Cody in FT: Inside curve: Waiting for the noise pollution to die down

Is a US recession already a foregone conclusion? Is that really what the markets, the fundamentals and the Federal Reserve are telling us? I’d argue that the set-up at the moment is more “binary”. Two starkly different outcomes look possible.

Certainly, the US economy has cooled from the torrid pace that had surprised all those economists that shoot off their guesses about the future of this $13,000bn economy in the first few months of the year, writes Cody Willard. | Read

CW on RM: The Wisdom Found in 'What if'

The Wisdom Found in 'What if'
08/25/2006 1:19 PM

What if I go fly fishing and camping in the mountains of southern Colorado next week and never come back to New York City? What if I could just let go of all the stress and pressures that come with running a fund in public to boot?

I'd have thought going to cash and subsequently being pleasantly surprised by a market collapse would alleviate some of the constant stress that comes with running other people's money. I'd have thought catching a big move in my Microsoft calls and further distancing myself from the market would help that omnipresent stomach knot that I whine about sometimes in these pages. I'd have thought that taking a break from being mostly aggressive in the market for the last 3 1/2 years of running this fund would have made this summer less stressful than last summer was.

And you know, I suppose that's all true to some extent. As I've outlined before, the pain that comes with persevering through the drawdowns -- especially big ones like I had last summer -- is brutal and horrifying. And I'm not brutalized (well, by some of my readers I am, but what's new there?) or horrified this summer.

But it's still stressful, isn't it? What if the market takes off while I'm still mostly in cash and Mister Softee? What if Mister Softee blows up? What if I start putting some money to work and immediately get crushed?

It reminds me of that ol' Marvel Comics series that I loved as a kid, What If, although it explored past events for characters, such as Captain America winning the 1980 presidential election.

I often think of that series when I write my "What's on My Mind" pieces on Friday afternoons, such as when I recently wondered what the setup would look like if Greenspan were still Fed chairman instead of Ben Bernanke.

We as investors always need to ask ourselves "what if." That analysis helps us determine our own risk/reward and can give perspective, such as the differences between Greenie and Ben.

It's an important tool, and while I wish that asking "what if" didn't stress me out like it does, I will, unfortunately, be asking myself that question constantly next week. I hope to have some new answers when I get back.

See you Sept 5.

The West Coast Blog Mafia

I'm gonna have to do more work on this idea, but is anybody else about as sick of what I call the "West Coast Blog Mafia" as I am? If you're a blogger, you know what I'm talking about.

Maybe I'm paranoid, as it's true that I like my independence and I certainly like to strive to rail against whatever I perceive to be "the system" (meaning pretty much any of "the system"s that exclude outsiders, free-thinking, etc). The West Coast Blog Mafia all link to each other and high-five each other and affirm each other's brilliance, you know? And, like all mobsters -- you're either in their mafia or you're not.

It's sorta' heartbreaking to see a "system", a "clique" or as I call it here, a "mafia" developing in what's supposed to be a wild west, meritocratic blogosphere. But it is what it is. And it's a shame.

That Addictive HD

I often write about how we'll eventually be able to "pull" whatever content we want off the net rather than having to let the centrally-controlled powers-that-be "push" that content to us. Most of that video content that we "pull" off the net at Youtube.com and what not is not exactly HD.

That will change over time, but in the meantime, I don't know if you guys realize it, but HD really is pretty awesome. We've got a 102" DLP HD projector from InFocus in my office and I've got a 42" Plasma Panasonic at my apartment. One thing I've noticed is that I can't hardly watch non-HD on my cable systems now. Might as well watch YouTube.

I think I've seen 10x more Discovery Channel in the last couple months than I'd seen in the rest of my life combined. Sharks, tigers, even just clips of the Grand Canyon, which my father and I almost died in once in a bad idea camping trip back in college -- it doesn't matter, you just can't take your eyes off it.

A New, Improved MetroCard

For a while when I lived in Harlem, it was a good thing I had a bicycle, because there were a few periods of time when I ran out of money for even a subway until I got my next paycheck. Since 9/11, I rarely ride the subway. It seems that when people were running around in panic after the planes hit and I was surrounded these masses, one of my primary fears was to lose control of where I was headed. Crowds in a panic are scary things, and it terrifies me to picture being underground when the next attack hits NYC (which hopefully will be many years from now, but who knows.)

But anyway, here's an idea that came to me when I was with my pop going to meet my mom and an ex-girlfriend a while ago. I suppose I could try to monetize the idea, but what the hell, Andrew Lanyi taught me long ago that pro bono (while cynically never really pro bono) is good thing.

Why don't they print the subway map on the back of each MetroCard? Even if just the subway map of Manhattan, it'd still be great to have right there on the back of the Metro Card. It'd fit pretty nicely.





And on the front? How about selling advertisement space instead of that stupid yellow MetroCard and MTA logo? Create more revenues and help lower prices for the taxpayers who get screwed by having to subsidize the MTA and then pay $2 to use the subway or bus.

I think it'd work. Too bad bureaucrats never try to help the people they purportedly help.

Best Damn Rehash Ever

Tonight's question: Who's dominated by group think more -- TV producers or hedge fund managers?

Don't these sports shows always drive you crazy with how conservative these guys always are with their picks. Tonight I happened to flip to the Best Damn Sports Show Ever and for the first time damn time ever, I actually made it through more than like 30 seconds of the pointless banter since they were doing a Top 50 Best Finishes Countdown. After they got to the top five, I could pretty much name each of what was going come up.

