The Daily Reckoning
Weekend Edition
April 2-3, 2005
Baltimore, Maryland
By Addison Wiggin and Tom Dyson
MARKET REVIEW: A DATE WITH THE DMV
We have just spent 30 minutes on hold in the Maryland DMV's
telephone system. Dealings with the DMV are always trying
on the patience, and this phone call was no different. Rage
was beginning to stir...
Six months ago we spent 90 minutes in a queue up in
Towson's DMV office. We'd gone there to score a Maryland
I.D. card. Without an I.D. or a driver's license, we'd been
using our passport as a proof of age in the bars and
nightclubs, and for obvious reasons, this was an
unsatisfactory arrangement. We'd had to beg a colleague to
go out of his way and give us a ride there, telling him we
wouldn't go out drinking with him any more if he declined
to take us. He took us. The drive took 45 minutes.
We brought all the paperwork we could find. Three proofs of
residence, two photo IDs, money, bank statement and a lease
agreement. But when we finally got to the service window,
the lady told us that, as a non-U.S. citizen, we should
have made an appointment first and she couldn't help us.
"Bloody Hell," we thought to ourselves. "You stupid, rigid,
trained monkey. Damn, damn, damn you and your two inch gem-
encrusted finger nails."
We knew it would happen. It always does. These people are
totally incapable of thought, let alone informed decision-
making. They can only think in rigid channels determined by
their training, a bit like a computer. No exceptions. We
hate the DMV and its employees.
We smiled. "Oh, isn't that a shame. I just drove forty-five
minutes to get here and I just waited in line for another
ninety. Besides, I have a Green Card. I'm a resident."
"Are you a U.S. citizen, sir?"
"No."
"Well then I can't help you. Would you like me to make an
appointment for you, sir?"
"No thanks." (Translation: Eat my paperwork, you cow!)
Now we're trying something even more ambitious. We're
trying to score a Maryland driver's license. We approach it
like a war. A struggle against the government.
Addison Wiggin says the U.S. government invented
bureaucracy. "They are the red tape world champions," he
always reminds us. "You should record how long it takes
you."
For a foreigner, the process is slightly different. First,
you have to attend a three-hour drug and alcohol awareness
class followed by a quiz. If you pass, you get a
certificate.
Then, you take your certificate, with two forms of photo ID
and two proofs of address, your home country driver's
license, your green card and your social security number to
the DMV.
Piece of cake...
We found the drug and alcohol course material on the
Internet, available for free. We'd still have to show up to
a test center in person to take the quiz and receive our
certificate, but rather than sit in a classroom for three
hours, we figured we could do the learning much faster online
and then smash the quiz in 10 minutes.
What percent of homicides take place while the aggressor is
under the influence of alcohol?
a. 50% to 60%
b. 75% to 90%
The drug that produces the most violence is:
a. heroine
b. cocaine
c. phencyclidine
d. alcohol
Habitual alcohol dependency causes brain damage that
eventually becomes irreversible.
a. true
b. false
Your emotional state of mind, such as fear, anger, stress
and fatigue can influence the conditions of the stomach and
the bowel, usually speeding the process of alcohol
absorption.
a. true
b. false
We were right. This was much faster. We flicked through all
five modules in 40 minutes, and the questions at the end of
each one.
Which of the following actions allow people to sober up?
a. taking a cold shower
b. letting time pass
c. drinking strong coffee
d. all of the above
Long-term effects of marijuana can cause damage to each of
the major organ systems in the body.
a. true
b. false
The use of amphetamines can:
a. Cause confusion
b. Cause inability to concentrate
c. Cause blurred vision
d. All the above
The main ingredient in marijuana is:
a. PCP
b. THC
c. MDA
Crack is an especially dangerous drug because it can:
a. Induce fever, headaches, and low blood pressure
b. Cause intense dependency and addiction after a short
period of time
c. Cause auditory, visual, time and other sensory
disturbances
When alcohol and marijuana are used together:
a. They are more hazardous than using either substance
alone.
b. They are less hazardous; they balance each other out.
c. It makes no difference if they are used alone or
together.
