Mark L Schemper Sunday December 21, 2014

Tuesday, October 21, 2008

For What It's Worth

I haven't written anything pertaining to investments for quite a while. Then again, I haven't written anything in a while. The purpose of this post is to serve as a mental note to myself. If someone else finds some value in it, consider it a bonus.

Today I allocated 50% of my IRA into equities. The balanced portfolio I maintained in this account was completely liquidated into 100% cash on the week of August 17, 2007, or 14 months ago. Outside of some dubious short-term directional bets and a profitable stint in gold, I've kept 100% of my retirement account in cash, until today. As you can see by the chart, I looked like a complete dolt on the week of October 12, 2007, and I was kicking myself at that time. Obviously, that feeling subsided shortly after.

I used to write posts about now-defunct subprime lenders being on sale given their cheap P/E ratios. That sentiment changed once the shit started hitting the fan in the summer of 2007. I started to reject the overly bullish calls of certain economists (read: Larry Kudlow and his ilk) who proclaimed the subprime lending problem would be limited to the subprime housing market. I saw their claims as spin/damage-control for the idiot President they so adore - they felt Bush was not getting the credit he deserved for the economic expansion - and far from objective analysis. I feared a credit crisis.

My projections differed from what actually played out; I feared a seizure in consumer credit due to careless lending via credit cards, resulting in a recession induced by a sudden drop in consumer spending. I had only been in this industry professionally for two years at this point, and my perspective was skewed toward consumer behavior because I'd been in the consumer market nearly my entire life (I started mowing lawns for money at Age Eight, yo). I didn't realize the extent of the Credit Default Swap market, I could have never predicted a situation where there would be - for a time - no bids in the commercial paper market, and I never thought I'd see negative yields in US government debt. Pure fear and panic. It turned out those unqualified home buyers weren't the only ones borrowing too much. Everyone had too much debt.

So I'm back in equities, half way, and my exposure is entirely in a consumer discretionary ETF. I'm unsure where the market is going from here, but I don't want to completely miss a turnaround. Then again, if another shoe drops - perhaps another exotic instrument like synthetic CDOs will become the next Boogie Man - I don't want to get killed. No one wants to get killed.

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Friday, August 15, 2008

Las Vegas Economic Woes May Be Due to Deemphasizing Gambling

Reprinted from the Online Casino Advisory, found here.

Perhaps there is an underlying lesson to Vegas planners; the town that gambling built may need to return to its putting gambling as its top and only priority.

Casino stocks continue to fade as major companies have seen their value plummet to a quarter of their worth less than a year ago, and gambling industry analysts remark that the recession-proof expectations of the past no longer exist. The question is, why did the casino business become responsive to economic downturns?

William Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno, has an idea. Eadington points out that in 1990, 42 percent of revenue for Las Vegas Strip casinos came from non-gambling sources, such as room rates, restaurants, and retail rentals.

In 2007, that number for non-gambling revenue had increased to 59 percent. A conscious decision had been made over the last twenty years that Vegas resorts were going to feature many forms of entertainment; gambling would no longer be the ultimate reason to visit Las Vegas.

Shows and buffets had always existed, but mainly as lures to draw gamblers. Now the collective strategy of the Strip hotels became to offer complete vacations, pulling tourists who had only marginal interest in gambling.

And the new features were each designed to be money-makers. Two-hundred dollar meals became common among upscale casino restaurants, showcasing the nation's finest chefs. Clubs at Caesars and the Palms were soon the hottest tickets in the country, with long lines willing to pay exorbitant cover charges and outrageous drink prices to stand near celebrities famous only for being famous.

Rooms were decked out in cutting-edge decor and electronics, as it became fashionable to stay at the resorts that ran the most ridiculous rates, and mini-bars and snack centers sold Diet Cokes and Snickers bars for ten dollars each in the convenience of your room.