And #1? Yeah, REAL shocker that "The Play" kickoff return from Cal v Stanford was. Not that it's not an absolutely thrilling play, but come on. It's not like there was some championship on the line or something. If you're going to put a show together like this, how about shaking it up a little bit? To copy the same list as every other greatest finishes ever is pretty much pointless.

PS. How bad are these "Who's #1" shows on ESPN Classic? The concept is great, but those stupid jazzy raps are so cheesy it's insulting. And the only footage they ever show is of interviewed people and photographs of whatever they're talking about. Hey, producer -- you do realize we watch TV to see video footage? Thank goodness the content revolution will put these incompetent producers out to pasture once and for all. Too bad that's still years away.

Present at the Reunion, or, Alone. By Choice.

Ah, the reunion. We didn't have a ten year for some reason that nobody who came to the event could explain, but whatever. So we had ourselves a 15-year. Class of 1991, Ruidoso High School. I've never gone to a college or high school reunion (hell, I didn't even bother to go to my college graduation as I'd bought a one-way ticket to NYC and caught a plane out a couple hours after my last final at University of New Mexico) so I really have no frame of reference as to what a reunion is supposed to be like, but I'd have a hard time believing anything could top the setting we had for this one.



Elyn, one of the oldest friends I have in the world whom I trade emails with often to this day, so graciously set up the whole event at the soccer fields at White Mountain Elementary School, where we'd gone to third through fifth grade. I'd also played in about a million soccer games on those fields on our way to winning the little kids' state championship back in like fourth grade or something before I'd foolishly made the mistake to focus on only the "big three" sports.





I'd been so nervous to show up at the event, as I didn't know what we'd say, who'd be doing what, and I knew that if they'd ask, I'd not have much to talk about except for my work and NYC life. Family? Kids? Wife? Girlfriend? Hell, dog, cat? I got nothing.

I dragged my little sister Lindsay to the event as my date (and possible buffer), but as soon I got to the fields, I felt transported back to childhood. I remembered running track at the end of the year track meet -- oh what a sweet memory. And then so many of the people I've known longer than anyone in my life were streaming in. Most with their beautiful kids in tote. I think only 12 or so people out of our class of 80ish showed up. I sure wish more people had come, but what can you do?

But what was so neat was that almost all of the people who did come were the people who'd actually gone through the Ruidoso School System for pretty much their entire education. A few had moved before graduation, others had moved into town after kindergarten, but these were truly "my people" in that they had experienced the same town, teachers, principals, flash floods, forest fires, cliques, opportunities, stores, sports, the endless plane crashes in town (including the one which crashed in my front yard up the road from the school, an experience I'll write about soon), and so many life events that I had.

It was beautiful. I sat and talked with so many of my friends that I'd lost touch with and at various points wondered about. We talked and asked about everyone. Interestingly, as I often feel like I've lost touch with so many friends and never have been much of a stereotypical gossipper, I think I might have known more about more people than just about anyone else there. Then again, maybe everyone walks away from these things thinking that.

I also got to see some other former classmates later that afternoon, including the first girl I ever, well, felt up. Of course, I also remember getting in trouble for jumping on her bed when we were like three years old, so what can I say? I've known her forever. Though I felt again like I was in some sort of time-space wrinkle as I pulled up behind the old lumber yard where I'd loaded I don't know how many tons of wood over the years for various building projects. I even remembered visiting the old house behind it as I pulled into the driveway of one of the now-deceased patriarchs of the village where she and my other old friends were hanging.

Nervous as I was when I pulled up in my 1976 Rusted old F150 pickup truck to my first day of high school, I got out of my mom's giant SUV and walked up to the porch. Awkwardly at first, we eventually broke the ice with a toast to 2006, and I sipped on some sort of spiked beverage.

Afterward, I stopped back by Elyn's, where we had spent part of the afternoon, and more people whom I'd known pretty much all my life were there, and we all piled into a couple big vehicles and headed downtown. A half beer in and having just ordered a new round, I realize I'd not eaten dinner. So Vince and I hop into my mom's vehicle and head to the one and only Ole Taco where my parents had gotten sick once when I was a little kid and I loved to eat at anyway.





After chatting for a while with Vince's girlfriend's relatives, who also happen to be my sister's boyfriend's (who by the way, whips up meals to challenge any hip NYC restaurant) and a former classmate of mine's parents, we head back up and find ourselves sipping Bud at the Win Place and Show where a live country band is rockin' the house with some great classic country covers. (While I'm on the small town kick, the next day I pulled over and offered a ride to a "kid" walking down the street. He was going to library which was on my way and it turned out he was the bassist in the band I'd seen the night before.) We get a phone call from the others and they're across the street at Quarter's, which is absolutely hopping by Ruidoso standards with lots of rich young white kids from Texas two-stepping to country and grinding to dance music, depending on what's playing.



It's getting to be 3am NYC time (1am Ruidoso) and my mind's been melted by the sum of the day's flashbacks, new experiences, and the intimacy of it all. We're taking bad pictures with our cameras, and as I snap a picture of Michael a Texan smartass sticks his face in front of my camera as he passes us on his way to the bathroom. I get up and start after him and I make some comment to the others joking that I'm going to go talk shit to the "outsider".



Lots of hugs and handshakes later and I'm walking out the door and Michael and I are talking about life's struggles and changes and what not and he says, "The thing is, Cody. In the end, none of that matters. The only thing that matters is that you are present." That comment's been boomeranging around my head since.

