Meeting Minutes

I was riveting with excitement after leaving our meeting today!  I had learned so much from everyone at the table that I may have been a bit overwhelmed by it, and the same may be said by those in attendance. I want to thank all who attended and contributed to our meeting today.  I would like to add that I feel, in great measure, honoured and privileged to know and converse among an enormously intelligent and well-informed group of individuals. 

I want to send a heartfelt thanks to Kevin Day who never fails to impart on us his wonderful market commentary and perspective, coming from his 40 years of experience in the marketplace.  I also want to thank Jeff Harrington for his genius understanding and explanation of the reality of the FED policy, which I will attempt to detail below as best as I can.  I want to thank Tommy Schultz, the group psychologist, for helping us all understand the human condition and drive to act in certain ways. Andrew Whatley, I can tell, is learning about the financial markets in bounds with every meeting he attends.  Lastly, I want to welcome Allan Derum to the Scarlet Kings and thank him for sharing his story in the auditing profession.  We had 6 attendees:  (from left to right) VJ Arjan, Tommy Schultz, Allan Derum, Jeff Harrington, Kevin Day, and Andrew Whatley.

Market Success Stories

During the first part of our meeting we mostly discussed our collective profits we’ve made investing. 

• Jeff Harrington invested in China Mobile (CHL) in 2007 and took his profits in August-September of 2008.  He made nearly 80% on his investment! 

•          Kevin Day, Jeff Harrington, and VJ Arjan all invested in Freeport-McMoRan Gold and Copper (FCX) early this year and have profited quite nicely, even though we all entered at different price levels.  Kevin Day entered at 19.90 (114% profit), Jeff Harrington entered at 29 (47% profit), and VJ Arjan entered at 24.20 (76% profit).

•          Kevin Day invested in Dow Chemical in the last few months after speaking with the CEO Andrew Liveris about the buyout of Rohm and Haas and the level of the stock price. He entered at 8 dollars (38% profit).

        VJ Arjan invested in Companhia Vale de Rio (RIO), a Brazilian mining company in January.  He entered at 11.64 (31%).

I am inviting all readers to post their investment/trading ideas every couple weeks, so that all the readers may share and profit together.  I, personally, have done much better after our meetings have commenced than before on my own; I hope this will be true for you all as well.  I doesn't have to be a very detailed report - perhaps a stock or future, a direction, and a chart or reasons why you think it will go a certain direction, etc.

The log-in for the blog is:

Username: scarletkings@gmail.com

Password: kings1215 

GM – Detroit Crime and Unemployment Rates

Allan Derum told us about the conditions in Detroit as he recently took a trip there.  The situation is, in his own words, reminiscent of Nazi Germany occupation.  Crime is rampant as workers who have been able to work as machinists at GM for generations with limited investment in their own education find themselves jobless indefinitely.  Allan narrated how sitting in a diner in Detroit he was shocked to notice several bullet holes fired into the window next to him.

Gold vs. Silver

Kevin Day explained to Andrew Whatley and VJ Arjan that noticing the volatility in gold has made him a little bearish on gold in favour of silver.  He thinks that silver, which has historically kept a multiple of 35 below gold, is ready to pop as the multiple is currently at 70.  As a result, he recently bought into Hecla Mines, which took a lot of courage on his part as it has fallen from a high of 13 to nearly 1 dollar.

How little we know about the marketplace

“Prices [in the market] will fluctuate.” – John Pierpont Morgan

“The main purpose of the stock market is to make fools of as many men as possible.” – Bernard Baruch

Kevin Day, who is no doubt one of the greatest experts on the market that I know personally, reiterated his conviction that no matter how learned we may be about the market, we know, in complete verity, nothing, and that the successful investor or speculator must be not only very selective in his investment plays but humble enough to recognize when he/she is wrong. 

He related a time in the early 1980s right after the Hunt bubble had burst and on the advice of a friend who had become a millionaire in silver speculation, entered at $20 an ounce.  He later lost $48,000 and exited, glad to see that the price went lower thereafter.  The lessons need not be as hard as he experienced, but one must realize when one has made a wrong decision.

