The Story of the SS Republic

I had a very busy day today. Not much to say on markets, they continue to have good action under the surface while the indices take a pause. Amazon missing earnings may cause some jitters tomorrow. I made two buys in the late afternoon, will see how it goes.

The long rally of 2012 has some tension building in the finance universe so rather than mix it up there, a totally non market related tale tonight.

The Story of the SS Republic

I am a huge fan of stories of lost ships and treasure. The SS Republic delivers quite a tale.

The ship was built in 1853. Powered by steam engine and propulsion was done by two huge paddle wheels on the sides of the ship. Originally the given name was Tennessee.

Adventure? Check out this list:
-Part of first steamship service between NYC and Central America
-During the California Gold Rush, transported "49'ers" to the eastern shores of Panama and Nicaragua to travel to California's Sierra Nevada mountains
-Transported the last wave of mercenary soldiers in William Walkers rogue take over of Nicaragua, then brought the defeated back home
-Served the Vera Cruz, Mexico to New Orleans shipping lane

Quite a run already, but it gets better.

In New Orleans when the US Civil War broke out, the Confederate navy seized the ship and used it for blockade running. She was re-named the CSS Tennessee in 1861. When the Union forces took over New Orleans the ship was dubbed the USS Tennessee and was pout to use at the Battle of Mobile Bay in 1864.

In March 1865 the old ship was deemed to expensive to refit and was sold at auction. Now given the name SS Republic, the ship was used for the New York to New Orleans travel route from then on.

Gold and Silver Currency for Rebuilding the South
Leaving New York on October 18, 1865 the ship was loaded with passengers as well as a sizable amount of gold and silver coins meant for rebuilding the hard currency base in the south after transfer to New Orleans.

A strong hurricane off Georgia proved too much for the ship, from Wiki:

On the fifth day of her voyage, a hurricane off the coast of Georgia proved too strong for the ship. By evening, her hull was leaking so badly that the fire in the boiler was extinguished, and she stalled in heavy seas, taking on water faster than her crew and passengers could bail her. At 4 pm on October 25, 1865, she sank. The passengers and crew escaped in four lifeboats and a make-shift raft, but 40-foot seas throughout the night made keeping them afloat a serious challenge. It was not until two days later, on October 27 that the survivors, now desperate with thirst, were found by the sailing ship Horace Beals. On October 29, the steamer General Hooker had been sent to look for the Republic, and rendezvoused with Horace Beals. The passengers were transferred and taken to Charleston. Most of the passengers and crew survived, although several were lost on the raft before they could be rescued. All the coins were lost.

And that was that. Or was it?

Rediscovery and Recovery of the Coins
In 2003 the company Odyssey Marine Exploration (OMEX) was able to locate the wreck off Georgia in 1700 feet of water. OMEX uses historical study, side scan sonar arrays, and Bayesian search statistics to locate ships.

The side scan sonar made the two huge paddle wheels very clear to see (its hard in this picture, but it was clear):

The rover robot that OMEX uses to search the ship and recover coins took this picture of one of the wheels:

All told, nearly $75 million dollars in gold and silver coins were recovered at the wreck.

Now that is a tale!

Further reading:
Lost Gold of the Republic - Priit J. Vesilind

Full disclosure: I have a small position in OMEX from years ago that is still "underwater" (pun intended) and thus this tale is not investment advice or trying to get back to even, just find it very interesting.

Have a good night.

Trapped Under Ice Friday

Damn Ice Dams
I was home yet again today after waking up at 5am, going downstairs to find a nice water fountain coming in the living room bay window. The culprit, ice dams! I had to wait for the sun to come up to get after it.

There was huge ice buildup over the window and all on the front of the house (it's a Gambrel style). I took out my 8 foot ladder, a hammer, a crowbar and set off to work. I got most of the ice away from over the window, but the huge ice block on the front of the roof was hard to dislodge. After a few attempts I felt a strange warning in the Force. Seconds later I saw a 75 pound block of ice (yes I weighed it on the bathroom scale!) come flying down the front of the house right at me! I was on the second to last top rung of the ladder! I calmly pivoted my upper body and pushed the ice block off to the side and onto the ground. I can say it was amazingly skillful and quick, like a ninja. Glad that's over for now but I cannot even bribe a roofing firm to remove the snow and ice damns from the roof as they are all too busy. Maybe a mind trick will work?

