MAS o Menos

During Thanksgiving, ThanksMAS and the Seattle Snowpocalypse, I was exposed to sick people.  On each of the three occasions, I started to develop slight symptoms the next day.  Instead of surrendering to the sickness or running off to the drugstore to buy some potion that suppresses symptoms, I decided to fight back.

From my 8 Tips For Avoiding Sickness, I focused on these three.

1. 8 Hours of Sleep MINIMUM. If I could sleep for 9 Hours, I would.  The 4th REM cycle between hour 7 and 8 is the largest and is anti-viral.
2. Garlic, Onion and Peppers. Put down the Tylenol and pick up your chopping board.  A stir-fry loaded with garlic, onions and peppers is antimicrobial, antiviral and antiparasitic.  Cold medicines aren’t.
3. Tea. I always drink tea.  I reduced my espresso intake and increased my tea consumption.

The result was I never got sick.  For me this is huge.  It has been many years since I’ve been able to fight off getting sick.  My immune system has never felt stronger.   Try these at the first sign you have been exposed to a cold and tell me if my Ninja method works for you.

Here comes yet another year end post.  I’ll start off with how well I did with my web empire in 2008.

CriticalMAS: A+  criticalmas.com

Earlier this year I dumped Blogger and started using WordPress.  I moved over 2 years of posts.  Every photo gallery was linked back to the blog.  All legacy content going back to 2000 was rolled into the new format.  And I did it in a way that not a single link broke (301 redirects).

The frequency and quality of posts (I think) got better this year.  Instead of fighting with Blogger, I was able to focus on creating content.

DeepFitness:  B   deepfitness.com

Back in February, I coded some additional enhancements to the site.  The number of XHTML compliant articles went from 1000 to 2000+.  The site is 100% automated.  For a while, Google rewarded the site with visitors.  Then nothing for months.  Recently the traffic has started to return.

Digital Colony:  W  digitalcolony.com

This site still uses Blogger and I vowed never to use that tool again.  So I took a “W” or withdraw on creating new content for this site until I can move it to another publisher.  I did create a new home page and logo which I think is much better than the old one.

INeedCoffee:  I   ineedcoffee.com

The plan was to spend a few months moving old content into a WordPress database, just I like I did so successfully with CriticalMAS.  I way underestimated not only the time it would take, but my comfort level with WordPress.  I also had LOTS of computer problems this summer and fall.  The redesign is still not completed, so I score this as an “I” or Incomplete.

MichaelAllenSmith: A  michaelallensmith.com

After a domain battle with GoDaddy, I was FINALLY able to setup a simple portal page on MichaelAllenSmith.com.  The design is very basic, but it serves its purpose.

Despite the continuing problems with the next version of INeedCoffee - it was a decent year.

2009 Web Empire Goals

1. INeedCoffee redesign - This MUST MUST MUST be done by April 4th.  Hopefully sooner.  That is the 10 year anniversary date for the site.
2. INeedCoffee new version - I expect to spend months after the redesign getting the site to run smoothly.
3. MichaelAllenSmith redesign - Version 1 was a placeholder for a better design.
4. CriticalMAS - Maybe create local versions of photo galleries that call SmugMug APIs?  Low importance.
5. Digital Colony - I’m thinking sometime in the 4th Quarter, I can revisit this site and start the move away from Blogger.  It will also turn 10 years old this year.

Here are my 2009 Financial Predictions.  My general thesis is:

• Cash is King
• If You’re Long You’re Wrong.

S&P 500 - By the end of 2009 it will hit 633.  This estimate is based solely off earnings ($42.26 x PE of 15).  That is a conservative number.  If you use a 12 PE, the number drops to 507.  If Bernanke loses control of the long bond, this number will go below 500.  The S&P 500 is at 931 now.  The upside is very limited, where as the downside is serious.

Dow - I don’t invest in or against the DOW.  Earnings in these global corporations are highly influenced by currency events.  No prediction.

Recovery, Recession or Depression in 2009? - Depression.  Until mark to market accounting is restored and the bailouts stop, monetary velocity will continue to plummet.  The new Treasury Secretary appears to be another Hank Paulson and we are stuck with Bernanke until at least 2010.