In other words, Las Vegas became a town that no longer comped and tempted its clientele to come gamble, but a place that sold everything it could find, one part of which happened to encompass wagering.

So, it may be seen that, among other factors including the prohibitive prices paid to build these all-encompassing mega-resorts, a major reason that the casino industry is suffering badly through the current economic storm is that it no longer is the casino industry.

Instead, Las Vegas has become the entertainment industry; and no one ever claimed that restaurants, clubs, upscale retail outlets, and swanky hotels were recession-proof. Perhaps there is an underlying lesson to Vegas planners; the town that gambling built may need to return to its putting gambling as its top and only priority.

According to Sherman Bradley, gaming analyst at OCA, "This is not to say all the flash and glitz must go, but that, if casino managers want an industry unaffected by downturns and recessions, the sparkle must resume its proper place, as a draw for gamblers. Comps and freebies must be brought back en masse, and luxuries and status items should be used as enticements, not revenue generators.

"If the non-gambling services and products cover their own cost, that would be sufficient. Then gamblers would fill the rooms in their rush to play in conditions far beyond what the local slot parlor or Indian casino could offer. Once again, Las Vegas would see revenue going only upwards.

"Las Vegas has reacted poorly to the spread of gambling venues across the country. Instead of pushing their casinos as the greatest gaming spots around, they have tried to diversify, and the result was finding themselves in businesses that do follow economic trends."

Published on August 3, 2008 by Joshua McCarthy

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Wednesday, September 26, 2007

Long Time, No post

ASSuming someone is reading this.

Hawai'i was better than I expected. Honolulu Chinatown was small, anticlimactic, but yielded raw gutted hogs, carpe pools, and a couple of loose white hands - and cameras.

Barry left the SFG tonight. Events like this force Everyone - those who don't qualify, combined with those who do - to face One of Two Faces.

Good Night.

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Friday, July 27, 2007

Fin

Email received Thursday, July 26th:

Dear Mark,

On behalf of Santa Clara University's Leavey School of Business, I am pleased to inform you that your MBA degree has been posted. Your diploma will be mailed out to you tomorrow by the Office of the Registrar.

Please note that any concentrations you declared will appear only on your transcript, not your diploma. Should you need an Official Transcript or a Degree Verification Letter, please visit the Office of the Registrar's website at www.scu.edu/studentrecords.

We congratulate you on this major accomplishment and wish you much happiness and success.

Sincerely,
Molly Hall
Assistant Director
Academic Support and Records

Thanks, I'll take it.

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Friday, July 13, 2007

New Orleans

Vacation came and went too quickly; I'm ready for another one. Below, some pics and a video from Nawlins.

Picture 050

A Casualty of Downpour - 2

The Teeth - 1

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Thursday, June 14, 2007

I Need a Vacation

Seriously, I need a vacation. I'm thinking Road Trip, from southwest Florida back to the West Coast, with some tasty stops along the way. Zig-zagging through the South, hitting Miami, Savannah, New Orleans, Memphis. Tying in with the old Route 66 in OKC and seeing the oddities and abandoned relics scattered throughout the Southwest. Maybe a day at the Grand Canyon, and I'd be remiss to omit Vegas.

Yeah, I'm thinking this sounds absolutely perfect. And I think I'll leave tonight.

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Friday, June 8, 2007

Final Update - The MAYhem Diet

Thirty (30) days have come and gone. Results time.

Lost 8.75 lbs.

Reduced body fat by 2.5 percentage points.

Waist reduced by 1.5 inches.

Belly reduced by 2 inches.

Butt reduced by 2 inches.

Thighs reduced by 1 inch.

One thing I noticed is I feel much better. I've been rough on myself the last few weeks, sacrificing much needed sleep for a master's degree. I should have felt like complete crap everyday, but didn't. Granted, I didn't feel spectacular, as I was quite tired. But I didn't feel as bad as I should have. Very cool.

More importantly, my pants fit again! Now if I could just find time to get a tan...

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