FSX Surprise Q2 Change

I wasn’t going to make any changes to the Family Stock Index roster for Q2 2011; I’m constructive on most of the stocks in the index, at least relative to the market, with the exception of poor Jenny (homebuilding—ugh).  So either I like our position in each name or I don’t consider substitutions to be karmically feasible (LEE, MCS, LULU, and REGN, for example).  But I should do something, right?  Otherwise you’re going to think I’m getting lazy, and when it comes to matters of inconsequential precision, I am as diligent as ever.  So here we go.

I’ve never liked ICA.  I wanted to do something better with Icarus, because he means well, despite not respecting crotch boundaries at all.  I want for there to be a company with the ticker symbol ICKY, but alas, there isn’t.  It will take me a while to get Icky, Inc. off the ground and take it public, so I need an interim solution.  The salient characteristic of Icarus, at least in the context of the FSX and my understanding thereof, is the unique bond between dog and master.  I am fond of my dogs, most of the time, but they are dogs, and that’s it.  I don’t consider them family members, I consider them dogs.  I felt differently about Randy, though, and when he died it was like losing a friend.  I don’t think my reaction will be the same this time.  I don’t know exactly how to explain the qualitative difference; I was younger, Randy was a special kind of curmudgeon, and most importantly, I didn’t have children when I adopted him.  A dog is not a child; I never thought that and I know Justin doesn’t think that.  But having children made my relationship with my animals change.  In the first place, my children occupy a place in my heart that nothing and no one ever has, and there’s less room as a result.  And the other, less pleasant consideration is that my animals are animals, and animals behave in squirrelly ways.  My thoughts are dark sometimes, and there will always be part of me that sees every animal as a potential threat to my small children.  I would kill anything that looked at my kids funny, no remorse and no hesitation.  I remember my Dad telling me that’s how he looked at it, and he was as much of a dog person as anybody.  I didn’t understand him really, because of course I didn’t, but I thought it was an awesomely hard-core way to think about things.  I understand him now, though, because of course I do.  I’m not suggesting I thought he was being over-the-top; I figured I would be the same way were I in his situation, as I reckon I am now, except that I am married to someone who wants me to be happy and he was married to my mother.  So the point of all of this is that Justin has the kind of bond with his dog that I remember having with Randy, and that I don’t have now and won’t have again.  So how do I work my market magic on that concept?  I liked JDOG, but it was not a workable stock from a trading standpoint.  So I have been muddling along with ICA for the better part of a year, and then today I had an idea.  Justin is WOLF; is there a company with the ticker symbol FLOW?  Turns out there is: Flow International, an industrial company that makes—get this—ultra-high pressure waterjet cutting and cleaning systems.  Holy crap, right?  Why don’t I make ultra-high pressure waterjet cutting systems?  What I am doing with my life?  FLOW trades around $4 and its 50 million shares give it a market cap in the neighborhood of $200 million.  That’s an improvement for the FSX, in my estimation, as I thought we were becoming more of a mid-cap index than I had intended originally.  So FLOW will replace ICA in the FSX after the close today, unless Brinkley refuses to take a nap this afternoon and I don’t get to make the change until tomorrow.

Insight

Reagan just now: Hey Daddy, if Burger King’s symbols were B.C., do you know what it could be for?  Butt concussion.

Me:  Good thing it’s not.

I started thinking, though, and now I’m not sure it is a good thing.

For My Birthday

I want a Jumperoo.

Do they come in size Old & Fat?

Overload

Sometimes it’s just too much.