So the reunion was a trip, it was neat, it was heartwarming, it was fun, and it was heartbreaking too. I've written before about how I wonder about whether I've sacrificed the right things in life as I am in this different world so disconnected from where I come from and my family and oldest friends. I loved seeing how some of my old friends had grown these families, some of which included like three or four kids already. Doesn't it just about say it all that I just struggled to find the right word "grown"..."built"...both make me think of good businesses. And I guess that's what I'm pondering as I'm back here in the big city. Alone. By choice. But hopefully present. Hmm.

On Being a New Yorker, or, The Cody Band Returns

I guess that makes me a "real" New Yorker. I've just passed my ten year anniversary of having moved to New York. Isn't it strange that our minds gravitate towards these arbitrary numbers as significant? If we only had four digits per hand and thusly used a base 8 number system, would we mark our 8th and 20th anniversaries as we do our 10 and 25? I've been saying I'm "from New York" for a long time, and I do refer to New York when I refer to "home" these days.

Anyway, before I went home for my high school class' 15 year (another aribitrary period of time to mark), reunion a few weeks ago (more on that event coming), I pulled my journal from back in New Mexico. I was pretty jazzed to find some songs that I'd written when I first started playing guitar. I've been working in the studio to put a few of them down, and we got one done so far. It's the "Bleed" song below. "Small Town Kid", as you might surmise was written when I'd first moved to New York.

We also stripped some of the songs that I'd published already down. At any rate, rock on, eh? (Right click on the song titles to download for free.)


Small Town Kid
I'm just a small town kid
Tryin to make it in the big city.

I say things like fixin' to,
But I never had a pair of cowboy boots,
I hope you think this song is pretty cute,
Cuz lord knows that I surely do.

I'm just a small town kid
Tryin to make it in the big city.

I used to mow lots of lawns,
I like brunettes and blondes,
I wanna sell stocks and bonds,
But don't look for me because brother I'm already gone.

This big city.
It ain't such a big city.


Bleed
And so I come home to myself,
Knowing your silence says so much,
I see your shadows mocking me,
And I remember how we touched,

Peace be with me, time of need,
Love comes for me, watch it bleed,
Lose myself, lost myself,
I can't stand to know myself,
I'm not asking for anybody's help.

What do you do when you think of me?
What do you cry when you feel lonely?
Watch it bleed.

I feel the flames start to rise,
I know the story they will tell,
It's pointless to run, they're everywhere,
I'll just go to burn in hell,

Sovereign pity, all for me,
It's so fun to watch me bleed,
Drink myself, drank myself,
I don't want to be myself,
I now hate everybody else.

What do you do when you think of me?
What do you cry when you feel lonely?
Watch me bleed.

Think it later, plant a seed,
Inhaling you, feel me bleed,
Loved myself, hate myself,
I'd do better to just kill myself,
For I got nothing left to sell.

What do you do when you think of me?
What do you cry when you feel lonely?
Feel me bleed.

Two Cents Worth (Stripped)
What's your two cents worth?
A penny for your thoughts.
What do I see what I look at me?
Do I even want to see?
I turned my life on a dime.
A penny for your thoughts.


Whisper to Me (Stripped)
Wanting to desire wanting only you,
Reaching for the memory of remembering only you,
Visions of the sights of looking down at you,
Our two tongues cross like swords.
Whisper to me.

Suddenly you tremble anew,
And I just know that you knew,
I feel born anew, Yes, I feel born anew,

And I won't come down, I'll bring you home,
No, I don't wanna stop now, don't wanna lose control,
No, I won't stop now, as hard as stone,
As I taste your sweet sweat and touch your soul.

Now I hear your breath, as I feel you plea,
Crystal visions of your essence in front of me,
Devoted emotions, bring out what we feel,
Our two hands grip reality.
Whisper to me.

You can check out my previously released music video for "Whisper to Me", now on YouTube, by clicking on the graphic below.




PS. I don't really know what to say about that FT column. It's really, well, neat. The real kicker is being called a "part-time rock star"!

CW Quoted in the FT

Both bulls and bears are running scared of a recession
By JOHN AUTHERS
Published: August 19 2006

When dashing young technology hedge-fund managers decide to sell everything and go into cash, you can tell that fear is stalking the market. That is exactly what Cody Willard - who combines hedge-fund managing with blogging, appearing on CNBC business television, writing columns for a number of outlets including the Financial Times' US edition, and part-time work as a rock star - did back in May.

Formerly an ebullient bull, Mr Willard decided on May 10 to sell all of his considerable range of tech stocks except for small positions in Microsoft, Google and Apple Computer, and started to opine in his blog on the attractions of cash.

The call made him very unpopular, as a number of aggrieved responses to his blog made clear. But it turned out to be inspired. Mr Willard, who makes his CNBC appearances wearing a black leather jacket, is one of the more colourful and likeable figures on Wall Street today. But the market suggests his actions were copied by many others.....



Click here to read the full article.

Cody on RM: The Long-Term Bull of Free-Flowing Information

The Long-Term Bull of Free-Flowing Information
08/17/2006 2:35 PM

We all focus on the Googles and Texas Instruments of the world when we talk about the information revolution, but there are implications are much, much bigger than just whether or not Google wins the next MySpace or AOL advertisement delivery bid or not. I argue that the incredible revolution of free-flowing information (and capital, which I will address again in an upcoming post) is the very reason that China, India and the rest of the developing world will become so economically viable.

Want a bullish counter to the endless drone of "we are doomed eventually from our twin deficits, profligate Fed, etc."? There you have it. I sure won't argue that we're going to enter some period of Utopian peace. But just as the magnitude of today's global issues has changed -- we've gone from discussing war deaths in tens of millions to tens of thousands -- so too does our ever more informationally and economically connected globe drive other remarkably bullish changes.

