The Best Is Yet To Come

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Today is the first day since Christmas that I feel well, and that’s relative. Had a really foul head cold and fever since then, one of the worst. Feeling rotten for days, just rotten I tells ya’.


There will be no special dinner here at the country bunker tonight. Since I cannot taste anything why waste a heavenly meal such as the annual steamed king crab legs big as Louisville Sluggers and stuffed Maine lobsters? I can breathe though my nose today but the sense of taste still hasn’t returned.

The annual great meal will have to wait until this Sunday when the Chicago Bears will be watching the NFL playoffs at home, just like me. By then my taste buds should be born-again. It will have to wait.

I WILL manage to gag down a few Bombay Sapphire mar-biggies tonight after my four-day Nyquil on-the-rocks binge. The worst is over. The best is yet to come.




The best is yet to come and babe won’t that be fine…

The best from me to you in two-thousand and nine!
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Goodbye 2008

Well, another year is over. I have a lot to be thankful for and a lot to look forward to with the coming of 2009. In 2008, I reconnected with some old friends, made a few new ones, did a lot of great things, and made a few mistakes. But I look to 2009 optimistically. And I am starting the new year out tomorrow by running in my first race, a five miler in the cold. I have to get some underarmour today for that. Anyways, thanks as always for reading LITGM and try not to end up like these people tonight.

Yoga

Better than the A-ver-age workout...

I had my second massage last night and it was better than the first one. I am learning how to relax. Doesn't that sound strange? I was pretty tensed up during the first massage, but I knew a lot of what was to come in this one so wasn't nervous or surprised at some of the immense amounts of pain that I was put through. Well, not immense amounts - but some spots on my body are just plain messed up from all the banging. Especially my legs.

I asked for a little more time on my upper shoulders and neck and that was MONEY. That is a must from now on.

This break from Muay Thai has served me well. Many of my bruises are healed up already, and with another week off I should be tip-top for the next round of strength conditioning and MT.

My first massage was right after my last MT test, which was a fairly brutal affair (the test, not the massage). Lots of padwork and sparring in that last MT test. I was pretty beat up. As the second massage went along my masseuse commented that I was basically "beat to hell" during that first massage, but she didn't want to say anything. I laughed and said "I told you so". Anyway, I have three left in this five pack that I received for my birthday and I am very much looking forward to them. The masseuse is a nice woman, and we seem to get along well. Everything is very professional, clean and I think I am getting benefits. The best part is that my masseuse does work primarily on athletes so there isn't any stupid aroma therapy, rocks on the back, or other nonsense like that going on. I will probably make massage part of my fitness routine, probably getting one every couple of weeks or so.

The place where I get my massages is actually a yoga studio. Last time I was there it was empty, but this time there was a class going on. I had never seen a yoga class, and I have to admit I was chuckling to myself. It looks rather silly to me, a yoga outsider. But after thinking about it for a while, it looked rather strenuous. All of the people doing it were breathing somewhat heavily, and some of them were sweating. I really didn't care for all of the spiritual things that the instructor was bringing into the class, but whatever. Different strokes for different folks, I guess. The bottom line is that at least these people were in class getting exercise and stretching, which is more than 95% of the population can say, as they sit on the couch pounding chips and booze.

During the class they concentrated a LOT on breathing, and lining up their spine to something or other, and listening to the YOGI. That was the instructor, who referred to herself as the YOGI. What is the first thing that pops into my head when I hear the word YOGI?

Oh well, simple man, simple mind. I honestly couldn't stop chuckling at this whole scene. When my masseuse showed up we entered the massage room and she asked me why I was smiling. I told her that this scene was soooo different from the one that I usually immerse myself into.

Yoga class:

• quiet
• mellow atmosphere
• spiritual
• concentrate on breathing
• instructor very soft spoken
• people drinking herbal tea and eating fruit (honestly)
• soft lighting

Muay Thai class:

• loud, heavy metal music blasting at all times
• stark, industrial fluorescent lighting
• gasping for air in intense workouts
• instructor yelling and shouting at you if you are dogging it
• water if you are lucky
• gigantic first aid kit at the ready for cuts and bloody noses
• attempting to disable opponent by projecting as much force into their body as you can while trying to stop them from doing the same to you

I am not bashing yoga here, as it is something that I could probably never do or even think of doing very well - if it weren't for Carl, I would be the least flexible person on the face of the planet. And I would bet that some advanced yoga classes would be pretty tough. But it just isn't for me.

Winter Sucks

A while back Dan and I went to see the Illini play Wisconsin in football in Madison and had a great time. The weather had a decidedly fall chill and we could tell that snow was coming in a matter of days. Dan is a tough guy as you can see from all of his fighting posts but for a minute he was like "I don't know if I can stand another winter like last years". Of course Dan operates under a handicap because he has zero body fat thanks to all of his training so the cold goes right through him... unfortunately I have a bit more padding.

I know the feeling. This winter has already been brutal in Chicago. I walk to work and bought a jacket with a hood and it keeps me from losing all my extremities to frost bite. On top of that, no one shovels their sidewalks so just getting around requires boots and a change of shoes. After all, why would the city bother to shovel sidewalks given that we pay the highest sales tax in the country?

When the weather got extremely cold (that Monday night Bears game was the coldest on record) they plowed the streets and if your car was parked on the street you were soon blocked in with huge snow boulders that were the consistency of concrete. We saw three men with HAMMERS trying to get a car out of this tundra in front of the Animal Cruelty Society (near where this photo was taken) a few days ago.

Well now the weather has changed and we get pouring rain, and everything is melting away in a grey soup of debris. The freezing weather is coming back soon, I am certain, and months more of this to come. And the sun came out for about 10 minutes on the day before Christmas and I had to ask myself "what's that big yellow thing in the sky" since I hadn't seen it for weeks. I have to take vitamin D suppliments because there is no way to get it naturally.

IT SUCKS!

Onion Sports 2008

My wife has had enough with the cooking routine for this holiday season, so I was dispatched to my favorite watering hole to procure some dinner. As is my custom I always grab a copy of The Onion on the way in. To my surprise this latest edition is the 2008 Onion Sports "Best Of" Edition.

Right up top on the front page is the headline "Patriots Season Perfect For Rest Of Nation". I couldn't agree more.

Pacman Jones: Who do I have to Kill to get Reinstated into the NFL?

"Thousands of Phillies Fans Boo Phillies Victory Parade"

"Red Sox Pay Eric Gagne $10 Million to Play for Brewers" - Man did I live that dream this year.

"Injured Player Gives Thumbs Down While Being Carted Off Field".

"Citing Poor Conditions, China Refuses To Send Delegation To Olympics"

"90% of Athletes survive Beijing Olympics"

"Manny Ramirez Breaks Free From Contract After 8 Years of Stifling Championship Baseball"

Of course there are more, but you get the idea.

Hedge Fund Blues

The hedge fund industry is coming under close scrutiny for a variety of reasons. In fact, it seems like that bad news doesn't stop.

- Madoff runs a giant Ponzi scheme that claims up to $50 billion in losses. The exact amounts will be different because some of the "losses" represent paper profits on statements that he sent to customers that were phantom but assuredly they are large and painful
- Worse than this scheme was the fact that so many "fund of funds" or hedge funds that are comprised of investments in other hedge funds charged a big fee for the right to invest in this fund in the first place. Gulp
- Many funds that claimed they were "hedged" against market moves (where the "hedge" in hedge funds comes from) most assuredly were not; large losses of 40% or more are common in the listings, and some very big names have been seriously bruised

More subtle than these obvious issues are the fact that these hedge funds often have "high water" provisions. Funds typically make money by charging an annual fee of 2% a year and 20% of profits. However, if the fund declines in value, the hedge fund can't charge the 20% fee on profits until after the old "high water" mark in value is reached. Thus if your fund was down 25% this year, you have to gain 33% before you can start earning your 20% cut again. On top of the "high water" issue, if your asset base drops 40% (remember those losses, above) then you are only making 2% on 60% of your former assets.

