Why Does Gasoline Cost $4 or More?

Here is a graphic from the Washington Post re: oil prices. I got this from Barry over at http://bigpicture.typepad.com a while ago:

http://www.washingtonpost.com/wp-dyn/content/graphic/2008/07/26/GR2008072601566.html?sid=ST2008072601558&pos=list

I disagree with the Barry "The Big Kahuna" Ritholtz on market capitulation (he is waiting for it, I don't think it will happen), but love his blog.

Stocks Update: out of SO/GRMN, in WFR/TTWO

Numbers below are based on prices at market's close on August 5, 2008.

I sold Southern (SO) after seeing it listed as one of the highest sold-off stocks (largest outflow of money) this week. Someone seems to know something I don't, and that makes me uncomfortable. I lost about 30 bucks on the trade, including the dividend payout.

I sold Garmin (GRMN), taking a loss. I violated the rule of never catching a falling knife. However, I wasn't completely off my rocker, because I bought only 80 shares, intending to average down slowly. In the end, I only lost around 180 dollars.

Since posting trades publicly, SO and GRMN are the first times I have lost money on short-term trades (held less than 7 days). Most of my short term trades--the ones I intend to be short-term--are major trades of 500 shares or more. My losses on SO and GRMN were about two hundred (200) dollars total, and I did not intend for them to be short-term trades, so I'm not concerned.

My two main holdings now are WFR (bought more today--stock went down because a storm might affect production--unless this storm is called Katrina's Sister or the Second Coming of Katrina, wake me up when it's over) and TTWO. I sold 150 shares of my TTWO holdings today, and now own 250 shares. I also have CCT, most of which was bought many months ago, and I am slightly positive on CCT.

The Fed decided to stay pat on interest rates. This should be good news for my international bond funds.

Open Positions
DUK = [bought on 8/7/08]
EWM = -5.73
EZU = +1.55 [excluded from average, insignificant movement; will be excluded completely in the future b/c I realized I only own 30 shares, below the 2,500 dollars basis or current value threshold for inclusion]
IF = -7.13
TTWO = +4.89
WFR = 0 [excluded from average; new position]

[Average of "Open Positions": losing/negative average 0.72% [changes with addition of DUK and sale of VNQ on 8/7/08]

Closed Positions:
Held more than seven days but less than one year (from May 30, 2008):
CNB = +10.0
EQ = -8.83
GE = -6.4
INTC = 0.0 (excluded from average; insignificant movement)
PFE = -5.5
PNK = -16.7%
PPS = -2.8
VNQ = +2.37 [sold 8/7/08]
WYE = +2.4%

[Overall Record: Lost an average of 3.97% [does not include 8/7 sale of VNQ]]

Held less than 7 days:
GE (1.0%); GOOG (0.8%) [7/28/08 - 7/29/08]; GRMN (-6.2%) [Sold 8/5/08]; ICE (2.0%), MMM (0.5%), MRK (0.1%), PFE (1.3%), SCUR (15%); SO (-0.3%) [Sold 8/5/08]; TTWO (4.3%) [partial sales on 8/5/08 and 8/7/08]

[Overall Record: Gained an average of 1.72% [does not include 8/7 sale of TTWO]]

Daytrades:
PFE = +0.5%
GE = +0.5% (Updated on July 14, 2008; bought at 27.15, sold at 27.30)
XLF = +4.3% (Updated on July 15, 2008)

[Overall Record: Gained an average of 1.76%]

Compare to S&P 500: losing/negative 7.27%
[from May 30, 2008 (1385.67) to close on August 5, 2008 (1284.88)]

The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.

Cypress Semiconductor Smacks California Gov

Cypress Semiconductor's CEO, T.J. Rodgers, continues to impress me months after the company's shareholder meeting. So many CEOs lack knowledge of their own company's product, come from a sales rather than technical background, or are just slimey (e.g. Yahoo's Terry Semel, who released information to China leading to the arrest of a blogger).