You Win Some and You Lose Some, and Others You Miss
I was stopped out of my HSY trade this morning at $49.80. In at $46.79 so I pocketed a cool +6.5%. Just missed my $50 target but it was there. If HSY breaks over $51 I may rebuy but it has been turned away from that top quite a few times.

I am still holding AMRC, a small position. Still think a bounce is ready to go, but I am down a bit on the stock (-3%) so I will not let it go much further.

I was shocked that I still held my OMEX shares at $2.90 and today it rolled to $3.60! Not bad for a 2 year hold, LOL! I actually forgot I still had this position until I started trading again. Nice!

The big regret? TRCR which I showed you all in this post on January 24th. What I saw was a repeating higher double high pattern, it is almost fractal like! Here was the chart that night:

After today's 2.8% move up:

Now this may not be the next move up, and I may just be imagining things but I had wanted an entry here but just never got to it. A friend of mine went in after reading that post and is happy so far. Hey bud, your welcome!

As for anything else, I am too tired. While destroying ice with a hammer has it's rewards, something feels very out of place where my right clavicle meets my right shoulder. No it's not just soreness, I probably bent something. Wonderful. Also the Bernanke speech from yesterday still has my furious that such a total apechit clown runs the FED and is not run out of town post haste. As such, macro stuff will have to wait for another post. Off to the fun stuff.

Friday Night Entertainment
I will endure serious pain to bring you the fun we all so richly deserve!

Funny Videos
These two are MUST see video!

A pug dog (not mine sadly) that yells "BATMAN" was around a while ago. Now he has been set to the Batman TV show theme and it is get out funny:

LOVE IT!

This may be the greatest commercial ad of ALL TIME!:

The team that made this ad are brilliant! How the kid captures the perfect moment at the :50 second mark I have no idea. If I was not in love in a weird way with my Infiniti G35X I would visit a VW dealership on this commercial alone. Try the real force kid, hee hee.

Did You Know?
It's that time again to grow neurons with Did you know!

-Ice dam war can be fought by stuffing nylons with Magnesium Chloride and pacing them on trouble spots? Just don't use black fishnet garters or you may get complaints from the neighbors.
-I missed this from January 28th, but did you know EconomicDisconnect stayed home from school to watch the space shuttle Challenger launch way back in 1986? My mother and I just sat there without saying a word, for a long time.
-Io, one of Jupiter's moons, is seriously strange?
-Hadrian's Wall is thought to be the last great work of Rome?

Rock Blogging
Wow, I am running way late! Must be my busted shoulder. On to the tunes.

Loyal reader Gawains, who is suffering in Texas under cold conditions and like 3 inches of snow (WIMP!!!), would like George Thorogood and the Destroyers hit "I Drink Alone", which works out if no one is around. I mean why not drink alone?:

Love this tune.

Ok, if your name is not Josh Brown you may not be into Hip hop. I am not really, but I do adore Lil Kim. Here is Sugar (Gimme Some) by Trick Daddy and crew:

"Lil Kim's eye candy baby!" Indeud. Call me Kimmy darlin.

Ok, after that I need the 80's! How about Europe and "Carrie"?:

MEGA vocals on that guy.

One of my all time favorite songs, and one I will mat the gas pedal to anytime, is Iron Maiden's masterpiece "Hallowed be thy Name". How about on Piano via by Scott Lavender?:

So sick it hurts. What a great job.

Two left! Two left and I am one armed at this point!

In case you missed it, I was best friends with all the future scientists in the band Man Bites Back in college. While they pursued other endeavors than music, I love this song "Ghetto Starlight":

Kick ASS!

Last call and my right shoulder is happy, but I am sad!

In regards to the never ending Bernanke market assault on new highs no matter the cost, take a crowd WILD ride with Rage Against the Machine and "Bulls on Parade". The crowd at this show was so amped:

Bad shoulder and all I want to jump!

Have a good night.

Friday and Fun: 2gether + 4ever = 6cess!

That title brings back the days of trading notes in grade school! Why that came to mind will be apparent below, but that stuff was funny. Remember folding the notes in a way that the teacher could never figure out how to open them? Beats ciphers.