Real Estate - Prices will continue to decline and decline at an INCREASING pace.  As this happens bank lending will get tighter as their risk increases.  Higher down payment requirements will force prices much lower.  Those on the sidelines will continue to see home prices fall faster than they can save.  There are $1Trillon in ALT-A resets.  A massive wave of foreclosures is coming.  The stigma of walking away from an underwater mortgage is going away as America becomes Bailout Nation.  No recovery in 2009.  If you must buy, the best deals will be new construction sold directly by distressed builders.

Oil - I nailed it last year.  Now with every central banker racing to devalue their currency this is going to difficult to predict.  My wild guess is it goes down to $25/bbl before heading back up slowly.

Unemployment - U3 unemployment will hit 9%.  U6 unemployment will hit 16%.  Definitions here.

Deflation, Inflation or Hyperinflation? - Deflation.  Asset prices will continue to fall as the leverage comes out of the system.

Gold - All the experts seem to think it is going up.  I’m a contrarian.  I’m thinking deflation will be a more powerful force than every central banker devaluing their currencies.  Gold drops to $600/oz.

30-Year Bond - This is the most important number.  If it ramps America is hosed.  Bernanke is using Quantitative Easing to push this number down.  It is working for now.  If it fails, look out below.  I plan to have a post on this topic soon.   I’m going to bet against the grossly incompetent Bernanke and go with 4%.

An Investing Strategy For 2009

Note that I am not a certified financial planner and you should do your own research.  The advice below is what I would say to a close friend.  There are no shortage of investing tips for 2009 on the Internet.  Here goes another one.

1. If you have debt, pay it off.  Stop consuming.
2. Exit all long positions in the stock market until trust is restored.
3. Fixed Income is still the safest.  Good old bank CDs.  Money Market accounts. Short term Treasuries.  You will not make money here, but more importantly you will not lose money here.  If the economy improves and the stock market starts moving up, you can always jump back in.  Missing the first few percents is worth it.  Let someone else take that risk.  Guessing the bottom has destroyed many investors.
4. Prudent Bear and Grizzly Short are two mutual funds that make money in a bear market. These funds will make money as long as stock prices are falling.  As soon as a recovery starts, you need to be out of these.  If you don’t follow the market at all, then I would stay away from these.
5. Bet against Bernanke with TBT.  This is a high risk ETF that I will most likely be acquiring soon.  There are a lot of banks, hedge funds and foreign governments holding US Treasuries.  Our Federal Reserve has been leveraging up its balance sheet buying these to force interest rates down.  If at some point any of these parties either stop buying Treasuries or if they try and dump them, interest rates will spike.  TBT is a leveraged ETF that will double that spike for you.  But if interest rates drop, you can lose.  For me this is ETF is less about an investing thesis and more about insurance against Bernanke stupidity.

Disclosure:  I own shares in both Prudent Bear and Grizzly Short. I also plan to buy TBT.

What are your 2009 Financial Predictions?

UPDATE (1/4/09): I realized after I published that there are 2 points I wish to make more clear.

1. If you plan on buying new construction from distressed builders, make sure that if there is an HOA, that is solvent.  That sweet deal you got on condo may backfire if you are the only paying into the HOA.  Buildings require money from the HOA for parking garages, security, elevators and a host of other fees.
2. My picks for Gold and Oil are pure guesses and not true predictions.  We are in uncharted economic territory now.  Currencies are being devalued everywhere and at different rates.  Everything else listed is a prediction.

Today was the day of my first (and last?) Polar Bear Plunge.  Here were the stats for the  7th Annual Polar Bear Plunge:

• water temperature was 44° F
• outside temperature was 41° F
• wind chill temperature was 34° F

I’m probably the only one that actually trained for this event.  Starting on Sunday I’ve been taking ice cold showers daily to prepare my body for the cold swim.  Turns out an ice cold shower is actually colder than Lake Washington, so the plunge wasn’t as bad as I expected.

Some people wore costumes.