A story on the front page of today's Wall Street Journal underscored this revolution, perhaps without even meaning to:

Why Ping-Pong Star Had to Spend a Week In a Cucumber Patch
Rowdy Chinese Player Got A Taste of the Simple Life; Shades of Mao Zedong
By SHAI OSTER

For many, talk of the Cultural Revolution remains taboo. The Communist Party officially condemned the episode in 1981, but fears too much discussion today about its role could damage its reputation. Schools don't teach about how Mao and other party leaders exhorted hordes of youthful "Red Guards" to destroy temples, harass intellectuals and, often, denounce their parents.

See, the state-sanctioned information flow that is taught in the state-sanctioned schools in China still tries to deny the truth. And while China does actively try to stem access to information by blocking certain Web sites and search terms, they certainly can't block it all in this day and age. And the Communists (or any other politicians) who try to continue to lie about reality will fail to convince anyone.

Another item in the Journal reinforces my thesis:

An Entrepreneur Has Quixotic Goal Of Wiring Rwanda
Greg Wyler's Internet Outfit Offers High-Tech Service In War-Ravaged Country
'A Booming Metropolis!'
By CHRISTOPHER RHOADS

MOUNT KARISIMBI, Rwanda -- Greg Wyler, an American tech entrepreneur, dreams of bringing the Internet to this troubled country. There are a few hurdles. One is a battered communications tower atop this 14,787-foot volcanic peak. The air is too thin for helicopters to transport the several tons of equipment needed for repairs. Instead, it has to go by hand.

In April I wrote in the Financial Times exactly about how burgeoning access to telephones and the Internet is by far the most important development for Rwanda and other places of horror in Africa. Forget "aid" -- the best way to help these places is to invest in them. And the gains will be huge as the ramifications of networking, communicating and free-flowing information forever alter the balance of power in these places.

My near term caution notwithstanding, one of the most important tenets of my being so bullish on the markets, the economy and especially society over the next few years is the free flow of information and the impact it will have on all facets of society. The masses -- all of us -- have always been subjected to compromised, biased information flow. In this country, the information flow has mostly been controlled by massive media titans who focus on the very politicians, issues and events that they have vested interests in. In too many countries, the information flow has been controlled by corrupt, oppressive governments.

As the old saying goes, "Freedom of the press belongs to those who own the printing press." And as I've written before, for the first time in history, the printing press is free. Whether we're talking about blogs, which have completely eviscerated the need for any capital to publish information, or podcasts or YouTube, the results are the same: Information flow is no longer controlled by anyone but the content creator.

And while each and every one of us will always have innate biases in our writing and therefore compromise the "truth," there's no arguing that having no filter between writer and reader is infinitely better than the many layers which in the past always had to approve any information flow. That is, we get "better" information without all the filters. Moreover, having many of sources for information that provide for triangulation of the truth is always better than having few sources that can collude with and/or feed off each other.

As this information flows ever more freely and often and can be accessed by ever more people through new devices and sources, corruption, coercion and, as I wrote in that FT article, even genocide become ever more difficult to carry out. Why? Because information flow is always the enemy of evil -- evildoers try to hide and don't brag about their actions for a reason after all.

People keep asking me when I'll get aggressive in the market again. I'm working diligently on finding some of the best-positioned companies to drive this revolution in the developing world. Motorola is on top of my list for its WiMax and cheap handset businesses. There are many more, and I would welcome any ideas from readers via either email or on our own revolutionary town hall Comments board.

At the time of publication, the firm in which Willard is a partner was long Google, though positions can change at any time and without notice.

Cody on RM: Similar Setups, but Yes, It's Different

Similar Setups, but Yes, It's Different
08/16/2006 2:33 PM

Where's that playbook from last summer? It's pretty much the same one I used the summer before that. And isn't this current setup awfully similar to the one we had when I used those playbooks? So, as many an emailer has been asking me lately, what's the diff, man?

Good question, and perhaps the difference is only in me, not the market or the economic setup.

I don't know if you remember the pain that the market doled out to the tech bulls in the summer of '04, but I sure do. My approach at the time had been to trim into strength and buy into weakness. As the market took off at the beginning of the year, most of my stocks exploded higher, and I had double and triples in some of my biggest positions before January was even over. I sold down a ton of stock and hedged aggressively to try to protect those gains.

Into spring, most of my favorite stocks at the time, which included Tellabs, Apple, JDSU and F5 among others, were getting pummeled on concerns about inventory levels and the strength of the consumer. As the stocks came down 20% and 30% in a straight line, I started buying many of them back, only to watch them go lower -- and my gains on the year start to evaporate.

By late spring, I had bought back a good bit of my positions and taken off almost all of my hedges, as I was confident that the economic "soft patch" was, indeed, only a soft patch, and I wanted to be long and strong when the rebound came. I have written before about persevering through the day when Nortel announced that all of its numbers were wrong and perhaps fraudulent. That day crushed me and took away almost all of my gains on the year, as anything telecom or tech related was smashed in the selling frenzy that ensued.

I held on through the summer and continued to buy on weakness and build up my positions. By the time the market bottomed that summer, I was in a horrible drawdown (some might call it a hole). As the Nortel problems faded from memory and the tech inventory concerns proved to be only a temporary wrinkle, tech stocks went on a tear, and I was positioned to catch a big move to the upside.

