Month: November 2005

Russians helping Iran to acquire missile technology?

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Jonathan mentioned in a comment to this post that Iran currently is still lacking a delivery system for its nukes. Unfortunately this won’t be true for much longer:

Former members of the Russian military have been secretly helping Iran to acquire technology needed to produce missiles capable of striking European capitals.
The Russians are acting as go-betweens with North Korea as part of a multi-million pound deal they negotiated between Teheran and Pyongyang in 2003. It has enabled Teheran to receive regular clandestine shipments of top secret missile technology, believed to be channelled through Russia.

Western intelligence officials believe that the technology will enable Iran to complete development of a missile with a range of 2,200 miles, capable of hitting much of Europe. It is designed to carry a 1.2-ton payload, sufficient for a basic nuclear device.

A senior American official said Iran’s programme was “sophisticated and getting larger and more accurate. They have had very much in mind the payload needed to carry a nuclear weapon.
“I think Putin knows what the Iranians are doing.”

As I wrote in my previous post, Putin doesn’t seem to be concerned about the prospect of an Iran with nuclear weapons, and seems to think that any resulting crisis would be to his advantage, no matter the outcome. There is nothing anybody can do about it directly. The only way to head off the march into an incredibly bleak future will be to take out the Mullahs, among a number of other regimes. If only European governments would realize that.

Your Fall Television Lineup!

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7:00 Wealthy Ironic Teenagers

8:00 Witches

8:30 Vaguely Leftist Mystical Bullshit

9:00 Young Doctors Having Sex

9:30 CSI Berkeley

10:00 Extreme Quarrelling Neighbors

11:00 Lawsuit TV

[. . .]

Walmart

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options trade that I have on. I’m holding a large chunk of the March 2006 $47.50 calls, and a smaller amount of March 2006 $50 calls. I picked up the $47.50 calls at an average basis of $3.20 per contract. I picked up the $50 calls for $1.90 this past Friday. Here’s my thinking:

Walmart stock’s volatility is extremely low. Being a Dow component helps. As a result, the option price is pretty cheap compared to even large cap tech stocks. The $47.50 calls cost me $3.20. It’s in the money by $2. So what I’m really paying for is $1.20 for the right to WMT’s upside from now until March 17, 2006. To put it in other words, if WMT is at $50.70 on or before March 17, 2006, I break even. Anything on top of that, and I’m making money.

Why do I like the $47.50’s? The $50 calls are not in the money. So I’m really paying $1.90 for the privilege to WMT’s upside from now until March. But the initial outlay is lower per contract. With the $45 calls, I would be paying 90 cents for that privilege, but the intial outlay is much higher since it’s further in the money.

For me, it’s like buying a $3 tech stock with the upside potential of Nasdaq, backed by the steadiness of a Dow component.

Buyer beware: options are extremely risky. Do not construe any of the above as investment advice.

Update: It seems Warren Buffet thinks Walmart is a value here as well.

WASHINGTON (Reuters) – Berkshire Hathaway Inc. (NYSE:BRK-A – News; NYSE:BRK-B – News), a company run by billionaire investor Warren Buffett, on Monday revealed previously undisclosed holdings of shares in Anheuser-Busch Cos. (NYSE:BUD – News) and Wal-Mart Stores Inc. (NYSE:WMT – News).

According to amended U.S. regulatory documents, Berkshire Hathaway disclosed that it held 44.7 million shares of Anheuser-Busch stock valued at about $1.9 billion and 19.9 million shares of Wal-Mart stock valued at about $874 million as of September 30.

It’s nice to have validation from the most influential value investor. Even better is that he has a legion of investors who follow his lead.

Update 2: Wal-Mart’s Black Friday numbers are better than expected, and they forecast November same-store sales growth to be 4.3%. This number is without new stores and former Wal-Marts converted to Wal-Mart Supercenters. It’s looking like a merry Christmas indeed.

Trackback Spam and “.info” Domains

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I added the domain “.info” to the comment-spam blacklist because lately it’s the common feature of most of our trackback spam and few legitimate commenters use “.info” domains. I have blocked “.info” in the past, but doing so always caused problems because the blacklist blocked any comment in which the string “info” appeared at the beginning of a sentence. However, this time I took the trouble to use the proper perl expression for the blacklist, so that now “info” gets blocked only if it is preceded by a period with no spaces between the period and the “i”. I hope this does the trick. If you still receive error messages about “info” and are unable to figure out a workaround, please contact me by email or comment. Thanks.

Iran’s strong negotiation position, and the inevitability of a military strike

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In the negotiations to somehow prevent Iran from acquiring nuclear weapons, the country has been treated with rather more deference than is warranted. This might well be one of the reasons:

The Saudi government is particularly sensitive about Shiite autonomy because the minority is concentrated in the oil-rich Eastern province, and any unrest or effort at secession might devastate Saudi oil production. A year after the war in Iraq, the Saudi regime has reached out to Shiite leaders.

“Things are really better than before. And Saudi Shia are ready for more and more,” said King Saud University professor A.A. Abdul Hai, a Shiite recently appointed to a new state-sponsored human-rights commission. “It is a natural thing that the majority should get their share of things, but at the same time that does not mean they deny the rights of the minority.”

Iranian agents are busy in Southern Iraq already, doing their best to stir up trouble among the Shia there, as the British found out to their sorrow in Basra. If they now can rile up the Saudi Shiites, and sabotage the Saudi oil production significantly, Iran would effectively be the only major oil supplier left in the region. They would increase their oil revenues by a huge margin, and at the same time make oil a much more effective weapon in their arsenal. On top of that it would make the threat of using the oil weapon much more credible than before, for sharply inflated prices would make it possible for them to reduce output, or to pick and choose whom to sell oil to, and to whom not. Oil may be fungible, but in case of a real shortage that won’t help any.

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