September 30, 2009

Global Market Comments
September 30, 2009

Featured Trades: (MSFT), (GS), (AIG), (MUSTANGS)

1) You may not be aware of this, but Microsoft (MSFT) is about to hit you with a massive marketing effort to buy its new Windows 7 operating system, which will be officially released on October 22. I have been an early adopter of technology for most of my life, and have been doing my own tech support for 25 years (remember  Evelyn?) Do yourself a huge favor and skip it. A number of beta testers have told me that this is the upgrade from Hell. Windows 7 doesn't explode in your face when you first turn it on, but it comes close to it.  If you have the 32 bit version of Vista, which most of you do, then you will only be able to install the 32 bit version of Windows 7, unless you want to go through a tortuous custom install. I shudder at the prospect of hunting down my lost original installation disks, web addresses of download sites, and long forgotten product keys. That defeats the purpose of the upgrade right there, as the 64 bit system was the main oomph behind the new version, enabling you to use more than 3 gb of memory at once. You will need 20 gigs of free disk space for the upgrade, which will put it out of reach of many laptops. If you do somehow get the 64 bit version installed, then many of your peripherals won't work. If you are one of millions who were too terrified to take on Vista and are still using the antiquated XP operating system, forget it. There is no upgrade. Better to save yourself $120, and wait a year until you buy a new PC with Windows 7 preinstalled on it, with enough extra RAM to take full advantage of its real power. That gives Mr. Softy another year to debug it and come up with a product that really works.

computer4.jpg picture by madhedge

2) Let me tell you why I turned down lunch with Michael Moore last week, and why I am reviewing a movie that I will never see. His immense, bulbous frame waddled through San Francisco promoting his latest fiction masquerading as documentary, Capitalism, A Love Story. Michael has a problem with facts. He has a tendency to bend, twist, or alter real facts to fit into whatever story line, political viewpoint, or bias he is peddling at the moment. In Roger and Me (1989), he made the case that GM's problems sprang from paying its workers too little, not too much. In Bowling for Columbine (2002) he equated violence in the streets with our missile defense shield. I find this approach an affront because I have spent a large part of my career bending over backwards to make sure my stories are accurate and true. Michael obviously harks back to an earlier age of reporting, when 'You never let the truth get in the way of a good story.' In the trailers it appears that much of the movie involves humiliating security guards attempting to prevent his entry into firms like AIG (AIG) and Goldman Sachs (GS), ostensibly some of the same working stiffs  he is trying to defend. I find this neither informative, nor entertaining. In fact, Michael Moore's principal business is to dress up as a working class hero so he can make hundreds of millions of dollars selling questionable cheap shots to the uninformed. He is an embarrassment to the causes he claims he is advancing. I have never walked out on a film, but I'm such a tightwad that I hate wasting two hours of my life and $7 on my senior citizen ticket. Better just not to go.

capitalism.jpg picture by madhedge

Moore.jpg picture by madhedge

3) The Western US has found a new wrinkle in the housing collapse, where homeowners are desperately struggling to cut living costs to meet the next doubling of their adjustable rate mortgage payments on their underwater houses. Raising horses can cost more than children, so Nevadans are turning them loose to join herds of wild mustangs, to dodge the $30,000/year it costs to board and care for them. Local populations are exploding, eating local ranchers out of house and home, who depend on public grazing lands to feed commercial livestock. Mustangs are the feral descendents of horses which escaped the conquistadores, and there are now thought to be 30,000 out there, down from a 19th century peak of 2 million. The Bureau of Land Management has another 30,000 in pens, and is making 10,000/year available for adoption at $125/each. The problem is that many adopt 'pets' who then flip them to Canadian slaughterhouses, which cater to the odd French taste for horseflesh. To see how this works, watch Clark Gable's last film, The Misfits. Madeleine Pickens, the wife of famed oil trader Boone Pickens, has offered to take the BLM's entire herd and put them out to pasture at an undisclosed million acre location. If there is anyone who could have an undisclosed million acres, it is Boone. I have frequently run into majestic and beautiful mustang herds over the years while camping in the remote desert (no, I don't go to Burning Man). Reminding me that there is still some 'wild' in the 'West', I will miss them if they are gone.

Mustang1-1-1.jpg picture by madhedge


'It amazes me how quickly amnesia sets in,' said Stephen Crawford, former co-president of Morgan Stanley, about the willingness of hedge funds to releverage positions in these conditions.