He also believes that the rules are always changing.  New rules are created, old rules are thrown out.  He subsequently does not believe in the long-term rules of the market.  Traders, therefore, are the winners, in his opinion, if they persist.

Kevin, who calls himself the ‘eternal optimist’, sees dark times ahead for the world economy.  He did not say how long it would take for a rebound, but instead stressed the importance of following the trend and not to predict what will happen.

The Successful Speculator

Kevin Day was asked the secret to his amazing and profitable market trading and this is what he had to say.  Being in the market for more than 40 years, he has developed a “nose for the market” and a patience for the entering at the right price.  He also only enters trades with limit orders, given the volatility of the market has increased especially in the last couple decades.  He also puts in buy orders hoping that they won’t be hit, and constantly adjusts his limit orders in accordance with price action.

The FED and the Crooks in Office

Basically, the policies initiated by the Federal Reserve is going to make lots of hedge-funds and investment banks very rich and leave the taxpayers holding the toxic assets.  The reason the people in power are able to pull off this elaborate robbing of the American public is that the public does not have the knowledge to understand what is actually occurring.  I have emailed Jeff Harrington to post his explanation as he has such a clear understanding of this issue, something the author of this blog still has not grasped yet.

The next meeting will be on Sunday May 3rd, 2009.  For those who have not attended a meeting, but would like to attend, please email your wish to VJ Arjan at vj_arjan@yahoo.com

Simulated Portfolio

The following is a simulated portfolio first started on October 31st, 2008.  This is the 6-month performance:

Date	Security	Entry	Current Price	Profit/Loss
April 5, 2009	FXI (iShares FTSE/Xinhua China 25 Index	$25.16	$30.95	$579
April 5, 2009	ILF(iShares S&P Latin America 40 Index)	$26.60	$28.96	$236
April 5, 2009	EWZ(iShares MSCI Brazil Index)	$37.69	$42.95	$526
April 5, 2009	PBJ(PowerShares Dynamic Food & Beverage)	$13.27	$12.19	-$108
April 5, 2009	GUR (SPDR S&P Emerging Europe)	$29.74	$25.90	-$384
April 5, 2009	FCX (Freeport-McMoRan Copper & Gold Inc.)	$29.06	$42.67	$1,361
April 5, 2009	WLT (Walter Industries – metallurgical coal)	$38.75	$25.40	-$1,335
April 5, 2009	RIO (Companhia Vale do Rio Doce – gold mining)	$13.12	$15.34	$222
April 5, 2009	GVA (Granite Construction Inc.)	$35.67	$40.34	$467
April 5, 2009	MT (Arcelor-Mittal ADR)	$26.25	$25.56	-$69

Meeting Minutes

We had a wonderful time at our meeting today!  It felt good to feel that perhaps our meetings are having some effect, however slight or small, moving in a positive, constructive, and more intelligent direction and perspective.  I hope that maybe the vision that I had at first that spurred me to arrange these meetings will be fulfilled slowly but surely in this fashion. 

I want to send a heartfelt thanks to Louis Reyes, Senior Police Officer of the City of Lewisville for sharing his perspective with us and giving us guidelines and advice on how to think more critically through understanding and without prejudice.  I also want to thank Jeff Harrington and a tired, but alert Tommy Schultz for coming and being the sounding boards for thought that they naturally are.  Louis later called me and especially wanted me to let everyone know that he sincerely enjoyed our meeting!  We initially had 4 attendees, but were joined unexpectedly by one of Jeff Harrington’s classmates who by chance bumped into us at Clay Pit.  We had therefore 5 attendees at our meeting:  (from left to right) Jeff Harrington, VJ Arjan, Louis Reyes, Tommy Schultz, and Jeff Harrington’s acquaintance (cannot remember his name, my apologies).

