Wednesday, March 18, 2015

President Obama Has the NCAA Covered, But the Rest of the World Is Screwed

Normally I would have no problem with the President of the United States taking a vacation, going to play golf, or picking the brackets for the NCAA. Let's face it. Being President of the United States is a tough job, and if anyone has followed presidents through the ages, one thing is definite.

These guys always look much older when they leave office than when they take office.

But with President Obama it has always been something done at the wrong time, in the wrong context, and it seems to me that his priorities are simply not in the right place. Ever. The man misses many of his daily intelligence briefings according to most reports, did not show up for a conference after France had one of its publishers attacked by extremist Muslim supporters, and left for a fundraiser in Las Vegas the day after an attack on the U.S. Embassy in Benghazi which left four Americans, including the ambassador, dead. He went to play golf the next day after journalist's heads were chopped off by ISIS. And he and his wife have taken extravagant vacations during the worst economic times in our history since the Great Depression. Some of that even on the taxpayers' dime.

Not to mention the fact that while the economy is improving, albeit slowly, and not due to any of his economic policies, it is still in the tank for the most part due to his lack of any sound economic policies, Israel remains under serious threat, Iran is close to obtaining nuclear weapons, and ISIS has grown in strength and numbers with no strategy to speak of from this president on really any of these issues. And quite frankly, no leadership.

The world has always looked to the United States, for better or for worse, for leadership and a firm handle on world issues. Despite a significant reduction in power the world over since Obama took office, we are still the superpower. And so the world looks to the President of the United States as sort of a leader of the free world by proxy. Obama is turning a blind eye to everything that is pertinent and important, and seems to always focus on what is trivial.

Like announcing his brackets for the NCAA.

Who cares? Who cares about the NCAA and who cares what President Obama thinks about that? Who should care? And with all of this turmoil and violence and angst the world over what message does this send again to the rest of the world about where his priorities are? And since he is the man who "leads" this country, what does it tell the rest of the world about where our (the United States') priorities are? Moreover, what does it tell our enemies?

Our president is asleep at the wheel. The people of the United States are also asleep at the wheel. No one is paying attention to the world. The people of the United States are paying attention to trivial stuff like the NCAA and are infatuated with a man who cares little about being president, and cares all too much about being the coolest guy in the room.

It seems to me like what sort of got us into a bit of trouble back during Pearl Harbor when the Japanese thought that we were an easy target, just sitting back and enjoying the American dream with little regard to everything else horrific happening around the world around us. Back then it was quipped that a sleeping giant had been awakened. These days I am not so sure that there is any sleeping giant at all. We are simply a country of people who have no idea where the country is, what the world is doing, and what the issues of the world are.

The fact that we are not calling our president out on these issues is very telling of the mindset of many Americans. Ask someone on the streets about Benghazi, for example, and the response you will get is something like, "Is that a band?" or "Ben who?"

The president can do all of the fun stuff when the times dictate that it is possible to do so. He can be a man with the people when it serves the times. But the fact is that we are not in a peaceful world, and the entire world (at least the free world) is under threat, ISIS is acting like the Nazi regime, we have real and present dangers before us, Netanyahu is left with virtually no U.S. support from serious threats, and more dangers become more and more apparent each and every day. The president should not have the time to focus on the fun stuff with the world in such a state. He should be focused on leading the country, and leading the free world, letting terrorists know that the United States will not stand idle, will support its allies to the full extent it can, and will hunker down and do the work that the president should be doing.

Like Governor Scott Walker of Wisconsin often said regarding national politics when asked, he said he had to focus on his own state's affairs first and foremost. That was his focus. That was his priority. If the President of the United States is asked about his NCAA bracket picks, his response should be something akin to Jim Mora. "Playoffs?"

There are much bigger issues the world over to deal with, worry about, and focus on. And right now that is where President Obama needs to have his head. Not on basketball. If we want to know how sports will fare we can ask Mike & Mike or Boomer & Carton. The president needs to be focused on how the world will fare and how the United States will fare. And if the NCAA is the top of the news as it applies to the president, we should all be worried. Very worried.

