A while ago I had come across a Twitter posting from Paul Kedrosky. He posts on an incredibly wide range of topics, many of them fairly thought provoking, while others are borne of boredom and appeal to those equally bored. This particular posting was soliciting worst ever airport layovers. Not really his usual thought provoking material, but I suppose that while going through his own personal nightmare, perhaps vicariously reliving other people's nightmares made his own more bearable.
The winner's 36 hour unexpected stay seemed to pale in comparison to my own experience. Especially, since as the winner noted, the Singapore airport was the only one in the world to have a swimming pool, making it easy to pass the time.
I was reluctant to write about my own experience, having been held hostage by Tamil Tiger Rebels in the Sri Lankan National Airport years ago. There didn't seem to be much gained from reliving that period of my life until I came to realize how the experiences had prepared me for life, although, in hindsight, it may have all just been a dream.
With dreams or memories of 18 days worth of Triscuits and a limited supply of North Korean 1953 era toilet paper, I realized that I had to share some of the things that I'd learned during that period, as they've formed my outlook on investing and on life, in general
Here are the 12 things that I learned about life after being held captive by Tamil Tiger Rebels for nearly 3 weeks.
1. Tamil Rebels don't have much of a sense of humor.
You don't joke about wanting an extra piece of lizard. People take their assets very seriously.
My recent articles on Apple (AAPL) certainly demonstrated that people take some things far too seriously and are incapable of being objective. One has to wonder whether someone who slings vitriol at the mere suggestion that caution may be warranted is capable of exercising an emotion free decision process when weighing the merits of continuing to hold a greatly appreciated stock.
2. Use your toilet paper sparingly.
Tamil Rebels don't teach hostages how to allocate their limited supply of amenities.
Instead of wasting your money on ridiculous investments, keep cash around. You never know when there's going to be a bargain that's just begging to be bought. Unfortunately, when Caterpillar (CAT) seems to be priced just right, you're caught with nothing in your account.
I will often write "in the money" call options, or "out of the money" put options with the express hope that the position be assigned, leaving me with a quick gain and cash to invest in some other direction, especially if there are bargains to be had.
Although I never suggest using both sides of the toilet paper, sometimes it makes sense to play both sides of a trade, such as with ProShares UltraShort SIlver ETF (ZSL) and ProShares Ultra Silver ETF (AGQ) and their options, thereby generating option premiums from both and recovering cash from assignment of calls sold or expiration of puts sold.
3. Sometimes basic cable is the best you can get.
Why go for derivative plays that are held hostage by their major customer. Just because Apple is using a certain chip in their iToiletPaper, doesn't mean that they'll be using that same chip tomorrow. Investment with the companies whose products or services you can understand and can survive without its Patron du jour. Would Zynga (ZNGA) survive without Facebook (FB)? Will Facebook survive without mobile ad placements?
4. Even Roy Rogers fried chicken is good sometimes. Oh wait, no it isn't.
Sometimes you have no choice. Plantains again?
Don't feel compelled to buy a mediocre position just because you have loads of cash lining your pockets. Wait for a better opportunity. Go for quality. There may be a KFC right around the corner, although not likely in a besieged Sri Lankan airport. This is just another way of saying go for "Best in Class". That would YUM Brands' (YUM) Kentucky Fried Chicken rather than the Kansas Fried variety.
5. Don't plan too far ahead for the future.
You can't count basic humanity coming from your captors. By the same token, your stocks can easily hold you hostage and destroy your dreams of a happy future. There's absolutely no reason to "Buy and Hold." In fact, for me, even a 28 day or so holding period on an option is too long. Low volatility or high volatility? It doesn't really seem to matter if you maintain flexibility and have an exit strategy. Don't tie yourself down long term to positions when there is more opportunity in capitalizing on their up and down cycles. If you learn to successfully capitalize on the ups and downs, you won't get the urge to vomit during the roller-coaster like rides.
6. Even Ideologues can be bribed.
Who would have imagined that a Tamil Tiger would look the other way in return for a new toothbrush?
Talking Heads and research analysts have been known to sway. When it comes to money, very few will stick to their guns if there are opportunity costs or just plain old opportunities. The grass is always greener elsewhere, if green is being flashed in your face. Take their recommendations with a grain of salt. Bribery isn't always about money, either. Sometimes it's about images of fame. People want airtime and notoriety. The more memorable a Talking Head makes himself due to their pronouncements, the more likely you'll continue see them on air. It's not necessarily about the quality of their calls, it's about the quality of their persona that matters. Then the green comes their way.
Had you ever heard of Brian White, an analyst for Topeka Capital Markets, before he came out with an Apple price target of $1,001?
Just as you shouldn't go for the Kansas Fried Chicken, stay away from Kansas analysts seeking your attention.
7. Stockholm Syndrome should be avoided if your captors are smelly.
No matter how attached you are to that loser of a stock, sometimes you need to recognize it for what it has become. Getting emotionally attached to something that would just as soon see you drained of all life and assets is not a good strategy. Think Green Mountain Coffee Roasters (GMCR) or Netflix (NFLX). Sometimes, the extra effort it takes to stay afloat in one of your losing positions just isn't worth it.
8. Ben Bernanke isn't a super-hero. He's just a mere mortal.
The Tamil Rebel leader, albeit powerful, couldn't control the monsoons or government bombings.
Don't blame the Fed for everything and don't expect the Fed to be the answer to everything. You're fat because you eat too much and your hacking cough may be tangentially related to that warning label you choose to ignore. But you shouldn't entertain feelings of guilt just because you're raking in profits from Altria (MO).
9. The New York Mets will never win another World Series.
Some stocks will never re-capture their glory. Don't fall for value traps or old sentimental favorites. You can still follow them, but don't get caught up in what will only lead to disappointment. Dell (DELL) may have made great computers at one time, but they have existed as a "value trap" for far too long. As a corollary, bringing in an aging superstar won't necessarily bring back the glory days. Tom Glavine and Jerry Yang can attest to that, although the late Steve Jobs and Howard Schultz of Starbucks (SBUX) might disagree..
10. There's no real reason to watch "Dancing with the Stars".
The Tamils found beauty and relevance in themselves and their core beliefs.
Technical analysis, although pretty and an art in and of itself, is worthless. How can you have so many well educated chartists, technicians and analysts looking at the same data, yet coming up with wildly different interpretations? You may as well be a Rorshachologist stock picker. Besides, sometimes a very loose definition is used to determine who is a "star". When it comes to choosing stocks and investment strategies that fit your temperament, who could possibly be better than you?
11. Sometimes "No" means "Go Ahead".
Your first instinct isn't always the best one. It is good, though, to be circumspect, but don't reject things out of hand before some meaningful thought.
A recent comment to a suggestion that I had made last week to sell a weekly $565 call option on shares of Apple was met by derision by someone criticizing the hubris of thinking that one could time the market.
The fact that had someone done so is irrelevant, despite the fact that they would have generated nearly $7 in premium for the week and retained their shares, having closed a week later at $561
It's irrelevant, because the shares could just as easily have been assigned. However, the very act of buying, selling or even holding is an expression of market timing. You buy because you believe it is the right time, and so too, do you sell.
12. SeekingAlpha is a productive use of time.
That one is self-explanatory. I don't know why I need Tamil Rebels to teach me that one.
Mess with someone's money and you will bring out the Tamil Tiger in them.