Burn me once, right? Well, heading into spring last year, tech was trading ugly, as tech inventory concerns were once again front and center of the market's mind. Tech was sold down, and I'd been too long and was in another drawdown by the time the dog days of summer settled the market into a gentle malaise. I saw the setup as binary, and again my analysis told me to stick it out because the economy was strong and the inventory concerns would again work out fine, despite many permabears being certain at the time they'd roil the industry in the second half of the year. The market took off and killed the shorts, while rewarding the bulls.

Here we are in 2006 and what's the setup? Well, once again, there's concern about tech inventories (along with the standard ol' lines of "consumer is dead," "twin deficits are going to collapse our economy," etc.) and the Nasdaq has been crushed from its spring highs. Perhaps those inventory concerns will work just fine again. But I have to say that housing's downturn is no longer "looming" as it was in 2004 and 2005. And oil and energy have been awfully high for how long? And we had a blow-off top in commodities. And the market's been crushing every cyclical without pause for months on end. And rates have gone from pretty much "please take this money" to "it'll cost you if you want this money."

I went almost entirely to cash before this crash in the semiconductors and other techs that I usually love to be long. And let's keep it real -- that is a factor in the risk/reward analysis I must do when trying to decide how long, short or underinvested I should be.

So, yeah, I agree that there are lots of similarities between the setup in tech (and the economy and the broader markets) to each of the last two years. But there's a lot that's different, too. And I'm going to stay patient. The binary outcomes of tech spiking back because the fundamentals work out great or tech tanking because the inventory problems really get bad aren't something I want to make a big directional bet on right now.

It is what it is, and that's my stance -- at least until my analysis changes because I will strive to be flexible and disciplined above all else.

Seeking Best Steak Frites or Bar Steak in NYC, or, Three Sexy Italian Ladies and a Bottle of Pelegrino

When I first moved to NYC, I wanted to break out and try anything and everything, which of course included food. I mostly lived on pasta, tuna and vegetables for dinner most nights, as there certainly wasn't any money to spare for nights out at nice restaurants.

But anytime I did go out, I'd always order something that I'd never tried before -- swordfish, octopus, seared tuna, whatever the specialty of the house was. Most of the time, I liked whatever was served just fine. But then one time after a year or so in the city, I was at a steak house and I was like, "Hmm, I'm gonna have me a steak and potatoes meal for dinner like my ol granpa always did."

We were at Peter Luger's and I ordered steak with everybody else at the table. And, oh, man it was a great steak. Crisped on the outside and a pink that converged in the center where you could to a razor-thin deep red stripe. By the time I finished savoring my first bite, I was trying to remember exactly why I'd ever ventured from my love of beef.

And while I eat out most nights a week these days, I rarely venture out and try something new anymore. I usually just order some sort of beef dish.

So I was at Les Halles with Doug Kass and coincidentally I'd been there a few weeks before with James Altucher who had rightly ordered the chef's specialty, steak frites, and then raved about it for days after. I didn't hesitate and ordered the steak frites, medium, and oh, man it was good. Darn nearly a perfect steak, sliced not-to-thinly and just singed on the outside and not to juicy on the inside. I give it a full W+, the brand my great-, grand- and father have used to mark our own bulls.

The next night I was at Lucky Strike and I ordered the Bar Steak with french fries from a pretty short-haired waitress that I'm not sure but either really liked me or couldn't wait for me to leave. It was dry and just a bit too flavorless as the quality of the beef itself (rather than the cut) wasn't of great quality. I give it a V, which is more than a /, both of which are less than a W, which is less than the perfect score of a W+. Follow all of that? I know any editor I've ever had would throw that line out in a heartbeat, which makes so thankful for the ability to have a free printing press of this blog so that I can write in what's my own voice -- sometimes restrained or not -- on my own terms. Viva la revolucion. But I digress.

On Sunday night I'm out to dinner at Barolo with a friend whom I met from having exchanged emails about stuff on this blog. I had the steak frites again. I love Barolo, but the steak frites there needs something to jazz it up. Maybe the waiter was supposed to tell me that I should have a side or something, but he didn't and the steak experience was especially lacking without it. A V.

Today for lunch I ate at Balthazar with an analyst from Goldman. I ordered, yes, the steak frites. And it was undercooked, especially for a lunch meal, and I didn't like the garlicy butter that they put on top. Another V.

If I know anything about the phase cycles I tend to go through in my own idiosyncratic ways, I figure that I'll be ordering steak frites or bar steak at just about every place I go for the next few weeks or months. I also figure it's going to be awfully tough to top Les Halles (ever see that guy's show on the Food Network? It's really good.)

Okay, I'm just home from a very long day and then a dinner out (steakless though it might be) with a buddy from Google, a media consultant from McKinsey and a distressed bond broker...and wrapped up with a bottle of Pelligrino (yes, water, it was late and it's Tuesday for crying out loud) with three sexy Italian ladies who might or might not have been pretending to not really speak much English.

The quest continues.

Flip It: Are We Too Nice? Is That Even Possible?

Okay, I'm back. It's been a wild, hectic summer full of excitement, exhaustion, joys and heartbreaks. Since the summer hit, I have been simply dizzied by all the changes in my life. I opened a new office in Soho. After years of being aggressively in the market, I went to cash. Went through another painful ending to a relationship (is there ever really another kind of ending to a relationship?). Took my first vacation (and day off of the market of just about any kind for that matter) in three and a half years. I moved to a new apartment, also in Soho, about a five minute walk to my office.

