May 20, 2009

Your Money and You

Oh No!
It’s Time for Yet Another Edition of …

An occasional Rant feature

IT WOULD APPEAR that my most recent installment of Your Search Engine Queries Answered! was, to use the technical term, a hit. Readership is up, it got a nice mention on something called Twitter, and people seemed generally pleased with it.

Thus, I’m going back to the well again for a special second round of Your Search Engine Queries Answered! Today, we’re going to look mostly at matters dealing with finance and economics. Why, you ask? Well, it was the most popular topic the last time. Reason enough for me. Besides, in these tough economic times, more people than ever hope to understand how our economy works. I’m happy to help. So, without further ado, let’s go to this edition of … Your Search Engine Queries Answered!

QUERY: assume that smith deposits $600 in currency into her checking account in the xyz bank. later that same day jones negotiates a loan for $1 200 at the same bank. in what direction and by what amount has the supply of money changed?

ANSWER: The supply of money will increase by $900. Here’s why.

Smith has put her money into a checking account, which means the bank will treat it as payable on demand and won’t loan any of it out. Thus the net increase there is zero. As for Jones, although he might negotiate a $1,200 loan at his branch, he’ll find out later the loan officer will get overruled by his boss, who is under orders not to actually loan money. This is because his boss’s boss is under orders from his boss not to loan money because the bank is trying to repay its TARP money, which the Treasury tricked it into taking.

However, when the bank tries to repay its TARP money, the Treasury tells it not only to pound sand, but that a senator from the bank’s state is holding a hearing on why it isn’t loaning out any money. So then the bank goes back and argues internally, and eventually decides that it can loan out Jones $900. Jones then takes his $900 and hides it under his mattress, thus technically adding it to the local money supply but really just contributing to the Paradox of Thrift that has been destroying our economy. Q.E.D.

QUERY: what is jpmorgan chase & co.’s p/e ratio hypothetically if the company issues equity in order to raise $10 million of capital?

ANSWER: The same as it was before, for all intents and purposes. What is $10 million to the House of Morgan?

QUERY: nonincentive stock option sell to cover

ANSWER: As a general rule, you should think about selling enough of your options to pay the appropriate tax due on them. Otherwise, you’ll end up like all those techies when the dot-com bubble burst, who owed oodles of tax when their options for vested at $89 each and then went to zero in little under a year. No one’s going to mind if you do this.

QUERY: what are the markets going to do next week

ANSWER: Ah, the timeless question: how will the markets do next week? I have no idea. So I turned to the I Ching, the ancient Chinese book of divination, and posed it your question. The I Ching said:

The present is embodied in Hexagram 5 - Hsu (Waiting): With sincerity, there will be brilliant success. With firmness there will be good fortune, and it will be advantageous to cross the great stream. The third line, undivided, shows its subject in the mud close by the stream. He thereby invites the approach of injury. The situation is evolving slowly, and Yin (the passive feminine force) is gaining ground.

The future is embodied in Hexagram 60 - Chieh (Limitation): There will be progress and attainment, but if the regulations prescribed be severe and difficult, they cannot be permanent.

The I Ching thus tells us that he who holds the line, and does not sell his shares in a panic, will garner great wealth and fortune in the long term. The mud by the stream represents institutional investors and hedge funds, who are targeting certain sectors -- *cough* commercial real estate *cough* – and may decide to go super-short on them, thus causing much distress and anguish to those who can’t bear to see their real-estate fund drop nine percent in a day. An increase in Yin represents selling pressure and caution among small retail investors, who would prefer not to lose any more of their money.

As for the future, this shows there will be upward momentum among financials, unless the Government steps in and crushes them under its foot. The I Ching has spoken. Behold its wisdom.

QUERY: on the pernicious speculation action and corresponding supervising countermeasures in the stocks market of china

ANSWER: As a market, China scares the hell out of me. For one thing, like any emerging market, it is prone to speculative bubbles, and if I remember right, it had a good one going until the Reds took the air out of it. This leads to the second reason why I’m scared of it – China’s Government makes Darth Vader look slow to act when it comes to changing the terms of a deal midway through. So you can keep Shanghai and Shenzhen, for all I’m concerned.

QUERY: how much money did it take to make xenia back to normal after 1974 tornado

ANSWER: Since when was Xenia normal? I mean, come on.

QUERY: hey bloated rates

ANSWER: How can this commercial STILL not be on YouTube? It was a classic. This was the one for Brown & Co. where the lady comes in and wants to trade on margin, and the front-office doofus thinks she wants to trade butter. (“No, MARGIN!” “Oh, right.”)

Oh, speaking of commercials you could see on CNBC all the time, here’s one for … well, I was hoping this would be a surprise, but NOOOOO -- YouTube's stupid preview screen ruins it. But hey! It's Smilin' Bob!

I loved these commercials, if only because they're so downright ... blatant. (Readers at work might want to turn off the sound or wear headphones, if only so your colleagues don't get any funny ideas). As for why these commercials aired constantly on the all-stocks channel ... well, I'll leave that for readers to discuss!

QUERY: operational research decision tree for an orange owner in florida faces a dilemma. the weather forecast is for cold weather and there is a 50% chance that the temperature tonight will be cold enough to freeze and destroy his entire crop, which is worth some $50 000. he can take two possible actions to try to alleviate his loss if the temperature drops. first he could set burners in the orchard; this would cost $5000 but he could still expect to incur damage of approximately $15 000 to $20 000. second he could set up sprinklers to spray the trees. if the temperature drops the water would freeze on the fruit and provide some insulation. this method is cheaper $2000 but less effective. with the sprinklers he could expect to incur as much as $25 000 to $30 000 of the loss with no protective action. compare the grower s expected values for the three alternatives he has. which alternative would you suggest the grower take? why?