T.J. Rodgers is the opposite of all of these CEO stereotypes. He is a plainspoken, knowledgeable man that inspires confidence and whose very presence seems to repel fluff (I had another word in mind, but wanted to keep this family-friendly). Here is a two-part interview with him:

http://news.cnet.com/8301-13578_3-9887435-38.html

http://news.cnet.com/8301-13578_3-9887436-38.html

T.J. Rodgers just had a letter published in the Wall Street Journal that serves as a warning to all Californians. Mr. Rodgers writes, "Except for our sales force, our company was 100% California-based as late as the mid-1990's...[Now] 7,000 of our 8,000 employees reside outside of California. And we are moving jobs out of California as rapidly as we can. Few people know it, but so-called Silicon Valley is not really Silicon Valley anymore--almost all of the wafer fabrication plants have been shut down due to the hostile business climate."

When was the last time you heard of a CEO openly criticizing the state government of his company's HQ? If Sacramento doesn't wake up soon, California will increase two types of jobs, lawyers and low-level service workers, while higher paying jobs move elsewhere.

Here is a paragraph from Mr. Rodgers' famous letter against quotas:

We simply cannot allow arbitrary rules to be forced on us by organizations that lack business expertise. I would rather be labeled as a person who is unkind to religious groups than as a coward who harms his employees and investors by mindlessly following high-sounding, but false, standards of right and wrong...

Cypress stands for personal and economic freedom, for free minds and free markets, a position irrevocably in opposition to the immoral attempt by coercive utopians to mandate even more government control over America's economy.

Read Mr. Rodgers' full letter here:

http://www.enterstageright.com/archive/articles/0996rodgers.htm

A friend of mine emailed me saying I was contradicting myself by advocating more diversity at McAfee and EA but supporting Mr. Rodgers. I told my friend she should realize that being anti-quota is not anti-diversity. Indeed, Mr. Rodgers has beefed up diversity in his company--a quick look at current (2008) executive management shows these names:

Dinesh Ramanathan
Ahmad Chatila
Shahin Sharifzadeh
Hal Zarem
Babak Hedayati

There's at least one Indian and one Iranian now in upper management. Contrast that with EA's executive ranks, and you'll see it's like night and day.

Also, read Mr. Rodgers' 1996 letter more carefully--he specifically states that the picture will change in "10 years," which is now here:

Unfortunately, there are currently [in 1996] few minorities and almost no women who chose to be engineering graduate students 30 years ago. (That picture will be dramatically different in 10 years, due to the greater diversification of graduate students in the '80s.)

In twenty five years, when most upper management in technology companies will be Indian and Chinese (that's where the growth markets are), I bet the same people advocating quotas for non-Caucasians will not be protesting on behalf of Caucasians.

Here is another letter from Mr. Rodgers, against government spying and patriotism:

http://www.commondreams.org/views05/1229-35.htm

New Positions: WFR, TTWO

Update: I added WFR and TTWO to my portfolio. Next potential stops: PNY or ADI. I would love to add some CY, but the price is still too high for my value-minded tastes.

Based on the WSJ's recent Saturday article, Garmin (GRMN) might be a more volatile stock than I expected. I was particularly unhappy with my assumption Garmin owned its own satellite service. Apparently, Nokia, a competitor, provides satellite images to Garmin. I will sell earlier than I expected.

Funny: How to Raise Snobs

This is a funny post by Nathan DeGraaf. Warning, not safe for work (NSFW) and contains coarse language. Also, do not read if you have no sense of humor.

http://www.pointsincase.com/blogs/nathan-degraaf/if-i-had-kid-i-would-raise-judgmental-snob

I love this paragraph on raising his kids to be part of the power elite:

When they reach their teens, then we'll start talking about the best ways to bribe elected officials and cops. But until then, they'll just have to learn to lie, cheat and steal. And if you don't think those are valuable American traits, well then explain our government. Hell, they stole 300 billion of your dollars to bail out their banking buddies and you didn't even flinch. If that's the way the game is to be played, I want my children on the winning side, the stealing side.

By comparison, Bear Stearns' bailout (30 billion or so) looks cheap compared to Fannie and Freddie.