Market Currents
Another day, another move up. I wrote a bit last night about the "wall of worry" and so it continues. Those with a mind to "shake hands with the government" and get in bed with the FED may want to scope out muni related instruments. These things are insane cheap when you consider the soon to be unleashed 100% US Government guarantee. Should not be too long now. This is not investment advice.

My tight stops on EW and NFLX were not triggered today so I remain in both stocks. I will be looking for new trades next week as nothing I turned up using screens late this week really jumped out at me.

Friday Night Entertainment
Sorry for the light content, but I am in a good mood and want to get on with the show!

NFL Divisional Playoffs
After a wild wildcard weekend it is time to see who has what.

Baltimore Ravens at Pittsburgh Steelers (4:30pm Saturday)
This is going to be a rough game. I am torn, they are evenly matched.
Steelers 27, Ravens 24

Green Bay Packers at Atlanta Falcons (8:00pm Saturday)
I am not sold on the Falcons due to their defense not being that good, but they are a good team. I just like the Pack here.
Packers 31, Falcons 28 OT (And remember there are new OT RULES!)

Seattle Seahawks at Chicago Bears (1:00pm Sunday)
This one screams upset special and trap game. I think Julius Peppers will be all too happy to be back in the playoffs and he is the difference late.
Bears 24, Seahawks 20

New York Jets at New England Patriots (4:30pm Sunday)
This third game between the two teams is hard to call. The week 2 drubbing of the Pats in New York was a different Pats team. The Patriots demolition of the Jets a few weeks ago seemed like the Jets were a bit overwhelmed by the moment. I think this game will be the game I expected the last time, a great one.
Patriots 28, Jets 21

Did You Know?
-Pistachios are dangerous cargo?
-That Port Royal in Jamaica (a favorite Pirate destination) was destroyed and engulfed by the sea after an earthquake in 1692?
-The Klenow Fragment enzyme can be used to repair ends of DNA by either chewing off broken ends or filling them in?
-One of the largest planes ever built, The Spruce Goose, was made from wood?

Pictures and Such
A few funnies. I will try and get more pics of my Pug and Cat this weekend. Those two are popular! Maybe I should make them a Facebook page?! I got a bunch of pug art prints for the wife at Christmas which now decorate the kitchen. Here is one, the Pugspresso:


KNOW YOUR GREMLIN FACTS!:

see more Very Demotivational
Geez.

Potential arbitrage opportunity?:

see more funny videos

Memories
The wife located a first edition book by Jack Finney, "About Time", which is a collection of short stories regarding time travel. I loved it so much! What was funny is that as I was reading the first tale (The Third Level) I had a feeling of deja vu. When I arrived at the end of the story here it was:

941 Willard Street
Galesburg, Illinois
July 18, 1894

Charley:
I got to wishing that you were right. Then I got to believing you were right. And, Charley, it's true; I found the third level! I've been here two weeks, and right now, down the street at the Dalys', someone is playing a piano, and they're all out on the front Porch singing, “Seeing Nellie home.” And I'm invited over for lemonade. Come on back, Charley and Louisa. Keep looking till you find the third level! It's worth it, believe me!

BOOM!
As I read the first few words I recited the rest in my head! I was instantly transported back to 4th grade when I read this in class! What a memory to come back. Amazing really. Then I started thinking about grade school and thus the title for tonight's post was born.

Rock Blogging
Time for a few tunes to start your playoff weekend!

Loyal reader Watchtower has been here almost since day one way back in 2007 (has it been so long?). Any request of his for Friday night goes (well you know what will not!) so let's start the show with SAGA and "On the Loose":

Never heard it, but I like it!

CT Hilltopper wanted some Depeche Mode, and luckily the wife is their biggest fan! She suggests "Behind the Wheel" and live at that:

NICE! Second choice here.

The last time I played Roy Orbison, I had 19 comments on the post! If you all have not figured it out, comments are like rocket fuel for me, I love it. Lets roll with "I Drove All Night":

Love that one.

I need a Motley Crue fix and so let's go with "Too Young to Fall in Love":

Love it.

Two to go! What shall we play? If I had Twitter I could do a snap poll. Oh well.

Let's close with a little heavy, yes? You know how I roll.

