Dec 26 2008
One of the side effects of shorting
Ever since I started shorting in February/March of 2007, my wallet has been clamped shut. For the entire year of 2008, I managed to squirrel away 25% of my pretax graduate student stipend. That includes health insurance, travel, random crap I buy, various big fat one time expenses, everything. And if it wasn’t for two unavoidable large expenses that came out of the blue, the percentage would be close to 31%, higher than the 28% rate in 2007.
If you are working and you have a nice paying job, saving 10% of your salary is easy. But 25% on a lame graduate student stipend that isn’t one of those higher paying fancy-smancy fellowships? That’s not easy, but it ain’t as hard as it seems since I still blow quite a bit of money eating out.
Why did I do this?
1. If you are short selling, you have a negative view of the economy and you hang onto every dollar that you can.
2. If you are short selling, you don’t want to get burned when companies report good earnings. Therefore you don’t buy as much stuff so that the companies you are shorting don’t do well.
3. When the economy starts sucking, everything gets cheaper and money becomes more valuable. If you’ve built up a pile of cash, you can go on a shopping spree at a HUGE discount later.
You do it not because you can’t afford it, but because you want to be frugal. You do it not out of economic uncertainty, but becomes a game of limbo and you want to see how low you can go. You go as low as you can without becoming a Jew. And it’s really not that hard. Just don’t buy random stupid crap that you don’t need.
A little more than a week ago when I was packing my bags to go home, I decided not to pack many clothes.
Why not?
Every shirt that I have that I didn’t get for free as a hole in it.
Of all the pants that I have, only two of them don’t have the bottom of the pant leg screwed up in some way. And of these two pants, one of them is faded in patches here and there.
Why pack it if it is all trash? Why not go home without many clothes and then go on a shopping spree?
Just like the shirts and the pants, until about two months ago, every sock that I had, had a hole in it. I couldn’t take it anymore and I bought a whole mess of socks with my new shoes that I get once once a year once it starts snowing or else something stupid like this happens.
Today I went out and blew $250 on shirts and pants. What did I get? The usual. You know me. You know what I wear. I wear the same kind of stuff I have always worn for at least the last 15 years. The next time you see me, you will not notice any change in my outfit. It’s the exact same crap but without the holes and the screwed up pant leg.
So was Black Friday II a success? No, it sucked. But by some measure it was a success because brick and mortar retailers managed to squeeze $250 out of me today, and that’s $250 more than any other day this holiday shopping season.
And one more thing, the $250 counts as a 2009 expense because I am such a cheap bastard that I have two credit cards with billing cycles 180 degrees out of phase so that I can ensure that every purchase I make I do not have to pay for for at least a whole month. The card I charged the $250 on had its billing cycle end on December 24th so I do not have to pay for this purchase until February 18th. It’s an interest free 7 week loan. I want these banks to die and therefore I try to deprive these guys of cold hard cash for as long as possible.