In order to get the Badge of Courage, you needed to go out far enough that the water hit your neckline.  It took me about 45-60 seconds to reach that point.  Instead of turning around, I dove under and swam another 10 meters, came up and then booked it back to the shore.  Upon returning to shore, I completely forgot about getting the Badge and instead focused on getting warmer. Brain freeze?

It was a fun event.  Some people do this every year.  I’m probably thinking this is a Hit and Quit It event.  Once is enough.  Check it off the list.  Damn I look pasty.  How many more months to sun?

** Inanimate Objects Comics #30
by Todd Zapoli
ineedcoffee.com/09/zap30/

The 30th Installment of Inanimate Objects.

** Spanish Coffee
by Marketman
ineedcoffee.com/09/spanish-coffee/

Mix coffee, liquor and a flame for a delicious dessert beverage.

** Flying Jewels of the Western Ghats
by Dr. Anand Titus and Geeta N. Pereira
ineedcoffee.com/09/butterfly/

Coffee forests provide  the ideal habitat for a wide variety of rare and endemic butterfly and  moth species. These evergreen forests with tall canopy trees provide  filtered sunlight that is beneficial to butterflies.

On July 30th, CNBC’s Jim Cramer told his viewers:  Yes, The Market Has Bottomed.

I am indeed sticking my neck out right here, right now, declaring emphatically that I believe the market will not revisit the panicked lows it hit on July 15. And I think anyone out there who’s waiting for that low to be breached is in for a big disappointment, and [they’re] missing a great deal of upside.

Stop waiting, buy the next dip because I think it might be the last big one.

Cramer went on to recommend buying Lehman Brothers, Citigroup and Wachovia.

A week earlier on July 24th, I said Hope Your 401K is in Fixed Income.

In a bear market preservation of capital not appreciation of capital is your number one goal.

We know what happened next.  The banks got smacked.  Lehman Brothers went bust and the S&P 500 ended the year down 30% from that week in July. Cramer is a legendary stock picker from the last bull market.  Well, if you read his book, you know it was actually his wife. The thing is we are in a secular bear market and his mad money skillz don’t seem to be working.

Jim Cramer is not alone.  An entire generation of financial professionals grew up working in the longest bull market in history and its all they know.  Jim is a performer for a network that makes money from advertisers whose sole mission is to keep you fully invested in the stock market all the time.   Telling you to wait out the bear market in fixed income for a few years won’t pay the bills at CNBC or Fortune magazine.

Stay tuned for my 2009 financial thoughts post.  Guess what?  It is far from safe to get back in the pool.

This year I polished off about 60 books.  A new record for me.  Most of the books were not written in 2008, so my “best of” list for the year just refers to when I got around to reading it.  This year I decided to break the list into four groups.

Finance

1. Fooled By Randomness - Understand survivorship bias and you’ll never look at the world the same.
2. Reminiscences of a Stock Operator - Investor classic from the 1920s. If you make more than a few stock trades a week, this is a must read.
3. The Origins of the Crash - Not only does regular history repeat itself, so does financial history. This is the definitive book on the greatest bull market in history and all the fraud along the way.

Food and Fitness

1. The 150 Healthiest Foods on Earth - The easiest way to lose fat  is to fall in love with healthy food. This book should be in every kitchen. Share it with your family.
2. Mindless Eating - The psychology of eating. Learn how to overcome your biology to get lean.
3. In Defense of Food - Don’t be a slave to the so-called nutritional experts.

Funny

1. Smile When You’re Lying - Not exactly PG-13, but I loved it.
2. Dave Barry’s Money Secrets - Anyone that has watched the clowns on CNBC will be ROFL.
3. American Shaolin - Great stories of an American that travels to China wanting to be a Kung Fu master.

Psychology

1. The Definitive Book of Body Language - Most people are unaware of body language. This book has some excellent photos and drawings that demonstrate the hidden language.
2. Satisfaction - Novelty + Action = Satisfaction.
3. Predictably Irrational - A very good book explaining the different ways humans behave irrationally.

Worst book of the year?  There were at least 20 books this year I started and bailed on.  Just like movies, I no longer feel like I need to finish everything I start.