BAGAKOAA; 3 August 2011 Wow I Am Famous

Post 479August/2011
Wow I Am Famous

 

About two weeks ago I celebrated a friend and reader's birthday by making sure they had an adequate balance in their account at their local wine shop. Of course that means providing the wine shop with my AX card. Now this was in the UK, and it is interesting to note when you are doing business in the UK, they have fairly strict privacy or as they say privacy (oh yeah, that was typed so you probably did not notice I pronounced it with a long i the first go around and a short i the second go around. But I digress) policy regarding usage of data bases and e-mails address.

 

We know that because our company is always trying to leverage our contacts to keep people informed about what is going on in our sport. Half of the time we cannot do the things we want to do because of the privacy (how ever you wish to pronounce it) laws. That is why I find it amusing that in the last two weeks, I have received 94 different solicitations from business in the UK. I can buy A4 copy paper at a bargain, there are incredible lease deals on Jaguars with the steering wheel on the wrong side of the dashboard (probably why the leases are so cheap), ironically I got a solicitation for protecting my identity for only 34 pound a year, and my favorite, a toilette conversion kit that will allow to wash my bum after every visit for only 79 quid. (That one almost had me but freight made the deal untenable.) Funny how things turn about.

 

I like this kind of normal life. I woke up, (did not swim-had a great excuse-you see I use a goggles and a snorkel while I do my laps and the little black figure eight thing that secures my mask to my goggles broke so now I can't use my snorkel.

snorkel loop

I know there are some scuba folk reading this so if you have a spare little black figure 8 thing that holds a snorkel on to you goggles or mask, send them my way. This one only lasted 19 years. Yeah it was US Divers stuff.) took care of my dogs, showered, had breakfast and got into the office to finish the desk assault.

By 11:30 I could actually see the wood on my desk. I have a huge pile to go through but look forward to tightening my TTD (Things To Do) list. It has been a few weeks.

 

I enjoyed a nice lunch at Hanna's and buddy Dave bought me a salad, and was bragging about his latest trip to The Riviera. Not the one with me, but yet another one. He got to stay the night in the place. Way Cool. Beth and Sean at the restaurant said the only golf courses they have ever been to was The Riv and Augusta. Not too shabby. Beth played her first round of golf on The Riviera. Here is a shot from the first tee at The Riv.

hole one riv

 

I don't know about you, but I would find that tee box a little intimidating as my first swing at a ball? Good on you girl!

 

Devin and Jack headed out to Disneyland but after two rides the heat and the crowds cramped their style. The called and suggested dinner at Hanna's. We enjoyed a great meal with their new menu. Sean convinced me to try the skirt steak and it was phenom. I had to do a side of the Lobster Ravioli, wow. I know how much work they are but they are terrific. Charge more for them Dave. I was surprised by one of my Augusta buddies who returned a favor and bought me a drink for a change. Thanks Fred. It was a fun night and we got home early enough to work on the blog. Life is good.

By The Hair On Our Chinny Chin Chin

 

hair on my chin

What a wild ride today. After starting out really low and making it look like we would have the longest downward trend since 1978 (10 days of decline) we eked out a small gain on rather heavy volume. Now let's take some guesses as to why we had the upward correction. Well, last night we explained that the indexes were hitting some really important technical levels and emotional levels. That was probably the catalyst for the upturn. All day, we started hearing about QE III or at least QE 2.5. I am not sure what the treasury and the fed can do, but there are rumors they are talking about more quantitative easing. Also, we are seeing the S&P P/E ratio drift down near 13, coming off the near 15 average. This means it is bargain time for many recognizable stocks.

 

We made no move in any of the portfolios except we picked up a few more shares of AMZN on the dip early today. The only thing we can see that could adversely impact AMZN would be a national e-sales tax. That would be applicable to all internet sales so relatively speaking it would impact all eSellers evenly. The Department of Commerce estimates on line sales in the US (2010) at 180 billion dollars with a growth rate near 10%. That would generate a new tax base of 5.4 billion at 3%, so you could assume it will happen. Since that seems to be the only chink in the armor, we will continue to add to AMZN. It is about 4% of our portfolio at the moment.

 

All this uncertainty about the market must make people hungry for burritos as CMG Chipotle Mexican continues its climb. We have not added to the position, but suggest you do your homework and take a look at the numbers.

 

burrito emiril

 

Look Up In The Sky It's a Bird, It's a Plane, Not It's a Gold Bar

 

gold bar

The discussion about gold got a few people thinking so I thought I would spend a minute explaining why the relationship between gold and liver is important. You can use a historical reference of the relationship between gold and silver just to see how crazy the market can get. I am not suggesting there are a lot of common value driver between two metals, but their historical price relationship can be indicator as to when gold and or silver reaches extreme values in relationship to one another. I kind of did this exercise for one of our readers, Dana S, but found it fun and enlightening. (What a sad life I lead.)

 

The chart below will show the 35 year price relationship between gold and silver. Year 1 is 1975. Gold's average prices was $139.29 and silver was $4.35. That created a ratio of 32.02 meaning gold was selling for 32 times the price of silver. When you look at 5, 10, 15, and 20 year averages you would discover that the ration hovers around 50 or so. The actual average for this data set is 56.65. That's the big black horizontal line on the chart. By applying some simple calculus to the data set, we can determine the standard deviation for the data set using the formula in Excel. (=STDEV(X1:X36) We get a standard deviation of 18.47. All that means that based upon this data set, any number 18.47 points above the average could be an anomaly and any number 18.47 points below the average could be an anomaly. When you look at the chart you can see that about 1980-1981 the ratio went down to 18.80 to 21 indicating that silver got a little ahead of gold during the interest rate issues of the early 80s. You can confirm that with the raw data which shows a 300% increase in silver compared to 70% increase in gold over the same time. Might have been a good time to take some profit.

 gold silver ratio

The light purple line is where the ratio is today. 40.64 is just a hair above our lower control limit number of 38.6. it might be time to start thinking about taking some profit in silver OR do you think gold will escalate? That would be my guess. We were suggesting 1700-1750 for gold in the near term. We are now thinking that 1800-1850 by Q 1 2012.

 

Salve Lucrum 

 

 

 

 

 

Brian Ireland
BAGAKOAA;

I am not a professional investment advisor. Anybody reading my blog and investing accordingly must be out of their minds. I have made more money than I have lost. There are many more qualified people than I to actually tell you how to invest your money.

BAGAKOAA=Boys And Girls And Kids Of All Ages

Salve Lucrum=Latin for Hurrah for Profit.

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