it hard to accept, the pictures give a pretty good idea of our relative place in the scheme of things.”

Today I promised tax fairness. But because the day got away from me, I offer you instead . . .

FRIENDFACTOR

As suggested yesterday, Friendfactor is a brand new way to help your LGBT friends, relatives, or colleagues – or even just Charles and me – attain the same first-class citizenship you enjoy.

RICOCHET

Sid/Diane: ‘Aren’t guns GREAT? Turn the sound up – you can hear the bullet head back. Watch in full screen to see it better. The target is a steel plate. You can hear the ping of the hit, and then the bullet comes back and hits the ground just in front of his position. This is a very, very lucky sportsman.’

HUBBLE TRUBBLE

Matt: ‘One issue with the slide show. Yes they are amazing pictures. But how did Hubble fly out of our galaxy and point itself backwards to take a picture of the Milky Way? slide #28. If it has a motor to do that then I am selling my BOREF. WheelTug – we have competition. I have trouble digesting these photos as true representations of anything. They publish them along with ‘photos’ of our own galaxy. That’s not possible, so the whole pile of ‘evidence’ is suspect to me. These look like covers of Isaac Asimov novels, not true pictures of space.’

☞ I had that same question! Someone started to explain it to me, but it involved a lot of arm-flailing in the form of double-helixes or something as we gazed up at the galaxy and I was afraid I might get injured. Can one of you explain it better?

Richard Vroman: ‘Your Hubble link inspired me to send this link to NASA’s Astronomy Picture of the Day. I look at it first thing every day for inspiration. It’s all succinctly explained by professional astronomers. Newcomers can browse a huge library of previous posts. It just might be good enough to convince the Tea Baggers that government is worthwhile after all. If this isn’t awe inspiring, nothing is.’

Monday, or soon: tax fairness.

Yesterday, I suggested that Robert Prechter’s prediction of ‘Dow Under 1,000’ was worth reading but likely wrong. Today, some thoughts on how we might go about foiling it.

But first this . . .

AN INTERESTING NEW WAY TO HELP

In case you feel like helping your LGBT friends, relatives, or colleagues – or even just Charles and me – attain the same first-class citizenship you enjoy, here‘s a brand new way to do it. Take two minutes to watch the video to see if it grabs you?

And now this, which is vaguely related to the Prechter issue . . .

JAPAN TO BUILD INSANELY FAST NETWORK

As Shelley Palmer summarizes: ‘Japan’s EMOBILE has made a deal with Ericsson to build a new 42Mbps wireless network. And, they even have a workable plan to crank it up to 84Mbps after it launches. That’s so remarkably fast, we don’t have anything to compare it to in the United States. Luckily the government just allotted an additional $800 million to the nationwide broadband effort; even so, we may still be left in the dust.’

And these, which are directly related to the Prechter issue . . .

PRECHTER

Monty Goolsby: ‘Robert Prechter predicted that the Dow would lose 90% after the ‘correction’ of 1987. At that time the DOW was just over 1750. If you had followed his advice you would have missed the large bull market that followed.’

WAVES, SHMAVES

Chris Brown: ‘Re the Times Article you linked to: ‘Originating in the writings of Ralph Nelson Elliott, an obscure accountant who found repetitive patterns, or ‘fractals,’ in the stock market of the 1930s and ’40s, the theory suggests that an epic downswing is under way, Mr. Prechter said. But he argued that even skeptical investors should take his advice seriously.’ Elliot may have found any number of things in the 1930s, but they certainly weren’t called ‘fractals’ at the time. That term was coined by Benoit Mandelbrot in the 1970s. The same Mandelbrot that demonstrated that a random, scaling (non-normal) generator will make charts that people see cycles and patterns in, ex-post, even if there is zero predictive value in these patterns. Nearly every chart, ex-post, lends itself to a short-duration cycle, a medium-duration cycle, and a long-duration cycle. Which is also why if Gluskin Sheff’s David Rosenberg wants to believe that we have several years of bear market ahead because that is how long it takes for a massive deleveraging, then that is a reasonable hypothesis, but that if he thinks the Dow is going to 5,000 because that is what the 18-year chart pattern tells him, one should realize that particular datum lends no support to his argument.’

And now . . .

FOILING CATASTROPHE

Global collapse is always possible, though (echoing Chris’s point above) I think it might more likely come from some unforeseen panic-cascading catastrophe than from any inexorably predictable financial ‘wave.’

