Thursday, July 31, 2014

The Haiku of Finance for 07/31/14

Startup meet and greet
The pitch is just the first step
Nest step is first sale

Wednesday, July 30, 2014

The Haiku of Finance for 07/30/14

Weekly staff meeting
Boss lies and steals work credit
Just another day

Tuesday, July 29, 2014

The Haiku of Finance for 07/29/14

Cocktail networking
Big shots all around the room
Chat them up with ease

Monday, July 28, 2014

Financial Sarcasm Roundup for 07/28/14

Death and taxes are certainties in life, according to folk wisdom.  Sarcasm should be an additional certainty.

Argentina moves closer to default by refusing to compromise with its holdout bondholders.  I saw this one coming.  Go read my previous Financial Sarcasm Roundups if you can't handle the truth or are too dumb to remember what I've been saying for weeks.  I note with interest the possibility that Argentinian soybean farmers may hoard their crops.  Hard assets like agricultural produce make sense in a high-inflation economy that world markets have isolated.

The IMF is letting us all know that there is no cause for alarm.  That's nice to know.  It's also nice to know that Chair Yellen acknowledged several equity market bubbles and is helping other regulators put exit gates on bond funds.  People should know these things but they prefer to remain ignorant.  Trusting some untrustworthy financial officials is going to get a lot of people hurt.

Bank of America hypothesizes that China is buying Treasuries through a European clearing firm in Belgium.  That would explain the mystery surge in Belgium's Treasury holdings that market observers noted earlier this year.  It's obvious that large holders of Treasuries will have a huge problem on their hands regardless of where they clear their trades.  They won't be able to find buyers to take large volumes in a hurry.  The Fed's bond fund gates for US investors are a message to foreign central banks.  Message received, loud and clear.

I'm pressed for time today because some Silicon Valley techies invited me to a reception down in Menlo Park.  I need to be on the road in a few minutes.  I will seek out sarcasm there but I don't expect to find much I can use, as these things tend towards proprietary discussions of business models.  I hope Models In Tech are on the scene; now those are some models I'd really like to discuss.  

Sunday, July 27, 2014

Living and Giving Among San Francisco's Nouveau Riche

I have been a San Franciscan for just over a decade.  There are times when I am tempted to believe that is one decade too long.  I never give in to this temptation because I am destined to show San Franciscans the path to enlightenment.  The local nouveau riche class is still finding its way to acceptance.

The New Yorker article "California Screaming" is the East Coast Establishment's way of looking down its nose at San Francisco's newly rich.  That magazine's circulation base is mostly old money trust fund babies who turn into full-time salon intellectuals, plus the libraries and medical offices serving a pretentious crowd.  No self-respecting East Coast WASP would ever agonize about how to bring public policy innovation to the lower classes.  Such trite notions are beneath them.  They would simply write a check to their favorite charity and get back to shopping in the Hamptons.  The Bay Area fetish for "getting involved" in solving poor people's problems must amuse the monied elites to no end at the other end of our continent.

We do things differently out here in the Bay Area.  I have observed the One Percent of this nine-county MSA long enough to understand that their social cognizance is precisely calculated.  The lyrics are a bit different out here but the song remains the same.  The social climbers on the East Coast would recognize the tune even if they deign not to hum along.  The "do something" impulse in the Bay Area means the nouveau riche tech elite translates its skill set into charitable outreach that . . . further enhances its skill set.

Full Circle Fund is the leading exhibit for the Bay Area elite's attitude toward charity.  Its members pay a premium for the privilege of helping accelerate local charities' tech adoption curves.  That effort, plus some high-end socializing, is a big career enhancer for mid-level corporate project managers in greater San Francisco.  I have nothing against Full Circle Fund, and I would probably join them if I thought my skills fit their needs.  The fund and its non-profit clients need well-pedigreed managers whose social connections translate into donations and prestigious board memberships.  They probably have no use for a sarcastic financial analyst, like yours truly.  I would just get in the way of their latest dynamic change initiatives.