Who remembers Ugly Kid Joe? I do, take a listen to "Everything about You":

Too funny.

Last call! Time to close the show.

You know it's coming! I want Randy Rhoads giving "Iron Man" a new life:

Unreal.

Have a good night.

Billions in Bailouts Mean Nothing, But Your Missing Tax Rebate Just Might

It was as advertised a big fat ZERO degrees this morning. Kind of takes your motivation away when it is that cold. At least I have Monday off as a Holiday so I get a three day weekend!

Odyssey Marine Exploration (OMEX) Update
Last night was the premier episode of the Discovery Channels program titled "Treasure Quest". I liked the opening episode. As I have read a great deal about the process that OMEX uses, I knew a bit about it. It was great to get a visual on all the action and equipment.

One scene stood out strongly: While searching for the ship "Merchant Royal" the searchers were combing an area that is a high traffic zone for shipping freighters. It seemed wild that maybe 500 Million in gold may lie on the ocean bed with tons of cargo going by day and day out. There will be 14 more episodes.

So how is the stock doing? Today OMEX closed at 3.51, up 16% from the 3.00 I have it at. Not quite the pop I am expecting, but it is still early on. I like the show and the stock for the pure excitement of treasure hunting.
Full Disclosure: I own shares in OMEX.

Gold and Silver Show Some Muscle
Gold and Silver took it on the chin along with the greater market over the last week and a half. The two metals have shown great resilience as of late and had a good day today. I like it when any asset exhibits real resistance to getting pounded in a bad market.

Of course you know I am extremely bullish on the metals. With all the money being created and the rush for currencies the world over to devalue I expect gold (and to a lesser degree silver) to remain solid. Probably not spectacular, but solid. That is more than you can say for many things at this point.
Full Disclosure: I own gold miners GG and KGC.

Great Blog Comment
One of the great features of any blog is the comment section. With access to all kinds of people and all kinds of lines of thinking you can really get a ton of information. Over at The Big Picture Blog today there was a thread about all the money being poured into the banks to backstop losses. One reader left a comment that I saved to put up tonight.

As it relates to bank earnings and giving never ending cash infusions to help balance sheets:

wally Says:
January 16th, 2009 at 8:37 am
There is no reason to believe that quarterly losses will not continue for the next several quarters - or longer- at the same rate. No profitability for banks can be expected for any reason other than uninformed hope.
This is just taking future money and pouring it into the past.

A great insight that crystallizes the problem.


Billions in Bailouts Mean Nothing, But Your Missing Tax Rebate Just Might
A new CNN poll out today showed that the sampled people were against any more TARP money bailouts by the rate of 61% against. While one cannot expect Congress to do anything that their constituents want, they passed the TARP anyway, you have to wonder why people are not more angry or loudly protesting the disgusting use of taxpayer money for rescues the world over.

I have a theory that the huge numbers involved simply mean nothing to most people. I mean what does a 20 Billion dollar gift to BAC and a backstop of over 100 Billion more really mean? Nothing tangible to anybody that is for sure. The long term effects certainly will be noticed, but only slowly and over time so as not to panic anyone. As long as the TV works, McDonalds is open, and the credit cards work when swiped most people do not even care how much money is being spent.

Mismanagement on many levels is being rewarded right now. From the executives at AIG, to the bosses of BAC, to the auto manufacturers, and even dead beat home mortgage holders money is being deluged on the problems with no repercussions for those that caused all the problems. Well there is a news story tonight that might just change how readily people accept non performance and failure.

From the LA Times:

California controller to suspend tax refunds, welfare checksJohn Chiang announces that his office will suspend $3.7 billion in payments owed to Californians starting Feb. 1, as a result of the state's cash crisis. Student grants are also affected.
By Evan Halper
11:24 AM PST, January 16, 2009
Reporting from Sacramento -- State Controller John Chiang announced today that his office would suspend tax refunds, welfare checks, student grants and other payments owed to Californians starting Feb. 1, as a result of the state's cash crisis.
Chiang said he had no choice but to stop making some $3.7 billion in payments in the absence of action by the governor and lawmakers to close the state's nearly $42-billion budget deficit. More than half of those payments are tax refunds.
The controller said the suspended payments could be rolled into IOUs if California still lacked sufficient cash to pay its bills come March or April.
"I take this action with great reluctance," Chiang said at a news conference in his office. But he said that without action to close the deficit, "there is no way to make it through February unscathed."
The payments to be frozen include nearly $2 billion in tax refunds; $300 million in cash grants for needy families and the aged, blind and disabled; and $13 million in grants for college students.