Yes, we face huge challenges, nationally and globally. But we also have astonishing new tools at our disposal. (My iPhone 4 is in Hong Kong as we speak, and I can track its journey as it flies east over a vast ocean into my outstretched graspy little fingers. A 3.6 kilowatt solar photovoltaic array sits on my roof, powering the equivalent of 36 100-watt light bulbs at peak capacity. Who would have dreamed of such things 50 years ago?)

There is the problem that, as a species, we’re breeding faster than we’ve learned to handle the extra load. (Were the people of Haiti – to take just one sad example – properly prepared to welcome so many million more children into the world over the last few decades?) There are the problems of ignorance and corruption, envy and short-sightedness – and the sometimes terrible consequences of religious fundamentalism. (Queen Isabella was a piker by comparison, yet even she acknowledged, ‘I have caused great calamities. I have depopulated provinces and kingdoms. But I did it for the love of Christ and his Holy Mother.’) And don’t get me started on evil dictators, cyberterror – or drugs.

So I’m not saying success is guaranteed – and I’m certainly not denying that many of us are going to have a tough slog as we work its way through the current mess.

But if we’re smart, it seems to me tremendous opportunities lie ahead.

Think about the basics. Can America – and the species, for that matter – grow enough food to feed everyone? Yes. Clothe and house everyone? Yes. Provide clean water and basic medical care for everyone? Yes. Provide the necessary energy? Yes.

The big problems come not in figuring out how to do these things, but figuring out how to organize ourselves to do them effectively.

How do you distribute the work that needs doing and then distribute the fruits of that work?

One strategy, born of high ideals and disastrous lack of insight into human nature, was ‘from each according to his ability, to each according to his needs.’ Communism. Which morphed into, ‘they pretend to pay us and we pretend to work.’ What a miserable failure that was. To address their most basic need, food, the Soviets thought collective farms would be a good idea – and all but starved their entire nation. They wound up relying in no small measure on the U.S., with its private farms, to supply their grain.

Another strategy is to have largely free markets, but with enlightened regulation, a modest level of government involvement, and progressive taxation. Our system. It’s worked awfully well, and the better once we added things like FDIC insurance to prevent bank runs, anti-trust law to preserve competition, and a social safety net to preserve individual dignity and lessen the severity of business contractions.

(Unlike the Soviets, we’re all about free markets and individual freedom. But even here government farm programs are in place – most at the request of the farmers themselves – to keep our farm sector strong. And few would argue that the SBA – or DARPA or the FDA – are bad ideas.)

I like our ‘enlightened capitalism’ strategy.

So the biggest point I want to make: the sun will surely come up tomorrow, and there’s plenty of work that needs doing – here in the U.S. and around the rest of the world – with both resources and technology equal to the task. If we’re smart, we’ll make the adjustments required to keep driving forward. And not get all freaked out if some of those adjustments include some temporary (or even some permanent) government involvement.

What adjustments?

The Republicans, as always, say tax cuts are the key (coincidentally lightening the load on those who are best off) and that we’d better slash government spending (coincidentally tightening the vise on those in direst straits). But as I’ve argued before, I don’t buy the tax cut notion, much as we’d all like that to be the answer. And can anyone think that laying off hundreds of thousands of teachers and cops and slashing the social safety net – by, for example, cutting off bare-bones unemployment benefits – will stimulate the economy?

Paul Krugman says now is not the time to slash spending, and as you can tell, I agree.

Matt Miller – who describes himself as a deficit hawk – ditto. He offers some interesting policy prescriptions to get things rolling in a better direction and then (but only then) applying fiscal discipline. Well worth the read.

Our country has a great deal of shaping up to do, most particularly in terms of becoming more energy efficient and independent but also in terms of renewing our infrastructure and educating the next generation.

At the same time, there are an awful lot of people looking for work.

Matching their talents with the tasks is no small issue. Indeed, it’s the challenge of our time. But as a general matter, it seems nuts to me that we would contemplate keeping them unemployed (with all the fiscal strains that puts on us to keep them from starving) when so much work needs to be done. What ended the Depression was a massive mobilization to win World War II. It ratcheted our debt way up, but had to be done. Now we should embrace a massive mobilization to become more efficient, energy independent, and to, well, shape up generally. (Insanely fast Internet, anyone? Smaller portions? Less meat?)

There’s no need for the country, or the world, to go over a cliff. And it probably won’t. But a rocky financial road is likely, so consider that four-prong strategy.

