Wednesday, October 28, 2009

I Told You the Boeing Strike was Stupid

Way back in September of last year, I posted a blog entry called Fools! They're All Fools! Boeing machinists were on strike, and I wrote:

And the main sticking point for them? Job security! Are these people out of their minds? There's no such thing as job security. When Boeing starts to develop the 797 and they need to decide where to assemble the plane, what do you think is going to happen? "Well, we could assemble it in Everett, but they like to strike all the time which causes problems. Perhaps assembling it in some other location where they're less likely to strike would be prudent?"

Shooting themselves in the foot. Boeing must stay competitive, and if that means outsourcing some of their chores, that's what they need to do. And it's not necessarily a bad thing either. If developing countries such as China have a financial interest to buy from Boeing--such as manufacturing some parts in China--they can sell more planes and have more business in Washington.

And while many people in this country are facing foreclosures, loss of jobs, and so forth, the machinists feel now is the best time to walk off the job?

Good luck with that.

The 797 isn't even a figment of someone's imagination yet (so far as I know), but my prophecy about moving jobs elsewhere has officially happened. Today Boeing announced that they would be opening a second 787 line, but this one would be in South Carolina. Nowhere in this news report about the second line does it say anything about that last strike being one of the reasons for the move, but I'd bet it was the single biggest reason for the decision. South Carolina threw in various tax breaks and such, but I bet in the meetings the upper management held, that strike was the straw that broke the camel's back.

I'm a bit sad with the decision. I've been to the Boeing factory where they're assembling the first 787s. I've seen the first several 787s in various stages of construction. It would be cool to see a 787 flying through the air and think, "Yeah, we made that in Everett." No more--we have to share the glory with South Carolina.

But I don't blame Boeing for the decision. Frankly, if I were in upper management there, I would have made the same decision, and for the exact same reason. It was the machinists who lost the 2nd assembly line. Good work, guys. Next time, just do your job and maybe next time they won't go out of state.

Tuesday, October 27, 2009

An iPod Conspiracy?

If you've watched the Jay Leno Show, you might have heard him ask his 'guests' on the 10 at 10 segment about what is on their playlist or iPod. In this segment, he asks various celebrities 10 questions, and since his show is at 10:00 (in most places, at least), the segment is called "10 at 10."

I think it's kind of lame myself, but the few times I've watched it, it seems like he always wants to know, "What's on your playlist right now?"

And today, I was reading the latest issue of Time magazine when people could ask the governor of Michigan questions, and one of the people asked, "What is currently on your iPod?"

And every time I see this question, I start wondering--is there an iPod conspiracy? Is Apple paying people to have this question thrown out everywhere? Or do the people asking this question think it makes them look cool to talk about iPods?

When you really dig down in the question, what's really being asked is, "What kind of music do you like listening to?" But that question is BORING. Why the heck do I care what kind of music the governor of Michigan likes to listen to? ("Everything from Andrea Bocelli to Aretha Franklin to Bruce Springsteen to the Black Eyed Peas," if you really needed to know.) But, if you rephrase the question by asking, "What is currently on your iPod?"--well, it is still a BORING question. But somehow, phrased in this manner, it's more socially acceptable?

The other reason this particular question bothers me is because it makes the assumption that everyone already has an iPod. I don't have an iPod. Or what if someone prefers to use the Zune? It's like saying, "If you don't have an iPod, you are a freak of nature." I resent that. The assumptions built into the question seem to imply that owning an iPod is more important that anything else one could spend money on. "Food? Clothes? Those are nice, but in the grand pecking order, the iPod has to come first."

It's a stupid question, followed by completely useless answers. Interviewers--you can do better than that!

Monday, October 19, 2009

Are You Stupid?

I saw this article today, called More Investors Overweight Equities: Citigroup. And I can't help but think, are you stupid?! The first paragraph reads:

"Investors are becoming increasingly confident in holding equities as U.S. markets continue to make new yearly highs heading into the final months of 2009, according to a client survey by Citigroup."
Later, the article points out that the S&P500 has risen 62% since it hit a 12-year low in March. And I can't help think--there's really a lot of stupid people out there. When stocks are at 12-year lows--oh, everyone is scared. Nobody wants to invest any money. AFTER the price runs up 62% percent--sixty two percent--in just seven months, those same people are now thinking, "Yeah, I think prices are good now."


