• Professor Elam

    Sat Feb 11, 2012

    UT Austin, MBA Program, 1971

    There was this one skinny kid in my MBA classes, back in the days of black and white 13 inch televisions when MCA bragged that you could get a meal and change back from a dollar, yeah that long ago…

    Anyway, he was always popping off in class. Then as now, most of the students had little to say or offer up. And gee he could be irritating. I mean we are all or were in this together, let's have a little mutual respect eh, but not this guy. He was as liable to jump on a less than perfect presentation Word was going around that more than a couple of class was laying in wait for his verbal faux pas.

    And he wasn't content to quote some dead English author or perhaps a politician to make a point. No, this geek quoted from car magazines, about good writing no less. As long as one was not the target of his critiques, I guess he was kind of entertaining. One day when he missed class the Prof did note that his absence seemed to leave a hole in the discussion. He did back off after a few got riled at the criticisms but what the heck, geeks never change much. 

    Today

    That geek was yours truly. I did frequently quote David E Davis, recently deceased, the dean of American Auto Writers. This past week I was in not one but two meetings with accounting and IT professionals. At each one the speakers bemoaned the lack of clear writing skills by their recently hired students. The first meeting was SA Internal Auditors. A panel of Senior Internal Audit pros noted that good writing was the sine qua non of their profession. At the end of th day, the report in the file was the work product. Come to think of it an Audit Partner at a major SA regional firm made the same point to me years ago. And then just yesterday the head of a SA IT firm said the same thing-better technical writing, please. 

    And since most IT and Accounting pros are writing to an audience which is NOT composed of IT or audit pros, it becomes even more important to 

    Write something that someone wants to read!

    It's Saturday morning. I feel like Ralphie at the end of Christmas Story. All is right with the world. For Ralphie it was  his blue beauty of a a Daisy-brand Red Ryder repeating BB carbine with a compass mounted in the stock. For myself it is my Saturday morning cyber-ride with two of the better auto writers around. Yep in the best David E Davis tradition, they don't list specs or colors or droll on about the gas mileage. Nope, their metaphors and similes leap off the page. It is as though I'm riding shotgun in that right front seat. The visceral thrill of high performance cars or the smug practicality of a small SUV  proves newsprint is hardly out of style, just re-packaged on the net. 

    Students become better writers by reading better authors, period. Most students do not seem to read anything, I never see anyone at school with a novel, fiction or non, or a newspaper. What do I mean, well here are a few samples from Dan Neil's review of the new Porsche 991. Apparently Porsche is numbering backwards rather than vault the 1,000 mark, the last iteration was the 997, go figure. Terry Box follows.

    Dan Neil on the Porsche 991, WSJ Feb 11, 2012 Page D 13

    Screen shot 2012-02-11 at 8.09.23 AM

    The new cockpit, with its banked and switch-laden central console like the Panamera, is futuristic, sternly elegant and purposeful, limned in rich alloys of aluminum and wrapped in more taut, tanned hide than a Miss Hawaiian Tropic pageant.


    A ripping, scalping, torque-wrenching, swivel-hipped snake of a car—and that's just so far.

    I get out of this car very much inclined to bite the head off a pigeon or something.

    The suspension compliance is velvety, the throttle response relaxed. Porsche's product planners would like the new 911 to appeal to more women. Just call me Nancy.

     Terry Box, Dallas Morning News, Saturday Feb 11, 2012

    NIssan GTR born to Really Run

    Screen shot 2012-02-11 at 8.37.00 AM

    Godzilla growls at 3,000 rpm, a final warning to the foolhardy

    The 2012 GT-R that recently arrived at The Daily Planet, coated in a fine shade of arrest-me-officer red, practically crackled with radioactivity.

    A typical run goes something like this: Nail throttle. Body and head slam into seat. Engine feels like a nuclear device. Grab second with the paddle shift. Body and head slam into seat. Engine seems to be making my hands glow. And so on.

    Professor Elam

    See what I mean?  Most newspaper accounts of cars are thinly disguised ads for cars to further induce dealers to advertise in the saturday classifieds not these guys. You are there, in the car, riding along with Dan or Terry.

    I can almost smell the leather of the taut tanned hide.

    I can feel the push back from the 530 bhp of the Nissan V 6.

    As LJK Setwright observed at Car and Driver years ago, there is no Refrigerator Monthly. One does not experience a refrigerator, one uses it. Cars are a visceral experience and writers that convey that mechanical emotion rise to the top of the genre. 

    So, I don't expect students to  be a gearhead as I am, but what blows your skirt so to speak, what sparks your interest?  Fashion, food, music, what?

    How about some examples of great writing. I have enjoyed reading the classes reflections on Emerson's Self Reliance. And indeed some of you are quoting famous authors with gusto, as I said on BB, setting the bar high for your classmates. 