It's great he's told us about his brackets. But we still don't know what his strategy is to defeat ISIS, nor what really happened with the IRS scandal, and most especially what happened in Benghazi...among the short list of course.




Tuesday, March 10, 2015

Plummeting McDonald's Sales May Be An Economic Signal

A couple of years ago I wrote that one thing about downturns in the economy is that it causes people to, of course, scale back their purchases, and that means low-end retailers such as Dollar Tree, Dollar General, Walmart, and even thrift stores like Goodwill will tend to do very well since consumers are more concerned about value than necessarily quality, or customer service. That is not to disparage any of those companies on either quality of product, or quality of service, but simply to suggest that price becomes king in that kind of an environment. In that commentary I suggested that when the economy begins to fire up a bit, retailers to look at to buy shares in are slightly higher end, or steps up from the deep discounters. Places like Target and Kohl's, for example.

During the same period I also wrote about how well McDonald's stock performed throughout the entire recessionary period. To put it literally the stock was on fire, and that was because people were flocking to McDonald's stores, particularly interested in their value menu which offered consumers the best bang for their buck when it came to dining out. Even when it came to coffee, a cheap cup of what is arguably a noteworthy brew was just what the hurting consumer needed to get their coffee fix at a price that went easy on their wheezing wallets.

Interestingly enough, Starbucks did not fare all too poorly during the recession either, but that's another story. There's a different dynamic going on there.

McDonald's sales have taken a turn for the worst, having seen percentage decreases for nine straight months, and even Walmart has been seeing some declining sales.

With gas prices lower and jobs numbers higher, the shortfall in sales at McDonald's may actually be a lagging indicator of better times ahead. What it suggests is that people may be stepping up to slightly
higher end operators like Wendy's, Chipotle, and Panera Bread to name a few. Five Guys burgers are a strong competitor in this sector as well, and have been one of the fastest growing quick serve hamburger chains for some time now.  My gosh, if they went public, I would be one of the first guys in line.

Shake Shack may shake things up a bit as well for McDonald's. And actually Wendy's stock has been seeing new highs, so to my mind these are very clear signs that there is a paradigm shift in where consumers are spending their dollars.

And the begging question? Could it be that with lower gas prices and better job prospects, consumer confidence may be rising, and consumers are now willing to spend a little more elsewhere?

If that's the case, it could well be a signal that the economy may be getting better. I think it is too soon to tell for sure. Certainly I am not going to use hamburger sales alone as any indicator in the macro-economic picture. But in the micro it seems to at least make a suggestion which I think is worth taking a close look at.

People are beginning to make a shift in their spending, and McDonald's horrible sales numbers are making that all too clear. Stocks that I think are ripe for this environment are Wendy's and Chipotle (I'd stay away from Shake Shack), Whole Foods, Target, and I will go ahead and throw Darden Restaurants into the mix as well. These are companies I want to own right now. I think these companies are primed to benefit from any improvement in the economy, and I think stocks to avoid right now are stocks like Dollar Tree, Walmart, and yes. McDonald's. But do watch the company very closely. McDonald's has historically been able to weather many storms and has an uncanny ability to right its ship eventually. I do not recommend writing it off completely in the short term. But these other companies, I think, have a lot more going for them as it currently stands, and that is where I would put my investment dollars.

We're up for a ride, and the ones who will win are those who are treats to the American consumer if it becomes all too clear that we are headed for better times. In this case playing the value play is not as good a bet as playing the upgrade play.




Wednesday, March 4, 2015

What Job Loyalty Means To Me

The short answer? Only a fool will allow himself to be beholden to anyone for his livelihood. I think of a job like I think of a business. It will make decisions that are imperative to keep the business afloat, and growing, regardless of how that affects the people in the business. That's just smart business and really nothing personal.

Don't get me wrong. I will continue to stay with any company that is doing all of the things that are right for maintaining my own business. That is, having the ability to pay my bills, having the ability to enjoy upward mobility, and having enough free reign to pursue my personal interests as it applies to money and ultimately my livelihood, present and future.