Tomorrow: Tax Fairness

But first . . .

CARS FLY!

Steve Gilbert: “The beauty of the flying car is that it isn’t illegal to talk on the phone or text while flying. Plus, it will have a small effect on overpopulation, what with the constant horrible crashes. TV news will love them.”

HUBBLE HUMBLES!

Theo Kent: “Thank you for the site with the slide show of the universe. I don’t know whether to cry or just sit in stunned silence. I’ve thought of the things this person reveals many, many times – and now have the ‘visual aids’ to display the thoughts.”

ATLANTA RULES!

Its city council yesterday became the twenty-first to pass a resolution endorsing the Uniting American Families Act. UAFA would allow LGBT citizens to sponsor their foreign partners for “green cards” to live here with them. Twenty other leading Western democracies already have something like this on their books – including every English-speaking country except (of course) the United States.

HAWAII SUCKS!

Well, not Hawaii – I’m crazy about Hawaii – but her Republican governor, Linda Lingle, who yesterday announced she would veto the civil unions bill passed by the legislature. Will she next attempt a ban on gay vacationers?

And now . . .

RUN FOR THE HILLS!

Kathryn Lance: “Scary article in the Times. Can you please comment on this in a column soon?”

☞ Robert Prechter is often wrong (as am I), but the article is worth reading (executive summary: 1929 was a cakewalk compared with what we may be in for) and I have long advocated the notion that those of us fortunate enough to have assets to protect should adopt a “four-prong strategy” – some liquid assets, an inflation hedge, a deflation hedge, and a “prosperity” hedge (in case things should go right).

Cash in the bank is always a good liquid asset – and FDIC insured now up to $250,000 per account.

For most Americans, just paying off their credit cards and having this first prong covered with an ample cash cushion is a distant (but worthy) goal.

For those with more:

Real estate (like your own home, and/or someone else’s) – and shares in companies that can raise prices – have been the inflation hedges I’ve long suggested (with big caveats as the bubbles grew in both). Last year I reluctantly added gold (for example, here). Today, with GLD up 25% since then at $117 or so, I think it still makes sense as an inflation hedge.

My deflation hedge of choice (apart from cash, which becomes more valuable as prices decline) has been long-term Treasury bonds. Yet with the likelihood of inflation returning some day, lending Uncle Sam money for 30 years at 3.89% carries its own risks. (So see: TIPS, below.) Yes, you would do exceptionally well if the yield continued to drop to, say, 2%. But you would need to be nimble in exiting as the yield eventually (or perhaps tomorrow) began heading back up. I hope long-term Treasuries never again yield 15% as 30 years ago they did (let alone more, as in a true meltdown they theoretically could). But if the general level of interest rates zooms, the market value of long-term, bonds paying 3.89% will be a small fraction of their $1,000 face value.

Prosperity hedges remain, of course, shares in American and international businesses – though I will admit my own guess is: more tough sledding ahead for many of them. Will the stocks of most retailers, restaurant chains, and home builders come roaring back? Well, some of them already have – a lot of stocks are still double or triple or quintuple where they were at their depths. To me, many of them embody more risk here than reward. I like to think we may be able to tilt the odds a little in our favor (you know my feelings on dredging, and some little drug stocks, and one preposterously speculative long-shot whose name starts with a B and shall otherwise today go unmocked). But stock picking is notoriously difficult, so index funds continue to make sense – though there may be an edge in unweighted index funds (like RSP) and an even greater edge in the Joel Greenblatt approach that I find persuasive.

One way to combine the first three prongs is with recently-issued intermediate-term TIPS. (“Recently-issued” so that, if we have deflation, you are not paying for an accumulated inflation premium that will deflate back down to the guaranteed $1,000 “par” value of the bond.) They will not be a perfect hedge against everything (least of all, prosperity) . . . and if we have inflation, Uncle Sam will tax you on the inflation factor . . . but they’re still something to consider for the portion of your assets you want to keep as safe as possible – while swearing off all possibility of any meaningful gain.

(Also always worthwhile: a true disaster hedge, whether that disaster be financial upheaval or hurricane, tornado, earthquake, or terrorism – basically, ye trusty olde supply of nonperishables, like tuna fish and peanut butter, aspirin and V8 juice, matches and so on – don’t forget a can opener – that could come in handy if normal supply lines to your community became disrupted for a week or three. I have those little solar-and-crank powered radio/flashlights . . . and guess whose rooftop solar photovoltaic panels now generate 3.6KW of electricity on a sunny day? (They were installed last week and look great. They get hooked into the grid this week or next, and my meter should start running backwards much of the time. This is still an infant industry, but one to “invest” in that might add more value to your home than a swimming pool.)