Now we were ready for the test. Colleague Lisa Surino took
us to a hotel out in the suburbs, and we made our way to
the ballroom. All the other attendees had broken the law in
some way...we could hear them bragging to each other: DUIs,
points on their licenses, speeding tickets, that sort of
thing.
We completed the test in 3 minutes-flat as the questions
were identical to the ones above from the prep material.
We were the first person to finish our test and we took the
answers to the invigilator. He quickly marked the
paper...and horror of horrors, we got one question wrong:
Driving in Maryland is a:
a. right
b. privilege
We knew the answer of course, we'd just ticked the wrong
box.
"You passed. Take this form to the lady in the black
shirt."
We approached the lady in the black shirt. She was just
putting the finishing touches to my certificate.
"How did you know I was going to pass?" We asked her.
"We hoped you'd pass..." And she put her hand out. "That'll
be $35 please."
Tom Dyson,
The Daily Reckoning
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------------------------
THIS WEEK in THE DAILY RECKONING: Another fine selection of
essays for you this week. My pick is Doug Casey's...
VANDALS OF THE INTERNET 04/01/05
By Bill Bonner
"
It seems as though media is taking over the world. But how
far does a barrage of headlines get us? We've seen what
became of the New Era. Whither, then, the Information Age?"
http://dailyreckoning.com/Issues/2005/DR040105.html
A SPECTACULAR BUBBLE 03/31/05
By Doug Casey
"
Most Americans would be wary of visiting, or investing in
any property that is located in the Middle East, no matter
how beautiful and prosperous the area. Doug Casey tells us
the location of this paradise should not be a drawback..."
http://dailyreckoning.com/Issues/2005/DR033105.html
DIVORCE AMERICAN STYLE 03/30/05
By Scott Burns and Laurence Kotlikoff
"
Marriage is not an easy undertaking...but that's not
stopping Americans from trying (and failing miserably). In
their book, The Coming Generational Storm, Scott Burns and
Laurence Kotlikoff examine just how difficult marriage
is..."
http://dailyreckoning.com/Issues/2005/DR033005.html
STRUCTURAL DRAGS 03/29/05
By Kurt Richebächer
"
Many economists are still convinced of the United States'
economic strength...but the Good Doctor shows us that the
U.S economy's famous resilience is due to clever statistics
and monetary looseness..."
http://dailyreckoning.com/Issues/2005/DR032905.html
ODIOUS MARKET_MANIPULATING REMEDIES 03/28/2005
By The Mogambo Guru
"
The conspiracy theory the Mogambo has about evil people
destroying the world with inflation, is true. We know, it's
hard to believe anyone who screams these theories late at
night from his roof, wearing only his underwear and a
cape..."
http://dailyreckoning.com/Issues/2005/DR032805.html
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------------------------
HEADLINE, NEWS And INSIGHT: Did you know about the ship
that blew up in Texas City harbor, in 1947? It caused a 15-
foot tidal wave and took two airplanes out of the
sky...details in Dan Denning's article immediately below...
SMOULDERING MORTGAGE MARKET
By Dan Denning
"
Freddie Mac reported a 42% drop in 2004 profits. Freddie
managed to lose $4.5 billion on its derivatives portfolio
alone, the one designed to protect the value of Freddie's
mortgage assets when interest rates are volatile."
http://dailyreckoning.com/Featured/SmolderingMarket.html
WILL THE BOOM CONTINUE?
By Doug Casey
"
Dubai has truly let the cat out of the bag. There's no
doubt in my mind that in coming years, other Dubai look-a-
likes will spring up. For most countries, it's either that,
or plan on becoming a petting zoo for those who do."
http://dailyreckoning.com/Featured/WilltheBoomContinue.html
LETHAL BUMBLERS
By Bill Bonner
"
Later, Mr. McNamara left the defense department for the
World Bank. The world improver turned from meddling in
military affairs to meddling in financial ones, with
similarly disastrous, but much less deadly, results."
http://dailyreckoning.com/Featured/LethalBumblers.html
------------------------
FLOTSAM AND JETSAM: We stole Kevin Kerr's weekly summary to
his RTA subscribers...and published it here for you!