Another element is that banks aren't going to lend as often or as frequently to hedge funds. Much of the gains that hedge funds claimed to make above the market are due to leverage. For example, if you put $1M in the stock market, and it goes up 20%, you have $1.2M. On the other hand, if you put $1M in the stock market, and borrow another $1M (at a low interest rate like 5% which the hedge funds probably used to get), then your $1M has a gain of $400k less the 5% interest which is a total of $350k. Thus your investment went up 35%, not 20%, due to the advantage of leverage. Some academics say that the entire hedge fund "premium" (or "alpha", as they call it) is due to leverage and you or your endowment could accomplish the same thing with debt all by yourself (without the 20% cut of profits).

With the "high water mark" issues, the fact that 2% of assets doesn't go far when your asset base has declined 40% due to losses, and the fact that banks and other entities aren't loaning out cash cheap to hedge funds anymore, the whole industry is facing a bleak future. Some commenters are expecting 1/2 the total hedge funds out there today to fold.

I was struck when I read today's Barrons' and you could see the performance statistics and strategies for pages and pages of individual hedge funds in tiny type. The hedge funds used to highly value their privacy (some, like Madoff, for obvious reasons) and this clearly isn't the case anymore.

One argument in favor of the 20% "cut" of profits (I don't begrudge them the asset fee) is that their strategies were proprietary and hard to pull off. But when I look at these pages and pages of hedge funds, often with very similar performance under each strategy (and most of the strategies relatively understandable), I don't see that at all. Obviously it can't be so hard to do strategy "X" because there are many other funds doing the same thing, getting roughly the same results.

These strategies could likely be pulled off, if they were desired, by in-house staff at large institutions or endowments or within large brokerages like Fidelity or Schwab with a much lower premium than 20%. Then individual investors could purchase shares in those if they desired to participate in the strategies.

Watch for the final indignity; lots of these hedge funds will close up shop because they don't want to work for years without their 20% cut trying to recapture the investor losses, and then they will spring back to life with a clean slate and start earning the 20% on NEW investor money. Maybe the investors will demand tougher conditions (10% of profits) or actual "claw back" provisions where they can pull back money earned from the fund if losses occur later. Or maybe they will hire a few of their people and do it themselves, probably for closer to the 2% management fee than the 2% plus 20% model.

Cross posted at Chicago Boyz

Vaseline Intensive Rescue Clinical Therapy

About a month ago I received an email from someone I didn't know. It was one of those where you sit and look at it, wondering if you should open it up. I did, and it ended up being from a marketing company that was hired to promote products. They wanted me to do a review of the above lotion. I have no clue how they found me, but the nasty dry winters of the midwest are a perfect place for them to market and sell this product.

This is the second time I have been "paid" to blog, the first resulting in a free picture book of old photos of Madison. So I sent back the usual reply to them, saying I am happy to take the stuff off of their hands, with one caveat - I would be truthful in my review.

I received a half dozen containers of this lotion yesterday and I have to truthfully say that I like it. I received the unscented version and this made me very happy as my nose is extremely sensitive - I rarely let my wife wear perfume because my eyes water and nose runs if I smell it too much. It is literally worse than taking a punch in the face. Anyway, this stuff has a very faint odor - it almost smells like one of those inner tubes you would blow up for your pool. Sort of plastic like. But the smell isn't that big of a deal.

When you rub it on your hands I like the fact that the greasiness goes away pretty quickly. I don't know if this is because my hands are so dry, or if it is because of the composition of the lotion. Probably some of both.

This lotion also passed the "mom test", so we will be using it on the kids as well.

I don't know if you can use it on your face or not - it doesn't say you can, but it doesn't say you can't. I usually grease up with some Ponds every morning after shaving, but I think I might give this stuff a go as well.

So, if you are looking for some lotion to combat the dry winter season, I would recommend this stuff if you can find it.

Entertain Your Friends

I found something else that you can do with your iPod Touch... entertain a lonely parakeet! The video looks much better in high quality, too (you have to double click or click thru to you tube and then select that option).

Christmas Smorgasbord

Click photo for larger.

I think we have hosted Christmas for the last five years or so. I actually sort of like it - it is our turn for many more years, until one of my kids eventually hosts it. The first couple of years we had a giant sit down dinner, but lately (I think the last two years) we have done the smorgasbord. This is a much more relaxed, conversation friendly way to eat imho. Everyone picks at what they want at their own pace, and you can go back for seconds if you want (or, in my case, thirds). Of course the appetizer course was cocktails. Here is this years version of the smorgasbord:
Let me see if I can do it right, we will go clockwise, starting at the bottom right. That is fondu, bread and apples that you dip into the cheese. Then are pastry cups filled with a spinach mixture, and some are topped with goat cheese. Then the traditional pickle and olive plate. Next is ham, and you can see the bread above it for little sammiches. The ham is from our local pig guy that I discussed a little while ago. I was sneaking chunks of it while slicing it up. Next is a covered dish - that is my wife's world famous Swedish meatballs. Then a brie that we baked. Next to that is steak tartare - what we call cannibal sandwiches. Raw ground beef, mixed with one egg and onion. Of ourse we also have shrimp cocktail, deviled eggs, a veggie tray, and fruit and cheese on skewers. The kids totally chowed this. And lastly, the towers of sweets for the end. MAN was I stuffed, and got to sneak in a late afternoon nap later with the cat and my youngest right next to the fire. Life was pretty good yesterday.

Merry Christmas

While not as comprehensive as Gerry's awesome post, here is my favorite all time X-mas song, by far.



So Merries to you and yours, from me and mine. And as always, thanks for reading LITGM.

Hitler Was a Bear Season Ticket Holder

Cross posted at Fire Ron Turner.

My Favorite Christmas Tunes

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While my mind longs for next year’s fishing season my ears are tuned in to my favorite top five Christmas songs.

Don’t laugh.

#5 This is the sound track to an ancient animated feature that played on Chicago television in the late 50’s (as far as I know but it was probably played elsewhere). This little ditty reminds me of shoveling neighbor’s driveways and walkways for money as a kid after Catholic grade school in the mid 60's. Here’s the classic Hardrock, Coco and Joe.



#4 One for the hippies. I hate Yoko but I like the tune. And I miss John.




#3 Nothing like the SoCal beach scene and hot rods to stoke my Christmas spirit.




#2 After a luxurious midtown Manhattan steak dinner and a few Bombay Sapphire Gibson’s I think I’ll go lay on da’ couch. I’ll be home for Christmas, after I sleep it off Dean Martin style.



#1 This is the ultimate seasonal song. Take it away, Nat.



Finally, the best non-conventional Christmas tune belongs to the King. It's not in my top five but deserves a listen...



From the country bunker here near Valpo to all of you out there, Merry Christmas, everyone!
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Laugh Out Loud

I am a sucker for various lists and compilations. I love the process of taking an abstract, disorderly mess and putting some criteria plus personal preferences and creating a list.

Every year there is the "best of" list and "worst of" list for albums, movies, books, etc...

But The Onion does it one better. They created the "Least Essential Album" list that doesn't pick out the worst music (that is kind of easy), but the music that is totally unnecessary.

Just try to read this entire list without laughing out loud a few times...

