Reel Ken
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COMMENTS STATS

3,850 Comments

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## 'Deep Blood Kettle', Ockham's Razor, Faith And Reason [View article]

The statement we're dealing with is your statement

"......... than the change of the constant from 58% of COGS to 50% COGS...."

Your answer....

....."......I stand by it. Both the formula and the "proof" are applicable whether COGS is 50% of SRP, 58% of SRP, any other % of SRP, any discount % to SRP, and so forth. ......."

Is non-responsive. Please note the statement in question never used SRP, it used COGS.

So, is the formula or "proof" applicable if it is 58% or 50% of COGS?

That is what you said and I want to be sure that is what you are now standing by. Because if it is, you're in a whole heap of trouble and if it isn't than you need to admit you were wrong.

## Softness for HLF shares continues [View news story]

Are you saying that between last quarter and this quarter saturation occurred?

## Herbalife: POOF! There Goes The Bull Case [View article]

..."...Your research and analysis are bar none. Bravo!...."

Way I saw it QTR bought a call. That's where his analysis led him.

Seems to me the opposite is true.

## 'Deep Blood Kettle', Ockham's Razor, Faith And Reason [View article]

First: Consistent with my "proof", 4401/log(e)(7.5) rounded to the nearest integer is 2184.

Second: ....".........make the minimal effort required to revise your "proof" for HLF using actual gross margins, whatever you believe they might be......"

I completely revised my example incorporating HLF and all your suggested parameters. That's what this is all about. The "proof" is that revision.

I also revised Kristina's generic illustration and "HLF-ized" it. I used 90%-95% SRP and 50% COGS. This is the data you fed me. I concluded there was no significant difference, whatsoever. So I went back to 100%SRP and 42% SRP. Just look it up, it's there to be seen. Do I really need to do it again for you?

Lastly: "Hundreds of thousands" is more than 1 order of magnitude away from "millions". How many orders of magnitude is it away?”.

Here's the answer......

Before I start the “proof” you should understand what “more than one” implies. You seem to think such an answer is non-responsive and it is absolutely not. It is a valid solution to many problems.

By example…

Let’s say I have 30 cents in my pocket and ask “how many coins do I have”?

“More than one”, is the simplest precise answer.. ..here’s why…

There are multiple solutions. There are at least two coins and as many as thirty coins. There are only two correct answers that incorporate all the possibilities..… 1) More than one and 2) >=2. Both >1 and >=2 provide the same result, but >1 is the best answer, because it can be expressed in simpler terms and incorporates >=2.

There is simply no more precise answer than >1. As long as there is uncertainty, we need to consider answers that account for and express these uncertainties.

So, “more than one” is a valid, precise and simplest answer to questions that have multiple solutions, all of which >1. (unless, of course, the lowest solution is >2 or some other higher number)

Is the “Order of Magnitude” question in the nature of the “coin” question? That is, does it have uncertainty and multiple solutions, all of which are best answered as >1. Let's look.......

Orders of magnitude differences are represented by the equation Log(x)(m/k). Where m=millions and k= hundreds of thousands.

But there’s a catch. Both the expressions “millions” and “100xthousands” are 0th order estimates. M can vary from 2M to 999M and K from 200K to 900K. So, all we can do is estimate the Order Of Magnitude (NYSE:OME). This isn't uncommon, after all, Orders of Magnitude is a conventional estimate in and of itself.

When a population can range from 2M to 999M the OME of the population is 100M (8 OM log(10)). When a population can range from 200k to 900K the OME is considered 100K (5 OM log(10)).

So, the log(10)(M/K) = 3, WHICH IS “MORE THAN ONE”.

Now, is there at least one other possible answer, that is not 3, but also >1? Because, if there is, then we must modify our answer to accommodate.

An 0th order estimate has a margin of error computed as O((x)^n+1) So, setting x=0 and n=0 , the error is +/- 1, and therefore could be as low as 2 and as high as 4. So, 2 and 4 are valid answers. Hmmm, multiple answers all >1.