My boss is a jerk is not necessarily a reason to leave a company any more than my boss is a really nice guy is a reason to stay with a company.

For me it boils down to one question. Does the company have the meat to allow me the ability to get where I want? If the answer is no, then just like a business will decide that having 500 employees is not beneficial to the bottom line and reduces their workforce to 400 at the expense of 100 people now out of a job, deciding to leave a company behind is simply the right business decision regardless of any other factors, if it is determined that the company that you work for is stifling your ability to meet your own  personal business' needs.

When YOUR business affects the health and stability of MY business, it's not about loyalty. It's about doing what's right for the health of MY business.

No business I have ever heard of longs to have its doors shuttered just because it wants to be loyal to someone or something.

I am not loyal to a company. I am only loyal to my business. And as it should be, just as much as the company I work for is not loyal to me, but to its business, I should be loyal to my business.

You cannot and should not ever consider yourself a simple employee. And moreover, you should never allow yourself to become a simple employee. In  other words, you must make it your primary goal to afford yourself the ability to become an individual business within the framework of any company you work for, and thereby afford yourself the ability to make decisions about how you proceed based on what you can do as opposed to what you must do.

Why do people stay in jobs that don't have the meat? The simplest answer is because they have put themselves into a position to need their employer to support at least the continuity of their own personal business and equate that to the idea that they are being loyal to an employer that is taking care of their needs. At that point it really isn't about loyalty. It's about simple survival. But some people will mistake that as being taken care of by their employer to maintain the status quo, and thereby will take whatever comes to them.

Most of the time, people are just getting by. Your own personal business is being sustained, but it's on a treadmill, your business is running in place, and at any moment the belt can break and you will be sent reeling onto your hindquarters with egg on your face.

In this sense, one is more like a slave to their job and to their company than an individual person able to decide for himself or herself what the best next step is in expanding their own personal business. That is a hugely dangerous and foolish position to be in.

I work for no one except for myself. Plain and simple. In reality? I have no boss other than myself so long as I understand the needs of my own personal business and the ability of the company I work for to have the meat to allow me to do what I need to in order to make my business a winner.

The moment that I decide that is not the case, I walk. Regardless of the inconvenience to the company I work for. Regardless of the consequence of the people I worked with. Regardless of the impact of my decision on the livelihood of others. It is a business decision that is made with regard to the needs of my business, and nothing else.

Nobody else, and no other business matters except my own. And that is exactly the way it SHOULD be.

Loyalty to a job means to me that a person is in need of their job. Not in control of their own future, their own destiny, and not in control of the future expansion and growth of their own personal business.

The old saying that a fool and his money will soon be parted sort of applies here. If you rely on being loyal, you are likely leaving opportunity, and potentially money as well, on the table. No successful or smart business ever worries about who gets hurt in the process, and certainly they don't worry about competitors who get taken out either. They do what is right for their business, and so should you consider your own personal business above all else.

However harsh it may seem, loyalty to anyone but yourself is simply a good way to ensure that others around you will thrive while all you get to do is survive. In essence, you will forever be beholden to someone else for your livelihood.

It may seem selfish. But at the end of the day any smart business is in business to become a powerhouse and grow and make money. If you think of yourself as a business, then it just makes sense to pursue your needs above the needs of all others, including the company you work for.

A boss it a title. A business is an entity. And where I come from? A business trumps a boss. The only time a boss trumps a business is when he is allowed to do so. I choose to be a personal business and trump my boss. And a boss only has power when his business trumps the business of the other personal businesses around him. If the businesses around him are strong and powerful, concession is the right order of business. And then the reality becomes that what is actually taking place is partnerships.

To my mind, loyalty is a fool's game, pure and simple.

Tuesday, March 3, 2015

Look Out, The Bunnies Are Stoned!

When it comes to the issue of the legalization of marijuana I tend to be one of those conservatives who actually comes down on the side of the legalization proponents. Why? For me it is quite simple.