Municipal Bonds... and Illinois

MUNICIPAL BONDS

A difficulty with finance is that statistics are all backwards-looking. For instance, there were umpteen articles about how stocks "return x% over y number of years" or that "residential real estate is a solid investment based on returns in area x over y number of years". We all know how those assumptions turned out.

While research is useful and assumptions need to be made, a crucial error that has lead to much of our financial malaise is due to retaining assumptions too long rather than chucking them aside when the underlying facts on the ground change. You also need to be aware of shifts in sentiment and try to anticipate what is going to happen next.

Specifically, municipal bonds have historically had a low default rate, less than 1%. And when they do default, investors generally have a relatively high "recovery percentage" (as opposed to Lehman when creditors received 7 cents on every dollar owed). Many investors view them as almost as safe as the debt of the Federal government. Municipal bonds are (generally) tax-free, so a municipal bond can have a lower debt coupon and still attract as many investors as a tax-adjusted amount from a corporate bond sale. I am generally speaking of general obligation debt, not the revenue bonds that might be tied to corporations or other initiatives (these carry a higher coupon and default rate).

More Doctors Smoke Camels Than Any Other Cigarette

I like old advertisements, and YouTube is just the thing for that fix. In particular I like old cigarette ads. We are so programmed to think "smoking bad" now that many seem to have a reflex action against smokers and/or smokes. Frankly I don't care if you smoke, but I might avoid you a bit to stay out of the by products. I can't have that crap in my lungs or it will affect my athletic performance. But if you like to smoke, go ahead, I don't care.

I detest these measures of late that force businesses to be "smoke free". I have to admit that I am entertained by the knots of smokers standing outside restaurants and bars.

Along these lines I found this CLASSIC advertisement that I thought I would pass along.

Fitness Year Completed

As the year winds down, lots of things come to an end. Tonight my fitness year came to a close. It was the final Muay Thai lesson, and my last strength circuit. The gym closes for the year after tomorrow night, but I am done for the year, and said my goodbyes and "Merry Christmases" to everyone there this evening. See ya next year.

I am very pleased with my fitness year. I was religiously at the gym for my Muay Thai lessons, leveled up twice in the Muay Thai curriculum, received my pad holding certification, became an assistant coach on the fight team, and began strength circuits. I even taught some Muay Thai classes to the beginners and actually trained fighters who got in the ring. Some won, some lost.

There were a million reasons I didn't need or have to go to the gym, but I went. And went, and went. I went in the snow, I went in the heat. I put in a ton of work there, and I am glad to say that it is time for a nice two week break. My body needs this opportunity to heal itself from all of the dings, scrapes, bruises, and aches. All I am going to do from now until the gym re-opens is some cardio every other day on the treadmill and stationary bicycle, to stay in shape. The gloves and shinpads are hung up - no Muay Thai until next year.

On top of all of this I managed to bike somewhere between 1500 and 2000 miles, which is a new record for me. I will keep track better next year, to see exactly how many miles I bike.

My body is ready for a break. This two weeks will do me a lot of good. I plan on getting a few more massages during the break, and trying to eat well. That will be tough with Christmas get togethers, but I will manage.

So...time for me to put up the feet, watch some college football, and booze a little too much for the bowl games. I deserve it. But in a couple of weeks, time to hit it again. There is no stopping now.

Here’s A Toast To A True Gentleman…

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Here’s an early Christmas toast to regular reader Johnny J. Johnny has his own blog:

http://scudmark.wordpress.com/

which I read regularly and leave appropriate comments at times.

Johnny bet me that Washington would beat Notre Dame a few months back. He bet from his heart, which is the wrong thing to do. I learned my lessons. So ND kicked the Huskies a$$es along with any team that played the lowly Un Willing Ham’s from Seattle.

At first I was afraid to bet because ND has been on the slide for about a decade and nothing I see shows me that anything will reverse that slide in the near future. Each ND game is a crap shoot. So Johnny wanted to bet a “sixer” that ND would lose to Washington. I took the bait, ND won much to my surprise.

Today in the mail came a box from Johnny. It wasn’t heavy enough to be a six-pack. Instead he sent a bottle of Gentleman Jack Bourbon. Very, very nice. Much more better than a six-pack.

So here’s to you, Johnny. You’re a real gentleman. And congratulations to you on your recent special announcement. I’ll drink to that!

Look in your mailbox soon for another batch of pheasant tails. Hope it is enough to satisfy your fly-tying jones for at least another year.

Oddly enough I was in Chicago this morning. While there I delivered my losing bet of a case of beer to Carl for the season-long college football pool.

I had Notre Dame. Oh well.
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Anywhere Else Most Likely A Drive Off...

As I was walking at Grand and LaSalle today doing some Christmas shopping the guy next to me pointed out something in the snow right next to us. It was the nozzle from a gas station that someone had apparently driven off with and which ended up here. If you look in the picture to the upper right you can see the BP gas station from whence it came...

Weirdly enough, what I thought of immediately was not that someone absently drove off with that nozzle still attached to their gas tank, nor that they stole the gas and drove away in haste, but that they (might have) drove off with that nozzle still attached in fear from attack from aggressive vagrants.

River North is a very wealthy area of Chicago, but since we are near downtown and filled with (well meaning) tourists, our neighborhood is filled with the homeless, bums and panhandlers. Here is a helpful schematic post that I created to identify their various types. That BP gas station is notorious - I won't go there at all if I can possibly avoid it, because they so aggressively try to pump your gas for you and you can't really get away from them if you have to stand there while your tank is filling.

The situation was documented when an off duty policeman was stabbed by a homeless person while filling his gas tank at that very station. Here is a link to a story about that stabbing. You'd figure that an off duty policeman is likely to be an intimidating figure, so it would be much worse if you were a woman or elderly.

Or it could have been a drive off, or someone who is absent minded. Either way I'd recommend that you find a different gas station.

Nature’s Zamboni

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It’s been snowy and cold here in Valpo since Halloween, an early winter indeed.


This morning we awoke to a freaky overnight storm that went from snow to sleet to freezing rain and back. It glazed the driveway but since it was mixed with snow and sleet this little winter cocktail went down easy.


We were worried about trees falling. If this storm had any breeze to it 100’ tall hardwood trees in my neck of the woods would be crushing houses at will. A dead branch or two fell harmlessly.

There’s still a layer of late-falling oak leaves on the lawn under that early winter frozen crust too. Not good.

The outboards and tractor have yet to be winterized.

This early cold spell screwed everything up. At least the hunting season was outstanding.

Global warming my a$$.
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Ahhhhhh...

I had my first ever massage on Tuesday night, the night after my Muay Thai test. It was simply awesome.

The woman who massaged me was about ten years or so younger than myself, and an elite triathlete. Before we started we talked for about fifteen minutes or so about what was hurting me, and how she could help. Almost all of her clients are athletes so that fit me perfectly.

I really had no idea what to do or what to expect. I was told to disrobe and get under some sheets. She told me that about half the guys stripped down to nothing and the other half leave on their underwear. Just from a hygiene standpoint I chose the latter.

She started with what I would describe as some probing actions, I guess to guage my muscle tone and how well I would handle things. I requested info from her as we went along as to the state of my muscles.

My main problem areas are my shoulders, upper back and neck from the weightlifting of late, and sparring. She worked my back quite a bit - I had many, many knots in my upper back. It was interesting to see that there were knots on different sides, in different places. Nothing was symmetrical. She could also tell that I kicked more with my right leg from the tight spots in my trunk. The masseuse really knew her muscles and told me how they all connected and worked together. It was quite educational.