The main thing to say about Prechter’s view is that the power of market tides is different from the power of lunar ones. The lunar ones are predictable and out of our control. The financial tides are vastly more complex to predict – and actions we take do affect them. So we’d be wise to take actions that prove Robert Prechter wrong.

Which is the subject I hope to touch on tomorrow.

Hope you had a great Fourth. Today is a holiday, so there is no column – just a couple of stock updates.

WHEELTUG

Artie: “Picking up on Friday’s Prague press release, do you know what it means for an airport to be WheelTug compatible? It would be nice if they had an infrastructure that would support such planes if and when they were to take off and land there, but I must be missing something.”

☞ I think adjustments will be minimal – things like new procedures for communicating with pilots rather than tow operators (as the pilots, not the tow operators, will maneuver the planes). And “good” problems, like deciding how much less they will need to worry about the blast of the jet engines near the terminal (since WT-equipped aircraft won’t have blast near the terminal, and there will be less worry of a stray suitcase getting sucked into the engine, or the blast from one plane interfering with another that may now not have to be spaced as far apart).

This agreement is more about helping to give both the Prague Airport and WT some validation, and making clear that some forward-thinking folks will be helping WT when it comes to making tarmac available for testing and demonstrations, working out best practices for ground operations procedures, and so on.

In other words, I think it’s largely symbolic – but symbols matter when you’re trying to persuade a very conservative industry to accept something new.

Imagine the pressure from “green” European airports for airlines to adopt the WT system if it means less noise and pollution, saves jet fuel, and allows planes to maneuver more adroitly, with fewer support vehicles and delays.

It may never happen, or someone else may come out of left field and beat WT to the punch. But game-changing technology, once it’s accepted, can be adopted relatively fast. Within a decade of the first plane’s being able to back up and tool around without starting its main engines, might not virtually all commercial jets (and some private and military jets) not have been retrofitted with this capability.

So, as always: a lottery ticket. We absolutely may lose every penny, as normally happens with a lottery ticket. But if there’s now a 50/50 chance of success – or even just one chance in five – it’s a bet worth taking (in my view), albeit only with money you can truly afford to lose.

And unlike a lottery ticket, the winnings of which are taxed at ordinary income rates, any success we may eventually have here will give new definition to the phrase “long-term capital gains.” Most of my shares are now almost old enough to vote! Or to bat mitvahed, anyway.

JK: “One might think that an electric motor capable of moving a plane a mile or so would be capable of moving an automobile several miles.”

☞ Auto companies may be even slower to adopt radical change than airplane makers.

DCTH

Kevin B. Knopf MD, MPH: “I think your guru is optimistic on this one. Neuroendocrine cancer that metastasizes to the liver does happen, but it’s a rare cancer. It also can have a very long natural history – sometimes as long as 10 years without requiring treatment. We can do standard chemoembolization instead of Del Cath which is cheaper and less arduous. In addition there are some newer medicines that work in neuroendocrine carcinoma (avastin, sutent, everolimus which was FDA approved). But your guru is clearly a smart guy. The Del Cath apparatus is very time intensive and labor intensive and not every hospital will be able to buy and use one. Lastly there is always my hope that eventually insurers and Medicare will start to regulate the cost of these devices (and drugs) so that we can have universal health care. But your guru is very smart, so I may be totally wrong.”

☞ Or you may be totally right. Another interesting way of playing this is to work with the January, 2012 calls. For example, one of your fellow readers reports he “was just able to put on 23 contracts of the long the Jan 2012 5 call / short the Jan 2012 10 call for $1.10.” Which, unpacked, means he bought one set of calls (the ones that give you the right to buy the stock at $5) for $1.10 a share more than he get for selling another set (the ones that give you the right to buyh the stock at $10). So if the stock if under $5 in January of 2012, he’s lost his $1.10 (2300 times over = $2,530 plus commissions). Oh, no! But if the stock is $6.10, he breaks even. And if it should be $10 or more – as guru thinks it will be – he turns his $1.10 into $5 (less commissions and taxes on the $3.90 profit) – $11,500.