There are additional factors lending to even more solutions. You said the 100K is continues each year. Well, that means it is accretive to 2M. So the OME needs to include, for M, an exponential factor. In situations, such as this, one would compute the OME using a natural base assumption. That means the OME differential expressed as (Ln(M/K) can range as high as 7.

There are yet, again, even other considerations that could lead to multiple solutions >1. For instance does one truncate, round or use the square root of 10? Do we use common or natural or most precise base? So, just as in the "coin example" the more variables to be considered ("nickels, "dimes", "quarters", "pennies") the more solutions possible.

Even using differential calculus or statistical analysis, the answer would be range bound at >1.

Therefore, rather than say "3"..... >1 incorporates multiple solutions all of which could be accurate but none of which can be determined with certainty.

In the end, “millions” is either 2,3 4, or potentially a number as high as 7, orders of magnitude greater than hundreds of thousands and the simplest, most precise answer that expresses this is “more than one”. It incorporates the lowest possible solution and expresses multiple solutions and uncertainty.

Now, still outstanding is your statement...

..."..........".......... than the change of the constant from 58% of COGS to 50% COGS...."

Do you stand by it, admit it's wrong or continue to be non-responsive?

## Doomsday Prepping, Rocky Balboa, And Herbalife Earnings [View article]

How's the call doing now? You holding or bailing?

Seems to me you may be a victim of the "ole whip-saw".

Do you subtract the losses on the call from your net result on the puts? Or do you just ignore them?

## 'Deep Blood Kettle', Ockham's Razor, Faith And Reason [View article]

O.K. so it's just down to three questions.

..."........Simple Question 1: What does 4401/Log(e)(7.5) equal?......"

Simple Question--Complex Answer: You have already noted it is irrational. Are you asking for a Arabic-numeric value for a non-Arabic-numeric equation? It's like asking for the area of a circle. Its value is represented by a formula including a Greek letter, and can only be approximated by an Arabic numeral.

I thought you understood this. If you want an Arabic-numeral approximation, then you'll just have to ask and I'll give you an approximation. However, you've previously insisted on an "exact" answer and that can only be represented with non-Arabic-numeric symbols.

....".......Simple Question 2: You've said "hundreds of thousands" is more than 1 order of magnitude away from "millions". How many orders of magnitude is it away?..."

Oh, so I see you've looked it up and discovered that my answer was "more than one" not "many" as you insisted on several occasions.

You said ..."more than 1 is no more precise than many..." Wrong. Many and "more than" mean two different things. Many is more precise in certain conditions and "more than" is more precise in other conditions.

Example: How tall is Bill Deblasio? ... "many feet" is less precise than "more than 6 feet". One would never think of using "many" in this example and I didn't use it in my "order of magnitude" answer.

Simple Question--Complex Answer: My answer... "more than one".... stands. I'd be happy to explain how I reached that answer, but you've never asked anything other than "how many" or dismissed it as non-responsive. It's futile to explain an answer until such time as you agree it is an answer. Now it seems, we'll also have to agree that "many" and "more than" are different measurements. Your "red-herring" has a bone caught in your throat.

...."........Simple Question 3: Please show how you derived your formula, specifically how log(e)(7.5) became part of it.......

Simple Question--Complex Answer: The formula explanation requires an understanding of irrational numbers, so until such time as we can agree on this, it is senseless to explain its significance. I guess your "red-herring" has several bones stuck in your throat.

......."......Kristina Raegan is interested in HLF....."

I'm sure she's interested in a lot of things ... like an illustration of a generic MLM that she asked for. Is this what we've become ... deciding what is acceptable for other people to be interested in? Do you think her world is so shallow that she can only be interested in one thing? Take it up with her. Unless, of course, you're suggesting she was not educated enough to ask for what she wanted.

...."......actual gross margins like she asked....."

She asked for a generic model. You are, once again, trying to re-define her statement. I suggest you take it up with her. She did not take issue with my illustration. Are you suggesting she didn't know what she was doing? Are you suggesting she is not educated enough to know the difference between what she asked and what you want to attribute to her?