The local social climbers who are not techies have their own philanthropic settings, aping the best salons on the East Coast.  I am a longtime member of BRAVO!, Symphonix, and ENCORE! where San Francisco's most pretentious yuppies cultivate a very selective meat market.  Quite a few of these people have blood connections to their fellow snobs on the Atlantic seaboard.  Some members of those organizations have asked me to leave over the years because they disapprove of my social class origins.  I refuse to leave, and that is my declaration of moral superiority over nouveau riche class condescension.  They need me around more than they will ever know.

San Francisco's socioeconomic elite has always ranked as the younger sibling to the New York and Boston elites whose ancestors gave the United States of America its founding mythos.  The locals are good at copying the East's social rituals but a copy never has the fidelity of the original.  Tech-oriented philanthropy is The City's native elite language.  Local branches of Eastern families will never grok the tech elite's culture or allow its practitioners to penetrate their hallowed drawing rooms.  That's too bad.  They're missing a decent sales pitch for the latest gadgetry.  

Launch Opportunities for Biotech Startups in Surviving and Conquering Disease

I attended two recent public lectures that opened my eyes to disruptive opportunities in the health care sector.  The first was Dr. Diana Schwarzbein's presentation at the Commonwealth Club on the "Survival of the Smartest," where she expounded on her findings in The Schwarzbein Principle linking nutrition and endocrinology.  The second was Dr. Nevan Krogan's talk at the local Umpqua Bank branch on mapping the human genome.  Their wisdom can drive capital into enterprises that benefit human health.

The common link between the two talks was the relationship between diseases and the body's natural pathways.  Dr. Schwarzbein's work has identified the chemical building blocks in foods that enable the body's "building" hormones.  Dietary changes that support the body's cell repair ability can mitigate long-term diseases.  Dr. Krogan described the large-scale data collection effort for disease as the next health care revolution.  Malfunctioning protein complexes occur in disease states, and mapping the mutations in cell function pathways enables precision medicine.

I am not a physician, biochemist, or nutritionist.  It is beyond my professional skill as a financial analyst to describe how chemical changes affect cells.  The medical community's attention to the interaction of chemistry and genetics is enough to signal that biotech entrepreneurs should offer disruptive solutions.  The channels for these solutions abound.  The Silicon Valley Health Institute's speaker series is probably a good forum for startups to show early adopters their latest ideas.  The Gladstone Institutes link scientific investigators to emerging research; startups should look there for research validating their business models.  The California Institute for Quantitative Biosciences (QB3) operates Bay Area incubators for promising startups.  I believe venture investors would look very favorably on a startup with a QB3 pedigree.

The combined effect of these two talks reminded me that the San Francisco Bay Area is ground zero for biotech innovation.  Scaling entrepreneurs need to hang out with endocrinologists, biochemists, and gene therapy specialists at major medical research centers.  I once connected with the California Institute for Regenerative Medicine on behalf of a health care startup in my own portfolio.  I would do so more often with other entrepreneurs who seek my wisdom, if I owned an equity stake in their enterprises.

Saturday, July 26, 2014

The Haiku of Finance for 07/26/14

Read Wall Street report
Full of lies and poor judgment
Fruitless search for truth

Friday, July 25, 2014

The Haiku of Finance for 07/25/14

Amazon net loss
Can't "optimize for profit"
More losses ahead

Thursday, July 24, 2014

The Haiku of Finance for 07/24/14

Mexico opens
Privatizing energy
End Pemex control

Lynden Energy Caught My Eye and Confused Me

Lynden Energy (LVL.V, LVLEF) is a Canadian company drilling for oil and gas in Texas.  It is very uncommon for a low-priced stock to have a positive P/E ratio.  I wonder what's going on with this company.  The management page does not list detailed bios at this time, so it's hard for me to judge their skill.

The company's projects page mentions two projects.  The Mitchell Ranch 50% working interest has little detail describing the project's status.  I find their Wolfberry project to be similarly confusing.  I honestly cannot tell what these land holdings are doing at this stage from reading these few paragraphs.