So it’s – sort of, vaguely – heads you lose $1.10, tails you win $3.90. (Sort of vaguely, because who knows what the odds really are on the stock being under $5 or over $10 on January 21, 2012? And unlike a coin, which rarely lands on something between heads and tales, the stock might be $6 or $8 or $9.13, so the outcome is not necessarily all or nothing. And because, finally, unlike a coin, you can exit this bet in mid-air, as it were. Let’s say the stock went back to $16 this fall. Chances are that the 5 calls you had bought and the 10 calls you had sold would now be not $1.10 apart in price, but more like $4.50 apart. (The 5’s would be about $11 and the $10’s would be maybe $6.50.)

One last thought for the three of you still with me and interested: this s not the only “spread” that could be of interest. In my own account, I was able to do a similar spread between the January 2012 10’s and 17.5’s, paying $1.30 or so for the privilege. Heads I lose $1.30, tails I turn that $1.30 into $7.50.

Dr. Knopf may be right that Guru is being too optimistic on this one, but Guru respectfully disagrees, responding . . .

“Well, I’m not more experienced than an oncologist with a masters in public health! He’s on the front line. Nonetheless: Neuroendocrine tumors do grow more slowly and are not the immediate death sentence that melanoma is. Some portion of them will metastasize to the liver – it’s the most common site. Eventually after 10 years, they will progress to the point where real therapy is needed. And of course, there may be some patients who want to get the treatment early and not wait the 10 years. The Delcath system takes about 2 hours, so really no more challenging than chemoablation. Avastin, etc. all carry significant side-effects: Delcath relatively few because little of chemotherapy gets outside the liver. There is a cost savings because of fewer complications. And if there are an estimated 6800 patients per year and they live 10 years without needing therapy, then the number extant now = 6800 x (10+9+8+etc.) means there are many, many more than I am estimating who really will need the Delcath procedure. As one doctor at Moffitt put it, the patients are driving demand. They all have internet access and they come asking for the treatment. I can assure you that anyone who DOES have a melanoma or neuroendocrine metastasized to the liver will want this. Wouldn’t you? Meanwhile, the hospitals will buy the equipment to meet patient demand. Is there precedent? Yes. ISRG – the robotic surgery. Not proven to be better than laparoscopic. Demand is coming entirely from the patients. And this equipment costs millions. What IS true, and where Dr. Knopf is certainly right, is that at $20,000 a treatment, the reimbursement agencies will make sure this is applied strictly on the label [and not for unapproved uses, even though they will be legal]. Still, Delcath will be expanding the label every year as more and more tumors are added. Again this is drug delivery, not one specific agent. You can put anything through the system. Here is a presentation that shows some of the data for neuroendocrine and notes the other trials ongoing. One by the National Cancer Institute in liver cancer should be nearing completion soon.”

We’ll just have to wait to see whether guru’s optimism is justified.

SWIMMING IN SINGAPORE

John Kraus: ‘Caning is still widely used. Make certain not to pee in that pool.’

WHEELTUG IN PRAGUE

Inch by inch, Borealis subsidiary Chorus Motors subsidiary WheelTug drives toward commercialization. Will it ever happen? That, my dear and patient friends, is the $64,000 question.

Prague Airport to support development of WheelTug electric aircraft drive system

Prague, 07/01/2010

Prague-Ruzyne Airport has become the world’s first airport to support development of a new technology enabling aircraft to use on-board electric motors to taxi between terminal gates and runways. The new WheelTug® system is expected to reduce aircraft emissions, fuel consumption, and noise at airports, and to improve safety, airlines’ schedule reliability, and both airline and customer convenience at airports.

Prague-Ruzyne International Airport, named the Best Airport in Central and Eastern Europe, will become WheelTug’s Flagship Airport in Europe and will be a world leader in encouraging cleaner air, less noise, and greater fuel efficiency, safety and operating efficiency within airports. The WheelTug system is projected to reduce aircraft taxi-mode fuel consumption and CO2 emissions both by 66%, and to reduce hydrocarbon emissions by 75% per flight cycle.

An agreement between Letiste Praha, a. s., operator of the Prague Airport, and WheelTug plc, developer of the WheelTug system, states that Prague Airport will actively assist WheelTug with development support during testing and certification.

“This support includes necessary airport assistance, as well as facilitation of smooth co-operation between WheelTug and other organizations at the airport including airport handling services and air navigation service provider,” stated Jiri Pos, Member of the Board and Executive Director of Aviation, Operations and Property Management at Prague Airport and he added: “The team of Prague Airport Consulting will also be working with WheelTug to adapt existing operating procedures, checklists, and operating regulations to achieve maximum benefit from WheelTug systems at Prague and at other airports.” . . .