Saxon Spring Break

Jenny and Reagan are out of school this week for Spring Break,  They will be leaving for Hilton Head on Thursday, but I have their assistance, such as it is, for the better part of this week.  Spring Break opened with morning snow showers, which I should have taken as an omen: after all, what kind of “break” is likely to accompany such a “Spring?”  The kind that leaves you refreshed, or the kind that leaves you in traction?  I love my Hussars/daughters, and I want them to enjoy their time off.  I don’t, in fact, need any help from them, as I have Brinkley well in hand.  He is not on a strict schedule, because I find such things unrealistic in the context of Operation Simba and, at least for me, it is better to have a loose tactical framework, or even no plan at all, than to have a precise battle plan that has to work or else.  I do, however, understand my baby and what he needs.  Those needs are certainly evolving, but for the past several weeks he has been much more particular about sleeping than eating.  Sometimes he loads up on formula early, sometimes he eats light.  But he almost always takes a 10- to 30-minute nap around 8 a.m. and a 2- to 3-hour nap beginning between 9:00 and 11:00.   This is a wide range for a start time, but the important thing is the length and quality of the nap.  His afternoons are not nearly as structured, although there is usually a second cat nap.  The reason why the structure is lacking in the afternoon is the presence of his sisters.  He loves them and love is nothing but an unwelcome obstacle when a nap is on the line.  If he doesn’t get his long nap, he becomes a horrible person, and shortly thereafter I become a horrible person.  The Long Nap of Prince Brinkles is the most important thing in the world.

As his reign lengthened and his ambitions grew, Napoleon developed the unfortunate habit of drafting operational plans that required the employment of larger quantities of soldiers than France herself could provide.   He closed the manpower gap not by limiting his objectives but rather by forcing/inducing large numbers of foreign troops to serve under French command.  Some, like the Poles, served the Emperor willingly, whereas others, like the Germans, were dangerously independent.  The difference is that Napoleon’s Polish brigades followed him out of love and loyalty, but his Saxon, Bavarian, and Prussian troops followed him because they were afraid not to.  Once that fear evaporated at Leipzig, the Saxons infamously turned their guns on their French officers at the height of battle, turning a close contest into a crushing defeat for France.  Napoleon was Emperor of the French, and he should have restrained his ambitions such that his adoring French troops could have achieved them.  Expanding the army was a mistake, and it was as much the cause of Napoleon’s downfall as was his misguided foray into Russia.  In fact, had he limited himself to his legitimate national resources, the conquest of Russia would have never have seemed so tantalizingly attainable.

I made the same mistake as Napoleon today, and I narrowly avoided a Leipzig of my own.  Brinkley was on schedule, even with the girls buzzing around, and I had prepared his sleeping quarters as usual.  About 10:30 or so, he fell asleep in my arms, as he often does.  I laid him down and he was quiet for 15 minutes, and then I overreached.  I decided to go up to the bedroom and exercise.  I gave the girls a baby monitor and I told them that if he starts to cry consistently, they could go re-insert his pacifier, but it was Long Nap time, and they were not, under any circumstances, to pick him up.  I rode the bike for 30 minutes, and when I went back downstairs, Jenny was sitting with Brinkley, who was now wide awake.  Saxon swine! I cursed at her.  I mean, I didn’t, but I should have.  Now Brinkley is back down again, 30 minutes into to a second attempt at the critical Long Nap.  And why is Reagan BOUNDING through the Family Room?  If there were some Prussians here the girls would have already switched sides.  Good thing Prussia hasn’t been in existence since 1945 or I’d be hiding in the backyard with dogs right now.

Sorry About That, Mom

So Mom’s supernatural power tally, so far: able to cause freak waves in Currituck Sound, yes; able to make Harrison Barnes pass the ball once in the last two minutes of a game, no.  I was pulling for Carolina, I think.  It would have been acceptable for UNC to win because it would still have set up a showdown between the Empire and Team Charlotte + Marcus in the resulting game between UConn and Carolina, with the winner of the Eure-Machi No-Prize being determined therein.  Alas, it was not to be.  Instead it’s like this:  Justin leads me by 20 points, with only Imperials having any potential points remaining.  The fate of the universe now hinges on the game between UConn and Kentucky.  The other game is meaningless because who had Butler and VCU?  You couldn’t even pick VCU when the tournament started.  Here are the possibilities:

1. If UConn beats Kentucky in the next game, but fails to win the championship, I will capture the EMNP, Justin will finish in second, and Katie will jump from 9th to 3rd, passing Charlotte by 20 points.
2. If UConn beats Kentucky and beats the winner of Butler/VCU, I will win, as in the first scenario, and Katie will move into 2nd, dropping Justin down to 3rd.
3. If Kentucky beats UConn in the next game, Justin will win the EMNP and I will finish in second, because of course no one picked Kentucky to get to the final game…or did they?  Brinkley felt very confident about his choice of Pittsburgh to win the whole tournament, but he was nearly as emphatic in advancing UK to play Pitt in the final.  So the Brinky bracket has 160 points remaining, and if Kentucky wins, he will move all the way from 8th into a tie with his father for second place.  Well played, boy.

So that’s it.  No #1 seeds made it to the Final Four, so my prospective rule against picking all of them to win seems even more justified.  Of course, I would’ve drawn the same conclusion if all four had made it, so I suppose the truth is that I am right no matter what happens.  Championship.

FSX Friday Update

I don’t feel as plugged into the market this week; maybe taking last Friday off wasn’t a good idea.  The action is really boring right now, and that doesn’t help.  The U.S. stock market was up consistently and gradually this week because it was short-term oversold and because the long-term global financial imbalances that favor equities have not corrected.  Japan should actually stimulate real economic activity as it prepares to spend hundreds of billions of dollars rebuilding, although whether there will be enough spending on U.S. capital goods to offset the decline in Japanese investment in U.S. financial assets isn’t clear yet.  If the Fed is still flooding the market with dollars and the Japanese aren’t soaking up as many, that will make U.S. imports much more expensive (uh-oh, Wal-Mart shoppers) and lead either to compensatory wage inflation or a decline in the standard of living for most Americans.  Remember that we haven’t had much in the way of household income growth in a decade or so, but we buy everything from China at rock-bottom prices, so no one has noticed—except when they have to visit the hospital or a gas station.  If the lower-middle-class voters who trend Republican on social issues are forced to pay attention to the systematic destruction of middle-class employment opportunities being engineered by rich people and corporations in the name of free trade, there could be trouble for the GOP.  Don’t worry too much, though, Mr. Boehner; the Democrats are too politically inept right now to take advantage.  Nothing will happen in Washington until something happens in the market.  If the Dow drops by the 2,000 or so points I think it ought to drop, the rats will start scurrying.  Until then, buy AAPL and try to drive less.

The FSX enjoyed a market-beating rally this week, up 3% to 1302.80, and the strength was broad-based.  Advancers trumped decliners by a record 21-2 margin, and if you throw out Zero’s corrective decline, only one stock was substantively lower.  Nearly one-third of the FSX stocks made new highs (Dustin, Lisa, Mario T.Y., Winston, Wilson, Brinkley, Reagan), and while the average itself is still more than 50 points below the early March high, much of that surge was Lucas messing with everybody, and the current levels reflect a healthier picture on the whole.  My stunt double did a bang-up job last week, of course, and I don’t plan to contradict anything she had to say.  I do want to add that in dropping to 1228 early last Tuesday and holding there, we had corrected by nearly 10%, the sort of affirmative pullback that washes out the fair-weather bulls and sets the stage for a stronger performance in the coming weeks and months.  The rebound through the end of last week and the entirety of this week is resoundingly positive for the FSX.  I could go on, but I’m making myself a little sick with all the roses and sugar-frosted cupcakery just now.  I sound positively giddy.  That can’t be good.  Besides, I need to save something for the Q1 review next week—the quarter wraps up this coming Thursday.