When she started to work on my legs I told her that it was no big deal, that they felt fine. She started in and asked me if I was sure of that. I said yea, my legs never hurt too much and OOOOOOOOOOOOOWWWWWW! My legs were pretty much trashed, but I was so used to it that I didn't notice - many of the nerves are deadened down there from all of the repeated kicking (as they should be). I could literally feel her pushing the lactic acid out of my thigh and calf muscles. It hurt and felt good at the same time. She could feel trauma in my thighs from my tough sparring on Monday night.

I am so happy that my wife got me a five pack of these for my birthday.

From our schedules conflicting and the holidaze I wasn't able to get in again until a week from Monday - I think the second session will help me even more as I won't be banging around in the gym for a couple of weeks, just some simple cardio for a few weeks to keep in shape until next year. I will relax more next time and let her do her work on me - and I HIGHLY recommend a series of sports massages for anyone seriously involved in athletics.

iBonds Update

Recently I have been writing about investing in secure securities (i.e. where you can't lose money, except in extremely unlikely scenarios). I focused on purchasing CD's that are insured by the FDIC and constructing a "ladder" of varying maturities through your brokerage account. The return on these CD's is much higher than is currently being offered by US Treasury securities and has other advantages such as convenience and simplification of statements.

There is another form of safe investing that is easy to do and risk-free (assuming the US Government does not collapse). This is called an "I Savings Bond" or "iBond".

ABOUT IBONDS AND CALCULATING THE INTEREST RATE:

iBonds are issued by the US Government. iBonds can be purchased at www.treasurydirect.gov after you set up an account and provide appropriate information, at zero charge. The iBonds are issued electronically and the money moves electronically which makes them very convenient, as well.

Unlike virtually all other types of bonds, the iBond interest or "coupon" rate is tied to the inflation rate as measured by the US Government. Virtually all other bond instruments either adjust their coupon rate according to how interest rates move (short term rates mainly determined by the Federal Reserve, long term rates a combination of short term rates and market sentiment) or the price adjusts (i.e. if you have a bond paying 6% interest and the market price moves to 5%, you could sell that bond for a gain in the market and it would be priced "above par"), depending on the type of bond.

The iBond has 2 components; a "fixed" interest rate that has varied between 0% (low) to 3.4% (high) over the last several years and a semi-annual interest rate component tied to the rate of inflation that changes every six months. ONCE YOU BUY AN IBOND THE FIXED RATE NEVER CHANGES, but the semi-annual component tied to inflation adjusts every six months (thanks to an alert reader for catching this error in a previous post). iBonds have a thirty year maturity.

The "fixed" interest rate component has had different base rates since the iBond program was started in 1998. The "fixed" component was 3.4% in 1998 and then dipped as low as 0% for bonds purchased between May 1, 2008 and October 31, 2008. The current fixed rate component on iBonds is 0.7% for bonds purchased between November 1, 2008 and April 30, 2009. If you buy iBonds today that "fixed" component will stay the same until you cash them in or they mature, 30 years from now.

The "variable" interest rate component is determined by the inflation rate, divided by 2 (the semi-annual inflation rate). The current semi-annual inflation rate is 2.46%, or 4.92% for the year. Thus iBonds purchased between November1, 2008 and April 30, 2009 pay about 5.64% (it is slightly higher than 0.7% + (2.46% * 2) because of compounding interest).

Note that if you buy different issues (i.e. $5,000 / year) of iBonds, your fixed rate may vary by year, but the "variable" component will be the same for each issue over every six month period. I realize this is confusing (it confused me, for what that is worth) and here is a link to the government site where they try to explain it.

IBOND LIMITS AND REDEMPTIONS:

An individual can purchase up to $5,000 / year in iBonds. If you are married and want to go into details 2 individuals can purchase $10,000 / year in iBonds under 2 SSN's, electronically. You can also go physically to a bank and buy "paper" iBonds up to that same limit (this can be done at a bank). You can also purchase iBonds for kids (i.e. for college or a trust account) under their SSN up to the same limits.

UPDATE - THE LIMITS HAVE BEEN REDUCED TO $5000 / YEAR AS OF 1/1/08.

You can't sell back your iBonds in the first year after purchase (unless there is a natural disaster or some other unique circumstance in your area); thus they are not "cash and cash equivalents".

If you sell back your iBond within 5 years of purchase, you lose one quarter of one years' interest. After 5 years you can redeem your iBond with no penalty.

IBONDS AND TAXES:

The advantage of iBonds is that you can defer Federal taxes on iBonds until they are redeemed, and they are immune from state and local taxes. Deferring taxes in this manner is useful because the interest that would have been taxable grows at a compound rate for the life of the bonds. In some circumstances (using them for education), the interest isn't taxed at all when the bonds are redeemed (you should read about these at the government site, I am not an expert on the various criteria, but they seem pretty generous). Overall, iBonds receive very favorable tax treatment. IBonds might be considered as part of your college savings solution; they essentially have the same treatment as 529 accounts (you aren't taxed on your earnings, assuming they are used for qualified education purposes). If you wanted a guaranteed portion for college you could use IBonds and get a guaranteed (albiet low, if the markets are booming) return.

IBONDS AND INFLATION:

iBonds provide protection against future inflation. If you own a bond with a fixed coupon at, say 6%, and inflation moves from 3% (current rate) to 5%, it will significantly erode the value of your bond (the price in the market will be lower if you want to sell it prior to maturity; you will receive your same coupon payments in the meantime). For iBonds, however, they automatically adjust to the inflation rate, and thus they provide a "hedge" against changes in inflation. For this reason it may be good to have them in your portfolio, because they are not correlated with your other investments (this is a good thing in "portfolio theory" terms).

Note that inflation as computed by the Treasury may not match actual inflation; they measure a basket of goods and don't count services like college costs nor do they count real estate (an asset). Thus YOUR rate of inflation could be much higher (or potentially lower) than the rate quoted for your iBond.

SUMMARY:

You may want to look into iBonds, especially if you are in a high tax bracket or the AMT. iBonds have very favorable tax treatment, more so if your state has a high tax rate. iBonds are also attractive if you are saving for college for yourself or your children; the interest may be non-taxable if used for certain purposes.

iBonds don't come with any expenses and are easy to buy and sell. You don't have to deal with a broker, you can just do it all online at the Federal government site.

IBonds are currently paying VERY competitive rates - 5% - 6% depending on when you made your initial purchase - but this could easily go down if inflation slows with the cooling economy. CD's are paying 4% or so for a couple year maturity. The brokerage CD's have an advantage in that they can be sold in the open market while the iBonds are "stuck" for one year. Money market (which is paying below 2%) is immediately available (but less well protected, in extreme cases).

The 1 year "lock up" and 5 year "interest penalty" of one quarter means that you shouldn't use this for your emergency fund. They might be a good component of a balanced investment program, especially if inflation rises which will erode your other bond and fixed rate investments.

Cross posted at Trust Funds for Kids

Montana-Bahn

There is a comment thread over at Chicago Boyz responding to my comment on Chicago drivers tearing down the left lane of I290. Someone asked if there was any experience about the experiment of unlimited speeds in Montana (they do have limits at night).

I... uh... found this photo on the internet of someone driving quickly in Montana. Rumor has it that there are many wide open spaces where you can see far ahead and the flat landscape means that there is no where for authorities to find you, should they care to do so.

There are speed limits at night and these are taken seriously; there is an amazing amount of wild life in parts of Montana and you do not want to hit them with your car at high speed.

Suburban Wildlife Link Dump

A few days ago I left my gym after another great workout. It was around 9pm. The parking lot and surrounding area was cold and dark. The usual silence was broken by a sound I hadn't heard for 30 years, since I visited a family friends' farm. I heard the distinct sound of coyotes howling. It sounded exactly like this.