☞  There is the very real possibility that this will never work out.  But do you know those little “winglets” at the tips of many airplane wings?  Here is the timeline of those folks’ innovation.  Company formed in 1991, patent granted in 1994, flight test on a Boeing Business Jet in 1999 . . . Southwest orders 169 of its jets retrofitted in 2003 . . . and it just keeps building.   My point is just that WheelTug’s endless delays don’t necessarily spell failure.  These things take time.

DCTH

Oy.  Last I looked, $5.75.  But cancers will still metastasize to the liver, I’m afraid, and patients will still want DCTH’s far better alternative to having themselves cut open, so time, I like to think, is ultimately on our side.  Hang in there.  And if you missed buying it the first time (with money you can truly afford to lose, because there are no sure things, even in treating liver cancer), a year or two from now, if not sooner, you could be pleased you bucked the trend.

WE’VE GROWN FAT

Astonishingly, according to this report on NBC News, in the last 50 years the average American male waist has gone from 35 inches to 39.7 – up nearly 5 inches.  Women have gone on average from 30 inches to 37.   Men have gone from 166 pounds up to 195, women from 140 pounds to 165.

Is it stating the obvious to say this is appalling?

Eating less, and healthier, would be better for us personally, nationally, and as a sustainable planet.

One simple step in the right direction: go back to the size plates we used to use, when we were trim and fit.

Alex Bogusky, author of The 9-Inch ‘Diet’: Exposing the Big Conspiracy in America and the brilliant ad man of Crispin, Porter & Bogusky (ironically, the agency for Burger King), noticed that the original kitchen cabinets in a 1940 house he bought wouldn’t fit his dinner plates.  “What kind of idiot makes kitchen cabinets too small for dinner plates?” he wondered – and then realized they weren’t idiots in 1940, they used smaller plates.  Over time, we had switched from the typical 9-inch plate to plates ranging up to 12 inches and more, which – I need hardly tell this numerate crowd – is not a third bigger, but (remember pi R-squared?) 78% bigger.   (Even a 10.5-inch plate is 36% bigger than a 9-inch plate.)

Not that you eat the plate itself, ordinarily; but a large plate just cries out for more mashed potatoes than a small one.  And once the food is on the plate, it’s a sin not to finish it.  And I wouldn’t be able to resist even if it weren’t.

SUNDAY

It’s a grand old flag – it’s a high flying flag.  And forever, in peace, may it wave.

SWIMMING IN SINGAPORE

James Musters: “Sometimes I forget the rest of the world is developing faster and smarter than us. Then I see something like this Singapore hotel swimming pool and think, wow!”

PARKING IN BUDAPEST

What Horn & Hardart’s automat did for the slice of pie, this underground parking system does for your Chevy Malibu (more or less): grabs it, stashes it someplace snug and safe, then retrieves it in two to four minutes when you return. (Thanks, Alan.)

WORKING FOR VIRGINIA

This guy happens to be extraordinary – in Congress for all the right reasons – but how boring is that? So he made a funny 30-second spot.

GOOGLE VOICE

John Seiffer: “Thanks for Friday’s alert – I got my G-voice number. Here are ten cool things you can do with it.”

JupiterThunder posting here: “You want this, even if you don’t know why: One phone number you can set up to ring all your other phone numbers (even schedule when and when not to ring certain numbers), awesome features like ‘always send ex’s calls to voicemail’ and ‘yes your mom did say that to me and I have the recording to prove it.’ Best of all: free outgoing phone calls.”

☞ I called my own Google Voice number and left this message: “Hey, Andy, it’s yourself, doing a test with Google Voice. Goodbye.”

G-Voice promptly transcribed, emailed and texted it to me (so if I were in a meeting, I would see the message just by glancing at my cell phone): “Hey the picture software test with google point. Goodbye.”

On a second try, it did better. It took, “So, hey, it’s yourself again. Now is the time for all good men to come to the aid of their country.” . . . and made it . . . ““So, Haiti. It’s yourself again. Now is the time for all good men to come to the end of the country.” Close enough.

Here are Google’s own top-10 features: voicemail transcription (sort of), one number, personalized greetings, international calling, SMS to email, share voicemails, block callers, screen callers, mobile app, conference calls.