In the last month, I’ve talked to several people about the stock market.  Here are some of the things I’ve heard.

• I bought at the bottom. - A very smart engineer said with complete confidence, that he fully invested into the stock market at the bottom.  When I inquired how he knew it was the bottom, he seemed puzzled as if the market couldn’t drop below the late October lows.  Note that since we talked it already has.  Other than the 1987 computer glitch crash, I have yet to find a market bottom formed from the massive day to day swings in price action that we are seeing today.  When the market roars back on a single day or week, it is often not a reaction to positive news, but a squeeze on those shorting stocks.  Once the squeeze ends, the stocks resume their downward channel.
• It’ll come back in three years. - A lady in software training informed me that all the losses in the market are troubling, but she is confident the market will return it all in three years.  I asked how she arrived at three years.  Her response was that it always comes back.
• It doesn’t matter, since I have a long time before retiring. - I’ve already covered this silly statement.  If retirement is delayed by years, then it does matter.

When I put my house up for sale in 2005, I heard similar nonsense.  Houses could only go up.  Home prices never go down. People just repeat what they hear without checking their sources.  And often what they heard was some nonsense they saw or read from the financial media, which make its money from advertisers whose goal is to keep you fully invested in the market at all times.

Market bottoms come after capitulation.  Here in Seattle, I haven’t even heard the faint whisper of capitulation.  We got a ways to go before bottoming.  I’m still calling for an S&P 500 of 600.

1. Pull-Ups - I needed 20 to move from Decent to Good.  I got 17, which is a new personal record, but still 3 shy of Good.  Darn high-reps!  I have set a new goal to do a 100 pound weighted pull-up sometime in 2009.  I might have to get MacGyver with the equipment at my Glitter Gym to pull that off. 
2. Leg Press - Last week I started this exercise with 135 and 185.  No soreness, so this week I did 225 and 275.  Slow and steady.
3. EZ Bicep Curl - In Part 2, I speculated that with my tiny wrists I would probably never get a Good score of 135 pounds.  Today I raised my poundage to 100.  Who knows, maybe Good is possible?
4. Monster Moves - I’m going to refer to the squat, dead lift and bent rows as the monster moves.  They all take place in the cage and like a monster, they tend to be loud.  These are the ones I need to go slow and steady or I’ll get injured.  Progress here will take months, not weeks.  And being injury free is more important to me than being Decent.

My 2008 Training Scorecard remains at 7/12 Decent.

My inspiration ran smack into a domain transfer problem with GoDaddy.  This week I was finally able to liberate the domain and setup my own quick portal.  Getting the domain moved over took months.  Hand coding the first version of the site took less than an hour and was done using NotePad.

In the coming months I will update MichaelAllenSmith.com.  The current version is just a placeholder.

MichaelAllenSmith.com

1. Dips - Have I mentioned how much I loathe high repetition training?  But I really want to be Decent, so I needed to hit 20 reps.  After completing the 20 reps, I grabbed a weight belt and resumed my low-rep weighted dips.
2. Bench Press - My only Decent bench press was back in May 2007.  I’m more of a incline dumbbell guy, so I’m just starting to revisit the classic flat barbell bench press.   Today I benched my weight (200) for 3 reps.  Since I work out in a Glitter Gym, it will be tough finding someone to spot me as I approach 225.
3. Skull Crusher - Added 5 more pounds to this ridiculous exercise.  I’ve already hit Decent and think that Good is possible by spring.

My 2008 Training Scorecard is now 7/12 Decent.  Looking at the table I’m guessing it will be several weeks before I hit another Decent milestone.  However, my first Good score is within reach on the Pull-Ups.

Instead of throwing away the tins, I started piling them up on my desk.  Then after one eventful Halloween, I found myself in possession of two very real looking plastic rats.  I decided to have a little fun at work.  I set up this display of tins and made it look as if the rats were teaming up to get at them.

Needless to say, it freaked more than one of my fellow co-workers out.  Before long people from other departments were coming over to view the Altoid Rats.

I really don’t like getting haircuts.  I don’t like waiting and most places over charge.  The great thing about living in San Diego was it was a military town, so you had military barbers.  Cheap and fast.  The closest thing Seattle has to the military is the Girl Scouts.  This means no military barber.

While living in Bellevue, I found a Vietnamese place that was a 2 block walk from my apartment.  It was cheap and fast.  This is the place I accidentally gave the big tip.  Now I get the Sinatra treatment, so even though I now live on the Seattle side of the bridge, I time my haircuts whenever I need to run errands on the Eastside.

Yesterday I needed a haircut.

Yesterday it was pouring rain.

Yesterday I remembered that Ted Turner cut his own hair.

Yesterday I drew blood.

A lot of blood.

Now did Ted Turner cut his own hair because he funneled every extra dollar into his media empire?  Or did he cut his own hair because he was a crazy redneck and everybody had awful looking hair in the early 1980s?

switch (novelty)
{
    too-little:
        condition = boredom;
    too-much:
        condition = overwhelmed;
    just-enough:
        condition = engaged;
}

if (condition == engaged && action == true)
    satisfaction = true;
else
    satisfaction = false;

This post had just enough novelty and required an action on my part.  I’m satisfied. 

Satisfaction: Sensation Seeking, Novelty, and the Science of Finding True Fulfillment by Dr. Gregory Berns was better than I expected.  He took a topic as geeky as brain chemistry and turned into an adventure.   He went from Iceland to a crossword puzzle competition to an endurance race and more on a quest to solve the riddle of satisfaction.  Along the way he setup tests and helped the reader understand the science stuff.

Satisfaction is not the same thing as happiness and that is key to this book.  Happiness can come whenever.  Satisfaction requires action and some novelty.  The human must connect their actions to the result in order to achieve satisfaction.  Ice cream might make you happy, but unless you made the ice cream yourself it might not result in the feeling of satisfaction.  And if you’ve made ice cream hundreds of times before, it may not have the novelty and thus its potential for giving you satisfaction.

Too much novelty is stressful and too little novelty results in boredom.

This book helped me understand why investing has not been more satisfying to me.  I have made money when I’ve been right and made money when I’ve been wrong.  On the flip side, I’ve lost money when I’ve been right and lost money when I’ve been wrong.  There is often a disconnect between the actions of an investor and the outcome.  In the end, we are still animals and I want a dopamine hit too.

Satisfaction was a satisfying read.  I also plan on checking out Dr. Gregory Berns new book Iconoclast: A Neuroscientist Reveals How to Think Differently.

From my 2008 Predictions post on MarketTicker on 12/27/2007:

OIL = $55
President Mitt

Even though I was dead wrong on Romney winning the 2008 election, I nailed the fact oil would hit $55 by the end of 2008.  This calls for a celebration dance.

I promise not to bring out the dancing banana until the S&P 500 hits 600 or Paulson is lynched.  Whichever comes first.