  • Professor Elam

    Saturday Feb 11, 2012

    Here are three very clever ads for a bus company in England, enjoy!

     

    Clever –

     

    There are 3 separate links. Very Unique Marketing Approach!

     

    http://www.youtube.com/v/gBnvGS4u3F0?hl=en&fs=1&autoplay=1

     

    http://www.youtube.com/v/mgCIKGIYJ1A?hl=en&fs=1&autoplay=1

     

    http://www.youtube.com/v/LuVPnW0s3Vo?hl=en&fs=1&autoplay=1

     

  • Professor Elam

    Saturday Feb 11, 2012

    Plan to arrive in time so that you can take your seat by 6 PM. There will be plenty of seats. The film wil be shown in the large auditorium located on the north side of the Brooks Campus building. 

    The featured film is The Paper Chase.  If you have teenagers this is an excellent movie about commitment, self reliance, and success in school. 

     

    See you there!

  • Professor Elam

    Friday Feb 19, 2012

    Kodak says it will save $100 M by exiting the point and shoot camera business. The improvements in cell phone cameras are making that a shrinking market. 

    The great irony of all this is that Kodak invented the digital camera back in the 1970s. Indeed several of the major DSLR manufacturers like Olympus and Nikon have used Kodak sensors. Kirk Tuck swears by one of the earlier models that is a Nikon body and a Kodak sensor. Kodak's decision to delay introducing digital was spurred by the idea it would hurt the film business. Indeed, but that allowed Sony, Oly, Nikon, Canon to get the foothold in the business. By the time Kodak woke up to reality, the opportunity was lost. 

    Kodak really only made cameras as a way for consumers to use their film. And to appeal to the mass audience the camera was never much more than a simple pinhole, just press the shutter affair. Fine for the christmas dinner snapshot but not much else. Admittedly the majority of pictures are taken by women of kids and they are not terribly interested in the technical side as much as they are in their grandchildren. 

    But it got me to thinking. Sure Gillette only makes razors to sell their blades. But shaving is a pretty simple act. I wonder if it is not a mistake to be permanently branded as the 'cheapest' product. 

    Screen shot 2012-02-10 at 8.52.08 AMBack in the 1950s and 1960s Kodak Germany produced an SLR, the Retina Reflex. To this day one of the highest quality and most expensive cameras in the world is the Leica. Kodak was not interested in developing the Retina to real pro level status, more money to be made selling instamatics with the drop in film cartridge. 

    But in exiting the business, I suspect Kodak branded itself in the same way GM did by installing Chevy engines in Oldsmobiles and Cadilacs. Try as it might, Wal Mart has never been able to move up market and even scare Kohl or Target a bit. And so they remain big, and cheap, atop the Dollar Stores in the line up. 

    In the same way that America gave up on electronics to Sansui and Yamaha in the 1970s, it's just one more market gone. 

    the latest idea is to sell their patents to stay in the printing business, just as we all attend seminars on the paperless office. 

    These guys just don't get it. 

  • Professor Elam

    Thursday Feb 9, 2012

     

    Okay so I made up the number 1,186. We are studying ethics and past fraudulent accounting practices in ACCT 5308, Ethics. We have another candidate for

    Who's the Worst

    Yep Diamond Foods DMND CEO Michael Mendes is cleanig out his office, as Trump would say, You're Fired. 

    Most accounting frauds involve shifting revenue or expenses from one period to another. That increases or decreases overall revenue for one or the other period. The object is to make th eperiod in question look better than it is. And that is the financial shenanigan that Mendes pulled. This is why end of the period cut off tests are performed in external audits. As I say in class, this all about what income and what expense goes in the bucket for the period under examination. 

    And now, the does it matter moment. DMND dropped 38% – yesterday!

    Screen shot 2012-02-09 at 8.36.48 AM

     

    DMND was going to buy Pringles from Proctor and Gamble. Now I see articles specuating on the break up value of DMND itself, will the company go up for sale piece by piece? ROC at bottom is a first derivative of th eprice – Rate of Change- remember calculus?

    Our solid analysis of GM and its cash per share resulted in a buy recommendation on our marketperspective.com blog at $20. Today the WSJ has an article detailing the success of the Cruze, GM's first small car success in decades. The Volt will go up for lease at $350. a month. I am still puzzled by what the California legislature plans to do if an insufficient number of their citizens do not buy electric cars to fulfill the state mandate by 2015. Does the legislature suspend all other car sales until enough Leafs and Volts are on the road? 

  • Professor Elam

    Monday Feb 6, 2012

    The news is here for all to see, our job at TMP is pointing out how that news affects socialmood and what is therefore likely to happen. 