All of the laws to curb the use of marijuana has simply created a black market, and pot is in as much demand as it ever was before.

Just like prohibition did not stop the sale, distribution, and use of alcohol, drug laws will not stop the sale, distribution, or use of marijuana. If people want to use marijuana, nothing is going to stop them from doing it.

Still, there are a ton of people out there who will go to any length to make a case against the legalization of marijuana, and just a few of those arguments are going to make one very telling suggestion.

They were toking before they made their argument!

Enter Matt Fairbanks, a DEA agent in Utah's "marijuana eradication team" who sat before a state Senate panel and actually made the suggestion that...

Are you ready for it?

If edible medical marijuana is legalized in the state of Utah, rabbits could become addicted to pot, lose their natural instincts, and sit around all day getting high.

Being a stock market guy, this is fantastic news actually. Imagine the shares of any stock of carrot chip makers going through the roof since there will now be a massive influx of high bunnies looking to cure a case of the munchies!

Start buying now.

Somehow I don't see the crux of the argument. And why just the bunnies? Surely there will be high grasshoppers, crickets, and maybe even some high locusts somewhere munching on the leaves of cannabis plants and getting high. Why single out the bunnies?

There is that thought that comes to mind sometimes that some people simply begin to "clutch at straws." This is what I think of this particular argument. High bunnies? Really? I mean, really?

Is that all you've got?

Forget destruction of families, deaths on the road due to high drivers, machinery injuries from industrial workers coming into work high, or any other argument that might just have an iota of legitimacy to it.

Besides the fact that we are talking about medical marijuana, not recreational marijuana.

I said I was on the side of the legalization proponents. That does not mean that I discount the real dangers of more open sale of marijuana anymore than alcohol has its problems. But I can assure you that if I wanted to make an argument against any legalization of marijuana, it's not going to be by going before a government body and saying that bunnies will get high.



Wednesday, February 25, 2015

A Lesson In The Value of Covered Call Options Final

READ PART ONE
READ PART TWO


One thing about the stock market is that it's okay to change your mind. And that's what I decided to do with Cypress Semiconductor in this month's options play.

Yesterday I sold 13 covered call options contracts with a March 20th expiration and a strike price of $15. The deal for me was a couple-fold. One, on Monday the premium for this call was 50 cents at the start of the trading day, or $50 per contract. As the stock pulled back yesterday that premium gave up 10 cents, or $10 per contract.

I got a little twitchy.

The $16 call for March 20th, the one I would have preferred to have sold, was only about 15 cents or $15 per contract.

Boring.

In January I collected $143 in dividends, and when I sold the first set of contracts on January 21st I collected a premium of $564 after expenses. The March 20th calls gave me a premium of $499 after expenses. Total collected is $1,206.

Based on my cost basis of $12.83 per share, with premiums and dividends collected this puts my total profit at $4,027 if the stock reaches $15 or better by March 20th and I am forced to sell my shares. I am still selling my shares at roughly a 24% gain and I am quite happy with that. I'd be happy to keep my shares as well, of course, and get to play it again in April, but I am inclined to believe that I will be forced to sell.

...and there happen to be a couple other companies on my radar I'd like to put the money from Cypress into.

I still believe that Cypress Semiconductor is a $17 stock, however. And I still like the company. Therefore, if my calls are called and I am forced to sell, I can then start to take a look at selling cash-secured put contracts to either simply collect premiums with no intent to buy shares, or to buy shares at a discount to what I think the future value is.

There is still money in Cypress Semiconductor no matter what happens is the point, and from a technical standpoint whether or not I own the shares,  I can still make money on it. So really, it's win win.

And of course the intention is to make money on wherever my proceeds from the sale of Cypress go.

So there you have it. A lesson in the value of selling covered calls on underlying shares you own to boost your overall profits from a stock. The dividends and options in the event that I'd be forced to sell, put my total per share amount collected to $15.92. So even if it only reaches say, $15.75 and I am forced to sell at $15, I am still getting 17 cents more per share than the market price at the time of the sale.