Speaking of which, I no longer have a doorman and on Saturday when I was about to have my new king-size bed delivered, I sauntered across the street to Belladora to buy a set of sheets. Oh yeah, a pretty woman, Carly, who referenced a boyfriend at one point (sigh -- James you can't stop the sighs! as Neil Young would say, "Though my problems are meaningless, that don't make them go away") patiently answered all of my questions about sheets (who knew you could actually think of any questions to ask about sheets -- I mean, 300 or 400 threadcount yada yada, whatever...until you're buying 'em.)

So anyway, I drop nearly as much on sheets, down comforter (is Hungarian good down, as it seems to be marketed?), whatever you call that thing that covers the comforter (duvee? Is that right?) as I spent on the bed and mattress and I wonder outloud about what an appropriate ratio one should spend on each relative to the other. I jog back across the brick street to my apartment building's entrance. I set one of the bags down and reach into my pocket. Now I used to always keep my keys in my left pocket and my wallet in my right one -- I strategized about the most ergonomic place to put them and somehow at some point decided that was the best set up. But then I lost my keys to my apartment at the place I had moved to many months ago; I'd not locked my door there aside from setting the alarm (hey, I lived in Harlem for a year and never spent the money on putting a bolt lock in the gaping hole in my door and lived to tell about it without ever getting burgled) except when I go out of town and then I lock the door and have to break in by going over the sundeck onto my deck to break in where the window is unlocked. So I lost the habit of my hands always knowing which pocket my keys are in and I wasn't too upset when my left hand came up empty on its first dig.

But when I reached into the second pocket and came up empty-handed, then I got to realizing that I'd left my keys in my shorts that I'd changed out of before going into the nice sheet store. Hey, no prob, right? At least, that's what I was thinking as I scanned the wall and scoped out my course. I set my bags down and jump onto the railing around the storm door entrance to the basement. As I throw my weight forward and grab part of the face of the limestone facade, I kick foward and am on the wall. A quick push up and I'm hanging from an iron bar that's bolted into the facade and the final floor of the fire escsape. Said iron bar sure is rusty, I notice as the bar starts bending from my weight. I can see the scene straight out of a bad Stallone movie, picturing the nuts holding the bar popping and dropping me onto the pavement or the railing a good few feet below me. I scramble back to the wall and let myself down, adrenaline pumping. I call my new landlord who of course isn't going to be in town on a beautiful summer Saturday and leave a message for her. I call my friend, Carly (yes, there's more than one Carly in this town) who's a badass at a meatpacking-based fashion house and with whom I'd worked on some songs with the night before. She is in Brooklyn chilling with The Beast, a fashion badass in her own sense as what must be the world's youngest fashion editor ever or something and they just ordered pizza so come on out.

The mattress delivery comes and I have to reschedule for the next day and I drop my bags full of my sheets off at the record label's office down the hallway from my office (what a strange sentence "I drop my bags full of my sheets off at the record label's office down the hallway from my office"....oh, and see, I had my wallet to buzz me in to the building, but no keys to my office itself obviously) and I head out to Williamsburg where I usually try to convince myself that I'm cool enough to realize that trying that hard to be cool ain't cool.

I accidentally upset the cabbie when I complain that he turned left instead of right, when he could only make a left, so I hop out and give him the change. Down a side street off Broadway in Brooklyn and I'm in a rather rough drug store buying a bottle of Chianti from Italy and trying to speak Spanish to the nice Puerto Rican lady behind the counter. I ask if they sell gum and she says no, but asks her co-worker who's leaving to give me some gum and she searches in her purse and hands me a fresh piece. People really are so nice, you know?

So I head over to The Beast's and toast 2006 (I've toasted this year every toast this year and I'm not gonna stop now) and eventually Carly and I catch a cab back to the city and she lets me crash on her couch. That's a nice friend to have, you know? After brunch mid-morning Sunday, I walk to the real estate office which acted as broker for my landlady hoping they'll have keys. They're closed.

In an epiphany, I cross the street to Belladora and ask Carly -- the Belladora Carly -- if she's got a really tall ladder. She thinks she does, but after searching the basement and the closets upstairs, she comes up empty-handed. How nice that she tried so hard to help, right? She sends me over to Capellini, an Italian furniture store next door, and the nice guy there fetches a ladder from their basement. Niceness, anybody? I take the ladder across the street and climb up to the fire escape. I get it pulled halfway down when I see that I need to unhook a chain that keeps the fire escape from going to the ground. My bud at Capellini lends me a broom handle, I get the chain unhooked and am in. Except I need someone to hold the fire escape as I start to climb it from the ladder, so I ask a nicely dressed middle-aged couple walking by for help and they nicely help out, and even offer to hold it while I climb the whole way up. I tell 'em I'm cool but thanks so much (people are SO nice!) climb up to the third floor where I pull open the unlocked window that I'd been looking out while waiting for the mattress guys the day before.

As I carry the ladder and broom handle back across the street, with my keys fully in my pocket and plenty of plans of giving copies of my keys to friends now that I have no doorman/deck in my mind, I'm pondering how nice everybody was to me when a thought strikes me: Do I need to flip it? Are we too nice? I mean, aside from Carly who is from Kansas, whom I met at UNM, who worked for Senator Domenici with the daughter of orthopedic surgeon who reconstructed my ankle twice in Ruidoso and casted me up countless other times, and I've been friends with here in NYC for the last few years -- and her fellow Wichita-an Ashly (The Beast), none of these incredibly nice people who helped me break into my apartment knew me from Adam. Nobody thought twice about helping this jeans- work/camping T-shirt-clad long-haired white guy get into an apartment in Soho that might or might not have been my own for all they knew.

People really are so nice. But is that always a good thing?