    A peak in positive investing mood lies immediately ahead. But a similar spike in unrest and negative sentiment world wide is also brewing .This is the result of repressive dictatorships, now no longer able to control the news citizens receive. It will also be the result of vastly inflated real estate speculation in commodity producing countries. They are about to experience their first taste of the downside of the business cycle-Sao Paulo ain't New York City. 

    Mood shifts to an\ Risk On Investing Peak

    This weekend using Chakin Money Flow we showed that investors rushed out of stocks at the Fall Lows when they should have been buying. Instead they bought govt bonds, at the highest prices of the year.  Here is an article page  C1 of today's WSJ that confirms our research,

    Itchy Investigators Ramp Up the Risk

    Robert Marcotte can't afford to play it safe anymore. With interest rates likely stuck near zero for nearly three more years, the 61-year-old retired telephone-company manager is about to ramp up his holdings of stocks and municipal bonds, using money now at the bank in certificates of deposit.

    "It gets me a little uneasy," says Mr. Marcotte. "Since I'm not working, I am very risk-averse, but still need to generate income."

    Mr. Marcotte is clearly not one of our 'alert Market Perspective readers!' He is about  to buy in near the top of the markets, going back to year 2000. Even a casual look at a ten year chart of any index shows the foolishness of this strategy. This is where the money will come from that will move out of TLT as we have been predicting, and into stocks. 

    The article later states

    One worry is that investors will take on risks they are not prepare d to handle.

    That precisely reflects our investment outlook here. One adviser is quoted as saying he has received lots of questions about high yield bonds (junk bonds) international bonds, andREITs. This is classic wrong way investment behavior. Amateurs are always seeking yield when the bank offers none. And that increases risk geometrically. We will be selling outREIts, the few we own, in the next few months. 

    At any rate, the hourglass is tilting towards risk for the little guy when risk is the highest it has been since Spring 2008. 

    That should result in a peak in various indices to new highs, the SPX stopped as short as it could of my 1345 breakout, 1344.9 to be exact. The markets are exhibiting their usual monday morning weakness today. 

    Meanwhile the winds of discontent are clearly blowing. Our cluster of Ides of March dates looms. Consider these stories

    World Wide Revolutionary Strife Grows

    It is all right here on pages A 6 and A 7 to see,yet Mr. Marcotte above is clearly not reading the paper. To wit - 

    Egypt to put foreign workers on trial-that won't set well with the US Congress

    Russia and China veto an Arab and US backed resolution calling for the ouster of Assad.Condoleezza Rice and Hillary, like Captain Renault at Rick's, are shocked. Hillary calls on an international coalition of our Allies to force Assad to step aside. Who pray tell does she have in mind?  Costa RIca perhaps?

     

    The Kremlin Resorts to Anti Americanism – and so the Russians are right where East Germany was in 1989 when the Berlin Wall came down. Note it is roughly a Fib 21 years later. 

    Sao Paulo is now one of the most expensive cities in the world thanks to an elevated real. A police strike spurs a crime wave. 

    But surely the winner of Most Naive Expectation of the Day award is the op ed on page A13 by Alwaleed bin Talal, a member of the Royal Family, and CEO of Kigdom Holding and as I recall an  investor in Citcorp. He calls his piece

    The Lesson of the Arab Spring

    Here is the seminal paragraph about three fourths of the way into the article. 

    If there is a lesson to be learned from the Arab Spring, it is that the winds of change that are now blowing in the Middle East will eventually reach every Arab state. Now is therefore an opportune time, particularly for the Arab monarchical regimes, which still enjoy a considerable measure of public goodwill and legitimacy, to begin adopting measures that will bring about greater participation of the citizenry in their countries'political life.

    Prince, I suggest you call Mikhail Gorbachev who reached that same conclusion in 1988, only to be reversed in East Berlin. There is no putting the genie back in the bottle. As one of my clients commented on a return from the Soviet Union in 1991. They have VCRS and satellites and can see how the rest of the world lives, and are not going to put up with their status any longer. The idea that the wealth of the $100 oil should be concentrated in even a large Royal Family will not continue to 'enjoy a measure of public goodwill'

    Yep, as Gary Cooper might say. 

    THe kings of England and France, post Magna Charta, had several centuries to adjust their monarchies to such change. Still, Marie Antoinette calculated her timing very badly. Today's leaders will ot have the luxury of that kind of time frame. The swirl of events moves much faster. 

    A Tunisian street vendor sets himself on fire. This is the butterfly effect pure and simple.

    In chaos theory, the butterfly effect is the sensitive dependence on initial conditions; where a small change at one place in anonlinear system can result in large differences to a later state. 

    WIki

    And so the collision course is set, it is now just a matter of tracking these forces at work.

     

  • Professor Elam

    Sunday February 4, 2012

    Look under course content in Black board for you copy of an e book on Fibonacci Numbers. This will also aid in understanding the content of the new show Touch on Fox. 