Not to long ago, the Dow Jones topped 10,000 for the first time in a year and I read that some folks on Wall Street were popping champagne corks to celebrate. I remember the first time the Dow topped 10,000, record highs, way back in March of 1999, and they were popping champagne corks to celebrate. The fools--would they have celebrated if they realized that ten years later they'd be celebrating the exact same thing?

At the beginning of the year, I was positively giddy about stock prices. I was looking at stock prices stunned at what seemed like impossibly low values. Companies like the mighty Microsoft--still a powerful monopoly, enormous piles of cash with virtually no debt--trading at less than ten times earnings? It hardly seemed possible! I did buy a little of Microsoft, but only a little. It was smaller companies that I'd never heard of before that fascinated me even more.

Terra Industries, which makes fertilizer, was trading for about 2 times earnings. In all fairness, the stock did deserve to go down from its highs--earnings were plunging. But they had an enormous pile of cash and virtually no debt, and they were still profitable despite the earnings going down. The company certainly had the resources to survive the crisis, and at just 2 times earnings, I was possible giddy with greed. So I bought a bunch, then started calling it my "crappiest investment ever." They do make fertilizer, after all! =)

I bought it twice. The first time in December, somewhere around $13/share. No matter how I looked at it, it seemed like people were trying to sell me dollar bills for 20 cents each. I'd be stupid to say no! The timing turned out to be incredibly lucky as the price started marching upward almost immediately.

By January, I saved a little more money and bought more. I was kind of hesitant--the stock had already shot up nearly 20% in the one month I held it. Maybe it would go back down and I could buy more at the same prices I did before? The stock still looked SOOO incredibly cheap, however, and what if prices never came back down again? I pulled the trigger--it seemed like a good deal, and 'haggling' did not seem like a good idea. "Oh, I see, you want to sell me dollar bills for thirty cents each? I'm afraid I can't--I won't pay more than 20 cents for each of them."

Sounds like of stupid, don't you think? That's what I thought, so I went ahead and bought the stock again, and I'm lucky I did because a few days later, another company--CF Industries--announced that they wanted to buy the company and would acquire it in a hostile takeover if necessary.

The stock price shot up overnight and hasn't looked back. As of this minute, it's now trading at $35.80, more than double what I paid for it. But you know what I feel? Bummed. I'm bummed that the price has run up so far. Today, I feel like the stock is selling more-or-less at what it's worth. Maybe a little less--perhaps 90 cents for a dollar. Not much margin of safety considering the inherent risks of investing, and certainly nothing to get excited about.

So I feel bummed. Sad. Earlier this year, I had a list of 20 stocks I wanted to buy that I felt were selling at pennies on the dollar. My biggest problem was trying to decide which stock I wanted to buy. Today, my biggest problem is trying to find just one stock I want to buy.

And then I read an article like this one, where people are feeling more confident about buying equities, and I can't help but think, ARE YOU STUPID? The time for confidence was earlier this year--not after prices have run up 62%. When it did become fashionable to "sell low and buy high"?

And no, not all of the stocks I've bought have done as well as Terra, but none has fascinated me more. I thought I bought a sleepy old fertilizer company. Boring, but cheap. CF Industries then announced Terra as a takeover target, and Terra rejected it. Then fine, CF says, it'll be a hostile takeover. Then Agrium comes along and announces they want to buy CF Industries--under the condition that they drop their bid for Terra. CF tells Agrium they aren't interested. Fine, says Agrium, it'll be a hostile takeover, then. CF raises their bid for Terra to seal the deal, the Terra plays shy. Agrium raises their bid for CF, but CF plays shy. CF raises their bid again. So does Agrium. And to complete the circle, it was announced today that if Agrium succeeds in buying out CF, they'll sell a plant to Terra to settle "regulatory issues."

Did you follow along with all of that? CF is trying to buy Terra in a hostile takeover, Agrium is trying to buy CF in a hostile takeover, and Terra will buy an Agrium plant if they succeed. I've seen soaps on TV with less complicated plots, and I've found the whole thing incredibly fascinating. Who will win? Will CF acquire Terra before Agrium can acquire CF? I don't know! But I can't wait to see what happens in the next episode of Days of our Fertilizer.

But the time to be excited about equities was earlier this year--not after prices have run up 62%. Idiots!