First off let me open by stating that this WILL NEVR HAPPEN. There is no way that California will not issue tax rebates to those that have them coming. No Way. I believe that this move is a threat being sent to two entities:
1.) The California Legislature; the threat will scare them into passing any budget with any bond issuance that is needed
2.) The US Government; the threat clearly will invoke the "systemic risk" qualifier and California will be first in a long line of state bailouts

With that out of the way, let's return to the idea of a government refusing to deliver tax rebates. For my family when I was young tax rebate season was the time of year the whole financial well being depended on. Car repairs, home repairs, and sometimes even christmas gifts were all put on hold until late February to early March awaiting the state and Federal rebates. Note: Times were tough, this is not a debate about my or any families' financial savy that they need their tax rebates, just the principal.

Now what if the state and/or the federal government said "Sorry, we need the money to avert systemic risk, so you are out of luck"? Do you think people would be as docile as they are now while trillions are being wasted bailing out failed banks and other firms? The bailout cash means nothing to most because it does not affect them personally or immediately. The lack of an expected rebate check will get their attention. I guarantee it.

One of my major issues is how fools like Ben Bernanke, Hank Paulson, Bill Gross and Paul Krugman throw money spending ideas around like it does not matter. I have written that it is easy to take billions from the "taxpayers" but near impossible to take any money away from one person. I have even challenged Bill Gross to a steel cage match so that he may learn just how hard it is to take money from someone directly. If a tax rebate freeze ever occurs there is going to be riots and violence.

I think this threat is dangerous and ill thought out. If Californians think their tax money will not be returned they may take extra exemptions to make sure they pay only at years end. This would hurt tax receipts all year and cause even more problems. The California controller John Chiang should be immediately fired for making such an irresponsible and dangerous statement. I am sure he can get a new job here in Massachusetts.

This is a big story. Huge. While I do not think it is for real (real meaning going to happen, the story is certainly true) it does open a line of thinking that needs to be addressed. What if a state refused tax rebates? What if the federal government, in the interest of "maintaining economic stability" stopped rebates as well? While they have no legal authority to do so, they have no reservations to this point about doing whatever they want anyway. The first half of TARP was viciously opposed, and it passed anyway. Not one Senator lost his/her seat due to their "yes" vote on that bill. Not one. Do you think thy will care that their voters are not going to get tax rebates? They won't if people are quiet about it. If tax rebates are ever withheld I imagine most people are not going to be quiet about it. Not quiet at all.

Friday Night Entertainment
A little mirth to get your mind on things more fun than thinking about the end of the world!

Hilarious Chart
This flowchart shows the difference what clothes a man wears and what outfit a woman wears may have on their drink selection:


Rock Blogging
Music can soothe the soul, or it can get you all riled up. Let's see what we can do!

Another great Ipod find was a song I had not heard in over 5 years. Haunting vocals and wonderful guitar rhythm. Try out Iron Maiden and "Wasting Love". Great opening verse: "Maybe one day, I'll be an honest man. Up to now, I'm doing the best I can. Long roads, Long days of sunrise to sunset. Sunrise to sunset.":


Along the lines of great hair band ballads, I have always liked the White Lion song "When the Children Cry":


Maybe I am in a slow music mood, but had this song stuck in my head. listen to Def Leppard and "Bringing on the Heartbreak":


I loved the remake of the Bob Segar classic "Turn the Page" by Metallica:


Have a good night.

Stock Treasure at the Bottom of the Ocean?

As a very special parting shot from the ice storm of last Friday, two of my heating system water pipes broke and the heat was lost for the second floor of the house yesterday! I was able to get a crew in yesterday and those guys worked all day and most of today to fix the problem. Excellent service and they were real professionals. Hopefully that will be all for the drama department until the new year, but you never know!