A Cody News Spot: August 10, 2006

Democrats Abandon Lieberman, Back Lamont
"I'm going forward because I am fed up with all the partisanship in Washington that stops us from getting anything done." -- Sen. Joe Lieberman, on his decision to run as an independent after being beaten by Ned Lamont in Connecticut's Democratic primary

You know, the fact is, he's right in that we all should be fed up with the partisanship in Washington that does stop us from getting anything done. But how incredibly insulting that an entrenched, soldout crony like our Mr. Lieberman, who is the problem -- i.e. he is a life long Democrat politician -- thinks that just because his crony-ized party voted him out in his party's so called democracy now thinks he can become part of the solution. He's can’t; he has been and always will be part of the problem. Down with the two party system.

Cody on RM: Microsoft Remains a Tech Safe Haven

Microsoft Remains a Tech Safe Haven
08/09/2006 4:50 PM

Good times are comin', I hear it everywhere I go.
Good times are comin', but they sure comin' slow.
I'm a vampire, babe. -- Neal Young

That was a classic fade. And that fade drives a stake into the heart of the bulls, who refuse to succumb.

There are so many broken stocks, broken charts and broken dreams out there that I want to start getting bullish. But I also feel like a broken record by saying that I prefer cash and Microsoft to fighting these ugly spirits who own this market right now.

Rev Shark taught me long ago to look at the speculative stocks as good tells for the direction of the broader markets, especially the Nasdaq. It's a great "Flip it™," in that conventional wisdom always tells us that we should be bearish when speculation runs amok while in reality those speculative stocks often foretell a spreading of the speculation.

What do those speculative issues say right now? Well, most reversed ugly, ugly, ugly from the open, and ended up down, blood red on the day. And the bulls don't want to see Transmeta down 10%, ON Semiconductor down 6%, Brightpoint down 10% -- on a day when the Nasdaq was up 2% midday. And speaking of a 2% reversal in the Nasdaq -- that's a "dislocation" with a capital D.

Finally, after noting that Microsoft has been hitting new recent highs this morning, I had us put together a chart put of its relative performance since I went almost entirely into cash and Mister Softee back on May 10. It speaks volumes:

Microsoft Taking the Tech High Road

Click here for larger image. Source: StockCharts.com, CL Willard Capital

Put simply, I think Microsoft remains the "safe" tech stock, though I sure expect to meet demons, devils and other boogeymen along the way.

Cody on RM: Stay Patient With the Market and Players

Stay Patient With the Market and Players
08/08/2006 11:17 AM

I'm gonna pass me a brand new resolution, I'm gonna fight me a one man revolution, someway,
Gonna start my rebellion today. But here come the people in grey,
To take me away. -- The Kinks

In the last 24 hours, I've received dozens of impassioned pleas in my inbox on top of scores of blog Comments and prior emails, all of which say something like this: "Make some paper trades so you have some trades to write about."

"Just make up a trade, if nothing else."
"I thought you were a money manager, not a poser wannabe."
"If you really think X, then you should be short Y. Players play, man, and writers write."

As James Altucher asked me this morning when I shared some of this with him: Why are people so upset that I went to cash?!

It doesn't make sense -- and is a real disservice to all readers -- for me to just pretend that I'm excited about a trading idea when I'm not, or even worse for me to just make stuff up. The ol' transparent manipulation ploy ("A real trader would do it") doesn't work, either. I think that worked on me when I was five. It doesn't work on me at 33. Seriously.

I think I've made it clear that I'm going to approach this market on my terms and my terms only, and all the chastising, pleading, anger and whatever else you send my way won't change that one iota. So enough already. I'm doing the best I can and writing about what my best is. And sometimes my best will be dead wrong, of course. But my best is all I can really do in the end.

The markets are flatlining slightly in the green as we approach the Fed announcement. Gun to head, I figure we rally more into the announcement and then we'll have to see what's said and done from there. Until then, I'm just going to have to tell you, I'm being patient. And I am.

Cody on RM: Cycling Through Cyclical Trade Ideas

Cycling Through Cyclical Trade Ideas
08/08/2006 9:44 AM

The Fed and oil. The Fed and oil. Throw in a little housing weakness and some geopolitical bad news and you've about got this week's headlines, nay, obsessions, in a nutshell. The economy's weakened -- or so everyone tells us, after the market started telling us that months ago. Perhaps there's some arbitrage in what's been priced in disparate cyclical sectors as the headlines and the markets converge.

The bad news is that those headlines are indeed bad news. The good news is that at some point (perhaps right now?), when those headlines truly become obsessions of Wall Street, they'll already be more than priced in. That's one of the biggest problems with the bear thesis: The shocking decline in such stocks as the semis, specifically Intel and Broadcom, has already priced in a lot of bad news. Of course, those stocks that Wall Street considers for some strange reason more purely "cyclical" than semis, such as Caterpillar and Phelps Dodge, haven't come down nearly as much.

That huge gap of relative outperformance in the traditional cyclicals vs. the more volatile tech cyclicals probably has to close somehow. And that likely means that either the semi's are screaming buys or the old world cyclicals are screaming shorts. Perhaps there's a sweet paired trade to be made by going long the tech cyclicals and short the traditional cyclicals. Of course, if the economy sputters and the sell through in the semi's really falls off, those stocks would have a lot more downside to them -- probably even more than the downside in the traditional cyclicals in such a scenario.

I keep working on ideas like this, but I keep ending up deciding that the risk/reward isn't compelling enough just yet. Thus, more patience is required.

Cody in FT: Inside curve: Cable could win the battle but lose the war

My investing is based on a central thesis about the “content revolution” – the inexorable process by which the distribution of content, such as songs, books or films, is being taken from traditional distributors and democratised through online technology.