Jeff Yeager and the Ultimate Cheapskate

I dislike Suze Orman. I think Alexis Glick is an airhead. In fact, I believe most financial commentary is worthless in terms of assisting someone with the day-to-day saving of money. Once in a while, however, a great book comes out that can actually convince people to handle money wisely--Jeff Yeager's book, The Ultimate Cheapskate's Road Map to True Riches, is my pick of the lot. Jeff is funny, humble, and entertaining--a great combination, especially when it comes to a dry topic like saving. His website is below:

http://www.ultimatecheapskate.com/index.cgi

I strongly recommend his book. Here is one sample of Mr. Yeager's writing:

http://www.stretcher.com/stories/04/04aug23c.cfm

Jamba Juice, Revisited

I own some Jamba Juice (JMBA) shares and averaged down, recently at 97 cents. My cost basis isn't high enough to make me worried, but I wonder if JMBA at under a dollar a share is worth a look. The company releases earnings on August 21, 2008, and for the past month, has been pulling out all the stops in getting traffic into its stores. It simplified its menu design, introduced brand-new breakfast items like granola poppers, and introduced a lower-priced orange refresher with the entertaining repartee, "Where's the Fruit?"

Here's the case for Jamba:

First, Jamba's stock price is below its book value.

Second, traffic has increased as a result of the marketing blitz. I have personally noticed traffic increase in its stores, at least in the Bay Area.

Third, competition is sparse. Starbucks' new drinks taste terrible. BusinessWeek's David Kiley agrees with me--he said one drink had a "chemical taste."

http://www.businessweek.com/the_thread/brandnewday/archives/2008/07/starbucks_vivan.html

The better competition is from Jack-in-the-Box's smoothies, which actually taste good but probably have no nutritional value (too much sugar).

Fourth, the prices for oranges has decreased. Jamba spends a lot of money of strawberries and oranges. With the recent good weather, Jamba's costs should decrease.

Fifth, most of us in California have had a very hot summer. Hot weather helps Jamba's business for obvious reasons.

The case against Jamba:

1. Service is slow. No matter how many songs their workers sing in the stores, Starbucks makes a drink faster. I see lines all the time at Jamba. This means traffic has increased, but their service model needs to be changed to improve efficiency. There is no reason people should be waiting 6 minutes or more for a drink. Also, I never get a receipt at Jamba unless I ask for one. This means customers and employees have no record of what they ordered, making some fraud inevitable. I saw someone recently tell an employee he ordered a pretzel. No one had any records. She had to give it to him. That situation also slowed down service for other people.

2. Jamba continues to be lackluster in finding good locations. A frozen yogurt place just opened up in downtown San Jose next to a new Popeye's. Both places probably got money from the city's redevelopment department. Why didn't Jamba get one of those locations? I am willing to bet Jamba doesn't even know a Redevelopment Agency exists in San Jose. This is Jamba's main problem--in food services, location is everything because if consumers can't easily get to you, they will just go across the street to someone else.

3. Jamba may be losing money on its orange refresher. To compete with Starbucks, Jamba introduced a new drink costing $2.95. If someone only orders that drink, Jamba may not benefit from all the increased traffic. (From what I saw, however, people were ordering many different drinks.)

4. Management continues to be non-responsive. I sent a detailed letter to Jamba's management several months ago after their annual meeting. I did not receive even an acknowledgment they received it. I understand that Jamba cannot respond to every inquiry, but a postcard confirming receipt of detailed letters might be a good idea.

5. Jamba has not used the futures market to lock in fruit prices. With orange prices being relatively low right now, Jamba is foolish not to consider using orange futures.

6. As far as I know, Jamba's warrants haven't expired yet. Explore previous Jamba posts for more on this issue.

7. If Jamba's stock price stays below a dollar for a certain period of time, it may be pink-listed or taken off the NASDAQ. That would make its shares harder to trade.

What's my conclusion? Skip the Vegas trip and put your play money on Jamba--if earnings disappoint on August 21, 2008, only then will I give up on Jamba.

Note: the Wall Street Journal's Richard Gibson had an excellent article on Jamba (April 2008):

http://www.smsmallbiz.com/profiles/Jamba_Rebound_Faces_Hurdles.html