I was shocked and not shocked at the same time. I have written rather extensively on the coming issues we have with animals encroaching back into suburbs and cities. On the one hand I was surprised to hear the coyotes so close to me smack dab in the middle of Madison, Wisconsin. They sounded very excited, and I surmised that they were celebrating a kill, be it a domestic dog or perhaps a deer. On the other hand I remembered all I had written about the seemingly increasing populations of wild animals in what used to be a "no mans land" for wild animals - urban centers. After thinking about it a while, it really is no surprise. The zoo does indeed seem to be coming to us.

All of my evidence that I have presented in my writings seems to support the idea that burgeoning populations of coyotes, turkeys, cougars, birds of prey, deer, and other creatures seem to be popping up in and around cities. Also, all of my evidence is totally and completely anecdotal. I am not a wildlife expert, but have a keen interest in this subject. Every single comment I have received here and at other blogs that I write at seems to support one general theme. The theme is that wildlife is almost certainly exploding in population and making a move into cities from the country. I remember some thirty years ago, when I was a boy seeing a deer and thinking it was an act of god. Now there is hardly a day that goes by where I don't see at least one and usually more deer on my way to work. That is only the beginning of what I see as one very large critter problem that we will have to deal with in the very near future.

I am not talking about the idea of "urban sprawl". I am more interested in investigating communities that have been around for quite some time that are now getting visitors that they haven't had for quite some time. Of note, deer and coyotes seem to be making gigantic comebacks. The cougar populations in the plains are swelling too, causing the males to begin making treks outside of their normal lands to find their own hunting and breeding grounds.

But enough of that, on with the links. Today we will cover cougars, coyotes and birds of prey.

Cougars:

Reports from Louisiana, Nebraska (YOW that is one LARGE kitty), Nebraska again (nice shot!), South Dakota (again, nice shot), Manitoba, Saskatoon.

Coyotes:

General info about coyotes. Northeast USA, Chicago (youtube link - excellent job by animal control btw), Dallas, New York City, Pittsburgh, Columbus.

Birds of Prey:

Peregrine Falcons in Iowa, Ann Arbor, Buffalo, and general information about the comeback of the Peregrine.

Urban Hawks - A whole blog about the birds of prey in NYC. Amazing photos. Red Tailed Hawk in San Francisco. I see a lot of these around Madison. Also, Red Tailed Hawks in Boston, New York City (good photos), Cleveland and Omaha.

Ealgles: Arlington, New Haven, Dublin, CA, Baltimore, Orlando.

If this subject interests you, visit Jonathan's new blog Subdivision Wildlife , and if you have any photos of urban or surburban wildlife, submit them to me at johnstone185 at gmail dot com, or to Jonathan at submit at subdivisionwildlife dot com.

Cross posted at ChicagoBoyz.

Photo Bleg

My friend Jonathan from Chicago Boyz is setting up a blog about a pretty popular subject that I have blogged about beofre, urban and suburban wildlife. If you have any photos that you wouldn't mind posted there, please email them to me at johnstone185 at gmail dot com and I will forward them to him. Please put in a location (be basic to protect others privacy) if you submit a photo. Thanks!

Green Sash

Last night's testing was probably the most interesting one I have been through. This is my third testing. Over a year and a half at Muay Thai now. Man, how time flies. I am glad I have been documenting this journey here - it is pretty interesting to go back and read my old posts on MT. For me anyways.

In the beginning of the test everybody in the advanced class was asked a boatload of questions on combinations and how to counter. Everyone missed some questions. It was tough. I can hardly remember what I did yesterday, much less a clinch defense from four months ago. But I got all of them right that I was asked except for two or three. Better than most.

Later in the test our group really got it together for pad drills and a flow that we had been working on for quite some time. At the end the conditioning was tested. After doing the flow for two rounds (this is very tiring as you are hitting pads the whole time) we did two five ups. These are pyramids of kicks where you kick 1, 2, 3, 4, and 5 with each leg, while giving a punching combination in between each set of kicks. That is 30 kicks. We are expected to complete this in a short period of time (approx 60-90 seconds) so you really need to motor. After that, two rounds of sparring (I will get back to the sparring later). Then, push ups, abs, running, squats and some other stuff that I couldn't remember. In all, about an hour and a half and the test was over.

The class in general received a pretty good tongue lashing after this one. This is in contrast to the last one where the test was phenomenal. The instructor was obviously disappointed in the class, and noted that class attendance was down, people weren't helping each other with encouragement, and that the class was out of shape. I am none of those things, but he was really trying to make a point and I think he did. I feel that he grudgingly passed some people who were there, but also think that in the future he will just not let people test if they don't attend class enough. We will have some new people in the advanced class next year and maybe that will motivate some of the guys to get more out of themselves.

I received recognition as having the best test in the class. I was pretty honored, and received a gift certificate for money off the pro shop. This comes in handy as I need new gloves in a bad way.

My whole left side is pretty sore today from the sparring we did. I was matched up with a guy who has been there forever and he was very good, but so was I. He caught a lot of my kicks, and even caught some of my knees (never been there before). We both tossed each other to the ground several times. He delivered one body blow to me that almost put me down but I recovered and pushed through. That one I can feel in a big way - no bruises this morning, but I guarantee there will be some battle wounds showing through in the coming days. By the end of the second round of sparring he was gassed and I was able to pile up some points and had my way with him from long range. It was fun to kick and punch him without getting anything returned. I was extremely happy with my sparring, and my strength training really paid off in the clinch as always. The instructor complimented me on my sparring and told me for a guy who isn't planning on getting in the ring I look pretty damned good out there. I was very happy.

Today is my first sports massage and it couldn't come at a better time. We have just two more classes, on Saturday and Monday, and these should be easy, "wind down" type of classes before we start into curriculum again next year. The gym closes on the 23rd until Jan 5 so that will be a welcome rest for me; while the gloves are hung I will just do some basic cardio on the stationary bike and treadmill. My body needs the break - I have been training pretty intensely for this test. And I am glad I did.

I’m Just a Lucky Duck

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Three days to hunt ducks is not enough. Considering that I stood in sub freezing temperatures (the heated blind helped a lot) in neoprene chest waders and was warm as possible it took a toll on my legs and back from hours of standing. My legs are still wobbly a week later too. But it was definitely worth any discomfort to experience waterfowling at it’s absolute best. I would do it tomorrow all over again for a few reasons.


First, the people. I was with veteran hunters who knew duck and goose hunting inside out and they were fun to hunt with as well. Without Nestor we would not have called in as many ducks as we did. That’s a photo of Nestor above getting ready to call in some ducks.

Nestor’s a very good friend that I have known and hunted with for over twenty years. It would not have been possible at all without him and his hospitality. His wife and mine were dorm mates at Purdue where all four of us met in the early 70’s. Getting together with them is always a warm and enjoyable experience. We have a lot in common family-wise. We laugh and curse at the same things. Politically we are joined at the hip.

The other hunters in the blind were all my age or older. With the exception of my good friend Nestor and myself all the members of this club are law enforcement professionals. The club president is a retired and legendary Illinois DNR C.O. (game warden) called J.R. He’s either cursed or loved by many hunters in southern Illinois. Funny thing, our other three blind mates at Honker Hilton were all named G(J)erry. Three other G(J)erry's in one place never happened to me before. Here we are.


From left to right: Jerry, (retired miltary), Jerry (correctional officer) Gerry, (pilot for the U.S. Fish & Wildlife Service) and me, Gerry From Valpo.