I had to check out their financial statements.  Their unaudited statements from March 31, 2014 show US$12.8M in cash on hand and positive net income, although their income is much lower than what they earned one year prior.  This continued profitability enables them to work down their accumulated retained earnings deficit, which is always good in any company.  They do admit in that document that access to capital impacts their future as a going concern and that they once took an impairment charge from writing off a bad investment in natural gas transmission operations.  I find it odd that they noted a disposal sale of some Wolfberry wells and leases for a one-time gain, in the same area they tout in their website's project listings.

The numbers look alright but I can't figure out from their publicly available material just how they're making this work.  Lynden should publish their properties' 51-101 reports on their website if they have competed versions.  They also need continued access to capital and to stay away from non-core operations like gas transmission.  I just don't know enough about their operations to figure out their chances for success, and that's why I can't expose my portfolio to this company.

Full disclosure:  No position in Lynden Energy at this time.  

Wednesday, July 23, 2014

The Haiku of Finance for 07/23/14

Debt-laden purchase
Paying a huge long-term price
Someone else paid cash

Alfidi Capital in Direct Capital's Point Blank and YoPro Wealth

The genius of Alfidi Capital is reaching into new corners of social media.  Two digital media sites have picked up my exclusive commentary on common-sense financial solutions this week.  Check it out.

Direct Capital's Point Blank blog published my brief discussion of a business loan.  I do track the banking sector and it's obvious to me that a bank is not going to risk a loan on someone whose income does not meet their internal criteria.  I disagree with some of the other commenters who claimed that a business owner should rely upon their business plan and financial forecasts to secure a loan.  That might be fine for a borrower with an established credit history and personal assets that can secure the bank loan.  I'm pretty sure a brand new college graduate with no income, assets, or credit history will have a tough time getting a conventional bank loan with nothing but their startup's fundraising pitch deck, unless of course a parent co-signs the loan.

YoPro Wealth shared my insights on the basics of investing.  I lived within my means for many years until I had enough capital to say goodbye to bad employers.  Living frugally is the kind of habit that turns an ordinary working stiff into The Millionaire Next Door.  It takes a while but starting sooner and saving more accelerates the date of financial emancipation.  I am not a millionaire yet but there are probably a few in my neighborhood.  There are certainly more than a few of them in San Francisco.

I do not give personal financial advice and I would prefer that social media publishers refrain from describing my wisdom as "advice," but I don't control their editorial habits.  The lessons I share are hard-won from my own life.  I don't need a securities license to showcase common sense.  My musings used to be common sense for many people but those days are long gone.  It falls to me to relight the world's lantern.

Tuesday, July 22, 2014

The Haiku of Finance for 07/22/14

Amateur stock pick
Merely technical focus
Ignoring earnings

Monday, July 21, 2014

The Haiku of Finance for 07/21/14

Create startup pitch
Comply with all JOBS Act rules
Standard disclaimer

Alpha-D Portfolio Update for 07/21/14

Okay, it's just after an options expiration weekend and that means I had to reexamine my portfolio choices once again.  All of my covered options from last month expired unexercised.  I renewed my covered calls on GDX and FXF.  I sold a very small cash-covered put position under GDX, because i wouldn't mind picking up some at such a low valuation.

I am still long FXA and FXC, but I simply could not write any options around them this month.  The option chains for those ETFs just aren't very lucrative right now.  Only the stability of FXF, thanks to Swiss monetary policy, makes writing call options attractive.

I still own my long put position against FXE.  I continue to marvel at how the ECB and IMF keep the jerry-rigged euro together.  Spain isn't looking very healthy these days and Greece is still in debt up to its eyeballs.

My longtime readers know that I own these ETFs on gold miners and select foreign currencies as hedges against a potential hyperinflation in the US.  My basic thesis has not changed in a long time.  I believe positions in Swiss, Canadian, and Australian currencies will hedge my portfolio against the potential devaluation of the US dollar.  Owning a gold mining ETF like GDX is one more hard asset hedge among many possibilities.  I await the opportunity to own long positions in a timber REIT, public storage REIT, and other securities that will strengthen my portfolio against hyperinflation.