Vietnam War

The bulk of our meeting was dominated, no doubt, by Louis’ horrible stories about his experiences in Vietnam.  Unfortunately, I can only relate some of his experiences to you as only those who were there at the meeting and listened to him relate them to us could know the intimate details of his situation.  But I will try my best to relate some of them to you.  According to him, nothing is gained by war – there are only losers on both sides.  Louis is deeply concerned about the general attitude of the young generation of today.  Their listlessness and apathy, he feels, will inevitably bring about another war that will necessarily shock some reality into them.  For he feels that the current generation who takes the freedoms of liberty and rights for granted and who did not bleed for any cause are currently living in a bubble of their own reality.  As Louis has aged, he feels starkly fearful about the future generations.  He feels that the next generation will be a generation of “fuck-ups” as he put it and they will go to a war that is much more sophisticated and disastrous than anything in the past (with the welcome aid of technology).

I must admit that listening to some of the atrocities he went through disgusted me thoroughly and I will try to relate some of them to you all as best as I can so you too can feel how undesirable a thing war is.

He has been wounded 4 times, therefore, he has 4 purple hearts, a military decoration awarded to those who have been killed or wounded while serving.

Vietnam, as some of you may know, is filled with rice paddies, and the soldiers would for days wallow and trudge in water to the point that their feet would become soaked, literally, like a sponge.  A small infection could grow across entire extremities, therefore.  Louis had sustained such an infection to the point that he described how the whole of his feet were literally covered in pus.  It took 7 army doctors to hold him down while they violently scrubbed it off his feet.

He wanted to relay distinctly how there was no glory in warfare, very much unlike what Hollywood has been so gracious to portray.  Real bravery and courage cannot be depicted in a movie.  He described how he would crawl into small tunnels that led to underground enemy bases and coldly shooting those who came his way.  His heart would literally be beating on his neck, so intense was his fear and his nervousness of finding an AK-47 starring down upon him.

He also related how Hollywood underplays the realities of war.  In some major motion pictures, one can see that people are shot by bullets and are intact and able to speak, etc.  This is not the case in real life.  To illustrate, the force of a bullet from an AK-47 is so intense that a hit in the shoulder would sever not only the entire arm from the body, but also blast off the head as well.  He recalls this very incident happening to one of his comrades in combat.

Prejudice

Louis told us very clearly that he thinks that prejudice is the main reason for intolerance and violence in the world.  The reason for prejudice is an unwillingness to see another’s history.  I will give you my example.  Although some may term me Indian, I am, as a person, not Indian at all excepting my skin tone.  In respects other than the skin on this body, I am not Indian at all.  I have been brought up in a culture that is decidedly Western.  However, the ability to label or judge someone based upon a physical trait like one’s skin tone, is, therefore, completely baseless.  This would fare no more or less for one who has black skin, or white skin, or yellow skin, etc.  The blind judging of one’s character without the intention of actually understanding why a person is the way it is, is a very dangerous concept, and one, Louis fears, may be eating this country up from the inside.  He partially blames the media for perpetuating these stereotypes, but also on the unwillingness of the people to challenge and think critically about what is presented.

He explained to us how most Muslim are so unlike what is seen on television.  In fact, a friend of his who served in Iraq relayed to him how extreme fundamentalist Muslims actually wait for the cameras to start rolling before they start screaming and yelling at the highest pitch.  And the media does not show the decent and nonviolent Muslims, because there would be nothing to comment about them.  I like to think of a certain news anchor that I particularly dislike, Sean Hannity, of Hannity and Colmes on Fox News.  He deliberately relates the message that will incite people to the most excitement, rather than the truth and reality, which may, in fact, spark no interest at all with its audience.  The media is looking out for its own best interest, its own survival as a business.  It is the very same reason why talk shows like Jerry Springer were so popular in its day because it stirred up excitement.  This excitement, however, does not have anything to do with the reality as it is.  The people who desire the excitement would stop watching the news stations at once if they found Muslims of the Middle East to be tolerant and peace-loving citizens.

He, therefore, finds racially separatists movements like the Ku Klux Klan and the Black Panthers to be very dangerous organizations and feels that if the authority were left to him, he would completely “wipe them out.”  Most dangerous is the indoctrination of the children into a belief system so polarized as morally acceptable race superiority/inferiority.  This group can become very powerful especially in times like this when people can be driven to desperate measures.  Let us hope that reason, amidst the hard times, will triumph over “irrational exuberance.”