Dear RTA Member,
Well, well. We were right about the buildup in crude oil
supplies. Now what? Simple: We make money. Seems easy,
right? For those of you who have been with Resource Trade
Alert since I became the editor last year, we have now had
17 winning trades in a row, and it will soon be 18 if our
crude options continue to move higher. They closed
yesterday at $1.48, and we paid only $1.08 just a few
trading days ago. Not bad!
While I am very proud of the 17 (or soon 18) winning trades
in a row, I never look at it in those terms, and neither
should you. Look at things one trade at a time. For
example, when I traded E-mini S&P futures a while back, I
would make over 150 transactions a day, with the majority
losing money. However, I would hold the winners longer, and
not only did it make up the difference, but I would even
come out profitable, albeit emotionally drained, at the end
of the day.
So putting it in those terms, we are way, way ahead of the
pack. For those of you who have just joined us and added
the August $48 puts in crude oil, welcome. If this is your
first trade, then I hope it's the start of the next 17 in a
row - but that's the exception, not the norm.
We have three open positions, one of which was added to the
portfolio before I joined RTA. These three trades were
recommended with great potential, but into every portfolio,
a little rain must fall.
OMI Corp. (OMM: NYSE) is an excellent shipping company, and
my outlook for its shares is very bullish. We have held
these options through thick and thin, and now time has
essentially run out. The problem is not that OMI is a bad
company. The problem is that the Dow overall has been weak,
and this is pulling down shares in all sectors. Remember,
options are funny animals - not only do they require us to
be right about the general direction of the stock, but we
need to be right within a certain time as well. As time
value erodes, so does our option.
When we entered the option, on Dec. 10, 2004, we paid
around $1.70. We are destined to recoup a little equity if
the stock comes back a little in the next few days. I will
be sending you another alert by Friday directing you what
to do if you own these options.
No big deal. We can take the recovered equity and move onto
something potentially more profitable. At the same time,
those of you who bought the May corn options as part of a
spread are still long the May $2.50 calls, which have been
struggling to come back. No sense in keeping the calls and
letting them erode away completely. We made good profits on
the first half of the spread, so taking the remaining
equity -- if there is any -- off the table is just smart
trading. I will include instructions for those calls in the
alert on Friday as well.
Please note: Many of you only have one of these positions,
some have both and newer subscribers don't have either. If
you have any questions, ask your financial professional to
see if you have these trades in your account, so you don't
accidentally execute an offsetting position. Again, I will
give you all the details Friday. Until then, sit tight, and
we will hope OMI and the others come back a bit more.
Moving onto gold... our June gold position has really taken
it on the nose, too, but I am not ready to say goodbye just
yet. This is the type of market, especially in this
climate, that can turn on a dime. So hold the June gold
$500 calls if you have them, and we will keep a close eye
on them for you.
So much for the house cleaning. The good news about our $48
crude puts is that the inventory data this week showed
another big buildup in crude oil, and we should certainly
see further softening in the August crude. However, there
is still a lot of bullish talk out there, and that makes me
wonder whether we have a lot more downside here. We need to
see the funds come in and sell it, but we didn't really see
that yesterday. No sense being greedy for profits we made
this quickly. I am watching what happens in the Asian
markets and, of course, today's open. You may get a quick,
urgent alert from me to simply grab those incredibly quick
profits, and then we can reassess.
To new subscribers and veterans alike: I always love to
receive feedback and questions. I can't always answer
readers individually, due to the sheer number of e-mails we
get, but I try to answer questions in RTA as they come up.
Please feel free to e-mail me.
We love to hear when you entered and exited the trades and
what prices you got. In addition, if you're a new
subscriber having any trouble opening a trading account,
absolutely let us know. And if you have any criticism, send
it on. I am pretty thick skinned -- working in the trading
pits will do that. And of course, your accolades are also
welcome -- we appreciate knowing we are doing a good job.
We would love to hear from you.
I will be writing to you again on Friday, and we can take
action then. I am watching several other markets I like and
picking out the next big mover. Stay tuned!
Yours for resource profits,
Kevin S. Kerr
[Ed. Note: If you haven't yet subscribed to Kevin's
service, you can do so here:
Resource Trade Alert
http://www.agora-inc.com/reports/RTA/WRTAF308
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