Advancers

• Mario the Elder (PBY) +16.7%.  Big Mario was incredibly oversold, having slid into last place among all FSX components in YTD performance following last week’s cathartic swoon.  The headline on PBY is that Uncle Tony is visiting, and, as Katie observed, there should be a decibel increase associated with that, if not a lasting jump in value.  The possibility does exist that the market is relieved that the rumored foray out of auto-parts retailing and into Pittsburgh real estate hasn’t materialized.  If the market is listening to me (it isn’t), it would note disdainfully that home builders have to stop building before the housing prices can put in a bottom.  Real estate is local, of course, and maybe the Pittsburgh market is exceptional.  I wouldn’t move there, but it was all I could do to go to the Dollar General to get laundry detergent this morning, so a permanent move seems entirely out of the question.  If we move somewhere interesting, there’s a halfway-decent chance Mario T.E. would buy us a house, but I really like the one we have.
• LEE +11%.  I was saying something to Katie earlier this month about how I felt like I was really getting the hang of this baby-battling thing, and that the market was bearing that out.  LEE had been solid and stable for a good six weeks, hovering right around the $3 level and banking a 22% gain on the year.  I was subsequently and viciously reminded that the market is always listening, and it doesn’t like to be taken for granted.  Over the next six trading sessions I went -8.1%, -2.2%, -4.1%, -3.5%, -4.8%, and -4.2% to slip all the way to 8% below my 2010 closing level.  Some of that was gout, and some of it was a legitimate penalty assessed due to my failure to build any kind of momentum on the book.  But down 24% in just over a week was too much, and now this week’s redemptive action has left me up a respectable 7% for 2011.  The girls will be in Hilton Head the second half of next week, and the market seems to be saying that I’m fixing to do something accretive.  Granted, I’m not saying that, but what do I know?
• Lisa (LSI) +8.6%, Dustin (DST) +4.9% and Lucas (LEI) +4.4%.  Lucas is usually all over the place week-to-week, mucking up my statistics like Mr. Mxyzptlk, and so I look to Lisa and Dustin for confirmation of underlying trends in his valuation.  I take it that his talent show was a success, or that it was an emboldening experience, if nothing else.  You might think that Lucas’ success would be reflected directly in the market, and I would have shared that opinion before I was in the audience for Reagan’s spelling bee destruction of the 1^st Grade earlier this year.  I have never been as excited about anything I accomplished myself as I was when Reagan won, except maybe for the time that I found 3 copies of Unity 2000 #1 and 2 copies of Shadowman (vol. 3) #6 in backstock long boxes at this comic book store in Raleigh.  Probably not even that.  So I get it.
• Reagan (REGN) +6.5%.  Speaking of Ray Gun, she has been on a tear since the beginning of the year, and now only Lucas in enjoying a better quarter than she is.  Both my girls are very smart, but Reagan is more like me in that she is working constantly to understand everything about everything and to reposition herself intellectually in accordance with each new discovery she makes.  Jenny is not concerned with things that don’t obviously concern her, which is one way to be, just not the way that I am.  For example, Reagan and I were having an existential discussion about faith and reason in my office one night this week while Katie and Jenny were taking turns playing Super Mario Bros. on the Wii.  Again, one disposition isn’t necessarily better than the other, but the two are not at all the same.  I’ve told Reagan that she’s going to hate high school and it will hate her right back, but she’s going to have a lot of awesome thoughts that she should definitely record, because they will be hilarious when she re-reads them 15 years later.
• Winston (HWD) +5.7% and Mario T.Y. (SUP) +3.9%.  I don’t remember what Katie said about Mario’s explosive performance last week, but it definitely had nothing to do with the unraveling of takeover-arbitrage trades and panicked short-covering.  I’m not contradicting Katie, so she must be right and I must be wrong.  Oh well.  Mario was down nearly 10% for the quarter up until last Wednesday, and he has soared by nearly 30% in the week-and-a-half since then.  What could be happening?  Not the NCAA results, certainly.  Not the absence of his cell phone.  Unless that is it, exactly—the cell phone, not the tournament.  Look at the action in Winston.  Like his master, he has pushed his way to a new 52-week high in a challenging market, and merger-related reticence certainly shouldn’t boost his prospects.  The focus of my speculation is on the strength of the master-dog bond.  If Mario doesn’t have his cell phone with him when he’s walking Winston, he might have to pay attention to what he’s doing, and that is the sort of thing that dogs notice.  Perhaps they are both feeling better and more centered in their relationship.  Sounds plausible, right?  Of course it doesn’t, it sounds like total bunk, and that’s because this is 100% SHORT-COVERING.  Sorry, I have to be honest; the market hates liars.  Wait, that’s not true, either.
• Katie (CATY) +4.8%.  The market is pleased with her not-entirely-derogatory or dismissive assessment of its prescience last week, and if she decides to give up accounting there may be a job waiting for her in the lucrative world of unpaid, obscure market commentary.  The pay is in comic books, though, and so someone else is going to have to get a job that pays in money.  Jenny?  Brinkley?