During slow times I heard a lot of stories. My favorites were from Gerry S., the pilot. He served in Vietnam flying Cobra and Huey attack helicopters. When I asked what his missions were like he said mainly to deliver rockets against NVA positions. He compared the cost of a load of AGM’s to a Cadillac Coupe DeVille. In 1968 a Caddy cost about $4500. His full rocket load cost $4500. He called his missions “delivering Cadillacs” since each time he returned to base the rocket bays were empty. I asked how many V.C. and NVA he may have killed. His response? “Not enough”. He served in the reserves until two years ago.

He served recently in Iraq flying Chinooks while his son was also called up for duty at the same time. He had photos of them in together in Baghdad. What a pleasant, interesting and funny guy he was. At 60 years old and two stints in his arteries he was still flying into remote outposts delivering troops and supplies in Iraq. God bless people like Gerry S.

Now Gerry S. flies small aircraft for federal biologists to survey the migration routes to photograph and estimate waterfowl populations among other things.


Second, There were a lot of birds. Any successful wild hunt involves timing. Timing the rut in deer hunting like timing the migration in duck hunting, both involve a natural occurrence, weather and time of day. Put it all together and all you need is good marksmanship to be successful. We happened to hit the perfect flight day. This happens when tens, possibly hundreds of thousands of ducks fly non stop for hundreds of miles seeking a new food source and open water. The ducks we saw has just arrived at this location within the previous day or so and would be around until snow covers up the food or the water freezes or both. One Jerry said all these ducks had in mind was getting mud on their feet and corn in their bellies. The sky was literally thick with them on day three. I have no images of these flights because it’s hard to hold a shotgun and take photos at the same time. Priorities, you know.


It was flight after flight and most of them worked in close, many not close enough. There was a lot of second-guessing going on. Were they too far to shoot? Too close to scare the rest of the flight? Did too much ice flare them? Were too many decoys out there for this time of year? It did not matter to me, I was having a ball with all the shooting opportunities and the sight of all these ducks flying.

Day three was outstanding. We did not get a limit for five hunters but plenty of ducks came home with me, well, at least their breast meat did. Yumm. Never have I judged an outdoor experience based on the amount of game taken. Limits are fine but the enjoyment goes way beyond the total bag to me. I took home about a dozen.


Nestor has a trip planned to northeastern Arkansas in January to a large corporate hunting lodge near Stuttgart AK., another legendary waterfowling hot spot. He asked if I was interested.

Sign me up!

Christkindlmarket Chicago

The Christkindlmarket occurs every year in Chicago in Daley Plaza. Here is a link to the official city of Chicago web site for the festival. I try to stop by every year for a bit because it is free and a lot of fun. Above is the huge main tree in front of the Daley Center next to where Santa sits for little kids to tell their Christmas wishes.
They have an elaborate train set lit up, as well. At the time I took this photo the trains weren't working but the lights were on.
They have food of all sorts, including German Bratwurst and Sausages. There are also tents serving beer and hot, spiced wine - I think it is called "glogg". I will be a dutiful reporter and check out the beer tents and get back to you.

Not Fair

I stumbled upon this video. It is pretty ridiculous.



Back in the day, K-1 would put on exhibitions where people of different martial arts styles would fight each other in the ring. This one is particularly bad.

The western style boxer was clearly unprepared to enter a kickboxing match with an experienced Muay Thai fighter and MAN did he eat those leg kicks. Ouch. After the second one you can see the trepidation on that guys face. Also he tries to block a low kick with his hand, and is almost rewarded with a kick to the grill. The boxer also makes the near fatal mistake of dipping his head in the clinch, and that is met with a knee to the aforementioned grill.

Exhibitions like this are ridiculous. They should have either make the boxer prepare correctly, or not allow the match to go off at all.

My thighs hurt from seeing those kicks - I can assure you that they hurt like hell, with shinpads on, much less without shinpads as you saw in the video.

I'm Thinkin' Baseball

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OK, so the NFL playoffs have not yet begun and no college bowl game has yet to be played. But recent events got me thinking about two openly partisan Chicago baseball fans who are in the public eye.





Being a Sox fan is the only nice thing I can say about that cat. Seeing both in prison would be better than another White Sox World Series victory to me.

Holeee Cow -Harry Carey
He Gone!-Ken "The Hawk" Harrelson
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An Interview Entrepreneur

I was walking near work recently when I saw this guy with a sandwich board (it was a few weeks ago because he isn't dressed like an Eskimo) and a sign reading "I will buy an interview" and his own web site www.buyaninterview.com. At the web site you can see that it is the same person in the photos - his name is Javier Pujals. From a review of his resume he has a varied business background, acting as a project manager, business analyst, and having set up his own firm at one point. He also says he has five kids, which probably accounts for his zeal and ability to face ridicule by standing on the street corner like this.

As far as being a creative stunt, it is a good idea. This approach draws attention and if you had a marketing company you'd probably appreciate the "flair".

As far as the current job market goes, it is terrible. I was talking with a co-worker recently about the idea whether or not someone was a "flight risk" - then I interrupted and said, "where is he going to go to find a job?"

Companies across the spectrum are cutting back. The financial sector is seeing layoffs at major banks and retail chains and restaurants are liquidating. A friend of mine said that there is hiring - "in medicine and education" - and I took a look at the Sunday paper and, true enough, most of the want ads seemed to be in those two sectors.

I remember the economy in the early 90's... it seemed terrible. You had to take what you could get in employment, even if the fit wasn't right and / or the work was tedious or in a sector you didn't like. We had the dot-com bust in the early 2000's but this business downturn seems far more severe.

Best of luck to this guy...

Cross posted at Chicago Boyz

Treasuries vs. Certificates of Deposit

PURCHASING CD'S THROUGH YOUR BROKERAGE ACCOUNT

Recently I wrote a post about how CD's can be purchased through your brokerage account (Fidelity, Schwab, Vanguard, etc...) and how easy that it is to do so.

Recently I built a "ladder" by taking the amount that I wanted to invest and breaking it into 4 equal groups and buying CD's as follows:

one year interest rate 2.75%
two year interest rate 3.95%
three year interest rate 3.9%
four year interest rate 4.1%

I called my brokerage account and they read the rates & banks over the phone and I was able to make these purchases in about 15 minutes. The process is simple because they only offer FDIC insured CD's, so there really isn't much to differentiate each issue except for the frequency of payments (my 1 year CD paid out at maturity, the rest pay out either semi-annually or monthly, as I noted in my other article all things being equal the more pay outs you get each year, the higher the "real" return).

These CD's are very easy to administer because they were purchased at face value (no discount or premium) and when the interest payments are made they will just show up in my brokerage account rather than compounding with the CD, which makes taxes (a bit) more complex later.

The reason I built a ladder is because I am not smart enough to "guess" the yield curve and which way interest rates are going. As each component of the ladder matures (i.e. a year from now), I will repurchase a CD at the "far" end of the maturity level. For instance a year from now my 1 year CD paying 2.75% will mature and at that time I will buy a 4 year CD at prevailing rates (which could be higher or lower than the 4.1% I received today).

CD'S VS. TREASURIES

Recently Treasuries have been in the news since the yield on government debt has fallen to extremely low levels. This article describes the situation:

"Due to stampeding demand for safe short-term investments, the US Treasury's four-week and three-month bills on Friday yielded an effective rate of 0.01 percent -- down sharply from 1.515 percent and 1.785 percent, respectively, in early September... the 10-year bond yield fell as low as 2.505 percent and the 30-year bond yield slid to 3.005 percent at one point on Friday. The six-month bond yielded a mere 0.20 percent. The low yields reflect a surge in demand for these instruments, seen as the safest in the world during times of turmoil. Analysts say the fear factor has pushed up demand for Treasuries, since investors are virtually certain the US government will not default. The panic in global financial markets has sparked an unprecedented rush into safe US Treasury securities, driving yields on short-term government notes down to almost zero..."