Stock Treasure at the Bottom of the Ocean?
A while back I had mentioned a book I read called "Lost Gold of the Republic" by Priit J. Vesilind. The novel chronicles the search for and eventual recovery of the SS Republic, a steamship that was carrying a large shipment of gold and silver coins. This money was destined for the city of New Orleans after the Civil War to act as aid in reconstruction. The ship was lost off the coast of Georgia in a hurricane. The novel is great as it details not only the search for a long lost ship and all that entails, but it also sketches out the experience of many people that were on that fateful voyage.

Economic Disconnect focuses on the macro picture for the most part. I feel that if you have the tide figured correctly, finding stocks to buy is easier. I hardly ever disclose personal trades or ideas on particular stocks. I will this time so you can see how I think in a more short term sense.

The company I took a position in is called Odyssey Marine Expeditions, Inc (OMEX). This firm is the company that found the SS Republic, and has located many other ships that may harbor valued salvage. If you read the book you can appreciate just how good these guys are. The stock itself trades at about $3 today, and shows a market cap of $158 million. The stock trades pretty thin with average volume of 242k shares daily. (All data from Yahoo Finance Ticker report)

As I see it, OMEX is a lottery ticket. The stock is one lawsuit gone wrong on a claim from going to zero. Ships that are located may have nothing recoverable. They could run out of money in short order. This stock is a speculative play at best. If you are still interested, read on.

OMEX does what many of us can only dream about. Bringing up gold and silver from long lost ships can only be termed "wild". The science behind their search methods and the methodical nature of their work is impressive. Those criteria make the stock interesting to me. As a catalyst for me to buy though, I look to this headline from December 11th:

Press Release Source: Discovery Channel
TREASURE QUEST Captures Thrill of High-Stakes Hunt for the Ocean's Greatest Lost Treasures
Thursday December 11, 4:39 pm ET
- World Premiere 11-Part Series Kicks Off Thursday, January 15 at 10PM ET/PT
SILVER SPRING, Md., Dec. 11 /PRNewswire/ -- TREASURE QUEST takes the meaning of "cold case" to a new level - it's not always what you find, but what you find out. Discovery Channel and Odyssey Marine Exploration (OMEX), the world's only publicly-traded company dedicated to deep ocean shipwreck exploration, plunges viewers to the ocean floor as they track the unsolved mysteries of the deep sea in this 11-part world premiere series. The nonstop race against time, secret locations and international intrigue will make the viewer's pulse race and remind them of their childhood fantasies. For the Odyssey crew and the Discovery Channel production team, it is a dream job -- but not one without its major challenges. TREASURE QUEST premieres Thursdays at 10PM ET/PT, beginning January 15, 2009.

So here we will have an eleven episode show on Discovery channel that shows the company in action. While Discovery Channel is not a major network, the channel does have high viewership and it is certainly the kind of inquisitive minds like mine. This kind of coverage will surely engender some interest.

I couple the show exposure with a thinly traded stock, and I see an opportunity to make a short term move. Like I said, at this point OMEX is more a lottery ticket as there are just too many unknowns. But if you are looking for a short term play that has some imagination, this stock jumped out at me. As I said and with full disclosure I now own a position in OMEX.

Automatic Earth Article
I read a great piece today on the blog The Automatic Earth (hat tip Some Assembly Required blog). The writer named Ilargi hits the nail dead on the head many times. I recommend the full read here.
Excerpt:

Yesterday’s rate cut by Bernanke's Fed is the clearest -though by no means the first- signal that the entire gamut of political action has run its course, and it hasn't helped one bit. The answer: double or nothing. When one idea fails, 3 of the same ideas will surely solve the issue. They are gambling with other people's money, and that is always easy. It’s your money though, and the chances of winning are miniscule. They just don’t know what else to do. Every politician is a mini-Bernie Madoff. Addicted to power, fame, money and attention. The combined stakes we see today are at least a 1000 bigger than Madoff's paltry $50 billion.

But this is not the only way to approach the failed system. They could simply let the failed banks fail. You don't, as they like to make you believe, need those banks. You need access to your money. Your government can give you that. Instead, it tries to use your money to save banks you don't need. And those banks are so deep in debt that I can guarantee you all of your money will be lost, and the banks will still in the end go under. How to solve this? For one, expose all the losing assets in the banks. Let the ones who have too many bad assets die.

The whole thing is a great read.

Have a good night.