.....".....I provided a value to the related Simple Question 1 4401/Log(e)(7.5), and you said it was wrong......"

Yes. Your number was wrong. An irrational number cannot be precisely expressed in Arabic numerals. Mathematics has developed non-Arabic symbols to express irrational numbers. Remember you had also specifically asked "exactly equal" not almost, etc..

So, it is clear that I was right in saying you were wrong.

## Doomsday Prepping, Rocky Balboa, And Herbalife Earnings [View article]

Interesting strategy.

You manage to implement a plan that decreases your Delta and increases your theta.

Add this to the fact that you're paying top dollar for pre-earnings vol that will drop after earnings so you likely lose Vega, also.

Simply trimming some puts would have Decreased your Delta and decreased your Theta and pocketed Vega.

Guess you enjoy handing money over to the counter-party. Is that the "party" you were referring to?

## 'Deep Blood Kettle', Ockham's Razor, Faith And Reason [View article]

Can you see the logical fallacy in these two statements of yours, both, by the way in the same paragraph.

...".........I know it's an irrational number...."

......".......and you refuse to provide any kind of numerical answer..."

Next......."......The only possible presumption ..."

The ONLY possible? How about ... the question presumes Katrina's illustration was for HLF and not generic MLM. I could name a few others, if necessary, but it only takes ONE to defeat ONLY.

Next: ..."......an answer given by a witness upon examination in a trial ....which evades or does not relate...."

First, I didn't know I was a witness in a trial. Must have missed that. Curiosity question ... am I a "character witness"... a "supporting witness"... an "expert witness" the "defendant" or the "victim"? It would help me, as I don't recall the trial in the first place.

Second... only if the answer does not relate, not if the answer is direct to the question. My answers are direct to the question. If you had a problem with them, you could have asked for clarification ... as any lawyer would interrogating a witness in a trial. Instead you dismissed them as non-responsive.

Third:....".......This is just a gross margin calculation, which we agree equals the sales price minus the COGS....."

Sorry we don't agree. This is your reference statement .....".........Other than the change of the constant from 58% of COGS to 50% COGS...." I thought I made it clear that your statement represents a gross misstatement of any illustration or proof I've put forth. I most certainly don't agree.

I think you need to "own" your statement and admit it is not accurate. Then we can put this issue (red-herring) to bed.

Last: ......"......you derived your formula, specifically how log(e)(7.5) became part of it........"

Finally you ask why instead of "how much". Thank you.

I intend to at the proper time. First I think you need to "own" that your persistent questions asking for a value was improper, especially now that you self-admit you knew it was an irrational number all along. Next, after all the red-herrings have been dealt with and we have reached common ground on both Kristina's illustration and yours. To do otherwise, would just offer up more unnecessary diversions.

## 'Deep Blood Kettle', Ockham's Razor, Faith And Reason [View article]

My formula does exactly as you requested. If you wanted a different parameter, you could have set it initially. Now it's too late.

Here we go on the whole Kristina thing again. You insist on trying to redefine Kristina from generic MLM to HLF.

Kristina was crystal clear, on more than one occasion, that she wanted a proof using a generic MLM. I did so. I used HLF only as a model, a starting point. You objected. You wanted it to be HLF-accurate. Talk to Kristina about it. My illustration was directed at her parameters, not yours. I even decided to take your HLF numbers, re-run a hypothetical, and concluded it didn't matter.

You were so insistent that it needed to be HLF and not generic MLM and that it needed massive revisions I suggested we clear the slate and you pick it..... you set whatever parameters you want ... Carte Blanche... use HLF if you want, use discounted SRP if you want...anything.

You did and I answered.

I don't know how to say it any more clearly ... Kristina's illustration is for a generic MLM and yours is for HLF. Of course there are similarities but there are also differences.

You can't equate them without making adjustments. You have been unwilling to do this.