To an individual investor, Treasuries and CD's insured by the FDIC should be viewed roughly as equal in terms of risk. It would have to be near "end of days" when the US Government defaulted on Treasuries, but the situation would have to be almost equally as dire when the government would consider letting FDIC insured bank deposits fail.

For large investors, CD's aren't really a substitute for Treasuries because of the limits on government insurance coverage and the comparatively il-liquidity of the CD market. Large investors, who are demanding access to low risk places to put their cash, are driving down the yields on Treasuries as noted above. The ten year bond per above is around 2.5% and presumably 2-4 year yields would be closer to 2%, so you are almost doubling your rate of return on CD's vs. Treasuries.

For smaller investors it is pretty clear that you are better off with brokerage CD's than with US Treasury securities for money that you wish to have some return and as close to zero risk as possible.

If you are interested in more information about FDIC insurance here is the official FDIC site and here is a link to Treasury Direct where individuals can purchase US government securities.

Cross posted at Trust Funds for Kids

A Thought Experiment

In past (work) lives I traveled across the USA and worked in many different cities. I think by the time I was done I had worked in 30+ states at one time or another. When I worked in Minneapolis, for instance, I was struck by the fact that when traffic was clear, most cars would travel near the speed limit, or maybe 5 or so mph faster. This pattern repeated itself in most other cities where I was forced to get a rental car and drive to the client on a regular basis.

In Chicago, on the other hand, on the few times when traffic is not congested, the average speed on an interstate highway like the Kennedy or Dan Ryan or Eisenhower is WAY up in the 80's. Even in a construction zone (like today on I88), if you drive near the posted speed limit, you are like a rock in the stream.

One of the clearest ways to test this proposition is to leave the Chicago loop on one of the few times it is not congested (say, Sunday morning) and take I290 (Eisenhower) West, towards the suburbs. I290 "starts" from the loop so when you get on it is WIDE open... and then as the exits move on traffic gets worse until you reach gridlock (on most days, not on a Sunday).

This photo shows the wide open traffic from the view of my high powered almost a decade-old Nissan Altima. You can see that I am in the middle lane.

The EXPERIMENT would be - how f*cking fast would you have to go in order to stay in the left lane until it ends (at Austin, when I290 inexplicably loses a lane) and NOT get passed, assuming it was mostly wide open in front of you. On a typical day you'd have to go at least 100 miles / hour because people are absolutely FLYING down that road. It is even crazier on the Dan Ryan once you get south of the Loop. I know that I am not crazy enough to do it.

I don't know what it is about Chicago drivers but they seem possessed to drive as fast as they can in the brief moments that they can see daylight and clear pavement.

Cross posted at Chicago Boyz

Practical

I have been doing a lot of reading lately about self defense. For the purposes of this post I will restrict the topic to open handed martial arts. Lets face it, if you are Bruce Lee, and you come up on any person who can shoot a gun, you are f1cked, for the most part.

I read an interesting statistic published by a prison guard - 70% of street conflicts end up remaining standup, and 30% go to ground. That is good news for a Muay Thai practitioner like me.

You can get attacked anywhere. In the grocery store, a parking lot, it doesn't matter. The key is to minimize your risk. I am somewhat poor at that last statement. Well, not as bad as some.

I like to sit and have a drink now and again at bars. The good thing is that most of my drinking is done well before 8pm, since I am now old - meh, lets say mature. But on occasion I will be out late at a bar and have a higher risk of a confrontation. Bars are fight magnets, compared to a health club, or grocery store.

That said, if I was approached to get into some trouble, as I was last year in Minneapolis with Carl, my initial reaction is to try to defuse the situation and get the hell out. Carl witnessed me do this and I was pretty proud of myself.

But there may be a situation where an assailant might have me cornered and push may come to shove. This video is the absolute best thing I have seen on self defense in a bar...well...ever. I never even considered the tabasco sauce - I put that stuff on everything I eat and very well could have a bottle on my table at any time in a restaurant or bar. And I LOVE the stance he uses to talk to his potential assailant.

Also note his use of head butts and groin strikes - this is very much modeled on Krav Maga or Jeet Kune Do.



Look up the rest of this guys videos and watch them all - they are REAL LIFE, outstanding videos about street fighting made by a guy who has been there, done that, got the t-shirt.

My first defense is still to try to avoid the situation and/or run like hell.

Two Rats

Some blog posts just write themselves... sorry my TV is in low-def but that sign next to Blogo is the iconic "Rat" poster that I wrote about and have a much better photo of here.

Cross posted at Chicago Boyz

Why Do This?

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Ever take pleasure in doing something slightly quirky, ridiculous or downright audacious while thinking nothing of it? You know what I mean. Urinating on a corner within two blocks of Wrigley Field on game day in broad daylight doesn't count.

When you mention an unusual activity you are about to partake in or have in the past to a friend or associate they may give you that ‘look’ and when they do you can be sure they are making a mental note to avoid your presence in the future. Works for me.

Why would anyone wake up well before dawn and drive to a rural iced up muddy waterhole and shoot at ducks even if there is no guarantee that the ducks will be flying? "Can’t you just buy chicken or duck at the grocery store?", she asks. Well, yes I can but it's just not as challenging to me.

If you are male and raised in a rural area or at least a suburb with some vacant woodlots nearby you might have built a tree house as a kid. We did. My friends and I built three of them. It’s a guy thing for sure. Girlyboys went shopping with mom.


Treehouses, that’s what duck blinds remind me of. Treehouses. A duck blind brings out the kid in this 50-something guy.

As kids we huddled in a cobbled-together shelter doing something you wouldn’t do at school or in a strip mall parking lot. As a grown up it's a similar experience. We went from Playboys to beer, from slingshots to large bore shotguns. Treehouses and duck blinds have a lot in common. Except the beer, obviously.


The private club blind we were in last week was more than 20 years old. The members rebuild it every few years but the framework is original. The shooting platform was uncomfortable to stand on but there was plenty of room and stools to sit on below. With ingenuity and overall comfort in mind the members built a kitchen with a heater and two bunks in a back room. It was low and tight but much more better than nothing.

On day two we got an early start and one member had an idea. Instead of wading out into the pond in the early morning dark chopping ice from the decoys one of us would crank up a boat and perform Coast Guard duty by breaking the ice. It was easy and it worked.

It got done with time to spare. The guns were loaded, the gear was placed within reach and breakfast was being cooked. Duck blind Sausage McMuffins. Amazing! They hit the spot too. At least one of us was on lookout at all times.

We had a few flights before noon and the members did an outstanding job of calling them in close. A designated member would call the shots on each flight. They used better judgment than I would. They were good at calling ducks in but many groups would not seal the deal. No shots beyond 30 yards were considered. Serious hunters would rather take a pass than wound birds and waste expensive steel loads. We passed on quite a few. the guys blamed the flaring mallards on the ice or too many decoys or both.


We bagged one mallard drake before 2pm. After that the air was alive with ducks of all kinds. There were Gadwalls, Widgeons, Bluebills, Pintails and one positive I.D. on a canvasback. Most were Mallards.

About 3:30pm one of the guys pointed to a large disoriented group of mallards about 300 yds. east. They were not flying in a V-line heading for a destination, they were circling and looking for a landing strip. He called them ‘corn chucklers’. These were birds looking to set in a cornfield for a night of feeding. They looked like they wanted to play with us and moved closer to our pond.