    And I got to looking at the month of March, things could get pretty interesting. 

    Socionomics

    100,000 Protest in Moscow Protestors braved zero degree F temperatures to protest the candidacy of Vladimir Putin.The election is March 4. I can easily imagine the above chart topping out, bullish percent, a month from now.  In other words, if Putin 'wins' social mood world wide may be as good as it gets at that point. 

    Apparently the 'state' bussed in demonstrators of its own across town. That sounds like an echo of what we are seeing in the Wisconsin recall of their Governor. Unions  are busing in protesters for demonstrations to force the state to continue to pay all state employee benefits.  This article mentions a siege mentality in Wisconsin.   That term dates back to the Middle Ages when one group would surround a defended castle and set in for a protracted who can last the longest battle, a siege. A date has not been set for the recall electionbut enough signatures were gathered so that there will be one. If that also happens i March, we have another puzzle piece.  I moved my original piece about the New Civil War to the top of this blog for the time being. We viewed On the Waterfront in Ethics class this weekend and the maps are quite informative about what was happening in 1954 as well as now. 

    Just checking, the actual US Civil War began April 12, 1861 and ended April 9, 1865, pretty close to this same time frame. 1865 plus the Fib number of 144 takes us to 2009, the year of the low in Stocks so far for this period of stagnation. 

    Meanwhile Greece ponders spending cuts. Greece has 14.4 billion in EU bonds maturing March 20.  Of course Greece does not have 14.4 B in Euros and at this point has not negotiated a loan. If nothing changes Greece defaults March 20. 

    Romney has won Nevada as I write. The next Super Tuesday will take place on March 6, 2012, and will involve contests in Alaska, Georgia, Idaho, Massachusetts, North Dakota, Ohio, Oklahoma, Tennessee, Vermont and Virginia. It should be all over by then.  

    Our point is that speculation on Russian elections and US nominees and Greek default will end in a cluster of days in March, only a month off. Recall that the low in 2009 was March 9 so we are nearing hte three year anniversary of that date. It seems reasonable then to muse that positive social mood may well peak by March. If confirmed by our internal indicators a powerful argument will present that the top in markets is in. 

    A wiki article makes this point about the Ides of March. Hmm, not much has changed in 2,000 years, eh?

    In modern times, the term Ides of March is best known as the date on which Julius Caesar was killed in 44 B.C. Caesar was stabbed (23 times) to death in the Roman Senate by a group of conspirators led by Marcus Junius Brutus and Gaius Cassius Longinus. The group included 60 other co-conspirators according to Plutarch.[2]

     

     

  • Professor Elam

    Thursday Feb 2, 2012

    The Professionals  One of my favorite movies is on Turner Classics at 7 PM tonite. The great thing about Turner classics is both Robert Osborn's interviews about the films and the fact that there are no commercials. As one female reviewer in my special edition DVD remarks, the dialog crackles among hte ensemble cast. And what a cast, Lee Marvin, Burt Lacaster, Robert Ryan, Woody Strode, Claudia Cardinale, Ralph Bellamy, and City Slicker star Jack Palance, it gets no better than this action fans. 

     

    Screen shot 2012-02-02 at 8.01.48 AMAnd the movie features one of my favorite ethical lines for accounting class (wondered how I would tie this to accounting didn't you, come on now, admit it…)

    Marvin gets the money from Bellamy to bail Lancaster out of jail. Bellamy (Grant in the movie) has proposed a daring rescue attempt by those men to rescue his kidnapped wife.  Discussing the proposition, and now freed from jail, Lancaster remarks, my word to Grant doesn't mean anything to me. 

    Marvin turns on his heels, looks solemnly at his friend and replies, 

    You gave your word to me. 

    and that boys and girsl is what Ethics is/are all about….

    None of us are any better than keeping our promises to our friends and the stakeholders in the workplace. A common complaint of all group assignments in school is that if it involves four people, someone is a slacker, and the rest of the group always resents that person. 

    There are no slackers in the Professionals. Get the popcorn…..

    Ohter notable films of that era with similar themes are The Magnificent Seven and The Great Escape. 

  • Professor Elam

    Thursday Feb 2, 2012

    Yes it's the cousin of the hemline indicator. Bright colors literally reflect a bright mood. Social Mood has turned quite optimisitc since the Oct 4 low  when the bullish percent of stocks went single digit. 

     

    SalvatoreFerragamorevealed an array of bright spring colors on the Milan runway this week. Hmm, readers  should notice that bright fashion show parallels the recovery in the Italian bond market. 

    Screen shot 2012-02-02 at 7.41.50 AMThis positive social mood will help propel world fashion and stock markets higher. Socionomics teaches that positive mood affects fashions, art, and the inclination to invest. It is ot surprise that the Facebook  IPO the largest ever, will no doubt cap this expansive mood.