Decliners

• Justin (WOLF) -9%.  This is a positive number.  It’s positive because as late as Wednesday Justin was down more than 17% on the week, and Icarus was down with him.  As it is, both Justin and his dog/exo-soul rallied sharply to close out the week.  This may be because a trip to the NC is in sight, and our backyard here is really getting it done this year, in a dog-satisfaction sense.  I try to play fetch with Zondro most afternoons and he’s got energy to spare, energy that is wasted on Wilson (not a dog).  Something to look forward to, perhaps, and the market is forward-looking.
• Zero (FRZ) -13.1%.  This isn’t a positive number, but it is more-or-less a wash.  Last week’s final hour spike from $3 to $3.50 had the feel of a bad trade, but if the NYSE says it’s legit, I’ve got to post it.  FRZ gave the full fifty cents back after-hours on Friday, to say nothing of trading at the open on Monday.  Zero, like me, is sitting on a more modest gain for the quarter (10% or so), which is not only more realistic, but is also more sustainable and less bubbly.  Bubbly is bad.

Name	Ticker	3/25/2011	Change
Brinkley	BCO	$31.90	+0.47
Charlotte	ICE	$127.98	+3.21
Dustin	DST	$51.85	+2.40
Icarus	ICA	$8.89	+0.24
Jenny	LEN	$20.03	+0.36
Justin	WOLF	$2.22	-0.22
Katie	CATY	$16.67	+0.77
Lee	LEE	$2.63	+0.26
Lisa	LSI	$6.94	+0.55
Lucas	LEI	$3.54	+0.15
Lulu	LULU	$78.64	+3.08
Marcus	MCS	$10.51	+0.13
Mario T.E.	PBY	$12.29	+1.76
Mario T.Y.	SUP	$25.06	+0.94
Marisa	MOLX	$24.94	+0.60
Nicole B.	NI	$18.80	+0.27
Nicole L.	COL	$63.49	+0.71
Reagan	REGN	$41.34	+2.53
Ruby	RBY	$4.79	+0.23
Wilson	WILC	$7.85	+0.20
Winston	HWD	$14.44	+0.78
Zero	FRZ	$3.04	-0.46
Zondro	ZRAN	$10.28	+0.42

I’m Mad, by Brinky

I have never been so mad

And I have never been so hungry

And I have never been so mad about being hungry

It wasn’t like this when you put me in the swing–

I just discovered it!

But time passes, relentlessly, and I am changed by it,

Into something even madder than before.

I can never forget this deprivation, this misery, this anger,

Except that now I am eating

And what were we talking about?

I love eating.

I am eating.

Another Poem by Brinky

Mutable Muses, by Brinky

The meager, passing rapture of

An overdue poop or

A bottle of mango-flavored formula or even

A self-drying diaper would be nothing but

Junk

Compared to the joy I feel the moment I see you, Turkey Clock.

I will never forget the Turkeyness or the Clockness of your face, how you

But what is that?

Is that Dora?

Why is the monkey with her jumping?  He’s jumping so many times.

Interesting.

A Love Poem By Brinky

I love you, Turkey Clock

I want to paint my eyes with you

I want to put you in my face.

We will be as one forever, Turkey Clock,

Or until my head jerks away involuntarily

And I am looking at something else.