The callers did their thing, I dropped down so my face wouldn’t flare this group and looked out from behind some cover. This was a huge group. They were drawn in by the calls and the temptation of 200 or so decoys floating on the water with another 300 behind us in the cornfield. Soon, our blind was swarmed with mallards flying in circles overhead with three or so ‘scout’ birds slowly descending into our trap with wings cupped and little orange feet sticking out. These birds were probably shot at before while traveling fhrough Minnesota or Wisconsin and took no chances. Suddenly they were gone, I saw nothing. The guys kept calling. Then came the word.

“OK take ‘em high and left” was all I needed to hear. All five of us stood up, looked left and saw this huge wall of mallards about 15 yards away.

There was a volley of steel. Birds dropped everywhere. The dog took off into the ice water. We all jumped out of the blind and acted as if we just won the Super Bowl. None of these veteran waterfowlers have ever seen anything like this and neither have I. They estimated this flight to be over 300 mallards. At least.

Max, the blacklab, was making retrieves out in the icy water. Two guys went into the cornfield to pick up the deceased that landed out there. Back into the blind we went. Would more come? They sure did! Problem was, none would be called within range. All ducks highballed into one huge cornfield about a mile away. We just watched and hoped tomorrow would be as good.

It was.
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The Good Old Days

Cross posted at ChicagoBoyz.

The Ducks Stop Here.

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Southwestern Illinois.

Took a trip last week for what promised to be some successful duck hunting. Been going there on and off for about 25 years.


Unless you live near a big river, waterfowl hunting is a complex affair involving travel, daily commercial club fees, a guide and dog with tip, food and lodging. Oh yeah, and bar tabs. It can cost thousands to hunt a productive flyway or you can have connections, like me, the lucky duck.

My good friend Nestor happens to be a very serious waterfowler. His wife and mine were dorm mates at Purdue and he was a student there as well. I visited West Lafayette every other weekend in the early 70’s and we had a lot of good times. He and his wife now live in farm country outside a small town southwest of Springfield IL and have for years. He is a passionate waterfowler and since he is in the agri-business there is plenty of time for him to hunt after the harvest. A few weeks ago we made plans for a yearly social visit and to whack some mallards.

The peninsula before the confluence of the Illinois and Mississippi rivers is as good as any for late fall ducks. A lot depends on the timing of the migration to increase our success. Ducks and geese migrate for two reasons, food and water. A good early snow pack and iced in lakes up north chase them south in search of snow free corn and beans that dropped from the combines. Waterfowl migration has nothing to do with their desire for warm weather and sunny beaches. The week before was the perfect set up for a large migratory flight as fresh snow and ice along the northern flyway should send them packing.

When I arrived Nestor had bad news. The club in which he is a member has been slow to dead and they had seen nothing for days. It’s located northwest of his place near the Illinois river. However, he knows a lot of hunters and club members elsewhere and they trade access permission if one area gets hot over another. He adjusted his plan to target the bottomland of the Mississippi river at another private club where another friend of his is a member. He called and we were granted permission to hunt their blind. Still, that didn’t mean the ducks had arrived on the Mississippi either.


The club we had permission to hunt is called Honker Hilton. It has seven members, all of which are involved in law enforcement. The president of the club is a retired Illinois DNR Conservation Officer – a Game Warden called J.R. They are all my age and above, grizzled waterfowl veterans. This sounded really good.

The members rent the property, which includes a ten acre lake surrounded by cornfields. It sits in the flood plain just east of the Mississippi river on the Illinois side between Louisiana and Clarksville Missouri. This is legendary, traditional waterfowl territory.

On the first day Nestor, his other buddy named Jerry and I put on the waders, grabbed our guns and left the rustic (I am being kind here) Honker Hilton clubhouse in the early morning darkness headed for the blind about a mile away. Shining a flashlight on the lake we saw a depressing sight, a sheet of ice encased the floating decoys and wild ducks do not know how to skate. Not good...not good.

I was selected to walk into the frozen lake (ice was about 1 ½” thick) to break it up and free the decoys, all 200 of them while the others dragged gear into the blind. Neoprene waders made it tolerable but treacherous. Call me crazy.


There better be ducks flying.

More to come.
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Default Rates & Static Analysis

As recently as a early 2007 ago there was very little "risk premium" between debt of varying quality. The risk premium is usually measured against US Government debt (Treasuries) of equivalent duration (i.e. a 5 year bond compared to a 5 year security). For instance, if the Treasuries were yielding 5%, then high-quality (at the time) corporate debt might be issued at 6%, with riskier debt as high as 9% (a premium of 4%).

At the time I wrote that this absence of a risk premium was unusual and meant that buyers of debt were being paid very little (beyond what they'd get for a risk-free government issue) for taking on the business risk tied to these often highly leveraged, cyclical businesses. As it would later turn out, these yields were far too low, and since have widened to historically high levels. For example, while Treasuries are around 5% now, "junk" bond yields for new issues are near 20%, which is an amazing premium of 15% or so.

Some analysts are saying that these yields are TOO high (i.e. the market is demanding too much for the level of risk that you are taking on). By their reckoning, companies would have to default at a rate that they didn't even approach during the great depression in order to justify these yield levels. Others are recommending that this might be a good time to jump in at these levels.

While their calculations of required failures do indeed seem high, the analysts have failed to take one CRITICAL variable into account - the absence of liquidity - essentially they are only modeling the risk of default in isolation.

The REAL cause of disruption in business today is something else - the complete seizing up of the market and closing of the door to companies seeking additional funding. For example, the risks in these two models are completely different:

1) what is the required return for a basket of "junk" credit quality companies assuming that they have access to additional funding (at that same high premium above Treasuries)

2) what is the required return for a basket of "junk" credit quality companies assuming that the market for high-yield debt has completely shut down and there is NO access to additional funding?

The analysts, looking at historical data (even comparing to dire scenarios, like the depression) are assuming a static market where companies can go back and raise more money, albeit at a high rate. However, in November 2008, there was only ONE (small) "junk" bond debt issue - the markets are frozen, per this article.

Companies that are have debt at "junk" credit levels are HIGHLY correlated with companies that NEED new funding to keep functioning (i.e. they are burning cash). Until recently there wasn't the prospect that markets would freeze and whatever cash was on hand would be pretty much all that was available for the intermediate term.

I am not saying that something IS or IS NOT a good investment- I am only pointing out that a static analysis of default rates that utilizes historical data needs to take into account the complete freeze in the credit markets and absence of new funding, at almost any rate.

This is an example of "negative correlation", or the old-wives tale of "when it rains, it pours". Lousy business conditions are tied with high interest rates and an absence of debt buyers at almost any price.

If these conditions aren't loosened up and access to new cash provided expect to see default rates that blow away historical levels, because today's companies are leveraged beyond the historic levels, and are required to continue to go back to the public markets for new funding.

The only slight silver lining is that many of these companies won't be able to get debtor-in-possession financing which is necessary to emerge from bankruptcy, meaning that they will be liquidated (like Linens & Things, Bennigans, Mervyns, etc...). The liquidation of competitors will give their slightly stronger competitors a chance to survive, since companies in bankruptcy operate at a distinct advantage (they can break contracts, for example). This logic is why Ford can't survive if GM and Chrysler go into bankruptcy (assuming they aren't liquidated immediately) - because then GM and Chrysler will have a big cost advantage that will overwhelm Ford immediately. In the past (when markets were liquid) entire industries such as airlines languished in bankruptcy seemingly indefinitely.

Cross posted at Chicago Boyz