Not everyone in the content business will be a winner, but owning and distributing content that people find entertaining has been a great business. Even the companies that lose out because of the revolution are not doomed to death, writes Cody Willard. | Read

Cody on RM: On My Mind: Fed and Freedom

On My Mind: Fed and Freedom
08/04/2006 4:02 PM EDT

Today's market was nasty enough to shake up a lot of the bulls that had just started to find some confidence during the stealthiest 5% S&P 500 rally in the last few years. Tough market, indeed.

Here's what's on my mind as we head into the weekend:

Why do the shorts love the cyclicals so much if they hate the economy so much?

Is it time to buy the cyclicals and sell the defensives?

How different would the setup be right now if it were Alan Greenspan instead of Ben Bernanke who will sign off on the next Fed announcement?

Why did Microsoft choose to do this stupid buyback instead of just starting a 5% dividend?

Should we just assume that every single company implicated in the options irregularity scandal is guilty? (Probably.)

Are most of these companies really going to get away with sneaking around behind the backs of their shareholders and our government, as seems to be the consensus?

Does this consensus really think the IRS is simply going to say, "Hey, thanks for writing us this check, after you got busted for lying to us, have a great life"?

If eBay, Google and the rest of these lobby-happy Internet companies who want the government to legislate the status quo are really concerned about the "end-user/consumer," then why don't they all just form a standards body and agree never to pay the pipe owners for premium access to the "end-user/consumer"?

Are they worried that the pipe owners and the companies that would pay them would create a better experience than can be created on the current platform?

Shouldn't we want better experiences? Isn't that the whole point of innovation?

Once we open that legislated can of worms, how will it effect peer-to-peer networks, which I think will be a much bigger driver of innovation than the telcos and cablecos that have the right to build their own style of networks ever could be?

Freedom is what it is, and no matter how these companies try to frame their crying to the government, asking for intervention and legislation, they're trying to strip one of our freedoms, the one to choose to pay for a different type of connection. (This one's not a question.)

Might the very fact that these Internet companies are fighting against their own ability to innovate and therefore generate profits be what's behind the endless declines in their stock prices? "Flip it™," eh?

And with that, I'm heading out to watch the Goo Goo Dolls and Counting Crows tonight. Thanks for reading and have a great weekend.

Cody on RM: Indices Hide Some Horrendous Action

Indices Hide Some Horrendous Action
08/01/2006 1:42 PM EDT

One of the more fascinating aspects of the market during the last couple months has been how the major indices have hidden the meltdown that many sectors and geographies have experienced. Heck, as Doug Kass has been reminding people, the S&P 500 has been up six out of the seven months we've had in 2006.

I wanted to parse this phenomenon further, so we pulled a bunch of data (from May 10 through yesterday's close) on a bunch of disparate S&P 500 Spiders:

Sector/Change
Materials/-7.66%
Industrials/-6.88%
Consumer Discretionary/-3.50%
Technology/-4.97%
Financials/1.07%
Energy/2.43%
Consumer Staples/5.73%
Health Care/8.36%
Utilities/10.43%

Say what? I know there are sectors that are down much worse than those data reveal. A little further digging reveals the performance of market subsectors, as broken down by the disparate DJ U.S. indices:

DJ Index/Change

BEST
DJ US Tobacco/10.28%
DJ US Autos/9.88%
DJ US Fixed-Line Telecom/9.67%
DJ US Pipelines/7.65%
DJ US Soft Drink/4.77%
DJ US Electricity/6.66%
DJ US Gas Distr/6.57%
DJ US Utilities/6.31%
DJ US Beverages/4.34%
DJ US Real Estate Investment Trusts/3.09%

WORST
DJ US Recreational Products/-16.70%
DJ US Telecommunications Equipment/-18.02%
DJ US Building Materials & Fixtures/-20.02%
DJ US Industrial Suppliers/-21.49%
DJ US Mining/-22.36%
DJ US Business Training and Employment Agencies/-24.29%
DJ US Home Construction/-24.79%
DJ US Tires/-25.15%
DJ US Coal/-27.68%
DJ US Platinum & Precious Metals/-36.39%

And that's where things got really interesting. Starting with the winners, how about those autos being the highest outperformers? Street Insight's Doug Kass long ago called for GM's relative outperformance in one of his surprises lists, and back in early May, I commented that all the negativity in the sector made me want to buy the autos. But seeing autos on top of the list of outperformers just about made me fall out of my chair. Pipelines? Oil's hung tough, so seeing the pipelines up isn't a surprise. And defensive sectors like tobacco, soft drinks and even telecom service providers are also understandable because they tend to outperform in times of economic downturns.

And then we get to the juice, man. How about those precious metals! Again, I was flabbergasted to see a sector down nearly 40% like that -- and don't forget that one of the primary catalysts for my going to cash back in early May was the parabolic action in the precious metals. Sure wish I'd shorted some.

Coal, tires, employment agencies, mining, industrial suppliers, building materials -- oh my! Talk about cyclicals. You know my thoughts on the cyclicals and how everyone keeps telling us about how they're so "cheap."

The major indices are hiding what's been some horrendous action in these markets. It's obvious that many bulls are reeling because they've had exposure to many of these sectors that have been crushed. And as I've repeatedly noted (try that link on "cheap," for example), there are so many bears who keep buying into the "cheap" cyclical concept that many of them have been crushed and/or they haven't coined much money during this downturn.

That's why people have been so negative about these markets, despite the relative calm in the major indices.