ANSWER: The orange grower should take none of these steps, and instead make a claim against his insurance in the event of a catastrophic frost. Barring that, he should apply for disaster aid from the Government, allowing him to get his $50,000 back at a nominal rate of interest, which would cost him just a couple of thousand dollars per year.

QUERY: never donate to alma mater

ANSWER: Good decision! One should only donate to one’s alma mater if one can deduct it from one’s taxes and wants really good football tickets.

QUERY: what does audibilize mean?

ANSWER: “Audibilize” is an Americanism that means the quarterback is improvising and has changed the previously-agreed upon play, known as “calling an audible.” For more on this, look under “trickeration” in your General Dictionary of American English.

QUERY: can a film director rewrite a script?

ANSWER: Not only can he rewrite the script, he can screw you out of your writer’s credit if he’s clever enough. So unless you want a “based on an idea by” credit, call your lawyer.

QUERY: how much is a legitimate markup

ANSWER: As much as you can get away with, just up to the point where people start thinking you’re a real jerk.

QUERY: i did everything right then everything went wrong

ANSWER: Ah, yes. I know the feeling! The important thing to remember is that you’ll rebound from this.

QUERY: how to speculate currency

ANSWER: Currency speculation isn’t my thing. But if you’re interested about this and other matters related to market trading, you might want to visit the good people at TTS Trading Ltd. in Vancouver, B.C. TTS Trading Ltd., according to its Web site, provides "insight, intelligence, and education for the self-directed active trader" – and they gave me a shout-out on Twitter for my last Your Search Engine Queries Answered! This sent bunches of readers my way. Thanks, guys!

QUERY: you have just noticed in the financial pages of the local newspaper that you can buy a $1 000 par value bond for $800. if the coupon rate is 10 percent

ANSWER: This is a trick question, because local newspapers don’t print bond listings any longer.

QUERY: i am consuming 50000 gallons/month of water. is this good

ANSWER: No, it’s not good, you stupid prat! What are you wasting that on, a replica of the fountains in front of the Bellagio? Also, you’re going to have the inspectors from the water utility fining you for your stupid manicured lawn.

QUERY: report in how to spend ur money economicly

ANSWER: Spend less than you earn. Next!

QUERY: guy billed $62 000 for downloading wall-e

ANSWER: I’m sure he deserved it.

QUERY: canadian football league run by idiots

ANSWER: Well, I can’t disagree with you there, if only because – once again! – I can’t get any telecasts of the CFL’s games this year. Jesus Christ. The season starts in July. That’s two months of real football I could be watching but can’t, and so I’ll have to listen to the games on Internet radio again.

QUERY: indoor football games fun to watch?

ANSWER: YES. Particularly in person. Get a seat a few rows up – trust me on this, because you don’t want a linebacker flying into your seat – but not too far up, and you’ll find it exciting and thrilling.

QUERY: american idol broadcast in san miguel allende mexico

ANSWER: You’re in San Miguel and you want to watch American Idol? Are you well? I mean, come on. You’re in San Miguel. The only television shows you’re allowed to watch are sports broadcasts and CNBC.

QUERY: summary of rich dad poor dad gold miner advice

ANSWER: Who the hell ever heard of asking a gold miner for financial advice? I mean, really. Here you have Prospector Jed out in Death Valley panning for gold or something, and twenty years later he’s … still out panning for gold. I mean, let’s get realistic here.

QUERY: towels are kinda scratchy meaning

ANSWER: Congratulations, Verizon – your advertisement has now become a topic for philosophers to debate.

QUERY: is a television a durable good?

ANSWER: You mean the box itself or what’s on it?

QUERY: goodwill inadvertant unwind

ANSWER: How do you inadvertently unwind goodwill? It’s goodwill. It sits on the balance sheet and does nothing. Well, OK, it reminds a company it overpaid when it ate a smaller company, but other than that, it doesn’t have any intrinsic value. And what if it’s negative? Then what? Do you have “badwill?” Actually, that’d be kind of cool on a balance sheet.

QUERY: next week market forecast

ANSWER: Oh, not this again. All right, here we go. A moment, please.

All right, I’m ready. The I Ching said:

The present is embodied in Hexagram 14 - Ta Yu (Possession in Great Measure): There will be great progress and success. The topmost line, undivided, show its subject with help accorded to him from Heaven. There will be good fortune, advantage in every respect. The situation is evolving slowly, and Yin (the passive feminine force) is gaining ground.

The future is embodied in Hexagram 34 - Ta Chuang (The Power of the Great): It will be advantageous to be firm and correct.

Well. I suppose this means … BUY! BUY! BUY! Clearly the I Ching means that buy-and-hold investors will be rewarded for their fortitude, because Hexagram 14 indicates institutional investors and hedge funds will all start going long. Unless, of course, the I Ching means that we’re all doing pretty well now, but that the hedge funds will all go short and we’ll hemorrhage red ink out of our pores until the market eventually turns around.

That’s it for this edition of Your Search Engine Queries Answered! Tune in next time, when we examine the foibles of Terrell Owens, why it’s a bad idea to do electrical work at home, and our standard boilerplate policy on financial matters, which is this:

DISCLAIMER: This entry is not intended to act as financial advice or serve as a substitute for financial advice from a qualified certified financial planner or other knowledgeable professional. Investing can and does involve risk and carries with it a chance of losing all your money, as we’ve found out over the past several months. Buyer beware. And if it seems too good to be true, it probably is.

Posted by Benjamin Kepple at May 20, 2009 10:54 PM | TrackBack
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