Mis-priced Assets

Sometimes, things of value get mis-priced in the marketplace. Despite all those efficient market guys saying otherwise, and despite HFT robot arbitrageurs that “make the market more efficient”, assets like stocks and commodities can be mis-priced relative to their underlying value. Sometimes it takes a human being to step in and realize that, and act accordingly. You have probably heard many market experts proclaim the relative value in cheap high-quality technology stocks lately, given the market weakness in general. They may be on to something.

What are my pictures above?

The top picture is my new-to-me boat, a 1987 Boston Whaler Revenge 20 footer. I got it for what I consider to be a fantastically favorable price, and I get her this Sunday as she is delivered to me all the way from Ohio. She was for sale locally there for a while, with no interested buyers. And her price reflected that. I bought her for what my Boston Whaler Montauk 17 footer will sell for this week in New Jersey. I am excited for three reasons! First, I love this model. Second, I followed Chief Brody’s advice and “got a bigger boat” for the same amount my smaller boat will sell for. And third, it proves that there are things of value that come from Ohio (sorry Scott… couldn’t resist).

The second picture is where I have breakfast a few mornings each week: Farley’s in Chatham, NJ. Farley’s is a not-so-friendly little place, where the owner insults you and makes really bad food (kidding Chris), where you can start your day off right talking local high school sports, local politics, the Bernank, and Anthony Weiner. Seated in the Nova Nation shirt is Dan from Chatham Wealth Management, and he is as regular as they come at Farley’s. He is Farley’s Norm. Standing in the white t-shirt is Farley’s mis-priced asset, Jim. Well, actually the food is all over-priced, but that’s a story for a different day. Anyway,  Jim was laid off after decades working at the same insurance company. He is an insurance fraud investigator, and he is without a bid, as we say in trader land. He is smart, tenacious, and possessing the wisdom only an old smart dude can. Joe and I are actually thinking of picking him up and setting him loose on some fraudulent going-ons in our equity markets. We think he is like the Boston Whaler in the first picture.

Mis-priced assets. You can find them, be they stocks, boats, or people.

Stay cool today; it should reach triple digits in Chatham!


Where we left off 4:00pm EST:

INDU              12,048.94                                -21.87

SPX                 1,279.56                                  -5.38

CCMP             2,675.38                                  -26.18

Futures now at 7:00 am EST:

DJA                             +26

SPA                             +4.40

NDA                           +6.00

Key Data out today:


08:30:              Initial Jobless Claims. Please remember that some News Providers get this information at 8:00am, and not 8:30am, and they package it in machine readable format so that at 8:30 they can “hit send” and the HFT’s, who pay them millions, can act at 8:30.001.

08:30:              Continuing Claims. Same HFT deal.

08:30:              Trade Balance.

10:00:              Wholesale Inventories.

Since the prior close, some key stories:


–       White House considering a cut in payroll taxes as a stimulus to spur hiring.

–       Obama is considering Date for Consumer job.

–       Bill Gross has no regrets missing the Treasury Bond Rally.

–       Gentlemen, place your bets: Bill Gross says there will be no QE3. Jim Rogers says Bernanke is a disaster who will bring QE3.

–       Steve Liesman (CNBC) thinks Bernanke has more bullets: CNBC Article here.

–       TXN warns.

–       Southern California Grocery Workers close to striking.

–       Huge Loss for banks. Lose Tester amendment to delay limits on swipe fees, vote 54-44. WSJ article here. I like to think that this was a test as to how much Wall Street owns Congress. Wall Street failed. Wal-Mart won.

–       Brazil raises rates. Hints more to come too.

–       High Unemployment Makes IHOP and Red Lobster Target Higher Income Customers (Bloomberg). I suppose they can target whoever they like. I will target Gus Sauter at Vanguard for business, but I won’t hold my breath.

–       “Low-Float-IPO’s” following LNKD lead. Look for low float versions of Pandora and Zynga later this month. And don’t get me started on Groupon. An ex M&A friend of mine took me through their SEC filing. Rut Roh. Buyer beware.

–       AAPL bans DUI checkpoint apps.





After the Close: HOKU, NSM, RLD, RENT, SEAC, THO


Significant Movers This Morning:

GM +3%, MW +3%, HBI -15%