## Is Herbalife An Endless Chain? [View instapost]

..."......The fact that anyone can become a distributor is what drives MLM sales. As long as there is no forced inventory sales this is a brilliant way to move product .."

Of course this is correct and it is also the basis for the complaints against MLMs.

The system is designed to move product. If you can just step back for a minute and look at the problem ... the churn rate, the egregious distribution of rewards, etc.. This is what fuels the fires of those that don't like MLMs.

You wanted to know what needs to be addressed... it is this.

## 'Deep Blood Kettle', Ockham's Razor, Faith And Reason [View article]

.....".....It has not been possible to get simple answers to simple questions...."

I've asked you to detail any unanswered questions and I'd be happy to respond if I overlooked any. Ironic how this request remains unanswered.

I've given simple answers to simple questions ... over and over... just to see them redefined and taken hostage by you.

For instance, I've repeated, that Kristina asked for a generic MLM. My model was a generic MLM and you insist that it must be HLF. I even accommodated you by "hypothetically" running your suggested numbers, using HLF and said it changes nothing. You continue to implant HLF into Kristina. So what's the sense of giving a simple answer to a simple question if you just do what you want without regard to the answer?

Any real "problem" may be that you seek simple answers to COMPLEX problems. Sometimes that's just not possible ... as in the "orders of magnitude" issue. In those cases I do my best to give the simplest and most accurate answer possible.

Sometimes, I can't give a "simple" answer ... as in log(e)(7.5).

For instance, regarding log(e)(7.5), you have repeatedly asked what the value is, yet your initial question requesting confirmation that it equaled 2 shows you were capable and able to look it up and obtain its value.

Therefore, it is abundantly clear that you posses the ability to discern the numeric value of the equation and your insistence on my supplying a value demonstrates you lack understanding of it's significance rather than needing its value.

Regarding the "orders of magnitude" .... You've done the same thing .. just repeated the question, never asked for an explanation. Just said it's not precise, never asked for an explanation. Said it's non-responsive, never asked for an explanation.

I'd be most happy to supply a detailed explanation of my answer. But first, you must either show me where I said "many" or acknowledge that your accusation is misplaced.

## Is Herbalife An Endless Chain? [View instapost]

You asked where it might go, that's one place.

A compliance dept is sure cheaper than law suits. Many industries have them. If doing something right cuts into margins (and I'm not so sure they do) than that's better than systemic fraud.

I think the objective would be to discourage masses of people from blanket joining. Right now, practically anyone can become a distributor.

It's an MLM problem and it will resurface time and time again.

## Is Herbalife An Endless Chain? [View instapost]

I think one would need to look at two things .... require 70% and "agency".

Right now, the distributor's "word" is not a crime. All they do is deceive MLM.

If they were required to report and "lied" they would be committing a fraud. If "agency" exists, MLM could be held liable if they didn't institute sufficient monitoring and jest let it be.

## 'Deep Blood Kettle', Ockham's Razor, Faith And Reason [View article]

You say, now...

........".......By the way, I wasn't seeking a weighted average formula as I was more interested in a number other than 100% SRP since we know 100% SRP is not correct, but we can work with it........."

Problem is, your Assertion said...

.............."...based on the actual average selling price of HLF products, which is a combination of product sold at .....

Need I say more?

## Is Herbalife An Endless Chain? [View instapost]

First, they certainly need to address companies with legitimate product and non-conditional rewards. For instance HLF pays rewards to upline when product is purchased not when sold to ultimate user. I think that link is necessary.

They could also restrict upline to 70% of rewards until more than 70% is sold to ultimate user.

In essence, force rewards to be ultimate user sales not inventory purchases. This will change the entire focus that many find abhorrent.

I don't think the return policy is enough.

Second, I think they could create an "agency" relationship between the MLM and the distributors. This would create a legal liability on the MLM that they try to sidestep.

Third, the whole idea of "phantom distributor" just to get a discount is problematic. perhaps "preferred customer" would be better. I think it's just a potentially deceptive tactic that encourages excess inventory purchases.